1. Heard on I.A. No.7505 of 2024, an application under Section 48 of the Arbitration and Conciliation Act and I.A. No.8151 of 2024, additional application filed in support of the application filed under section 48 of the Act of 1996.
Background of these applications (I.A. No. 7505/2024 & I.A. No. 8151/2024) The main application has been filed under Sections 47, 48 and 49 of the Arbitration and Conciliation Act, 1996 for the enforcement of a foreign 2 AC-60-2024 award dated 31.05.2017, which revises the Original Final Award dated 21.09.2015. Initially, an order was passed by this Court on 15.07.2024, holding that the award in question is executable. Accordingly, it was directed that execution proceedings be initiated against the non-applicant along with certain further directions.
2. After the above-mentioned initial order, the non-applicant filed I.A. No.7399 of 2024, an application for modification of the interim order dated 15.07.2024. This Court, after considering the submissions of the learned counsel for the non-applicant, modified the earlier order to the extent that instead of restraining the transfer of movable or immovable property as a whole, it directed that the non-applicant deposit the principal amount of USD 153,972.58 (based on the exchange rate prevailing on the date of order) with the Principal Registrar of this Court within a period of one week. Additionally, the non-applicant was required to secure immovable properties worth Rs.3,00,00,000/- by filing an affidavit within the same period. The direction in para 8 of the order dated 15.07.2024 was modified and dispensed with.
3. The Court further considered the matter in I.A. No.7399 of 2024 and vide order dated 30.08.2024, further modified the earlier orders dated 15.07.2024 and 06.08.2024, inasmuch as the non-applicant was allowed to deposit 50% of the principal amount of USD 153,972.58.
4. This Court then considered I.A. No. 8276/2024 and passed order dated 16.06.2025 whereby while allowing the said application recalled the part of the order dated 15.07.2024 to the extent declaring the respondent ex- 3 AC-60-2024 parte, however, rest of the order was kept undisturbed, but the same was made subject to the final order which may be passed by the Court on the objections of the respondent. In this background the present applications came to be filed.
The background of the case :
5. Before adverting to the aspect of enforceability of the foreign award, it would be profitable to have a brief background of the contesting parties and the dispute at hand.
5.1 The applicant M/s Tricon Energy UK Limited is a company incorporated under the laws of the United Kingdom. Its registered address and principal place of business is III Floor, 167 Fleet Street, London EC4A 2E. It is engaged in the business of trading in chemicals, Petrochemicals, Polymers and related products. The respondent Kriti Industries India Ltd. is a company incorporated under the laws of India. It carries on the business of trading in plastic pipe systems, chemicals and PVC.
5.2 The applicant and Kriti entered into an agreement on 20.08.2014 for the sale of 504 MT of PVC by Tricon to Kriti at a price of USD 1100 per MT with a shipment date not later than 30.09.2014. The contract provided that a Letter of Credit (L/C) must be received within three working days from the date of issuance of the order, complying with the seller's requirements. Accordingly, the contract of sale was forwarded to Kriti on the same day i.e. 20.08.2014 and was duly accepted by an authorised person of the respondent. It was signed, stamped and returned to the applicant in the month of August itself along with a draft Letter of Credit.
5.3 The applicant having received the concluded contract acted upon the same by purchasing 504 MT of PVC from Formosa Plastics Corporation at the rate of USD 1100 per MT with the latest shipment period of 10 October, 2014. The contract executed by the applicant with Formosa provided that Formosa would deliver the goods directly to Kriti thereby satisfying Tricon's obligations to Kriti under the sale contract.
5.4 In the month of September, the applicant and the respondent remained in negotiations for the finalisation of the Letter of Credit. Considering that the latest shipment period was 10.10.2014, the applicant repeatedly requested the respondent to provide a completed Letter of Credit. However, the respondent failed to respond during the entire shipment period or even during the grace period that the applicant had extended.
