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Mitsui Osk Lines Ltd., (Japan) Vs. Orient Ship Agency Pvt Ltd. (India) - Court Judgment

LegalCrystal Citation
CourtMumbai High Court
Decided On
Case NumberArbitration Petition No. 842 of 2009
Judge
AppellantMitsui Osk Lines Ltd., (Japan)
RespondentOrient Ship Agency Pvt Ltd. (India)
Excerpt:
arbitration and conciliation act, 1996 - section 8 - section 9 - section 11 - section 34 - article 44 (2) - sections 46 - section 47 - section 48 - section 49 - arbitration law of japan - section 792, 797, 800 to 802 - declaration - petitioner and the respondent entered into an agency agreement by which the petitioner appointed the respondent as an agent of ship's business - petitioner stated that petitioner noticed various irregularities in the general statement of account prepared by the respondent - dispute arose between the parties - petitioner terminated the agency agreement - petitioner thereafter filed an application praying for injunction against the respondent from operating the bank account - petitioner invoked arbitration clause and nominated arbitrator and called upon the.....by this petition filed by the petitioner under sections 46 to 49 of the arbitration and conciliation act, 1996, petitioner seeks a declaration that the award dated 2nd february 2009 is enforceable within the meaning of the arbitration and conciliation act, 1996 and is accordingly a decree of this court and seeks direction against the respondent to pay to the petitioner the total amount of rs.39,28,91,751.67/- and usd 1,89,342.19 and rs.92,15,284.38/- with interest and costs. some of the relevant facts for the purpose of deciding this petition are as under. 2. the petitioner company is incorporated under the laws of japan and is engaged in shipping business. respondent company is carrying on business of agency of ocean transportation. on or about 1st april 1964, petitioner and the.....
Judgment:

By this petition filed by the petitioner under Sections 46 to 49 of the Arbitration and Conciliation Act, 1996, petitioner seeks a declaration that the award dated 2nd February 2009 is enforceable within the meaning of the Arbitration and Conciliation Act, 1996 and is accordingly a decree of this Court and seeks direction against the respondent to pay to the petitioner the total amount of Rs.39,28,91,751.67/- and USD 1,89,342.19 and Rs.92,15,284.38/- with interest and costs. Some of the relevant facts for the purpose of deciding this petition are as under.

2. The petitioner company is incorporated under the laws of Japan and is engaged in shipping business. Respondent Company is carrying on business of agency of ocean transportation. On or about 1st April 1964, petitioner and the respondent entered into an agency agreement by which the petitioner appointed the respondent as an agent of ship's business, cargo business, passenger business and other related activities and duties in the Western Coast of India and in North Calicut. Article 17 of the said agreement provided for disputes being adjudicated upon by arbitration. Article 17 of the said agreement is extracted as under :

œARTICLE 17 : any difference of opinion or any claim or dispute arising out of this Agreement shall be settled by arbitration in Tokyo. Each party shall appoint one arbitrator with power to such arbitrators to appoint, if necessary, an umpire. Any such arbitration shall be deemed a reference to arbitration under the provisions of the 'Code of Civil Procedure of Japan 1890 regarding Arbitration Proceedings' or any statutory modification or reenactment thereof for the time being in force.?

3. The said agency agreement dated 1st April 1964 was amended in the years 1972, 1973, 1974, 1975, 1987, 1993 and 1997 for the purpose of altering agency fee, commission and retainer fee. All other terms of the said agency agreement remained unchanged.

4. It is the case of petitioner that in the month of January 2001, petitioner noticed various irregularities in the General Statement of Account prepared by the respondent and the petitioner therefore called upon the respondent for explanation and for correcting the irregularities. Dispute arose between the parties. On 2nd January 2002, petitioner called upon the respondent to pay various amount. Vide letters dated 5th April 2002 and 5th June 2002, petitioner terminated the agency agreement. Petitioner thereafter filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 in this Court inter alia praying for injunction against the respondent from operating the bank account bearing No.44000531 with the Sumitomo Mitsui Banking Corporation. By an order dated 1st November 2002, the said arbitration petition was disposed of by this Court.

5. On 10th June 2002, petitioner invoked arbitration clause and nominated Mr Mitsuhiro Toda as arbitrator and called upon the respondent to appoint their arbitrator. Respondent did not appoint any arbitrator. Petitioner filed an application under Section 11 of the Arbitration Act before the Supreme Court. In those proceedings, it was contended by the respondent that Section 11(6), (8) and (12) of the Arbitration Act would not be applicable as the arbitration agreement provided that arbitration was to be conducted in Tokyo (Japan) and was governed by law of arbitration applicable in Japan, particularly Code of Civil Procedure of Japan, 1890. By an order dated 24th July 2002, the Supreme Court held that the proposed arbitration was to be governed by Japanese law and the place of arbitration was also Tokyo and thus Indian Courts did not have jurisdiction to pass any orders for appointment of arbitrators. By letter dated 14th August 2002, petitioner informed the respondent that they would apply to Japanese Court for nomination of an arbitrator on behalf of the respondent. Since respondent did not appoint any arbitrator, petitioner applied to the Tokyo District court for nomination of an arbitrator as per the terms of agency agreement and provisions of Code of Civil Procedure of Japan 1890 regarding arbitration proceedings. The respondent appeared through their advocate in those proceedings. Tokyo District Court nominated Mr Hiroki Okabe as arbitrator on behalf of the respondent by an Order and Judgment dated 9th February 2005. Respondent impugned the said Order and Judgment dated 9th February 2005 passed by the Tokyo District Court in the Tokyo High Court. By an order dated 22nd June 2005, the Tokyo High Court upheld the order of Tokyo District Court. Respondent challenged the order of Tokyo High Court before the Supreme Court of Japan. By an Order dated 25th October 2012, the Supreme Court of Japan upheld the order passed by the Tokyo High Court.

6. On 20th June 2006, petitioner filed statement of claim before the learned arbitrators arising out of the agency agreement. Respondent filed its reply on 18th September 2007. On 2nd February 2009, the learned arbitrators made an award and unanimously awarded the petitioner Rs.39,28,91,751.67/- and USD 1,89,342.19 with interest @ 6% p.a. on the principal amount from 19th January 2002 till payment. The arbitrators also awarded costs during the pendency of the arbitration proceedings.

7. The petitioner herein has filed a suit (351 of 2001) in this Court against the respondent for recovery of the amount arising out of the said agreement. It is the case of the petitioner that though there was an arbitration agreement, petitioner was constrained to file the said suit due to the opposition put up by the respondent in proceeding with the arbitration and the petitioner wished to save its claim from the bar of limitation. On 7th October 2009, petitioner filed this petition for enforcement of the said award dated 2nd February 2009.

8. It is not in dispute that the respondent has not challenged the said award dated 2nd February 2009 in the country in which it was made. It is the case of the petitioner that since the said award has achieved finality, petitioner is entitled to seek enforcement of the said award in this Court since the properties of the respondent are situated within the territorial jurisdiction of this Court. Petitioner has annexed a certified copy of the agency agreement dated 1st April 1964 with addendum to this petition. Petitioner has annexed the original award dated 2nd February 2009 which is duly signed and authenticated by the learned arbitrators and Secretary of the Tokyo Maritime Arbitration Commission. Petitioner has also filed an affidavit of Mr Masahiro Amemiya, a lawyer practicing in Japan. In the said affidavit, the lawyer practicing in Japan has stated that he has attended the arbitration on behalf of the petitioner in Japan and had read an award dated 2nd February 2009. Deponent of the said affidavit has stated that the award has been made in pursuance of the submission to arbitration which is valid under the laws of Japan. The subject matter of the award is capable of settlement under the laws of Japan and is also capable of settlement by arbitration under the laws of India. The award is in accordance with the reference and in conformity with the law governing the arbitration procedure and in accordance with the Code of Civil Procedure of Japan 1890. The award has been made in Japan which has acceded to the New York Convention on 20th June 1961. The learned advocate has stated that to his knowledge, no application for setting aside of the award has been made by the respondent or proceedings to challenge the award has been made by the respondent within the period of three months from the date of receipt of the award by the respondent on 4th May 2009 and thus the said award has become final in Japan is not open to opposition or appeal in Japan. It is stated that the said award is not contrary to public policy or the law of India. Petitioner has also annexed copy of the arbitration law of Japan and also the extract of the arbitration procedure.

