.i ,-^-: <<•% i^ IN THE HIGH COtJRT OF JUDICATURE AT BILASPUR (C.G.) MISC. APPEAL N0. 't>^ I OF 2004 IN THE MATTER OF: t BHARAT ALUMINIUM CO LIMJTED /. Balconagar, Korba -495684, Chhattisgarh. VERSUS / KAI SER ALUMINIUM TECHNICAL SERVICES, Inc. 6177 Sunol B oulevard Pleasanton,Califiornia 94566-7769 APPELLANT .\ RESPONDENT ^. APPEAL UNDER SECTION 37flVrbVOF TBE ARBITRATJON AND CaNCILIATION ACT. 1996, / AGAINST THE JUDGEMENTAND_ORDERDATED •20s^7.2a04PASSED FN MJC N0.9T/20Q3. BY TH^ DISTRICT JUDGE BILASPUR. C.G. ^ ^ V- HIGH COURT OF JUDICATURE CHHATTJSGARH: BjLASPUR {Division Bench) CORAM : Hon'ble Shri A.K. Patnaik, CJ & Hon'ble Shri V.K. Shrivastava, J. MISC. APPEAL N0. 889 OF 2004 AND MISC.APPEAL N0. 890 OF 2004 ORDER FOR CONSIDERATION Sd/- Chief Justice HON'BLE SHRI V.K. SHRJVASTAVA. J v^ Sd//- V.K.Shrivastava Judge \« POST IT FOR: 10/08/2005 Sd/- ChiefJustice ,/ '^^^ > ^ HIGH COURT OF JUDICATURE CHHATTJSGARH: BILASPUR (Divjsion Bench) CORAM: Hon'ble Shri A.K. Patnaik, CJ & Hon'ble Shri V.K. Shrivastava, J. MISC. APPEAL N0. 889 QF 2004 Bharat Aluminium Co. Limited Appellant. Versus Kaiser Aluminium Technical Sen/ices, Inc. Respondent. MISC. APPEAL N0. 890 OF 2004 Bharat ATCKninium Co. Limited Appellant Versus Kaiser Aluminium Technical Sen/ices.lnc. Respondent Present: Mr. Vivek Tankha, Mr. S.N. Mukherjee, Sr. Advocates with Mr.Abhishek Sinha learned counsel for the appellant. Mr. Ravish Agrawal, Sr. Adv.. with Mr. Sanjay S. Agrawaf learned counsel for the respondent. ORDER (Passed on \ottt>fAugust, 2008) The following Order of the Court was passed byA.K.Patnaik,CJ: - The two miscellaneous appeafs are appeals under Section 37(1 )(b) of the Arbitration and Conciliation Act, 1996 (hereinaUer referred to as "the Indian Act1). • 2. The facts briefly are that an agreement dated 22.04.1993 was executed between the appellant and the respondent under which the respondent was to supply instatted equipment for modernizatipn and upgradation of the production facilities of the appellant at Korba in the State of Chhattisgarh. The agreement provided for settlement of disputes by arbitration. Certain disputesarose between the parties and were referred to arbitration. The arbitration was held in England and the arbitral tribunal made t^o awards dated 10.11.2002 and 12.11.2002 inEngland. The appellant thereafter, filed applications under Section 34 ofthe Indian Act for setting aside the two awards dated 10.11.2002 and 12.11.2002 in .the Court of learned District Judge. Bilaspur which were numbered as MJC Nos.92 of 2003 and 14 of 2003, respectively. By order dated 20.07.2004, the learned District Judge, Bilaspur held that the applications filed by the appellant under Section 34 of the Indian Act for setting aside the two foreign awards are not tenable and accordingty dismissed the same. Aggrieved, the appetlant has filed these appeals. 3. Mr. Vivek Tankha and Mr.S.N. Mukherjee, learned counsei appearing for the appellant in the two appeals submitted that in the impugned order dated 20.07.2004, the learned District Judge has held that the apptication filed by the appellant under Section 34 of the Indian Act was not maintainable, but the learned District Judge has not recorded any reason whatsoever for coming to the aforesaid conclusion. They argued that the learned District Judge should have decided the issues of fact and law raised by the parties in their respective pleadings, but no such exercise has been undertaken by the jearned District Judge in the impugned order. They submitted that since the impugned order is without any reason, it is liable to be set aside. In support oftheir submission, they relied on the decision of the Supreme Court in Smt. Swaran Lata Ghosh vs. Harendra Kumar Banerjee & Another, AIR 1969 SC 1167 and State of Punjab vs. Bhag Singh, 2004 AIR SCW 102. 4. Mr. Tankh.a,,next submitted that the leamed District Judge has proceeded on the assumption that the provisions of Section 34 ofthe Indian Act are not applicable to a "foreign award" and for this reason held that the applications filed by the appeltant under Section 34 of the Indian Act to set asi$le the foreign awards were not maintainable. He submitted that this view taken by the learned District Judge is contrary to the decision of the Supreme Court in Bhatia International vs. Bulk Trading S.A. & Another (2002) 4 SCC 105 in which it has been held that the Indian Act applied to the arbitration which are hetd in India between the Indian Nationals as well . l;... as to internationa! commercial arbitrations whether held in India or out of India. He also cited the decision of the Gujarat High Court in Nirma Ltd. vs. Lurgi Energie Und Entsorgung GMBH, Germany & Others, AIR 2003 GUJARAT 145 in which a Division Bench ofthe Gujarat High Court has taken a view that when the agreement between the parties was governed by the Indian law, then the application for setting aside the award made outside the country can also be filed in a Court in India under Section 34 of the Indian Act. Mr. Tankha submitted that since the agreement between the parties was governed by the Indian law, the learned District Judge should have held that the applications for setting aside the awards could be filed under Section 34 of the Indian Act before the learned District Judge at Bilaspur. 