5.5 Consequence of respondent's failure to issue the Letter of Credit was that the applicant was compelled to resell the 504 MT of PVC to a third party at the price of USD 860 per MT, which was considerably lower than the price agreed upon between the applicant and the respondent. The agreement provided that the rights and duties of the parties were to be governed by the laws of the State of Texas. Clause 14 of the agreement referred to arbitration, stipulating that any and all disputes arising under the contract were to be resolved through arbitration to be held in New York City in accordance with the Rules of the Society of Maritime Arbitrators, Inc. (SMA).
5.6 In January, 2015, the applicant sent the respondent a notice invoking the arbitration clause, nominating a sole arbitrator and seeking the respondent's consent. However, the respondent did not reply; it neither agreed nor proposed any other name for the appointment of the sole arbitrator. Instead, the respondent raised an objection that there was no valid contract and therefore no arbitration clause rendering any appointment of an arbitrator void. The applicant nevertheless invoked the arbitration clause and the proposed arbitrator issued notice to Kriti. Ultimately, an original final award was passed on 21.09.2015. However, due to an error in the title of the award, it was revised so as to correct the title of the parties and thus the final foreign award was issued on 31.05.2017.
5.7 Initially, the applicant filed Arbitration Case No.7/2016 before this Court for enforcement of the original arbitral award. The same was dismissed by this Court vide order dated 29.11.2016 on the ground that the award was in favour of Tricon Energy Limited (Tricon) located at Houston, Texas, whereas the petition had been filed by Tricon Energy UK Limited. As such, a petition for execution of an award by a person in whose favour the award has not been passed cannot be entertained. However, while dismissing the petition, the Court granted liberty to file a petition by joining the proper party. Consequently, the correction in the title of the award was made (as stated herein above) and thereafter the present application under Sections 47, 48 and 49 of the Arbitration and Conciliation Act, 1996 (for short, "the Act of 1996") has been filed.
Consideration on the objections raised by the respondent under 6 AC-60-2024 Section 48 of the Act, 1996 :
5. The non-applicant thereafter filed I.A. No.8276 of 2024, which was heard by co-ordinate Bench of this Court on 21.04.2024 and the order was pronounced on 16.06.2025. After due consideration of the peculiar facts of the present case and the position position of law, the said I.A. was allowed on payment of costs of Rs.25,000/-. Accordingly, the order dated 15.07.2024 was re-called only to the extent that it declared the non-applicant ex parte.
The rest of the order was left undisturbed but was made subject to the final order to be passed by this Court after hearing the objections filed by the non- applicant. Thus, the present objections came to be filed by the non-applicant and are being decided by this order.
5.1. The objections of the non-applicant are two fold : -
(i) A set of objections based on the provisions of Section 48(2)(a) of the Arbitration and Conciliation Act, 1996; and
(ii) A set of objections under Section 48(1)(e) of the said Act.
Objections under Section 48(2)(a) of the Act :
6. In this limb of the objections, the learned Senior Counsel has submitted that the subject matter of the dispute is not capable of settlement by arbitration under the laws of India on two grounds :
"(i) The claim was not raised by the applicant within the period prescribed under the Indian limitation law, specifically Article 137 of the Limitation Act; and
(ii) A decree passed by a civil Court has declared that there was no concluded agreement between the parties and therefore, no valid arbitration agreement exists."
On these two grounds, it is contended that the award is not enforceable.
7. The learned Senior Counsel, with respect to point No.(i) regarding limitation, submits that the present arbitration application was filed on 16.05.2024. He submits that the original award was passed on 21.09.2015, which was subsequently revised on 31.05.2017. He therefore states that the limitation period for filing execution proceedings under Article 137 of the Act is three years, the period stood expired on 30.05.2020.
7.1 He further submits that the Hon'ble Apex Court, in the case of Government of Indian vs. Vedanta Limited and Others reported in (2020) 10 SCC 1 held that the provisions of Article 137 of the Limitation Act apply to the execution of foreign awards. He submits that this pronouncement was made on 16.09.2020 and till then, the position of law was not clear.
7.2 As such, if the date of commencement of the limitation period is taken as 31.05.2017, the arbitration application filed on 16.05.2024 is hopelessly barred by limitation. He further submits although delay in filing application for execution of foreign award may be condoned upon an appropriate application, however, no such application has been filed in the present case to explain the delay or to seek condonation. In the absence of 8 AC-60-2024 such an application, the delay cannot be condoned.
