Ease Of Doing Business In India Is A Matter Of 'Public Policy', Fruits Of Arbitral Award Must Be Protected To Promote Business: Calcutta High Court

The High Court of Calcutta has held that ease of doing business in india with indian entities is also a matter of 'Public Policy'. These observations were made by the High Court while hearing an application under Section 9 of the A&C Act at post award stage in arbitration with seat in United States (US). The Bench of Justice Ravi Krishan Kapur held that the fruits of the award must be made real and realizable so that the award is not rendered illusory or meaningless. It held that Courts must make serious attempts to protect awarded amount so that the awards are enforced and do not become mere paper awards. Facts The parties entered into a Share Purchase Agreement dated 30.10.2020 by which the petitioner agreed to buy the majority of the stakes in respondent no.1. Clause 14 of the agreement provided for resolution of any dispute through arbitration with seat in US. A dispute arose between the parties when the respondents failed to transfer the control and management of respondent no.1 after the petitioner completed its part. Accordingly, the petitioner invoked arbitration. The arbitrator passed an award dated 15.03.2024 in favour of the petitioner and directed the respondent to pay a total of Rs. 2,91,36,96,629 to the petitioner. The petitioner approached the High Court under Section 9 of the A&C Act seeking respondents to deposit the awarded amount with the Court or give bank guarantees of the equivalent amount. It also requested the Court to direct respondents to file an affidavit declaring their assets/liabilities. Submissions of the Parties The respondent made the following submissions: That the court lacked jurisdiction and the application was not maintainable. That the prayer for an Affidavit of Assets was premature, as it should only be ordered in execution or enforcement of the award.That the application is not maintainable due to the petitioner's ongoing bankruptcy proceedings in the USA. The award is contrary to public policy and unenforceable under Section 48 of the Act, as it did not align with the terms of reference which limited the quantum of damages. The damages awarded by the tribunal are beyond the agreed sum.The award exceeded the damages allowed under the agreement and was passed beyond the mandatory 60-day period, making it without jurisdiction. The petition did not fulfil the requirements of Order XXXVIII Rule 5 of CPC as no allegation of dissipation of assets was made. Analysis by the Court The Court rejected the submissions that the relief cannot be granted since the requirements of Order XXXVIII Rule 5 of CPC are not fulfilled. It held that power of Court under Section 9 are wider than the power available to court under Order XXXVIII Rule 5 of CPC and the party approaching the Court under Section 9 cannot be relegated to the rigours of CPC. The Court also rejected the objection regarding passing of award after the mandated period. It held that the award is passes within the extended period permissible under ICC Arbitration Rules. The Court held that ease of doing business in India with Indians is also a matter of public policy and the respondents have prima facie emasculated it by defying the orders of the tribunal and the Court and by acting fraudulently making attempts to render award unenforceable. The Court also observed that the respondents have threatened the petitioner's legal team. It held that an order to obtain discovery is to avoid unnecessary trouble in obtaining the ultimate enforcement of the award which the Court can grant in a Section 9 application. It held that considering the quantum awarded by the tribunal, the conduct of the respondents avoiding its liability, there is a risk that the assets might be dissipated to render award unenforceable. Upon being satisfied that prima facie the respondents have failed to make out any ground allowed under Section 48, the balance of convenience and irreparable injury to the petitioner, the Court allowed the application and directed the respondents to file an affidavit of their assets. Case Title: UpHealth Holdings Inc v. Glocal Healthcare Systems Pvt Ltd, AP-COM/490/2024 Date:12.04.2024 Counsel for the Petitioner: Mr. S.N. Mookherjee, Sr. Adv. Mr. Ratnanko Banerji, Sr. Adv. Mr. Suddhasatva Banerjee, Adv. Mr. Chayan Gupta, briefed by P&A Law Offices, team consisting of Adv. Mr. Anand S. Pathak, Adv. Mr. Vijay Purohit, Adv. Mr. Shivam Pandey, Adv. Mr. A. Mookherji, Adv. Mr. Anirudhya Dutta, Adv. Ms. S. Hoon, Adv. Mr. S. Bajaj, Adv. Mr. Nav Dhawan, Adv Counsel for the Respondents: Mr. Anindya Kumar Mitra, Sr. Adv. Mr. Debashis Karmakar, Adv. Mr. Sarvapriya Mukherjeee, Adv. Mr. Piyush Agarwal, Adv. Mr. A. Nandi, Adv. Mr. Debojyoti Das, Adv. Mr. Satyam Ojha, Adv. Mr. Parikshit Lakhotia, Adv. Ms. Ridhi Jain, Adv - Mr. Jishnu Saha, Sr. Adv. Mr. Debashis Karmakar, Adv. Mr. Pijush...

Ease Of Doing Business In India Is A Matter Of 'Public Policy', Fruits Of Arbitral Award Must Be Protected To Promote Business: Calcutta High Court

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