5. Mr. Mukherjee, learned counsel appearing for the appellant further submitted that Article 22 of the agreement between the parties provided that the agreement will be governed by the prevailing law of India and therefore parties to the agreement have chosen the prevailinglaw of India as the law governing the rights of the parties. He submitted that since the substantive rights of the parties to the agreement are to be governed by the law prevailing in India, even though the arbitration has taken place and the awards have been made in England can be challenged in a Court in India by an application under Section 34 of the Indian Act. He submitted that in the case of Bhatia International Vs. Bulk Trading S.A. and another (Supra) the Supreme Court has laid down the test that if a Court has jurisdiction to entertain an application under Section 9 ofthe tndian Act it would also have jurisdiction to eritertain an application under Section 34 of the Indian Act to set aside an award made by the arbitrator. He argued that in the present case since the cause of action in connection with the subject matter of the jurisdiction arose within the jurisdiction of the District Judge at Bilaspur, the District Judge at Bilaspur had the jurisdiction to ent6rtain the application under Section 9 of the Indian Act and accordingfy also under Section 34 of the Indian Act to set aside the award. Mr. Mukherjee submitted that Part-11 of the tndian Act provides for enforcement of certain foreign awards and Section 48 therein stipulates the conditions for enforcement of the foreign awards. He submitted that it will be clear from Section 48(1) (e) of the Indian Act that a foreign award can be set aside or suspended by a competent authority of the country in which, or ^ '¥ \ under the law of which, that award was made and hence a foreign award can be set aside or suspended not only by the competent authority of the country in which the award is made but aiso by acompetent authority ofthe country under the law of which the award was made. He vehemently submitted that since it is the law of India which governs the agreement between the parties, the awards have been made under the law of India and the competent authority in India can under Section 48(1 )(e) of the Indian Act also set aside or suspend the awards in the present case though the same have been made in England. In support of his submission, he relied on the decision of the Division Bench of Calcutta High Court in White Industries Australia Limited Vs. Coal India Limited reported in 2004 (2)(CLJ (Cal) 197 in which it has been held that where the express choice of the parties with regard to the law of the contract is Indian Law and the contract was signed in India and was performed in India, there is no reason for the Court to hold that the expression "under the laws of which that award was made" in Section 48 ,(1)(e) of the Indian Act woufd mean nothing but Indian Law. 6. Mr. Mukherjee also relied on the decisions of the Supreme Court in NTPC Vs. Singer Company and others (1992) 3 SCC 551 and Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. (1998) 1 SCC 305 in support of his contention that if the proper taw of contract chosen by the parties is the law of India, then the Courts in India would have the jurisdiction to consider the appfications for setting aside awards made by arbitrators outside the country. He atso relied on a similar view taken by Justice Potter in the decision of the Queens Bench Division in Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. reported in (1994) Lloyd's Law Reports 45. He finalty submitted that in view ofthe aforesaid law laid down by the Courts, the appeals should be allowed and the impugned order dated 20/07/2004 of the learned District Judge should be set aside and the mattep should be remanded back to the learned District Judge to decide the matter afresh in accordance with taw. 7. Mr. Ravish Agrawat, Sr. Advocate, on the other hand, submitted that Articte 1J.1 of the agreement between the parties provided thatany dispute