7.3. In support of his contentions, he relies on the judgments of the Hon'ble Apex Court rendered in the following cases :
"(i) V areed Jacob vs. Sosamma Geevarghese and Others reported in (2004) 6 SCC 378 ;
(ii) Municipal Corporation of Delhi and Others vs. International Security & Intelligence Agency Ltd. reported in (2004) 3 SCC 250 ; and
(ii) Fairgrowth Investments Ltd. vs. Custodian reported in (2004) 11 SCC 472."
7.4 Thus, he submits that the effect of not filing an application for condonation of delay is that the proceedings are liable to fail.
8. Learned counsel for the respondent submits that the original award was passed on 21.09.2015, which was revised on 31.05.2017. The period of limitation for filing an application for enforcement of a foreign award is governed by Article 137 of the Limitation Act, which provides a three-year- period from the date when the right to apply accrues. According to the learned counsel for the respondent, the right to apply accrued to the applicant on 31.05.2017, when the impugned award was finally passed by the arbitrator. Thus, the three-year-period from 31.05.2017 would expire on 31.05.2020. Even considering the fact that the applicability of Article 137 of the Limitation Act to foreign awards was decided by the Hon'ble Apex Court in the case of Government of Indian vs. Vedanta Limited and 9 AC-60-2024 Others reported in (2020) 10 SCC 1 only on 16.09.2020 and till then the position was not clear thus if counted from the said date, still the limitation period of three years would in any case expire on 15.09.2023. However, the present application for enforcement of the foreign award has been filed on 16.05.2024 i.e. beyond the stipulated three-year-period. He therefore submits that the application is hopelessly barred by time.
8.1 He further argues that there is no averment in the application explaining the period of limitation. According to him, if a proceeding is barred by limitation, the court loses jurisdiction to entertain the same. He emphasises that the law of limitation operates strictly and equitable considerations are irrelevant while applying it. He also points out that no application for condonation of delay has been filed and in absence of any such application, the delay in filing the present execution proceedings cannot be condoned. As such, the present application deserves to be dismissed as being barred by limitation having been filed beyond the prescribed period of three years.
8.2 Learned counsel then refers to the judgment and decree passed by the trial Court in COMMS No.51/2020 on 31.01.2024. He refers to the date of filing of the suit before the Commercial Court, which is 16.09.2015. He then refers to para 43 of the judgment and submits that the competent court having jurisdiction in the matter has declared that the arbitration award dated 21.09.2015 passed by the sole arbitrator is null and void and not binding upon the plaintiff, as there was no concluded contract between the parties and consequently no arbitration agreement.
8.3 Learned counsel submits that in view of this clear declaration by a competent court of law, the enforcement of the award is not permissible. He submits that this declaration by a competent Court of law is equally binding upon the applicant, as it was the defendant in the said suit.
8.4 Learned counsel points out that the decree passed by the competent court falls within the grounds available under Section 48(2)(a) of the Act, as it declares that there was no concluded contract between the parties and that the original award is null and void. He submits that the subject matter of the present enforcement proceedings is no longer capable of settlement by arbitration under the law of India, as there is complete absence of any arbitration agreement and consequently complete absence of jurisdiction in the Arbitral Tribunal.
8.5 The learned counsel in the alternative of the arguments as advanced above would then refer to the provisions of Section 48(1)(e) and contend that the award has not yet become binding on the parties, for which he refers to I.A.No.8151/2024 filed for furnishing additional grounds in support of the application under Section 48 of the Arbitration and Conciliation Act, 1996 particularly to para 8 of the same, which provides that under the sale contract Clause 13 provides that the contract shall be governed by the laws of State of Texas. Learned counsel then refers to the Civil Practice and Remedies Code of Texas. Particularly Section 171.001 and submits that a written agreement to arbitration is valid and enforceable if agreement is to arbitrate a controversy that exists at the time of the agreement or arises between the parties after the date of the agreement. Any party may 11 AC-60-2024 revoke the agreement only on a ground that exists at law or in equity for the revocation of a contract.
