1999 Supreme(Del) 125

High Court Of Delhi
FUERST DAY LAWSON LIMITED - Appellant
Versus
JINDAL EXPORTS LIMITED - Respondent
Arbitration 347 of 1998
Decided On : 02/19/1999

Headnote:Arbitration & Conciliation Act, 1996 - Section 48 & 49 — Enforcement of foreign award — Conditions for — Distinction with the provision of Foreign Awards (Recognition & Enforcement) Act, 1961 — Procedure for execution of awards — Requirement of notice to opposite party — Necessity of prior subjective satisfaction of court.

       Held:

       The Objects and Reasons of the Act could be taken into consideration in interpreting the provisions of the Statute in case of doubt. Such statement of objects and reasons seeks only to explain what reason induced the mover to introduce the bill in the house, what object is sought to be achieved and what objects and reasons are not voted upon by members. The bill, if it is introduced in the house, and during the course of its discussions and during the process tilt it is approved by the house and becomes an Act may undergo radical changes during its passage through the House or Houses and there is no guarantee that the reasons which led to its introduction and the Objects thereby sought to be achieved have remained the same throughout till the bill emerges from the house as an Act of the Legislature. Dining the process the Objects and Reasons for which the bill was introduced in the House, may or may not have undergone certain changes and may or may not correspond to what it was originally there. The same, thereforee, may not reflect the actual intention of the Legislature. But it could be held that the same may be referred to for the limited purpose of ascertaining the purpose of the mover at the time of introducing the same. In other words the statement of objects and reasons may be the evidence of surrounding circumstances. At the same time it is also settled law that where the language of the Act is clear and explicit, the court must give effect to it whatever may be the consequences, for in that case the words of the Statute speak the intention of the Legislature.

       A comparative reading of the provisions of the FARE Act and the new provisions of Arbitration and Conciliation Act, so far enforcement of foreign award is concemed indicate that the provisions of the two Acts are almost peri material except for the provisions of Section 5 of FARE Act which stood deleted and substantial change in Section 6 of FARE Act in the new Arbitration & Conciliation Act, 1996. Under the FARE Act a procedure was laid down for filing of foreign award in court and making the same a Rule of Court, which has since been done away with under the provisions of the new Act. Except for that change there is no other material change in the new provisions enacted for enforcement of a foreign award. That was probably because of the fact that both the FARE Act of 1961 and the Arbitration and Conciliation Act, 1996 are founded on the New York Convention. According to Section 46 a foreign award, in order to be treated as binding, has to be enforceable, for which a specific mode is provided for enjoining the party to apply for such enforcement of a foreign award by filing an application and Along with the application some documents are to be enclosed therewith.

       Section 48 lays down the conditions for enforcement of foreign awards and if a party can prove to the satisfaction of the court that any of the conditions mentioned therein is attracted, enforcement of the foreign award would be refused. Section 48 contains two types of objections which could be raised to oppose enforcement of a foreign award - (a) those that can be raised by a party against whom the award is sought to be enforced under Section 48(1); (b) those

       which the court must suo moto itself under Section 48(2). In this regard the observation of the Supreme Court in Renusagar Power Company Ltd. Vs. General Electric Company, reported in AIR 1983 SC 1156 is relevant and material and I quote under the New Work Convention the party against whom the award is sought to be enforced can object to recognition and enforcement of foreign award on grounds set out in Sub-clauses (a) to (e) of Clause (1) of Article V and the court can, on its own motion, refuse recognition and enforcement of a foreign award for two additional reasons set out in Sub-clauses (a) & (b) of Clause (2) of Article 5". The same provisions exist both under FARE Act and the Arbitration and Conciliation Act, 1996. Thus there is no change at all to the aforesaid provisions.

       Under Sub-section (1) of Section 48 of the Act, the court has been empowered to refuse enforcement of a foreign award if the party against whom the foreign award is sought to be enforced is able to prove and establish that any of the grounds mentioned therein is satisfied. Such steps could be taken by the party concerned only when it receives a notice from the court, to the effect that the said award is sought to be enforced against him in that particular court. Otherwise there could also be the possibility of institution of proceedings in different courts for cause of action for the proceedings could also arise in parts in two different courts having territorial jurisdiction. For if cause of action arises in two different courts a proceeding for enforcement might be filed in one court whereas objections against the award could be filed in a different court which also may have territorial jurisdiction to try the proceedings and thus leading to complications. Accordingly, in my considered opinion, rules and principles of natural justice-are embodied in the aforesaid provisions and, thereforee, when a party applies seeking for enforcement of an award notice has to go to the other party atleast to the extent of intimating him that such an application has been filed in the court seeking for enforcement of the award. On service of notice the court shall proceed to hear the parties in order to determine and record its satisfaction and at that stage the court would examine existence or otherwise of the two conditions as found in Section 48 (2) of the Act as also the objection if filed by the party under Section 48(1) of the Act is disposed of by recording satisfaction as envisaged under Section 49 of the Act. Any contrary argument and decision to the effect that no notice is required to be given to the parties at that stage, in my considered opinion, is fallacious and without merit. Once the award is held to be enforceable by the court then the same becomes binding on all the parties connected with the said award and thus the said awardbecomes deemed decree in accordance with the provisions of the Act, which would be and could be executed through the process of the court.

       In my considered opinion, titles and principles of natural justice are embodied in the aforesaid provisions and, thereforee, when a party applies seeking for enforcement of an award notice has to go to the other party atleast to the extent of intimating him that such an application has been filed in the court seeking for enforcement of the award. On service of notice the court shall proceed to hear the parties in order to determine and record its satisfaction and at that stage the court would examine existence or otherwise of the two conditions as found in Section 48

       (2) of the Act as also the objection if filed by the party under Section 48(1) of the Act is disposed of by recording satisfaction as envisaged under Section 49 of the Act. Any contrary argument and decision to the effect that no notice is required to be given to the parties at that stage, in my considered opinion, is fallacious and without merit. Once the award is held to be enforceable by the court then the same becomes binding on all the parties connected with the said award and thus the said award becomes deemed decree in accordance with the provisions of the Act, which would be and could be executed through the process of the court.

       Civil Procedure Code, 1908 - Order 21 Rule 11 — Foreign award — Execution petition before the award is made rule of the court, is not maintainable.