9. Since objection to the enforcement of award is raised by the respondents on various grounds, I shall first summarise the submissions/objections of the respondents to the enforcement of award.

10. Mr Kamat, learned counsel appearing for the respondents submit that in the statement of claim filed by the petitioner before the arbitral tribunal, petitioner did not disclose the filing of suit (351 of 2005) in this court praying for same relief and based on same cause of action. It is submitted that suit filed by the petitioner was a substantive remedy and there can't be two separate remedy for same cause of action. Petitioner firstly elected the remedy of arbitration and then filed a suit. Mr Kamat placed reliance on the judgment of this court in case of Onyx Musicabsolute.com. Pvt. Ltd. vs. Yash Raj Films Pvt Ltd. and Ors. reported in 2008 (6) Bom.C.R. 418and in particular paragraphs (21) to (23) in support of his submission that suit and arbitration cannot be filed simultaneously for the same relief. Paragraphs (21) to (23) of the said judgment read thus:-

œ21. Mr. Tulzapurkar submitted that the subject matter of the arbitration petitions and the subject matter of the suit was the same. By filing of a subsequent suit the plaintiffs must be held to have withdrawn from and/or prevented themselves from referring any dispute to arbitration. In any event, the arbitration proceedings and the suit cannot go on simultaneously. The arbitral tribunal being a private forum must lead to the adjudication by the public forum. Countering the submission, Mr. Khambatta submitted that the points in issue in the suit and points in issue in the proposed arbitration proceedings are not and could not be the same. The suit relates only to grant of the internet/mobile rights of the content of the film "Tashan" covered by the licence agreement. The arbitration proceedings, however, relate to all the films covered by the licence agreement and therefore the subject matter of the two is not the same.

22. Suit No.959 of 2008 has been filed alleging the existence of the joint venture agreement the licence agreement dated 23rd April 2005. It is not disputed that the film "Tashan" is covered by the licence agreement dated 23rd April 2005. An injunction has been claimed in the suit on the premise that release of the internet/mobile content of the film "Tashan" by the defendant No.1 to defendant No.3 would amount to breach of the licence agreement. The defence of the defendant No.1 is not that the film "Tashan" is not covered by the licence agreement but is that though the film was covered by the licence agreement, the licence agreement stood terminated on issuance of the deadlock notice or otherwise. Grant of any injunctive relief in a suit would depend upon an affirmative finding on the issues: "Whether the licence agreement dated 23rd April 2005 is in full force and effect and continues to be binding on the parties? and Whether the licence agreement stands terminated and/or has ceased to be in full force and effect after the dead lock notice? The reliefs which are sought to be claimed in the proposed arbitration, as can be seen from the averments made in the petition under Section 9 of the Arbitration Act are to restrain the defendant No.1 from granting internet or mobile rights in any of the films including "Tashan" to the defendant No.3. The defence of the defendant No.1 in the arbitration petition again is the same viz. that the licence agreement dated 23rd April 2005 stands terminated on issuance of a deadlock notice or otherwise. The grant of any relief in the arbitration proceedings in favour of the plaintiffs would therefore depend upon an affirmative finding on the very same issues. viz. whether the licence agreement dated 23rd April 2005 is in full force? Whether it stands terminated and/or has ceased to be in full force and effect after the deadlock notice? Undoubtedly, there would be some other issues but the common issues in both, suit and arbitration petitions are whether the agreement dated 23rd April 2005 was in force and defect and was binding on the parties. Unless the affirmative finding was recorded on the same issue in both the proceedings and the claimants in the arbitration proceedings would not be entitled to any relief. That issue is the heart of the matter. The subject matter of the suit and the arbitration proceedings are the same.

23. In Doleman and Sons v. Ossett Corporation , the Court of Appeal was required to consider whether two tribunals, each having jurisdiction to decide can simultaneously proceed to decide the same dispute between the same parties. The decision was followed by the Calcutta High Court in Ram Prasad Surajmull v. Mohan Lal Lachminarain MANU/WB/0495/1920 : AIR 1921 Cal 770. The Division Bench of the Calcutta High Court following the decision of the Court of Appeal in Doleman and Sons held that there cannot be two tribunals each with jurisdiction to insisting on deciding the rights of the parties and to compel it to accept its decision. In Jai Narain Babu Lal v. Narain Das , the Lahore High Court also accepted the principle laid down by the Court of Appeal in Dolemans case and held that arbitral tribunal and court cannot proceed with the resolution of the same dispute simultaneously. In Firm Gopi Ram Guranditta Mal v. Pokhar Das and Ors. , a Division Bench of the Court held that arbitral tribunal would become functus officio in respect of the portion of the dispute referred to the public forum like an ordinary court. In Firm Jowahir Singh Sundar Singh v. Fleming Shaw and Co.Ltd. Tek Chand, Acting C.J. speaking for the Division Bench reiterated the same principle. In Whirlpool Corporation v. Registrar of Trade Marks MANU/SC/2076/1997 : 1998 SCC (1) : A.I.R. 1999 S.C.22 the Supreme Court held that where the two tribunals under the Trade Marks Act viz. Registrar of Trade Marks and the High Court have both jurisdiction to entertain, such jurisdiction can be exercised only by one to the exclusion of other the jurisdiction being concurrent. If they both exercise the jurisdiction, there was a possibility of conflict of decisions In Oil and Natural Gas Commission v. Western Company of North America, MANU/SC/0014/1987 : [1987]1SCR1024 , the Supreme Court held that if two tribunals simultaneously exercise the jurisdiction there was a likelihood of conflicting decisions resulting into legal chaos. The Supreme Court therefore held that only one tribunal would have a jurisdiction to the exclusion of other. The principle appears to be well settled that where two tribunals simultaneously have jurisdiction only one of them would exercise the jurisdiction. Section 10 of the Code of Civil Procedure is only a statutory embodiment of that principle. It says that no court shall proceed with the trial of any suit in which the matter in issue is also directly or substantial in issue in a previously restricted suit between the same parties. In case proceedings before two public forum like two courts, the rule is the forum wherein the proceedings were filed first would hear it to the exclusion of other. In my view, this principle of general application has not undergone any change under the Arbitration Act. Section 8 contemplates that a judicial authority before which an action is brought in a matter which is subject of an arbitration clause shall, if a party so applies not later that it submitted his first statement on the substance of the dispute, refer the parties to arbitration. The Civil Court therefore would be required to refer the parties to arbitration when there is an arbitration agreement and one of the parties applies for the court to do so. Though Section 8 of the Arbitration Act, 1996 does not provide for a stay of a suit like 34 of the Arbitration Act, 1940, in effect the suit would stand stayed and/or the court would not exercise the jurisdiction to hear the suit by referring the parties to arbitration. This also contemplates that only one forum could decide the matter. But when no application under Section 8 is filed, the public forum of Civil Court would hear the dispute to the exclusion of a private forum of an arbitral tribunal. In the present case, the plaintiffs after having filed two arbitration petitions has chosen to file the suit. The decision of the arbitration proceedings and the suit would depend upon the decision of the very same issue. In the circumstances, the plaintiffs themselves have chosen to waive the jurisdiction of arbitral tribunal by choosing the public forum. The plaintiffs are therefore not entitled to any relief in the arbitration petitions.?

