Deletion Of Names Through Chamber Summons Does Not Render Appeal U/S 50(1)(B) Of A&C Act As Not Maintainable: Bombay High Court

Facts

The present appeal had been filed under Section 50(1) of the Arbitration and Conciliation Act, 1996 (“ACA”) raising a challenge to the judgment dated 24.10.2024 passed a single judge in Commercial Arbitration Petition No. 414 of 2018. The said proceedings had been filed under Sections 47,48 and 49 of ACA for a declaration that three foreign awards passed in favour of the Appellant were enforceable under the provisions of Part-II of ACA.

By the impugned judgment, the judge dismissed the petition holding that the same was barred by limitation with further finding that the foreign awards in favour of the Appellant did not deserve to be enforced and executed. It was also held that the impleadment of 2^nd to 4^th Respondents in petition was unwarranted as they were not parties to the arbitration proceedings.

Contentions

The primary contention of the Petitioner was that the finding in the impugned award that Respondents 2, 3, 4 could not be impleaded on the premise that the Petitioner was seeking execution of the said awards against them was incorrect.

The execution of the foreign awards had also been sought against 2^nd to 4^th Respondents as it was the case of the Appellant that the entire assets/properties of the 1^st Respondent had been improperly diverted in their favour so as to defeat enforcement of the foreign awards against the 1^st Respondent. It is a well settled position of law that a combined petition seeking recognition and enforcement of a foreign award as well as its execution is maintainable.

The 1^st Respondent strongly opposed the arguments advanced by the Petitioner. It was submitted that the Single judge after consideration of all relevant aspects had rightly dismissed the petition and no interference with the findings as recorded was called for.

The Counsel for 2^nd and 3^rd Respondents challenged the maintainability of this appeal. It was contended that the Respondents were neither signatories to the arbitration agreement nor were they parties to the final award proceedings. Despite that, the foreign awards were sought to be executed against them. Additionally, the Respondents had preferred chamber summons in the arbitration proceedings seeking deletion of their names from the proceedings which were allowed by the judge. As the said chamber summons were allowed by the judge, the appeal as filed against 2^nd and 3^rd Respondent was not maintainable. Th only remedy available to the Appellant was to independently challenge the decision allowing the chamber summons in appropriate proceedings.

Similar plea was taken by the Counsel for Respondent No. 4

Observations

The court at the outset clarified that it was not making any determination on the merits of the case against any of the Respondents. It was only the aspect of maintainability of the current appeal as filed under Section 50(1)(b) against the 2^nd and 4^th Respondents that was being examined.

The Court placed reliance on the judgments of the Apex Court in M/s Fuerst Day Lawson v. Jindal Exports Ltd. (2001) 6 SCC 356 and Government of India v. Vedanta Limited and Others (2010) 10 SCC 1 to discuss the proposition of law that while seeking enforcement of foreign award, there is no need to take separate proceedings, one for deciding the enforceability of the foreign award to make it rule of the court and another to take up execution thereafter.

The Court observed that under Section 50(1)(b) ACA, an appeal lies from an order refusing to enforce a foreign award under Section 48. The enforcement of a foreign award would also take within its compass the execution of such foreign award. The consequence of the recognition ad enforcement of a foreign award is its execution. Thus, the legal position that now stands settled is that an award holder can seek recognition and execution of a foreign award in a common arbitration petition.

Coming to the facts of the present appeal, the Court noted that the Appellant had sought dual reliefs in the arbitration petition filed by it. The impugned order passed by the judge declined enforcement and execution of the foreign award that was sought against all the Respondents. Thus, if the recognition, enforcement and execution of a foreign award is permissible in a common arbitration petition as held by the judge, the mere fact that the said Respondents had filed chamber summons seeking deletion of their names, which relief came to be granted, would not render the appeal filed under Section 50(1)(b) ACA as not maintainable.

The Court noted that the Appellant is aggrieved by the refusal to enforce and execute the foreign awards against all the Respondents. That was, in fact, the prayer made in the Arbitration Petition filed against all the Respondents. The learned Judge having refused the enforcement as well as execution of the Foreign Awards against all the respondents, it goes without saying that an appeal filed under Section 50(1)(b) of the Act of 1996 against all Respondents, who were parties to the petition would be maintainable.

Hence, the Court dismissed the object to maintainability of the appeal raised by 2^nd to 4^th Respondents and held that the present appeal as filed under Section 50(1)(b), ACA is maintainable against all Respondents.

Case Title – IMAX Corporation v. E-City Entertainment (I) Pvt. Ltd. and Others (Commercial Arbitration Appeal (L) No. 38267 of 2024)

Citation – 2025 LiveLaw (Bom) 162

Appearance-

For Appellant - Mr. Aspi Chinoy, Senior Advocate with Mr. Shanay Shah, Mr. Rahul Mahajan, Mr. Amit Surve & Ms. Simran Gulabani i/b Fortitude Law Associates, Advocates

For Respondent No. 1 - Mr. Prateek Seksaria, Senior Advocate with Ms. Pooja Tikde, Ms. Krushi Barfiwala, Ms. Rima Desai, Mr. Nishant Chothani, Mr, Rohit Agarwal, Mr. Shlok Bodas & Ms. Jahnavi Bhatia i/b Parinam Law Associates, Advocates

For Respondent No. 2 & 3 - Mr. Navroz Seervai, Senior Advocate with Ms. Gulnar Mistry, Mr. Saket Mone & Mr. Devansh Shah i/b Vidhii Partners, Advocates

For Respondent No. 4 - Mr. Sharan Jagtiani, Senior Advocate with Mr. Saket Mone, Ms. Apoorva Manwani, Mr. Siddharth Joshi & Mr. Devansh Shah i/b Vidhii partners, Advocates

Click Here To Read/Download The Order