8.6 Learned counsel then refers to Sub Chapter 'C', which relates to 'Arbitration' and refers Section 171.081 and points out that jurisdiction is conferred on the Court to enforce the agreement and to render on an award under this chapter on the making of an agreement described by Section 171.001 in the State of Texas.
8.7 He then refers to Section 171.087 and submits that unless grounds are offered for vacating, modifying, or correcting an award under Section 171.088 or 171.091, the court, on an application of a party, shall confirm the award. He submits that these three provisions in a conjoint reading would suggest that an award is not enforceable till it is confirmed in terms of these provisions. Thus, submits that as per the provisions of Section 48(1)(e) of the Act of 1996, the award has not yet become binding as in the present case it has not been confirmed by the competent court/authority.
8.8 Learned counsel thus, submit that the award in question is not enforceable for three reasons. Firstly, it is barred by limitation; and secondly, there is a judgment and decree of the competent Court of law, which has declared that there is no concluded contract and consequently the original foreign award has been declared as null and void; and thirdly, the award in any case has not been confirmed by the competent authority in terms of Section 171.087 of the Civil Practice and Remedies Code of Texas. The learned counsel in support of his submission has placed reliance on following judgments :
"(i) Government of India vs Vedanta Limited and Others in (2020) 10 SCC 1;
(ii) Vareed Jacob vs. Sosamma Geevarchese and Others in (2004) 6 SCC 378;
(iii) Municipal Corporation of Delhi and Others vs. International Security & Intelligence Agency Ltd. reported in (2004) 3 SCC 250 ;
(iv) Fairgrowth Investments Ltd. vs. Custodian reported in (2004) 11 SCC 472;
(v) Arbaza Alimentos Ltda vs. MAC Impex and Others in Commercial Arbitration Petition (L) No.8122 of 2020; and
(vi) Aircon Beibars FZE vs. Heligo Charters Private Limited in Commercial Arbitration Petition No.1130 of 2019 ."
9. In reply to the submissions of learned counsel for the respondent, learned counsel for the applicant submits that the contentions of the respondent that the law of Texas is applicable on the proceedings of arbitration is incorrect. He refers to award (Annex. A-1) particularly para 4 and submits that it has clearly been provided in the same, as also in the sale contracts in Clause 14, that the arbitration of any and all disputes under the contract to be held in New York City in accordance with the Rules of the Society of Maritime Arbitrators, Inc. (SMA). As such, it is not the law of Texas but the law of New York, which is applicable in the present case.
9.1 He further submits that in any case the implication of provisions of Section 171.087 is not that the party is essentially required to get the award confirmed, however, it means that on an application and in absence of objection, the award has to be confirmed, which would mean that the refusal of confirmation is limited to those grounds which are mentioned in said section and not that without confirmation it will not become enforceable. He submits that the moment award was passed by the Arbitrator, it has become an enforceable decree in terms of provisions of Sections 46, 47 and 48 of the Act of 1996.
9.2 He further submits that Section 48 in substance mandates that there should be minimal judicial interference in an arbitration award duly passed. He then points out that in fact the respondent had also filed SLP No.19247 of 2024, which was dismissed by the Hon'ble Apex Court. Hence, there is no scope of interference in the order dated 15.07.2024 passed by this Court in these proceedings, thereby holding that the award is executable.
9.2 As regards the question of limitation, learned counsel submit that exclusion of time due to COVID has completely been forgotten by the respondent while contending that the limitation would expire on 15.09.2023. In fact, as per the directions given by the Hon'ble Supreme Court in W.P. No.3/2020, the entire duration of period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special law in respect of all judicial or quasi judicial proceedings. As such, if the said period is excluded then the filing of the execution proceedings will be well within the period of three years' 14 AC-60-2024 limitation.