11. Mr Kamat placed reliance on the judgment of Delhi High Court in case of Raj and Associates and Another vs. M/s. Videsh Sanchar Nigam Limited, 113 (2004) Delhi Law Times 318 and in particular paragraph 9 and would submit that the petitioner could not have pursued arbitration proceedings as well as suit for the same relief. Paragraph 9 of the said judgment reads thus:-

œ9. What remains to be considered is whether this Court should continue with the hearing of the present Suit or refer the plaintiff and the only remaining Defendant, VSNL, to arbitration. It has already been mentioned above that in response to the first application all rights for referral of disputes to arbitration the plaintiffs had adopted two positions firstly that the application was not maintainable and secondly that the disputes may be referred to arbitration ostensibly for an early decision thereon. Significantly, since the plaintiff had already filed a Writ Petition which was disposed of granting liberty to it to initiate civil or arbitration proceedings, the plaintiffs were well aware of the existence of an Arbitration Clause. Clearly and indubitably, instead of pursuing the path of arbitration, the plaintiffs instead filed a civil action for the recovery of its dues. Similarly, fully conscious of the existence of an Arbitration Clause VSNL had decided to renounce its rights to enforce arbitral proceedings and has instead traversed the avenue of the civil suit not merely by resisting the plaintiffs' claim but by filing its own Counter Claim in respect of which Court Fee of Rs. 30,800/- has been paid. During the course of arguments of this 'comedy of errors' the plaintiffs have joined issue with RITES and has contended that the Court is duty bound to refer the parties to arbitration because the existence of an Arbitration Clause in the Agreement between the parties has been brought to its notice, especially in view of the fact that none of the parties have demurred on its existence. This is also the view taken in Magma Leasing Limited vs. NEPC Micon Limited and another MANU/WB/0076/1997 : AIR 1998 Cal 94. In my view once the plaintiff opts to file a suit it is no longer open to him to pray to the Court that the parties be referred to arbitration. The present case is not one where the plaintiff can be heard to plead ignorance of the existence of the arbitration clause. Furthermore, counsel for the plaintiff had made an oral request that such a referral should take place but this submission does not fall within the purview of Section 8 which specifically envisages that a request of this nature should be contained in a written application. I am fortified in this view by the pronouncement in Garden Finance Limited v. Prakash Inds. Ltd. and another, MANU/MH/0357/2001 : AIR2002Bom8 . It has been contended by counsel for Defendant No. 2 that this Court is duty bound to refer the parties to arbitration no sooner it is made aware of the existence of an arbitration clause. I cannot accede to this argument in view of the following pronouncements in Sukanya Holdings (P) Limited v. Jayesh H. Pandya and another, MANU/SC/0310/2003 : [2003]3SCR558 :

"For interpretation of Section 8, Section 5 would have no bearing because it only contemplates that in the matters governed by Part I of the Act, the judicial authority shall not intervene except where so provided in the Act. Except Section 8, there is no other provision in the Act that in a pending suit, the dispute is required to be referred to the arbitrator. Further, the matter is not required to be referred to the Arbitral Tribunal, if: (1) the parties to the arbitration agreement have not filed any such application for referring the dispute to the arbitrator; (2) in a pending suit, such application is not filed before submitting first statement on the substance of the dispute; or (3) such application is not accompanied by the original arbitration agreement or duly certified copy thereof. This would, Therefore, mean that the Arbitration Act does not oust the jurisdiction of the civil court to decide the dispute in a case where parties to the arbitration agreement do not take appropriate steps as contemplated under subsections (1) and (2) of Section 8 of the Act".

12. Mr Kamat placed reliance on the judgment of this court in case of Corn Products Company (India) Limited vs. Ayaz Ghadiya and another, AIR 1997 Bombay 331 and in particular paragraph (8) in support of his submission that claims in the arbitration and suit being identical, petitioner could not have proceeded with arbitration proceedings. Paragraph 8 of the said judgment reads thus:-

œ8. Mr. Tulzapurkar further submitted that by act of initiation of proceedings in Court either by filing winding up petitions or instituting summary suits against the Petitioners, the 1st Respondent had given up the right to have the dispute adjudicated by reference to arbitration and hence the question of 1st Respondent making reference to arbitration, in the facts and circumstances of the case, did not arise. It is correct that an agreement to arbitrate can be brought to an end by express or implied consent. The conduct of the party to an arbitration agreement may, in a given circumstances evidence willingness to give up the agreement to arbitrate. An arbitration agreement can be terminated by abandonment on the part of the claimant but a distinction must be drawn between abandonment of the claim and abandonment of agreement to arbitrate. If the claimant elects to bring the agreement to an end, the obligation to put forward the claim to arbitration comes to an end but the claim by itself may survive which the claimant may assert by instituting proceedings in a Court of law if the claim has not become barred by limitation. Merely, because petitions to have the Petitioners' Company wound up under the provisions of The Companies Act, 1956 were filed by the 1st Respondent, it is not possible to hold that the 1st Respondent had abandoned the arbitration agreement since the institution of winding up proceeding is a statutory right given under the provisions of the Companies Act, 1956 and is not a recovery proceeding which can be equated with filing of a suit in a Court of law. However, if a suit in a Court of law is filed over a claim which is also intended to be referred to arbitration by the claimant, it is possible to hold that by instituting the suit in respect of the claim intended to be referred to arbitration by the claimant, abandoned the arbitration agreement. Though, it is submitted on behalf of the Petitioners that the claims in the pending suits filed by the 1st Respondent against the Petitioner also form part of the claims which the 1st Respondent intend to refer to arbitration, there is nothing to show that the claims in the pending suits are intended to be referred to arbitration. Moreover, the letter dated 7th August, 1992 invoking the arbitration makes it explicit that with regard to certain claims not forming part of he claims in the suits already instituted, the 1sst Respondent intended to make reference to arbitration. Hence, in the facts of the case, it is not possible to hold that by act of initiation of the proceedings in Court by way of filing the winding up Petitions and institution of suits, the 1st Respondent as abandoned his right to have the disputes adjudicated by reference to arbitration.?

13. Mr Kamat then submits that since arbitral tribunal had no jurisdiction in view of the petitioner filing the suit for the same reliefs, any participation by the respondents in the arbitration proceedings is of no avail. It is submitted that in any event, the participation of the respondent before the arbitral tribunal was under protest, without prejudice to the rights and contentions of the respondents and was without submitting to the jurisdiction to the arbitral tribunal. My attention is invited to paragraph (14) of the pleading filed by the respondent before the arbitral tribunal in this regard and it is submitted that there was no rejoinder to the said averment of the respondent by the petitioner.

14. Mr Kamat, learned counsel then placed reliance on the judgment of this High Court in case of JindalDrugs Limited vs. Noy Vallesina Engineering SpA and others 2002 (3) Bom.C.R. 554 and in particular paragraph (10) in support of his submission that the grounds on which a domestic award can be challenged can also be grounds on which a party can resist enforcement of foreign award, the grounds being identical under sections 34 and 38 of the Arbitration Act. Relevant portion of paragraph (10) of the said judgment reads thus:-

œ10. The learned counsel for the petitioner submits, as literal construction of the provision of Section 2(2) of the Act, leads to the conclusion that, the petitioner is rendered without a remedy to challenge the validity of the Award, the provisions of Section 2(2) of the Act, should be so construed, as to mean that only for application of procedural provision of Part-I holding of the arbitration in India is necessary and not the substantive provision of Part-I. It is submitted, that the provision of Section 2(2) of the Act should be construed to be only inclusive, in the sense that, it makes the provision of Part-I of the Act applicable to the Arbitration which is held in India but does not exclude their application to the arbitrations held outside India. It is clear, that according to the petitioner, the need to place such a construction on the provision of Section 2(2) of the Act arises because otherwise the petitioner is denied the remedy of challenging the Award. The submission, that the petitioner is left with no remedy to challenge the Award, in my opinion, is not well founded. The learned counsel for the petitioner, as observed above, has himself stated that the award which is challenged in this petition is a foreign award, The Supreme Court in its Judgment in the case of Sumitomo Heavy Industries Ltd. referred to above, has observed thus "the need to file an award in Court arises only if it is required to be enforced, and to the need to challenge it arises only if it is being enforced." It is thus clear that the need of the petitioner to challenge the award would arise in case the respondent No.1 takes steps to enforce the award. In case, the respondent. No.1 decides to enforce the award in India, it will have to make an application under Section 48 of the Act, and in that event, the petitioner can appear before the Court, and request the Court to refuse to enforce the Award against it. Section 48 of the Act reads as under:

"48. Conditions for enforcement of foreign awards. ( 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.