or clai^rising out of or relating to the agreement shatl be in the first instance settled amicably by negotiation befr^een the parties fajling which the same witl be settled by arbitration pursuant to the English Arbitration Law and subsequent amendments thereto. He pointed out that Article 17.2 of the agreement between the parties further provided that the arbitration proceedings shatl carried by two arbitrators; one appointed by the appellant and the other appointed by the respondent chosen freely and without any bias and the Court of arbitration shad be held wholly in London, England. He submitted that Article 22 of the agreement between the parties not only provided that the agreement will be govemed by the prevailing law of India but also that "in case of Arbitration the English Law shall apply", He argued that a reading of the aforesaid clauses of the agreement between the parties would show that the English Arbitration Act, 1996 (hereinafter referred to as "the English Act'^ was to apply to the conduct of arbitration and the award was to be made under the English Act. He further submitted that the aforesaid clauses in the agreement also made it clear that the arbitration was to be hetd in England. He also submitted that a reading of different paragraphs of the awards would show that as a matter of fact the arbitration was conducted in accordance with the provisions of the English Act. He explained that the respondent invoked the arbitration under Section 14 ofthe English Act, the Tribunal comprised of an Arbitrator appointed by each party and an Umpire as provided in Section 16(6)(b) of the English Act. He further submitted that Section 10 ofthe Indian Act does not provided for Umpire but only a presiding and a third arbitrator. He, however, submitted that since the role of the Tribunal could not be agreed upon, the Tribunal directed that the arbitration would proceed in accordance with Section 21 (2)(3) & (4) of the Engtish Act. He further submitted that the respondent claimed compound interest under Section 49 of the English Act and no objection was taken fc^ the appellant in the reply under Section 49 of the English Act did not apply, rather the appellant itsetf claimed compound interest @80%. He submitted that in course of arbitration, the respondent applied for teave to seek interim retief under Section 44(2)(e) and Section 44(4) of the English Act and no objection was taken by the appeltant that Section 44 of the English Act did not apply. He submitted that in course of the arbitration proceedings, the respondent afso applied to the Tribunal to invoke the power under Section 34 of the English Act and the Tribunal accordingty fixed a time table exercising such powers and no objection was taken that Section 34 of the English Act did not apply. He further pointed out that the resp&ndent also applied for an interim award under Section 47 of the EnglishWct and no objection was taken by the appeltant that the ^ English Act did not appty to the arbitration and no interim award coutd be m8de under Section 47 of the English Act. 8. Mr. Agrawal submitted that Part-1 of the tndian Act applied only to cases where the place of arbitration is India and the award made by the arbitrator is a domestic one and this will be clear from sub-Section 5 of Section 2 of the Indian Act. He further submitted that Part-tl of the Indian Act provides for enforcement of certain foreign awards and Chapter-1 of Part-tl ofthe Indian Act relatesto New York Convention Awards and appties to an arbitral award on differences between persons made on and after the 11th day of October. 1960 in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedute applies as would be clear from Section 44 in Chapter-1 of Part-11 of the Indian Act. He further submitted that Chapter-11 of Part-11 of the Indian Act relates to Geneva Convention Awards and applies to arbitral awards on differences in pursuance of an agreement for arbitration to which the Protocol set forth in the Second Schedule applies. He argued that to arbitral awards referred to jn Sections 44 and 53 of the Indian Act the provisions of Part;-! including Section 34 ofthe Indian Act has no application. 9. Mr. Agrawal further submitted that enforcement of the foreign award may be refused only one of the conditions mentioned in Section 48 in Part-11 of the Indian Act. He submrtted that Section 48(1)(e) provides that a foreign award may be refused to be enforced at the request of the party against whom it is invoked if that party furnishes to the Court proof that the award has not yet become binding on the parties or has been set aside or suspended by a competeht authority of the country in which, or under the law of which, that award was made. In the instant case, the award has been made in England and also under the law of arbitrationin England and could be set aside or suspended by a competent authority of England and not.by a Court in India. Hence, the Court of the learned Di'stricf Judge Bilaspur had no jurisdiction to entertain the application under Section 34 of the Indian Act to set aside the award. 