9.3 Learned counsel for the applicant then refers to the judgment of the Hon'ble Apex court passed in the case of Sesh Nath Singh & Anr. vs. Baidyabati Sheoraphuli Co-operative Bank Ltd. and Anr. reported in (2021) 7 SCC 313 and submits that if no application is filed still the delay can be condoned, hence looking to the facts of the present case and the conduct of the respondent if at all this Court finds that there is any delay in filing the execution proceedings then it can be condoned on the oral request of the applicant considering the fact that the Hon'ble Apex Court in time and again has stated that in foreign award execution proceedings the bias should be towards execution and not against.
9.4 He further points out that the judgment in the case of Vedanta Limited (Supra) came on 16.09.2020, the March, 2020 is the period from when COVID Pandemic spread. As such, the entire period of Pandemic as per the above referred judgment of the Hon'ble Apex Court (in W.P. No. 3/2020) has to be excluded and after exclusion of this period if the commencement of limitation is taken from the date 15.09.2020 then the execution proceedings are filed well within the period of limitation.
9.5 Learned counsel further submits that the conduct of the respondent is also required to be looked into as it completely failed to disclose about the dismissal of SLP before the Hon'ble Apex Court against the order passed by this Court on 15.07.2023. Even otherwise also the applicant had earlier filed A.C.No.7/2016, which was dismissed by this Court for misjoinder of parties with a liberty to file afresh and fresh enforcement application has been filed 15 AC-60-2024 after getting the title of the arbitral award correct. Hence, in any case the application was not sleeping over its right and delay, if any, is bona fide.
9.6 Learned counsel lastly submits that this Court is not the seat Court of the arbitral proceedings, hence the same cannot be assailed on merits before this Courts. There is only a limited scope of objection, which is provided in terms of Section 48 of the Act of 1996, which is available to the respondent, however in the facts of the present case even those grounds of objection are not available to the respondent.
10. In rejoinder submissions, learned counsel for the respondent submits that in fact the limitation has to be counted from the date of original award i.e. 21.09.2015 and not from 31.05.2017, when the revised award was issued for the reasons that the award is completely intact and only correction was in the title of the parties. Thus, the award dated 21.09.2015 is the final order in fact. He submits that in terms of the law as laid down by the Delhi High Court in the case of Reebok International Ltd. Vs. Focus Energy Ltd. in 2021 SCC OnLine Delhi 4414, the applicant was required to file an application for condonation of delay, in absence of which, the enforcement application has to fail on the ground of delay.
10.1 Learned counsel further submits that to hold the decree of trial Court as null and void, this Court is not the appropriate forum. It is to be decided in first appeal, which is pending before the Division Bench. As such, in any case the proceedings of enforcement of foreign award are required to be kept in abeyance till the decision in the first appeal pending in the 16 AC-60-2024 Division Bench of this Court. He submits that the decree was passed by competent Court of law and parties to an agreement/lis cannot simply assume that decree is without jurisdiction. The same is binding and thus, it is covered under Section 48(2)(a) of the Act of 1996.
11. Heard learned counsel for the parties and perused the record.
12. The aforesaid applications have been filed by the respondent Kriti Industries raising objections to the enforcement of the foreign award in terms of Section 48 of the Arbitration and Conciliation Act, 1996. For the ready reference, Section 48 of the Act is reproduced below:
"(1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that--
(a) the parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or
(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place ; or
(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
(2) Enforcement of an arbitral award may also be refused if the Court finds that--
(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or
(b) the enforcement of the award would be contrary to the public policy of India.
1[Explanation 1.--For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,--
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.--For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.]
(3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security."
13. Learned counsel for the respondent has mounted a three pronged attack on the execution application :
"(i) that it is barred by the law of limitation;
(ii) that it is unenforceable in view of the fact that the competent civil court in Commercial Suit No.51/2020 has declared that there was no concluded contract and has held the arbitration award to be null and void against which F.A. No.604/2024 is pending before this Court; and
(iii) that the award has not become enforceable for want of its confirmation in accordance with the Laws of Texas."