Explanation. Without prejudice to the generality of Clause (b) of this Section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.

(3) If an application ............................................ the other party to give suitable security."

It is clear that the party, against whom the award is sought to be enforced can resist the enforcement of the award on one or more of the grounds set out in Section 48 of the Act. The grounds on which a party can challenge an award are detailed in Section 34(2) of the Act, which reads as under :

"34(2) An arbitral award may be set aside by the court only if-

( a) the party making the application furnishes proof that -

( i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute 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, only the part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or failing such agreement, was not in accordance with this Part; or

(b) the Court finds that-

(i) the subject-matter of the dispute is not capable of settlement by arbitrator under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India."

A comparison of the provisions of Section 48 and Section 34 of the Act quoted above shows that the grounds on which a domestic award can be challenged as also the grounds on which a party can resist enforcement of a foreign award are identical. Thus, as and when enforcement of the award is sought against the petitioner, it can resist the enforcement of the award on the same grounds on which it could have challenged the award under Section 34 of the Act. Therefore, it cannot be said that the petitioner has no remedy of challenging the Award. It is a settled principle of law that in construing statutes one has to adhere to the ordinary meaning of the words used and to the grammatical construction unless that is at variance with the intention of the legislature to be collected from the scheme of the statute itself or leads to any manifest absurdity or repugnancy. It appears from the reading of the Act that insofar as the challenge and enforceability is concerned, there are different schemes for a domestic award and a foreign award. The Act provides for a direct challenge to a domestic award (section 34). A domestic award is enforceable as a decree passed by a Civil Court, after the period provided for challenging the same is over, and in case it is challenged, after the challenge fails (section 36). Whereas, insofar as a foreign award is concerned, it is not enforceable in India unless the court finds that it is enforceable. For that purpose, the party which seeks its enforcement has to make an application to the Court, and has to satisfy the Court about its enforceability (section 49). It is only after the party satisfies the Court that a foreign award becomes enforceable as a decree passed by a Civil Court (section 49). The Act, provides different remedies to persons, against whom domestic award is made and person against whom foreign award is made. A person against whom a domestic award is made, has to immediately approach the Court for challenging the same by making an application under Section 34 of the Act otherwise the person in whose favour the award has been made can execute the same as a decree. On the other hand, a person against whom a foreign award has been made, is not required to challenge the same, because it cannot be executed against him in India unless the Court finds that it is enforceable. He can wait till the person in whose favour the foreign award has been made, makes an application before the Court (Section 47). Rule 803E of Rules framed by this Court, provides for a notice to be issued to the person who is likely to be adversely affected by the proceeding. After receiving the notice from the Court, he can appear before the Court, and submit his defence and resist the enforcement of the foreign award against him. He can request the Court not to enforce the award and in case he succeeds in satisfying the Court on one or more of the grounds mentioned in Section 48 of the Act, the Court has to refuse to enforce the award. As observed above, comparison of the provision of Section 34 and Section 48 of the Act shows that a person against whom a foreign award has been made can resist the enforcement of the foreign award against him on the same ground on which he could have, had it been provided, challenged the validity of the award under Section 34 of the Act. In other words, the grounds on which a domestic award can be challenged and the grounds on which the enforcement of a foreign award can be resisted are identical. Thus, though the Scheme of the Act provides different kind of remedies to the persons aggrieved by a domestic award and a person aggrieved by a foreign award, both the remedies are equally efficacious and adequate, it cannot be said that the Act does not provide an effective remedy to a person who is aggrieved by a foreign award. Hence, there is, in my opinion, no need to construe the provisions of Section 2(2) of the Act in any other manner.

15. It is submitted that the arbitral tribunal did not decide the issue of jurisdiction though raised by the respondents. Learned counsel placed reliance on section 48 of the Arbitration and Conciliation Act 1996 which reads thus:-

48. Conditions for enforcement of foreign awards.

(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 tic 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 failing 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 matter submitted to arbitration can be separated from those not so submitted, that pail 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.

Explanation. Without prejudice to the generality of clause (b), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.

(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 subsection (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.

16. Learned counsel submits that under section 802 of the Arbitration Law of Japan annexed to the affidavit of Mr Masahiro Amemiya, Advocate provides that the petitioner ought to have obtained execution judgment from the appropriate court of Japan before filing application under section 48 of the Arbitration Act for enforcement. It is submitted that since the said award is not binding on the respondents, such award cannot be enforced on that ground section 48 (1) (e) of the Arbitration Act.

17. Mr Kamat learned counsel then submits that in any event the petitioners have not complied with the mandatory requirement under section 47 of the Arbitration and Conciliation Act, 1996. It is submitted that in the courts in India, a point of foreign law is a matter of fact and a plea based on a point of foreign law must satisfy the requirement of pleading on material fact in the petition for enforcement filed before this court. Paragraph (28) of the judgment of the Supreme Court in case of HariShankar Jain vs. Sonia Gandhi (2001) 8 SCC 233 is relied upon which reads thus:-

œ28. There is, thus, no manner of doubt that in the courts in India, a point of foreign law is a matter of fact and, therefore, a plea based on a point of foreign law must satisfy the requirement of pleading a material fact in an election petition filed before the High Court. The two election petitions do not satisfy this requirement. The averments made in the two election petitions do not go beyond making bald assertions. The pleadings do not give any indication of such Italian law on which are based the averments made in the election petitions-whether it is any statutory enactment or any other provision or principle having the force of law in Italy. During the course of hearing we asked the two appellants if they could show us any book, authority or publication based whereon we could form an opinion, even prima facie, in support of the averments relating to Italian law made in the election petitions. The two appellants regretted there inability to show us anything.?

18. Mr Kamat also placed reliance on the judgment of this court in case of RhodiaLtd. and Ors. vs. Neon Laboratories Ltd., 2005 (1) ALL MR 703 and in particular paragraph (44) of the said judgment on the issue that foreign law has to be pleaded and proved. Paragraph (44) of the judgment of this court reads thus:-

œ44. At this juncture, it will not be out of place to mention that under the principle of Private International Law the parties are bound by the jurisdiction clause to which they have agreed unless there is some reason contrary thereto to apply it to municipal contracts. In Lee v. Showmen's Guild, Lord Denning said:

"Parties cannot by contract oust the ordinary courts from their jurisdiction. They can, of course, agree to leave question of law, as well as question of fact, to the decision of the domestic tribunal. They can, indeed, make the tribunal the final arbiter on questions of fact, but they cannot make it the final arbiter on question of law. They cannot prevent its decisions being examined by the courts. If parties should seek, by agreement, to take the law out of the hands of the courts and put it into the hands of a private tribunal, without any recourse at all to the courts in cases of error of law, then the agreement is to that extent contrary to public policy and void."

