G.A. No. 2095 of 2014 and C.S. No. 262 of 2013. Case: LMJ International Limited Vs Swiss Singapore Overseas Enterprises Pte. Limited. High Court of Calcutta (India)
| Case Number | G.A. No. 2095 of 2014 and C.S. No. 262 of 2013 |
| Counsel | For Appellant: Abhrajit Mitra, Sr. Adv. and For Respondents: Surojit Nath Mitra, Ratnanko Banerjee, Sr. Advs. and D.N. Sharma, Adv. |
| Judges | Soumen Sen, J. |
| Issue | Arbitration Act, 1940 [Repealed] - Sections 11, 32; Arbitration and Conciliation Act, 1996 - Sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 48, 85; Code of Civil Procedure, 1908 (CPC) - Order VII ... |
| Judgement Date | March 27, 2015 |
| Court | High Court of Calcutta (India) |
Judgment:
Soumen Sen, J.
-
The instant application has been filed by the defendant for rejection of plaint and for dismissal of suit.
-
The plaintiff has filed this suit praying, inter alia, for setting aside of a foreign award made in pursuance of an arbitration clause contained in a contract dated 22nd October, 2009. The arbitration clause reads:--
Clause 15 Arbitration
All disputes in connection with this contract or the execution thereof shall be settled amicably by friendly negotiations between the two parties. If no settlement can be reached, the case in dispute shall then be submitted for arbitration in Singapore. Arbitration result should be final and binding on both parties.
-
The basis of the instant application is that a suit challenging an award is not maintainable in law.
-
Mr. Abhrajit Mitra, the learned Senior Counsel appearing on behalf of the applicant submits that the Arbitration and Conciliation Act, 1996 is a complete code as has been held in Fuerst Day Lawson v. Jindal Exports Limited (AIR 2011 SC 2649 Paragraph 72: 2011(8) SCC 333) and, accordingly, the plaintiff can only challenge the award in the manner and circumstances as provided in the statute.
-
It is submitted that an Act is to be held as a complete code when, inter alia, the Act itself provides for an adjudicatory mechanism and exclusion of the application of other statutes (expressly or by necessary implication). The applicant has relied upon Paragraph 79 of the judgment in Girnar Traders v. State of Maharashtra reported at (2011) 3 SCC 1.
-
In support of his submission that no suit lies for setting aside of a foreign award, reliance has been placed on the following decisions:--
i) Spentex Industries Limited v. Dunvant SA reported at (Division Bench of the Delhi High Court dated 29/10/2009) Paragraphs 4, 8, 9 and 10;
ii) Coal India Limited v. Canadian Commercial Corporation reported at 2013 (2) CHN 494 Paragraphs 22, 24 to 29.
-
It is submitted that so far as domestic award is concerned, the law is the same both under the 1940 Act as well as 1996 Act. No suit lies for setting aside of a domestic award. In this regard, the applicant has referred to the following decisions:--
i) Deokinandan v. Basantalal reported at AIR 1941 Cal 527;
ii) Ashok Kalra v. Akash Towers reported at Paragraphs 18 and 19.
-
It is submitted that Section 5 of the Arbitration & Conciliation Act, 1996 is of general principle which would be applicable to all arbitration proceedings irrespective of whether it is domestic or international arbitration. In Board of Trustees for the Port of Calcutta v. Louis Dreyfus G.A. No. 1997 of 2014, C.S. No. 220 of 2014 dated 29th September, 2014, the judgment of the Hon'ble Supreme Court in Chatterjee Petrochem Co. & Anr. v. Haldia Petrochemicals Ltd. reported at 2014 (1) Cal LT 83(SC) on this proposition was expressly followed. It was held:--
The judgment cited at the bar would show that Section 5 of the Arbitration & Conciliation Act is a general principle which would be applicable to all arbitration proceedings irrespective of fact whether it is a domestic arbitration or an international arbitration.
-
The same proposition was also followed in Enercon (India) Ltd. & Ors. v. Enercon GMBH & Anr. reported at 2014 (5) SCC 1 in Paragraph 90 in which the Hon'ble Supreme Court emphasized the need for least intervention by Courts in arbitration matter in view of Section 5 of the Act.