The issue of limitation :
13.1 Learned counsel for the respondent has contended that the final award was rendered on 21.09.2015 and a demand was raised by the applicant on 24.09.2015. Although the original award was subsequently revised on 31.05.2017, the counsel submits that in view of Article 137 of the Limitation Act, the right to apply for enforcement accrued to the applicant on 31.05.2017. Article 137 provides a period of limitation of three years, which according to the respondent has to be counted from 30.05.2017 and would therefore expire on 30.05.2020. Since the present application was filed on 16.05.2024, there is a delay of 1232 days and no application explaining such delay has been filed by the applicant.
13.1 In view of the above, the respondent submits that the application is hopelessly time barred and deserves to be dismissed on this ground alone.
13.2 It has further been argued that the Hon'ble Apex Court in the case of Vedanta Limited (Supra) decided on 16.09.2020 held that the enforcement of a foreign award is governed by Article 137 of the Limitation Act. He thus submits that even if it is assumed that prior to 16.09.2020, the legal position was unclear and the period of limitation is counted from 16.09.2020, the limitation would expire on 15.09.2023. However, the application in the present case was filed on 16.05.2024. Therefore, even after applying a liberal approach and treating the date of the said pronouncement as the starting point of initiation, the present application remains barred by time.
14. Learned counsel for the applicant responded by submitting that in view of the unclear legal position prior to the judgment in Vedanta Limited (Supra) and the fact that the Hon'ble Apex Court in the case of In Re: Cognigance for Extension of Limitation in Suo Motu Writ Petition (C) No.3 of 2020excluded the period from 15.03.2022 to 28.02.2022, the application is well within time. This Court after anxious consideration finds that earlier there existed a divergence of views among various Courts regarding the applicable period of limitation for filling a petition for enforcement of a foreign award. Certain decisions held that Article 136 of the Limitation Act would apply, whereas others held that Article 137, which prescribes a limitation period of three years, would govern. Significantly, Article 136 provides a period of 12 years, while Article 137 provides only three years Thus, there is a substantial difference between the limitation periods under the two Articles.
15. Considering the fact that until the authoritative pronouncement of the Hon'ble Apex Court in the case of Vedanta Limited (Supra) on 16.09.2020, there was no clarity regarding the applicable period of limitation owing to the divergence of views expressed by various Courts, it was not clear that wether the period of limitation is 12 years (Article 136) or it is 3 years (Article 137), a pragmatic approach has to be adopted by this Court, particularly keeping in view the principle of enforcement bias as mandated by the Hon'ble Apex Court in the case of Vijay Karia vs. Prysmian Cavi E Sistemi in (2020) 11 SCC 1. As such, it is hereby held that the period of limitation of 3 years will commence from 16.09.2020, when the Hon'ble Apex Court held that Article 137 of the Limitation Act would apply to proceedings for enforcement of a foreign award.
15.1 Further, the period from 15.03.2020 to 28.02.2022 has to be excluded for all purposes in terms of the order passed by the Hon'ble Supreme Court in In Re: Cognizance for Extension of Limitation (Supra). After exclusion of the said period, the application for enforcement of the foreign award filed on 16.05.2024 is well within the prescribed period of limitation.
15.2 Consequently, the enforcement of the award cannot be declined on the ground that the application is barred by limitation.
Enforceability of the awards dated 21.09.2015 and 31.05.2017 (Revised), in light of the judgment and decree of the Commercial Court :
16. The contention of the learned senior counsel for the applicant on this issue is that the arbitration award is based on a purportedly concluded contract between the parties, namely the sales contract dated 20.08.2014. He submits that the respondent, challenging the said sales contract as well as the award dated 21.09.2015, filed a commercial suit on 16.09.2015 before the Commercial Court at Indore seeking a declaration that there was no valid and enforceable sales contract between the parties and, consequently, the foreign award dated 21.09.2015 is a nullity and not binding upon the plaintiff (the present respondent).
16.1 The aforesaid suit was registered as Commercial Suit No. 51/2020. The Commercial Court vide judgment and decree dated 31.01.2024 declared that there was no concluded contract between the parties and no 21 AC-60-2024 concluded arbitration agreement. Consequently, the arbitral award dated 21.09.2015 was declared null and void and not binding upon the plaintiff / respondent.