Under Section 23 of the Contract Act, the consideration or object of an agreement is lawful, unless it is opposed to public policy. So long as the parties to the contract do not oust the jurisdiction of the Courts, which would otherwise have jurisdiction to decide the cause of action under the law it cannot be said that the parties have by their contract ousted the jurisdiction of the Court. If under the law several Courts would have jurisdiction and the parties have agreed to submit to one of these jurisdictions and not to other or others of them it cannot be said that there is total ouster of jurisdiction. In other words, where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law their agreement to the extent they agree not to submit to other jurisdictions cannot be said to be void as against public policy. If on the other hand the jurisdiction they agreed to submit to would not otherwise be proper jurisdiction to decide disputes arising out of the contract it must be declared void being against public policy. In this backdrop, when the Court has to decide the question of jurisdiction pursuant to an ouster clause it is necessary to construe the ousting expression or clause properly. In the present case, in order to construe the said clause and in view of the conclusive finding recorded by the learned single Judge of this Court in the earlier round of litigation, the said clause will have to be construed in accordance with the English law? how it should be determined? The English law is a foreign law so far as the Courts in India are concerned. While dealing with the similar question, the Supreme Court in the case of HariShanker Jain v. Sonia Gandhi, MANU/SC/0551/2001 : AIR2001SC3689 held that under Section 57(1) of the Indian Evidence Act, 1872, the Courts in India are required to take judicial notice of, inter alia, all laws in force in the territory of India. Foreign laws are not included therein. Under Order 6 Rule 2 of C.P.C., every pleading shall contain a statement in concise form of the material facts relied on by a party but not the evidence nor the law of which a Court may take judicial notice. But the rule against pleading law is restricted to that law only of which a Court is bound to take judicial notice. As the Court does not take judicial notice of foreign law, it should be pleaded like any other fact, if a party wants to rely on the same. The Supreme Court further went on to observe that it has no manner of doubt that in the Courts in India, a point of foreign law is a matter of fact and, therefore, a plea based on a point of foreign law must satisfy the requirement of pleading a material fact in the petition fact in the petition filed before the Court. If foreign law is a matter of fact and is required to be proved as any other fact, then the question is who should establish that fact. In my considered view, obviously, the person who is alleging or seeking ouster of the jurisdiction of the Court based on the interpretation of the clauses in the agreements applying the English law. So far as the judgment of the Apex Court in the case of Modi Entertainment Network (supra) is concerned, the said judgment unequivocally recognizes one solitary principle that by an agreement parties to the agreement can agree to submit to the exclusive or nonexclusive jurisdiction of the foreign Court which other wise the parties to the agreement cannot confer, where none exists, on a court to which C.P.C. applies. In other words, in the vary same judgment, the Apex Court has ruled that exclusive or nonexclusive jurisdiction of the foreign Court can be accepted by the parties to the agreement. In other words, more than one Court can have inherent jurisdiction to try the dispute and the parties to the agreement can agree to oust the jurisdiction of any one Court if they are governed by C.P.C. and can also agree to accept exclusive or nonexclusive jurisdiction of foreign Court where non exists. It means parties to the agreement can also confer exclusive or nonexclusive jurisdiction in favour of the English Court or foreign Court even it has no inherent jurisdiction. Whether on foreign Court exclusive jurisdiction has been conferred or not would again be a question of fact requiring interpretation of the agreement applying English law. What is English law would always be a question of fact. Therefore, even if the law laid down by the Apex Court in the case of Modi Entertainment Network (supra)is applied to the facts of the present case, even the burden would lie upon the defendants to establish what is English Law and based on such proof will have to further establish that exclusive jurisdiction has been conferred on the English Court. Ouster of jurisdiction has to be proved as any other fact and, therefore, I do not see any infirmity in the order passed by the trial court.

19. Mr Zaiwala learned senior counsel appearing for the petitioner responded to the objections raised by the respondents. My attention is invited to Articles 16 and 17 of the agreement entered into between the parties which provides for appointment of arbitrators and the law applicable to parties. It is submitted that the parties were governed by Arbitration Law of Japan. Since petitioner did not appoint any arbitrator, proceedings were filed by the petitioner for appointment of arbitrator on behalf of the respondents. Respondents opposed the petition filed by the petitioner in Supreme Court for appointment of arbitrator on the ground that Indian law will not apply. Supreme Court accepted the objections of the respondents. The petitioner applied for appointment of arbitrator on behalf of the respondents as per law of Japan.

20. Mr Zaiwala, learned senior counsel placed reliance on section 792, 797, 800 to 802 of the Arbitration Law of Japan and submits that arbitral tribunal was empowered to proceed with arbitration and make an award even if contention of jurisdiction was raised by the respondents. Award rendered by the arbitral tribunal is final, conclusion and binding between the parties. Respondent did not file any application for challenging the impugned award before the Japan Court admittedly. Under Article 44 (2) three months time was prescribed for challenging an arbitral award. Section 792, 797, 800 , 801 and 802 of the Arbitration Law of Japan Law read thus:-

Section 792.

* (1) The parties may challenge an arbitrator on the same grounds and on the same conditions as they were entitled to challenge a Judge.

* (2) Apart from the provisions of the preceding Sub-Section, an arbitrator nominated otherwise than by an arbitration agreement may be challenged if he unduly delays the exercise of his office.

* (3) Persons who are under disability, deaf, dumb, or deprived of or suspended from the enjoyment of public rights may, if nominated to be arbitrators, be challenged.

Section 797.

If the parties contend that the arbitration procedure entered upon is not one which is to be allowed, or in particular, that no legally binding agreement of arbitration has been made, or that the arbitration agreement does not relate to the controversy to be settled, or that the arbitrators have no power to exercise their office, nevertheless the arbitrators may proceed with their function and make an award.

Section 800.

As between the parties the award shall have the same effect as a final and conclusive judgement of a Court of Justice.

Section 801.

* (1) Application to set aside an award may be made in any of the following cases:-

1. Where the arbitration was one which ought not to have been allowed;

2. Where the award orders a party to do an act which is prohibited by law;

3. Where in the arbitration procedure the parties were not lawfully represented;

4. Where the parties were not heard in the arbitration procedure;

5. Where the award does not show the ground on which the decision was made;

6. Where for any of the reasons specified in 4, 5, 6, 7 and 8 of Section 338(1) of the Code of Civil Procedure a motion for a new trial is to be allowed.

* (2)Where otherwise agreed between the parties, an award cannot be set aside for the reasons specified in 4 and 5 in the preceding Sub-Section.

Section 802.

* (1) Execution by virtue of an award can be carried out only if it is pronounced to be allowed by an execution-judgment.

* (2) No such execution-judgment as is referred to in the preceding Sub-Section shall be given, if there exists any ground upon which application for setting aside an award can be made.

21. It is submitted by Mr Zaiwala learned senior counsel for the petitioner that admittedly respondent did not file any petition impugning the arbitration award in Japan. The representative of the respondents was present before the arbitral tribunal. The arbitral tribunal had allowed all the claims made by the petitioner. Learned senior counsel submits that Section 800 of the law of arbitration applicable to parties, arbitral award as between the parties shall have to same effect as a final conclusive judgment of a Court of Justice. Learned senior counsel submits that Section 48(d) and (e) of the Arbitration and Conciliation Act 1996 does not apply to the said award which is binding on both the parties.

22. In so far as submission of Mr Kamat, learned counsel for the respondents, that since suit filed by the petitioner regarding the same subject matter was pending during the pendency of the arbitration proceedings, the arbitral tribunal became functus officio and award rendered by such tribunal is not enforceable under section 46 r/w sec. 48 is concerned, learned senior counsel submits that the the said suit was filed by the petitioners with a view to obviate any objection regarding limitation. Petitioner had made relevant averment in the said suit in this regard. It is submitted that the petitioner had already filed a praecipe in that suit inter alia praying for permission to withdraw the said suit, respondents cannot be permitted to raise this issue at this stage. It is submitted that to the knowledge of the respondents, petitioner did not pursue the said suit nor respondent filed any application for dismissal of the said suit during the pendency of the arbitration proceeding. Mr Zaiwala learned senior counsel submits that the petitioner is entitled to rely upon the said foreign award which is not a judgment and is sought to be enforced.

