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IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
SOUMEN SEN, J.
Sleepwell Industries Co. Ltd. – Appellant
Versus
LMJ International Ltd. – Respondent
G.A. No. 3306 of 2016 & E.C. No. 487 of 2013 (Original Side)
Decided on : 22-08-2017
The judgment discusses the enforceability of a foreign arbitral award under Section 48 of the Arbitration and Conciliation Act, 1996 (the "Act"). The Court held that the objections raised by the judgment-debtor were not tenable and that the award was enforceable.
Fact of the Case:
The judgment-debtor, LMJ, had filed an application under Section 48 of the Act seeking to set aside the enforcement of a foreign arbitral award in favor of the award-holder, Sleepwell. LMJ raised several objections to the enforceability of the award, including that the arbitral tribunal was improperly constituted, that the award dealt with a matter not contemplated by the arbitration agreement, and that the award was procured by fraud.
Finding of the Court:
The Court rejected all of LMJ's objections. It held that the arbitral tribunal was properly constituted, that the award dealt with a matter that was contemplated by the arbitration agreement, and that there was no evidence of fraud. The Court also held that the award was not contrary to public policy.
Issues: 1. Whether the arbitral tribunal was properly constituted. 2. Whether the award dealt with a matter that was contemplated by the arbitration agreement. 3. Whether the award was procured by fraud. 4. Whether the award was contrary to public policy.
Ratio Decidendi: 1. The Court held that the arbitral tribunal was properly constituted because it was appointed in accordance with the arbitration agreement and the law of the country where the arbitration took place. 2. The Court held that the award dealt with a matter that was contemplated by the arbitration agreement because the dispute arose out of the contract between the parties and was within the scope of the arbitration clause. 3. The Court held that there was no evidence of fraud because LMJ had not provided any credible evidence to support its allegations. 4. The Court held that the award was not contrary to public policy because it did not violate any fundamental principles of Indian law or justice.
Final Decision: The Court dismissed LMJ's application and held that the foreign arbitral award was enforceable.
The judgment-debtor is the applicant.
1. The judgment-debtor has filed this application ostensibly under Section 48 of the Arbitration and Conciliation Act, 1996 but essentially for having a ‘second look’ at the foreign award, notwithstanding an earlier order dated 4th September, 2014, by which the question of maintainability including enforceability of the foreign award was decided.
2. The earlier challenge was oral.
3. This time an application has been filed disclosing further grounds of challenge to the enforceability of the award. The present application highlights a cosmetic difference between the expression “maintainability” and “enforceability” used in the order dated 4th December, 2014.
4. The award-holder has filed an application for enforcement of a foreign award in November 13, 2013.
5. Initially, the execution application was not accompanied by the original award and a certified copy of the agreement for which a leave was given to the decree-holder to produce the said documents, pursuant thereto on 16th January, 2014, the original award and a certified copy of the agreement were produced in Court. Justice I.P. Mukerji by an order dated 16th January, 2014 recorded the production of the said two documents and photocopies of the said documents were taken on record without prejudice to the rights and contentions to the judgment-debtor. The said order was passed in presence of the judgment-debtor. The question of maintainability of the application was kept open.
6. On 18th September, 2014, the judgment-debtor was directed to file an affidavit disclosing the particulars of the bank accounts and the amounts lying on to the credit of judgment-debtor in each of such bank accounts with supporting documents mentioned in Paragraph 26 of the Affidavit in support of the tabular statements. The said direction was passed without prejudice to the rights and contentions to the judgment-debtor with regard to the maintainability of the execution application. The judgment-debtor although had filed an affidavit in terms of the earlier order but in the affidavit, the judgment-debtor did not furnish any proof as required under Section 48 of the Arbitration and Conciliation Act, 1996 questioning the enforceability of the said award nor any independent application was filed challenging the enforceability of the foreign award. In absence of any such application being filed, the judgment-debtor was invited to make submission with regard to the enforceability of the foreign award as by that time the original award and the certified copy of the agreement were taken on record. The expression “maintainability” in both the earlier orders was intended to mean and, in fact, meant enforceability of the award. The judgment-debtor has also understood the earlier orders in the same manner as would be evident from the submissions made and recorded in the order dated 4th December, 2014. It is significant to note that in the affidavit filed in terms of the order dated 18th September, 2014, the judgment-debtor did not dispute the agreement or the award and not a single sentence was mentioned raising any objection with regard to the enforceability of the award. Thereafter, when the execution application was taken up for hearing on 4th December, 2014, I permitted the respondent notwithstanding the objection raised by the decree-holder that no challenge in writing has been made with regard to the enforceability of the award to argue on the maintainability of the award meaning thereby the enforceability of the award.
7. The judgment debtor raised five objections with regard to the enforceability of the said award.
8. The said objections are recorded in the order dated 4th December, 2014. The said objections as recorded in the order are reproduced below:-
“The first objection raised is that no prayer for declaration has been made in the application that the foreign award is enforceable. It is submitted that unless prayer is made seeking a declaration as to the
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