10. Mr. Agrawat relied qn the decision of the Supreme Court in Transocean Shipping Agency (P) Ltd. vs. Black Sea Shipping & Others reported in (1998) 2 SCC 281, in which it has been held that since no steps have been taken in accordance with the law of Ukraine to chaltenge the m:: r arbitration or the award. the award had beconle final and binding as per the Ukrainian law. He also relied on the decisions in Force Shippjng Limited vs. Ashapura Minechem Limited reported in MANU/MH/0260/2003 in which, the High Court of Bombay has held that Part-1! of the Indian Act make special provisions for "enforcement of foreign award" and the provisions in Part-1 of the Indian Act dealing with those aspects as provided in Part-11 will not appty to foreign awards. He also cited the decision of the High Court of Bombay in Jindal Drugs Limited vs. Noy Vallesina Engineerlng SpA and Others, reported in 2002(2) Arb. LR 323 (Bombay) in which a view has been taken that the Indian Act provides for different kinds of remedies to the persons aggrieved by a domestic award and a person-^ggrieved by a foreign award and both the remedies are equalty efficacious and adequate. Mr. Agrawal pointed that in Bhatia International vs. Bulk Trading S.A. & Another (supra) the Court was concerned only with the maintainability of the proceeding under Section 9 ofthe Indian Act in respect of an arbitration held out side India and was not concerned with the enforcement of foreign award. He referred to paragraph 26 of the judgment of the Supreme Court in the said case of Bhatia Internatibnal vs. Bulk Trading S.A. & Another (supra) in which the Supreme Court has clarified that special provisions for enforcement of foreign awards are made in Part-tl of the Indian Act and to the extent that Part-11 provides a separate definition of an arbitral award and separate provisions f^r enforcement of foreign awards, the provisions in Part-1 dealing with these aspects will not appjy to such foreign awards. He also clted paragraph 28 of the said judgment of the Supreme Court in which the Supreme Court has clarified that foreign awards which,.^re enforceable in India are deemed to be decrees and can be executed relying on Sections 49 & 58 of the Indian Act. Mr. Agrawat further submitted that the decisions of the Gujarat High Court in the case of Nirina Ltd. vs. Lurgi Energie Und Entsorgung GMBH, Germany & Others (supra), the Calcutta High Court in the case ofWhite Industries Australia Limited Vs. Coal India Umited (supra), the Supreme Court in the case of NTPC Vs. Singer Company and others (supra) and the decision ofthe Supreme Court in Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. (supra) were decided on the facts of those cases and are not applicabte to the present case. He submitted that the learned Distr'ct Judge, Bilaspur has therefore rightly held in the impugned order dated 20.07.2004 that the applications filed by the appellant for setting aside the is: & 8 'NINNII§y^ awards under Section 34 ofthelndian Act were not maintainable and has rightly dismissed the same and this Court should not interfere with the impugned order in the present appeals. 11. On a reading of the said impugned order dated 20/07/200-4 we find that the learned District Judge has recorded the contentions of the learned counsel for the parties and has atso quoted the decisions cited by the learned counsel for the parties and has finally held in paragraph 16 of the impugned order that the application filed by the appellant under Section 34 ofthe Indian Act was not tenable and was liable to be dismissed, but he has not given his reasons for this conclusion. Since the learned District Judge has failed to give his reasons for comingto the conctusion that the application fited by the appeltant under Section 34 ofthe Indian Act was not tenable and was liable to be dismissed, it is now incumbent upon this Court as an appellate Court to consider the contentions of the parties on the maintainability of the application fited by the appellant under Section 34 of the Indian Act and give adequate reasons for recording its conclusion on the issue. Only if it is not possibte for this Court to decide the issue with regard to the maintainability of the applications under Section 34 of the Indian Act filed by the respondent on the basis of the materials available before the Court, the Court will have to set aside the order passed by the District Judge and remand the matter to the learned District Judge to decide the issue afresh after giving opportunity to the parties to adduce the relevant evidence. 