23. Learned senior counsel submits that petitioners have complied with the requirements under Section 47 of the Arbitration and Conciliation Act. Petitioner has already annexed original of the award dated 2nd February 2009 made by the arbitral tribunal, original of the agreement and evidence to demonstrate and has proved that the said award dated 2nd February 2009 is foreign award in terms of Section 47 of the Arbitration and Conciliation Act 1996. Learned senior counsel also placed reliance on the affidavit filed by Mr Masahiro Amemiya, a lawyer practicing in Japan who had attended arbitration proceedings on behalf of the petitioner in Japan who has deposed that the said award had been in pursuance of the submission to arbitration which was valid under laws of Japan. The subject matter of the award was capable of settlement by arbitration under the laws of India. Award has been made under the agreement between the parties and in accordance with Code of Civil Procedure of Japan 1890 and was in accordance with reference and in conformity with the law governing the arbitration proceedings. It is stated that the award has been made in Japan which has acceded to the New York convention on 20 June 1961. The learned advocate and also annexed copies of Code of Civil Procedure of Japan 1890 and New Arbitration law of Japan to the said affidavit. It is stated that award dated 2nd Feb. 2009 has become final in Japan and is not open to opposition or appeal in Japan. The enforcement of the award is not contrary to public policy or the law of India. No application for setting aside the award has been made by the respondent within the period of three months and no application or summons have been served on the petitioner.

24. Mr Zaiwala learned senior counsel submits that all ingredients of Section 48 are satisfied by the petitioner. The said foreign award is thus deemed to be a decree of this Court and is enforceable.

25. Mr Zaiwala learned senior counsel placed reliance on the Judgment of Delhi High Court reported in (2009)156 Delhi Law Times in case of Ministry of Sound International Ltd. Vs. Indus Renaissance Partners Entertainment Pvt. Ltd. and in particular paragraph 20 in support of his submission that merely because suit is filed by the petitioner after filing of arbitration proceedings, it would not amount to waiver or abandonment of the rights of the petitioner to pursue arbitration proceedings. It is submitted that it is matter of record that respondents never applied for stay of arbitration proceedings on the ground that suit for identical reliefs was pending in this Court Paragraphs 20 of the said Judgment of Delhi High Court reads thus:

œ20. The said suit has been withdrawn by the defendants on 23rd October, 2008 stating, inter alia that the matter between the parties is covered by arbitration clause. I do not think by filing the civil Suit, the defendants 1 and 2 have abandoned or waived their rights under the aribtration clause. All along, defendant Nos.1 and 2 had been pressing for the present application and had not abandoned the same, though I find that the conduct of defendant Nos.1 and 2 in filing the civil suit is rather peculiar and not in consonance with their stand in the present suit. Defendant Nos.1 and 2 may be guilty of trying to take contradictory stand but they did not abandon or waive their right to have the disputes resolved by arbitration. Abandonment or acquiescence or waiver is not established. Defendant Nos.1 and 2 have all along pressed this application and have not given up their rights under the arbitration clause.?

26. Mr Kamat, learned counsel appearing for respondents in rejoinder submits that unless petitioner discharges burden under section 46 respondents were not bound to discharge burden under Section 48 of Arbitration and Conciliation Act 1996. Learned counsel submits that U/s 802 of the law of arbitration of Japan, the petitioner ought to have applied for execution of the said award in Japan and that also could be executed only after it was pronounced to be allowed by an execution judgment.

27. Mr Kamat distinguished the judgment of Delhi High Court in case of Ministry of Sound International(supra) on the ground that in that case, plaintiff had already withdrawn suit whereas in this case after several years, petitioner has now filed a praecipe for withdrawal of the suit filed by the petitioner for identical reliefs which was subject matter of arbitration.

28. Mr Kamat also distinguished the other judgments relied upon by Mr Zaiwala on the ground that the same are not applicable to the facts of this case as facts before various courts in those matters were totally different.

REASONS AND CONCLUSION :

29. Question that arises for consideration of this court is whether conditions under sections 46, 47 and 48 of the Arbitration and Conciliation Act, 1996 are satisfied or not in this matter for granting reliefs in favour of the petitioner for enforcement of the arbitral award.

30. It is not in dispute that the respondent has not challenged the said award dated 2nd February 2009 in the country in which it was made. It is the case of the petitioner that since the said award has achieved finality, petitioner is entitled to seek enforcement of the said award in this Court since the properties of the respondent are situated within the territorial jurisdiction of this Court. Petitioner has annexed a certified copy of the agency agreement dated 1st April 1964 with addendum to this petition. Petitioner has annexed the original award dated 2nd February 2009 which is duly signed and authenticated by the learned arbitrators and Secretary of the Tokyo Maritime Arbitration Commission. Petitioner has also filed an affidavit of Mr Masahiro Amemiya, a lawyer practicing in Japan. In the said affidavit, the lawyer practicing in Japan has stated that he has attended the arbitration on behalf of the petitioner in Japan and had read an award dated 2nd February 2009. Deponent of the said affidavit has stated that the award has been made in pursuance of the submission to arbitration which is valid under the laws of Japan. The subject matter of the award is capable of settlement under the laws of Japan and is also capable of settlement by arbitration under the laws of India. The award is in accordance with the reference and in conformity with the law governing the arbitration procedure and in accordance with the Code of Civil Procedure of Japan 1890. The award has been made in Japan which has acceded to the New York Convention on 20th June 1961. The learned advocate has stated that to his knowledge, no application for setting aside of the award has been made by the respondent or proceedings to challenge the award has been made by the respondent within the period of three months from the date of receipt of the award by the respondent on 4th May 2009 and thus the said award has become final in Japan is not open to opposition or appeal in Japan. It is stated that the said award is not contrary to public policy or the law of India. Petitioner has also annexed copy of the arbitration law of Japan and also the extract of the arbitration procedure.

31. The respondent has not denied the averments made by the learned advocate Mr. Masahiro Amemiya, a lawyer practicing in Japan. A perusal of the said affidavit and the documents annexed to the said affidavit which are forming part of the arbitration petition clearly indicates that the petitioner had produced the evidence to prove that the award sought to be enforced is a foreign award and has also annexed various documents as contemplated under section 47 of the Act. In my view the petitioner has complied with the requirement for enforcement of the foreign award as contemplated under section 47 of the Act. There is no merits in the submission made by Mr. Kamat, learned counsel appearing for the respondent that the petitioner has not satisfied the conditions under section 47. The award in question is a foreign award. The affidavit filed by the learned advocate practicing in Japan and the pleadings in the petition proves that the petitioner has not only pleaded the foreign law but has also proved. The petition filed for enforcement is thus in consonance with the law laid down by this court in case of RhodiaLtd. (supra) and the judgment of the Supreme Court in case of BhaishankerJain (supra).

32. Next submission of Mr. Kamat, learned counsel appearing for respondent is that since suit filed by the petitioner regarding the same subject matter was pending during the pendency of arbitration proceedings, arbitral tribunal had become functious officio and the award rendered by the arbitral tribunal is not enforceable under section 46 read with section 48 of the Act.