-
The policy behind Part II of the Arbitration & Conciliation Act, 1996 and especially Sections 46 to 49 is that enforceability of a foreign award is to be decided only when execution application is filed by the award holder. The said provisions do not even contemplate two several applications, one deciding enforceability of foreign award and the other for execution of foreign award. In this regard the defendant has referred to the following decisions of the Hon'ble Supreme Court:--
"i) Fuerst Day Lawson v. Jindal Exports Limited reported at AIR 2001 SC 2293 Paragraph 29 at Page 2303: 2001(6) SCC 356.
ii) Shri Lal Mahal v. Progetto Prano SPA reported at 2014 (2) SCC 433 Paragraphs 45 and 46."
-
The seat of arbitration determines the curial law that is to apply. In the instant case, the seat of arbitration is Singapore and the proceeding for setting aside of the award could have been filed only before the appropriate court in Singapore. In this regard the defendant has referred to a decision of Bharat Aluminium Company v. Kaiser Aluminium reported at 2012(9) SCC 552 Paragraphs 123, 151 to 153.
-
Aue-contraire, Mr. Surajit Nath Mitra, the learned Senior Counsel appearing on behalf of the plaintiff submitted that the ouster of jurisdiction of a Civil Court has to be strictly construed. There has to be some specific provision to that effect for the same. The learned counsel has placed reliance on Ramesh Gobindram v. Sugra Humayun Mirza Wakf reported at AIR 2010 SC 2897 Paragraph 5: 2010(8) SCC 726 (Paragraphs 12 & 13). It is submitted that there is no such provision in Part-II of the 1996 Act.
-
It is submitted that there is also no provision in the 1996 Act which says that no suit shall lie challenging a foreign Award.
-
The submission made by the defendant that principles of Section 5 of Part I of the 1996 Act also applies to Part-II of the 1996 Act is unacceptable. A bare reading of the 1996 Act would make it clear that Section 5 limits itself to Part-I only. Further Section 45 provides "Notwithstanding anything contained in Part I...." Therefore, such submission are contrary to the scheme of the 1996 Act.
-
A perusal of the said 1996 Act would show that while Part-I of the said Act deals with domestic arbitrations, Part-II deals with 'enforcement of certain foreign awards'.
-
The legislature while framing the said 1996 Act has included the provisions as contained in Section 5 thereof in Part-I only. Section 5 of the Act clearly envisages that the said section is applicable only to Part-I. A perusal of Section 5 would show that the phraseology 'this part' has been used twice in Section 5.
-
It is well-settled that when the legislature does something or incorporate some words in legislation, the same is done with an intention.
-
The fact that the legislature while legislating the 1996 Act and particularly, Part-II thereof, did not intend to put any restriction on judicial intervention would be evident from a perusal of the 1996 Act. The absence in Part-II of the 1996 Act of a provision similar to Section 5 contained in Part-I clearly shows that greater judicial intervention was contemplated in respect of matters contained in Part-II of the said Act.
-
The Hon'ble Supreme Court in Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. & Anr. reported at 2005 (7) SCC 234 has held that greater judicial intervention is contemplated in Part-II of the 1996 Act (Paragraph 73) and while deciding enforceability of a foreign award, the same has to be tried out by a full trial by invoking all kinds of evidence including oral evidence (Paragraphs 87,100,101,104 and 105).
-
This decision has not been considered in the subsequent Supreme Court decisions.
-
The legislature in enacting Part-II of the 1996 Act contemplated greater judicial intervention.
-
Prior to enactment of the 1996 Act, there were two statutes one dealing with domestic arbitration namely Arbitration Act, 1940 and the other dealing with foreign awards, i.e., the Foreign Awards (Recognition and Enforcement) Act, 1961 (in short '1961 Act'). Section 3 of 1961 Act states:--
3. Stay of proceedings in respect of matters to be referred to arbitration.-
Notwithstanding anything contained in the Arbitration Act...
To continue reading
Request your trial