12. In Smt. Swaran Lata Ghosh vs. Harendra Kumar Banerjee & Another (supra) cite'd' by the learned counsel for the appetlant, the Supreme Court found that neither the trial Judge nor the High Court in appeal recorded reasons in support of their conclusion that the plaintiff had prpved the case in the plaint and for this reason the Supreme Court set aslde the decree passed by .the High Court and remanded the suit to the trial Court for trial according to law. This will be clear from the following observations of the Supreme Court in paragraph 6 of the said judgment as reported in AIR 1969 SC 1167:- "tt is unfortunate that the leamed Trial Judge has recorded no reasons in support of his conclusion, • ancf the High Court <n appeal merely recorded that they thought that the plaintiff had sufFiciently proved the case in the plaint." V. ^ 13. Similarly, in State of Punjab vs. Bhag Singh (supra) crted by the tearned counsel for the appeltant, the Supreme Court found that neither the trial Court nor the High Court had appreciated the entire evidence f<jr coming to the conclusion on the guilt or otherwise of the accused and accordingly set aside the judgment of the High Court and directed the High Court to hear and dispose of the appeal in accordance with law. The relevant portion of the judgmentof the Supreme Court in State of Punjab vs. Bhag Singh (supra) is quoted herein below: "The trial Court was required to carefully appraise the entire evidence and then come to a conctusion. If the triat Court was at lapse in this regard the High Court was obtiged to uncfertake such an exercise by entertaining the appeal. The tnal Court on the facts of this case dld not perform rts di.ities. as was enjolned on (t by law. The High Court ought to have in such circumstances granted leave and thereafter as a first Court of appeal, reappreciated the entire evidence on the record independently and retumed (ts flndings objectively as regards guiit or othen/vise of the accusecf. 14. ln the present case. we find that we can decide the issue with regard to the maintainability of the applications fil©dby the appellant under Section 34 of the Indian Act in the Court of the learned District Judge, Bilaspur on the basis of th'g'-agreement between the parties and the awards made by the arbitrator which were part of the records of the Court of learned District Judge and which have also been annexed to the memorandum of appeal. We do not think therefore that it is necessary to remand the matter to the tearned District Judge for fresh decision on this issue in accordance with law. 15. The only question which has to be decided by us in the two appeats is whether Section 34 of the tndian Act can be invoked by the appellant to set aside the awards dated 12.11.2002 and 10.11.2003 in favour ofthe respondent. Section 34 ofthe Indian Act is tocated in part-t of the Indian Act, which is titled "Arbitration". Part-11 ofthe Indian Act is titled 10 ^ "Enforcement of certain foreignawards". In Bhatia International vs. Bulk Trading S.A. & Another (supra) the question whether Part-1 of the Indian Act applies to arbitration which take place only in India or also to international arbitration which takes place outside India came up for consicleration and the Supreme Court held that Part-1 of the Indsan Act appll©s not only to arbitrations which take place in tndia but also to {nternational arbitrations which take plac® outside India. In th® said declsion, however, the Supreme Court clearly hetd that Part-11 ofthe Indian Act contains speciat provisions for enforcement of certain foreign awards and to the extent that part-11 provides a separate definition of arbltral award and separate provisions for enforcement of foreign awards, the provisions in part-1 dealing with this aspect will not apply to foreign awards. The relevant portion of the said judgment of the Supreme Court as reported in (2002) 4 SCC 105, is quoted herein betow: "26, xxx xxx xxx. The said Act is one consolidated and integrated Act General provisions applicable to all arbitrations will not be repeated in atl Chapters or Parts. The generat provisions will apply to alt Chapters or Parts unless the statute expressly states that they are not to appty or where. in respect of a matter, there is separate provision In a separate Chapter or Part. Part tt deals with enforcement