33. A perusal of the claim in Suit No.351 of 2005 which was filed by the petitioner in this court against the respondents for recovery of Rs.46,08,05,327.40/- is concerned, it is averred by the petitioner in the said suit that the application for appointment of an arbitrator was opposed by the respondent. By an order dated 24th July, 2003 the Supreme Court directed the petitioner to approach the District Court in Japan for appointment of an arbitrator on behalf of the respondents. The petitioner thereafter filed an application in the Tokyo District Court for appointment of an arbitrator. The Tokyo District Court had placed the application for orders on 9th February, 2005. It is stated that it was the intention of the respondents merely to delay the arbitration and delay the submission of proper agency accounts to the petitioner. In paragraph (37) of the plaint, it is stated that the said suit was being filed by the petitioner as a protective measure only to save limitation in the event the arbitration proceedings were not disposed of by the Tokyo District Court before the period of limitation for filing the said suit expired and it should not be construed as if the petitioner having given up its rights under the agency agreement to refer the disputes to arbitration. It is not in dispute that upon application of parties proceedings in Suit No.351 of 2005, Arbitration Petition No.446 of 2003 and Arbitration Petition No.842 of 2009 have been clubbed together by an administrative order passed by the Hon'ble Chief Justice of this Court.

34. On perusal of the order passed by Tokyo District Court dated 9th February, 2005 in the petition filed by the petitioner for appointment of arbitrator against the respondents pursuant to the order passed by the Supreme Court of India, it is clear that the respondents had opposed the appointment of arbitrator on various grounds including the ground that the agency agreement including arbitration agreement became void. It was also pleaded by the respondents that there was change of method of transportation in the year 1981 and since then the respondents were supposed to do agency business of transportation by containers pursuant to oral agreement or exchange of letters between the parties. The respondents had pleaded oral agreement for such alleged changes in the nature of work carried out by the respondents. The respondents had also pleaded duress on the part of the petitioner. By the said order dated 9th February, 2005 the Tokyo District Court held that there was no evidence that the parties rescinded or concluded a new agreement which differed from the agency agreement. The parties had agreed at the time of concluding addendum that all terms and conditions of the agency agreement remained unchanged in almost all the addendum and thus arbitration agreement remained in force upto the date of passing the said order. It is held by the Tokyo District Court that it was clear that all the addendum of evidence from KO9-1 to KO9-10 were concluded with reference to agency agreement from their wordings and there was no evidence of duress of the petitioner and the argument of the respondents could not be accepted on that point. The Tokyo District court also rejected the submission of the respondents that the practice of the transaction between the parties considerably changed after 1981 would mean that the agency agreement had come to an end. It is held that the parties continued the transaction based on the agency agreement inspite of the change of the practice and thus argument of the respondent could not be accepted. The Tokyo District Court also dealt with the submission of the respondents that the said proceedings should be stayed because the suit regarding the same dispute is now pending in India. It is held that where the arbitration agreement exists in force, as held by the said court, the court should appoint an arbitrator promptly regardless the other suit being pending or not and rejected the contention of the respondent. The Tokyo District Court accordingly appointed the arbitrator on behalf of the respondent and rejected all such contentions. High Court of Tokyo as well as Supreme Court of Japan has rejected the appeals filed by the respondents. The Arbtiral tribunal has thereafter rendered the arbitral award which is subject matter of enforcement in this petition. Respondents have admittedly not challenged the said award under law of arbitration of Japan. Under section 800 of the Law of Arbitration of Japan, as between the parties the award shall have the same effect as a final and conclusive judgment of the court of justice. The said award is binding on both the parties.

35. I am therefore of the view that the order passed by the Tokyo District Court rejecting the contentions including stay of arbitration in view of the pendency of civil suit in this court, that arbitration agreement had become void in view of change of terms and conditions etc. are final and binding on the parties. Appeal filed by the respondents before the High Court of Tokyo and Supreme Court of Japan impugning the order passed by the Tokyo District Court are rejected. In my view, respondents thus cannot be allowed to agitate those issues in this proceedings.

36. Even otherwise in the facts of this case I am of the view that the award dated 2nd February, 2009 is enforceable, the petitioner having complied with all the requirements of Sections 46 to 49 of the Arbitration and Conciliation Act, 1996.

37. Next submission of Mr. Kamat is that since the petitioner had already filed a suit in this court in respect of the same reliefs which were subject matter of arbitration, arbitral tribunal had no jurisdiction to grant any reliefs and the award of the arbitral tribunal is void and illegal. It is also contended that merely because the respondents participated in the arbitral proceedings without prejudice to their rights and contentions or even otherwise, arbitral tribunal would not have jurisdiction to render any award.

38. In my view the respondents cannot urge this ground in this application for seeking enforcement of the award in view of the order passed by the Tokyo District Court rejecting this plea. Even otherwise on perusal of the plaint in Suit No.351 of 2005 which was filed by the petitioner in this Court, it clearly indicates that the petitioner had filed the said suit as a protective measure with a view to save limitation in the event, the arbitration proceedings were not disposed of by the Tokyo District Court before the period of limitation for filing the said suit expired. In paragraph 37 of the plaint, the petitioner has averred as to why the petitioner had filed the said suit including on the ground that respondents had from time to time delayed the proceedings before the Tokyo District Court and the matter was placed for orders in Tokyo District Court on 9th February, 2005. It is not in dispute that the order passed by Tokyo District Court rejecting all such contentions and appointing arbitrator has been upheld by High Court of Japan and Supreme Court of Japan in the appeals filed by the respondents. It is also not in dispute that the respondents did not make any attempt to apply for dismissal of the suit filed by the petitioner in this court during the pendency of the arbitral proceedings. It is also not in dispute that the said suit remained pending all these years in which respondents did not take any steps. The petitioner has filed an application for withdrawal of the said suit which is being considered separately by this court. In my view filing of the said suit and pendency of the said suit in this Court would not make the arbitral proceedings and award rendered therein void as canvassed by the respondents.

39. In so far as judgment of this court in case of Onyx Musicabsolute.com. Pvt. Ltd. (supra) relied upon by Mr. Kamat, learned counsel for the respondents is concerned, on perusal of the said judgment, it is clear that this court has considered the judgment of Supreme Court in case of Whirlpool Corporation v. Registrar of Trade Marks(1998) 1 SCC. Supreme Court in the said judgment has held that when the two tribunals and/or court having jurisdiction to entertain the same relief, such jurisdiction can be exercised only by one to be exclusion of other the jurisdiction being concurrent. If they both exercise the jurisdiction, there was a possibility of conflict of decisions. This court has also considered the judgment of Supreme Court in case of Oil and Natural Gas Commission vs. Western Company of North America [1987]1SCR1024 in which Supreme Court has held that if two tribunals simultaneously exercise the jurisdiction, there was likelihood of conflicting decisions resulting into legal chaos. It is held that only one tribunal would have a jurisdiction to the exclusion of other. It is held that in case proceedings before two public forum like two courts, the rule is the forum wherein the proceedings were filed first would hear it to the exclusion of other. It is not in dispute that the petitioner has after obtaining the arbitral award has not pressed for similar reliefs also in the suit filed by the petitioner. This court thus has not yet decided the said suit on merits or has not exercised its jurisdiction to decide the matter on merits. The petitioner has rightly applied for withdrawal of the said suit. In my view filing of the civil suit after filing of arbitration proceedings and in view of the petitioner pursuing the arbitration proceedings only, it would not amount to waiver and/or abandonment of right to pursue remedy under arbitration. Reliance placed by the learned counsel for the respondents on the judgment of this court in case of Onyx Musicabsolute. Com. Pvt. Ltd. (supra) is thus misplaced.

40. In so far as judgment of Delhi High Court in case of Raj and Associates and Another (supra) relied upon by Mr. Kamat is concerned, the issue before the Delhi High Court was that once the plaintiff opted to file a suit inspite of their being an arbitration agreement, whether could pray to the court that the parties be referred to arbitration. Judgment of the Delhi High Court is not applicable to the facts of this case at all and reliance placed thereon is misplaced.