16.2 This judgment and decree has been challenged by the applicant before this Court by way of F.A. No.604/2024, which is presently pending consideration before the Division Bench.
16.3 Learned counsel submits that once such a declaration has come into being, the award has become unenforceable because the judgment and decree has been passed by a competent Court of law. He contends that this Court while hearing an application for enforcement of a foreign award is not sitting in appeal over the said judgment and decree and therefore cannot reverse it in these proceedings. Hence, until and unless the judgment and decree is reversed by the Division Bench in the aforesaid first appeal, the award cannot be enforced.
16.4 This assertion is countered by learned counsel for the applicant, who submits that no Court in India can declare the instant foreign award to be null and void. He argues that subject foreign award can be set aside only by the Court or competent authority of the country in which, or under the law of which, the award was made, as the same is not made under the laws of India or within its territories, the Courts in India have no jurisdiction to take its judicial review on merits.
17. In the present case, such a Court is not any Court in India, as the award in question is a foreign award passed in accordance with the laws of 22 AC-60-2024 New York. Learned counsel further submits that the agreement between the parties was executed subject to the laws of the State of Texas. Accordingly, on both counts, the Courts in India are not covered under Section 48(1)(d) of the Arbitration and Conciliation Act, 1996. Therefore, even if a Court in India has declared the award null, the same cannot affect its enforceability on this ground.
17.1 However, the learned counsel for the respondent contends that the situation is governed by Section 48(2)(a) of the Act. He submits that the subject matter of the dispute is not capable of settlement by arbitration under Indian law. In support, he argues that once an Indian Court has held that no concluded contract exists, the corollary is that no arbitration agreement exists. Consequently, the matter cannot be resolved by arbitration in India, and, as such, the provisions of Section 48(2)(a) would render the award unenforceable.
17.2 In the considered view of this Court, the contention of the learned senior counsel is misplaced. The counsel appears to assume that the agreement could have been tested by any of the parties in India merely because one of the parties resides in India, and, consequently, the award itself could be tested in India. This, however, is a fallacious conception of fact and the law.
17.3 Once a validly constituted arbitral tribunal pronounces an award, and that too a foreign award, the validity of the same can only be tested within the four corners of Section 48 of the Arbitration and Conciliation Act, 1996. The arbitral award can be set aside only by a Court of the country in 23 AC-60-2024 which, or under the law of which, the award was made. Here it has to be kept in mind that the Arbitrator while rendering award has also deliberated on the existence of an arbitration agreement and recorded its findings on the same. Now these findings cannot be assailed before a Court in India as the curial court is court at New York and not in India.
17.4 It is undisputed that the contract in the present case was made subject to the laws of the State of Texas, and the award was passed in New York under the Rules of the Society of Maritime Arbitration Inc. (SMA). Accordingly, until the award is set aside by a competent Court of the said country, it cannot be refused to be enforced merely by reason of a decree passed by a Court in India.
17.5 Accordingly, the submission of the learned counsel in this regard is hereby repelled and it is held that on this count the enforcement of the award cannot be refused.
The award is not enforceable due to the absence of confirmation under the laws of Texas.
18. The third and final contention of the learned senior counsel is that Clause 13 of the sales contract provides that the contract, and the rights and duties of the parties arising out of it, shall be governed by the laws of the State of Texas. He submits that the laws of Texas, namely the Civil Practice and Remedies Code, provide, in Chapter 171, Sub chapter A, general provisions regarding arbitration, including Sections 171.001 to 171.026, which deal with arbitration agreements, their interpretation and related 24 AC-60-2024 matters. Sub chapter C provides for arbitration proceedings including appointment of arbitrators, time and place of hearings, adjournments and related procedures. Sub chapter D covers court proceedings under Sections 171.081 to 171.098.
18.1 Learned counsel submits that Section 171.081 of the Civil Practice and Remedies Code confers jurisdiction on the courts in Texas to render a judgment on an award under the said chapter. Section 171.082 contemplates the filing of an application to the Court, while Section 171.084 provides for a stay of proceedings. Section 171.086 deals with attachment, restraining injunctions and similar measures, which are akin to Section 9 of the Arbitration and Conciliation Act, 1996 of India.