41. In so far as judgment of this Court in case of Corn Products Company (India) Limited (supra) is concerned, this court has held that merely because the party has filed winding up proceedings against the respondent, it cannot amount to abandonment of the right of the plaintiff to have the dispute adjudicated by reference to arbitration. It is held that institution of winding up proceedings is a statutory right given under the provisions of Companies Act, 1956 and is not a recovery proceedings which can be equated with filing of a suit in a court of law. In my view the said judgment is of no assistance to the respondents.

42. In so far as judgment of this court in case of JindalDrugs Limited (supra) relied upon by Mr. Kamat, learned counsel for the respondents is concerned, it is held by this court that a comparison of provision of section 48 and section 34 of the Arbitration and Conciliation Act shows that the grounds on which a domestic award can be challenged as also the grounds on which a party can resist enforcement of a foreign award are identical. It is held that when enforcement of award is sought against the petitioner, it can resist the enforcement of the award on the same grounds on which it could have challenged the award under section 34 of the Act. Supreme Court in its recent judgment in case of ShriLal Mahal Ltd. vs. Progetto Grano S.P.A. JT 2003 (11) SC 84 has held that enforcement of foreign award would be refused under section 48 (2) (b) only if such enforcement would be contrary to (I) fundamental policy of Indian law or (II) the interests of India or (III) justice or morality. It is held that the wider meaning given to the expression 'public policy of India' occurring in section 34 (2) (b) (II) in case of Saw Pipes decided by the Supreme Court is not applicable where objection is raised to the enforcement of the foreign award under section 48 (2) (b). Supreme Court has held that for the purposes of section 48 (2) (b), the expression public policy of India must be given narrow meaning and the enforcement of foreign award would be refused on the ground that it is contrary to public policy of India if it is covered by one of the three categories enumerated in RenusagarPower Co. Limited v. General Electric Co. It is held that although the same expression 'public policy of India' is used both in section 34 (2) (b) (ii) and section 48 (2) (b) and the concept of 'public policy in India' is same in nature in both the sections but its application refers in degree in so far as these two sections are concerned. The application of public policy of India doctrine for the purpose of section 48(2) (b) is more limited than the application of the same expression in respect of the domestic arbitral award. Paragraphs 25 to 28 of the judgment of Supreme Court in case of ShriLal Mahal Ltd. (supra)reads thus:-

œ25. In our view, what has been stated by this Court in Renusagar Power Co. Limited v. General Electric Co. MANU/SC/0195/1994 : 1994 Supp (1) SCC 644 with reference to Section of the Foreign Awards Act must equally apply to the ambit and scope of Section 48(2)(b) of the 1996 Act. In Renusagar Power Co. Limited v. General Electric Co. MANU/SC/0195/1994 : 1994 Supp (1) SCC 644 it has been expressly exposited that the expression "public policy" in Section of the Foreign Awards Act refers to the public policy of India. The expression "public policy" used in Section was held to mean "public policy of India". A distinction in the rule of public policy between a matter governed by the domestic law and a matter involving conflict of laws has been noticed in Renusagar Power Co. Limited v. General Electric Co. MANU/SC/0195/1994 : 1994 Supp (1) SCC 644. For all this there is no reason why Renusagar Power Co. Limited v. General Electric Co. MANU/SC/0195/1994 : 1994 Supp (1) SCC 644 should not apply as regards the scope of inquiry Under Section 48(2)(b). Following Renusagar Power Co. Limited v. General Electric Co. MANU/SC/0195/1994: 1994 Supp (1) SCC 644, we think that for the purposes of Section 48(2)(b), the expression "public policy of India" must be given narrow meaning and the enforcement of foreign award would be refused on the ground that it is contrary to public policy of India if it is covered by one of the three categories enumerated in Renusagar Power Co. Limited v. General Electric Co. MANU/SC/0195/1994 : 1994 Supp (1) SCC 644. Although the same expression 'public policy of India' is used both in Section 34(2)(b)(ii) and Section 48(2)(b) and the concept of 'public policy in India' is same in nature in both the Sections but, in our view, its application differs in degree insofar as these two Sections are concerned. The application of 'public policy of India' doctrine for the purposes of Section 48(2)(b) is more limited than the application of the same expression in respect of the domestic arbitral award.

26. We are not persuaded to accept the submission of Mr. Rohinton F. Nariman that the expression "public policy of India" in Section 48(2) (b) is an expression of wider import than the "public policy" in Section of the Foreign Awards Act. We have no hesitation in holding that Renusagar Power Co. Limited v. General Electric Co. MANU/SC/0195/1994 : 1994 Supp (1) SCC 644 must apply for the purposes of Section 48(2)(b) of the 1996 Act. Insofar as the proceeding for setting aside an award Under Section 34 is concerned, the principles laid down in Oil and Natural Gas Corporation Limited v. Saw Pipes Limited MANU/SC/0314/2003: (2003) 5 SCC 705 would govern the scope of such proceedings.

27. We accordingly hold that enforcement of foreign award would be refused Under Section 48(2)(b) only if such enforcement would be contrary to (i) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality. The wider meaning given to the expression "public policy of India" occurring in Section 34(2)(b)(ii) in Oil and Natural Gas Corporation Limited v. Saw Pipes Limited MANU/SC/0314/2003: (2003) 5 SCC 705 is not applicable where objection is raised to the enforcement of the foreign award Under Section 48(2)(b).

28. It is true that in Phulchand Exports Limited v. O.O.O. Patriot MANU/SC/1217/2011: (2011) 10 SCC 300, a two-Judge Bench of this Court speaking through one of us (R.M. Lodha, J.) accepted the submission made on behalf of the Appellant therein that the meaning given to the expression "public policy of India" in Section 34 in Oil and Natural Gas Corporation Limited v. Saw Pipes Limited MANU/SC/0314/2003 : (2003) 5 SCC 705 must be applied to the same expression occurring in Section 48(2)(b) of the 1996 Act. However, in what we have discussed above it must be held that the statement in paragraph 16 of the Report that the expression "public policy of India used in Section 48(2)(b) has to be given a wider meaning and the award could be set aside, if it is patently illegal" does not lay down correct law and is overruled.?

43. In my view none of the objections raised by the respondents are covered by any of the grounds of objections under section 48 of the Arbitration and Conciliation Act, 1996. None of the grounds raised by the respondents indicates that the enforcement of award would be contrary to the public policy of India. Supreme court of India in case of ShriLal Mahal Ltd. (supra) has laid down the principles that only if enforcement would be contrary to fundamental policy of Indian law, the interest of India or justice or morality, enforcement of such award can be refused under section 48 (2) (b). I am respectfully bound by the judgment of the Supreme Court. In view of the judgment of the Supreme Court in case of ShriLal Mahal Ltd. (supra), reliance placed by Mr. Kamat, learned counsel appearing for respondents on the judgment of this court in case of JindalDrugs Limited (supra) would be totally misplaced being contrary to the principles laid down by this court are overruled by the Supreme Court on that issue.

44. In so far as submission of Mr. Kamat that under section 802 of the Law of Arbitration of Japan, petitioner ought to have applied for execution of the award in Japan and could have applied for execution in India only after it was pronounced to be allowed by the execution judgment is concerned, in my view Mr. Zaiwala, learned senior counsel is right in his submission that petitioner have not applied for enforcement of the award in Japan. The petitioner has applied for enforcement of the award in India under section 48 of the Act. Under section 802 of the law of Arbitration of Japan, petitioner was not required to apply for pronouncement for an execution judgment since no application for enforcement for award was made at Japan. There is no merit in any of the submission of Mr. Kamat, learned counsel for the respondent.

45. In my view petitioner is entitled to relief as claimed in this petition. I therefore pass the following order:-

(a) Petition is made absolute in terms of prayer (a).

(b) No order as to cost.

(Petitioner is directed not to take any steps to execute this order for a period of four weeks from today on the condition that interim order passed by this court is continued for the said period.


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