18.2 He further refers to Section 171.087, which provides for the confirmation of a foreign award. He points out that the provisions specify that unless grounds are presented for vacating, modifying, or correcting an award under Sections 171.088 or 171.091, the Court upon application by the parties, shall confirm the award. Thus, he submits that the award holder is entitled to apply to the Court in Texas for confirmation of the award. If an application for vacating, modifying or correcting the award is pending, confirmation cannot be granted during the pendency of such application. However, if no such application is made, the award holder is still required to file an application for confirmation. In other words, confirmation of the award is mandatory for making it enforceable.
18.3 The submission of the learned counsel appears to be faulty 25 AC-60-2024 inasmuch as the plain and simple language of Section 171.087 of the Texas Civil Practice and Remedies Code provides as under :
"Unless grounds are offered for vacating, modifying or correcting an award under Section 171.088 or 171.091, the Court, on application of a party, shall confirm the award."
19. The plain and simple meaning of the said provision, as it appears on reading is that unless grounds are offered for vacating, modifying or correcting an award, the Court on the application of a party shall confirm the award. Thus, in the absence of any ground for objection, the award must be confirmed by the Court upon an application by the award holder in other words, the confirmation cannot be refused in the ordinary course of business but only under the three exigencies as provided by section 171.087.
19.1 However, there is no provision in the said law stating that, in the absence of confirmation, the award cannot be enforced. For this purpose, Clause 14 of the sales contract is relevant, which provides as follows :
"(14) Arbitration - Should any dispute arise out of or relating to this Contract, the matter in dispute shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them shall be final, and for the purpose of enforcing any award, this agreement may be made a rule of the Court. The proceedings shall be conducted in accordance with the Rules of the Society of Maritime Arbitrators, Inc. (SMA). If the party receiving a demand for arbitration does not nominate an arbitrator within 20 days receipt of the demand, the demanding party is entitled to appoint the second arbitrator with the same force and effect as if the other party had made the appointment. Should the sum claimed by each party not exceed US$ 125.000, the dispute is to be governed by the "Shortened Arbitration Procedure" of the SMA, as defined in the Society's Current Rules for such procedure."
19.2 It is clear from the said clause that the parties agreed that the decision of the arbitrators shall be final and for the purpose of enforcing any 26 AC-60-2024 award, this agreement would be made the Rule of the Court. It is thus clear that the award of the arbitrators is final and binding between the parties and the absence of confirmation by the Court in Texas cannot be held to affect its finality or binding nature.
19.3 The contention of the learned counsel that in view of the provisions of Section 48(1)(e) of the Act, the award has not become binding in the absence of confirmation by a Texas Court is untenable.
19.4 In this view of the matter, on this count also, the refusal to enforce the arbitral award is denied.
20. In view of the above findings recorded by this Court, it is not necessary to dwell upon the proposition of law advanced by the learned senior counsel regarding the absence of an application for condonation of delay, as the Court has found that the application was filed within the period of limitation. Consequently, I.A. Nos.7505 of 2024 and 8151 of 2024 are hereby rejected.
20.1 The objection raised by the respondent against the enforceability of the foreign award is overruled. The order dated 15.07.2024 is hereby made final.
21. As this Court has overruled the objection against the enforcement of the foreign award, the corollary is that the Court may proceed to enforce the award. However, the peculiarity of the situation is that the same issue is pending before the Division Bench in F.A. No.604/2024. Consequently, there is a possibility of conflicting decisions by the same Court in two 27 AC-60-2024 separate proceedings relating to the same subject matter.
22. As a matter of settled law, the Court shall always seek to avoid conflicting decisions on the same subject matter. In view of this, registry is directed to place this case before the Hon'ble Chief Justice to assign both cases i.e. A.C. No.60/2024 and F.A. No.604/2024 to a single designated Bench so as to obviate any possibility of conflicting decisions.
Registry is directed to take all necessary steps at the earliest.
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