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Enforcement Of A Foreign Arbitral Award Can Be Filed In More Than One High Court: Madras High Court

Ausaf Ayyub
31 May 2022 12:45 PM GMT
Enforcement Of A Foreign Arbitral Award Can Be Filed In More Than One High Court: Madras High Court
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The High Court of Madras has held that more than one High Court can exercise jurisdiction for the recognition and enforcement of a part of arbitral award if the claims are decided for and against the parties thereto.

The Single Bench of Justice Senthilkumar Ramamoorthy held that the Court for the purpose of the enforcement of a foreign award would be the one within whose jurisdiction either the award debtor carries his business or its assets are located within its jurisdiction.

The Court held that as a corollary at least two High Courts can have jurisdiction if the arbitrator has allowed the claims of both the parties and each party would file an application for the enforcement of the award in the High Court where the assets of the other party are located.

Effect Of Dismissal Of Insolvency Petition Of The Award Holder Against The Award Debtor.

The Court further held that merely because the NCLT has declined to admit an insolvency petition preferred by the award holder against the award debtor, it would not preclude the award holder from filing an application for the enforcement of the award.

Facts

The parties entered into a Securities Purchase Agreement (Agreement) whereby the petitioners agreed to sale their shares in the Himachal Sorang Power Ltd (Company) to the respondent in the paid-up share capital of the Company. Clause 14 of the agreement provided for the resolution of the dispute through arbitration under the Rules of the SIAC.

A dispute arose between the parties related to their respective obligations under the agreement, accordingly, the parties were referred to arbitration before the SIAC. The respondent and the company were the joint claimants before the arbitral tribunal, they made several claims. The petitioners also preferred several counter claims against the respondent especially.

The Award

The arbitrator directed the petitioner no. 1 to pay a total sum of Rs. 119 Crores along with 12% Interest. The respondent was directed to pay a sum of Rs. 9 crores towards the balance sale consideration along with 12% interest thereupon to petitioner no. 1. Petitioner no.1 was directed to pay a sum of Rs. 18.5 Crores towards the cost to the claimants and the claimants in return were directed to pay a sum of Rs. 8.5 Crores to the petitioner no. 2.

The Contention Of The Parties

The petitioners sought the enforcement of the foreign award on the following grounds:

  • The part of the award that recognizes the right of the petitioner to claim payment from the respondent has attained finality, therefore, the same is liable to be recognized as a decree of the Court.
  • The Company was not a necessary party to the present petition as the award only recognizes the right of the petitioners to recover the amount only from the respondent.
  • The order of NCLT does not preclude the petitioners from seeking the enforcement of a foreign award that has attained finality.
  • The proceedings before the High Court of Delhi are not a bar to the present application as more than one High Court could exercise jurisdiction for the enforcement of a foreign award.
  • None of the ground mentioned under Section 48 of the Act is made out.

The respondent objected to the maintainability of the application on the following grounds:

  • The respondent has already filed an application for the enforcement of the award before the High Court of Delhi and only one High Court would have the jurisdiction to entertain an application for the enforcement of a foreign award.
  • The petitioner had preferred an insolvency petition against the respondent which has been rejected by NCLT with an observation that the petitioner does not qualify as the operation creditor of the respondent.
  • The Company who was the joint claimant before the arbitral tribunal has intentionally not been made a party to the petition as the tribunal had directed the petitioners to pay a much larger sum to the Company over which the respondent has an interest. For the same purpose, the Company has filed an affidavit confirming the interest of the respondent over the amount due from the petitioners.
  • The proceedings before the Delhi High Court are for a much larger sum arising out of the same award, therefore, the present petitions are not maintainable.

Analysis By The Court

The Court held that the Court for the purpose of the enforcement of a foreign award would be the one within whose jurisdiction either the award debtor carries his business or its assets are located within its jurisdiction. It would be the Court that can enforce an award by issuing a process for the attachment or sale of the assets of the award debtor.

The Court held that as a corollary at least two High Courts can have jurisdiction if the arbitrator has allowed the claims of both the parties and each party would file an application for the enforcement of the award in the High Court where the assets of the other party are located. Therefore, the award holder is entitled to forum shopping and find the assets of the losing party wherever such assets may be situated.

The Court held that the respondent has not disputed the position that it has assets within the jurisdiction of the Court and its challenge is confined to the issue that two High Courts cannot have jurisdiction to enforce a foreign award, therefore, the petition is maintainable.

"Keeping in mind the fact that it may often become imperative to approach more than one high court for recognition and enforcement especially when the relevant foreign award may be enforced by and against parties with assets falling within the jurisdiction of different high courts, it cannot be said that the institution of petitions for recognition and enforcement of a foreign award, in more than one High Court, is per se contrary to the public policy of India."

The Court further rejected the objection that the petition is liable to be rejected for not making the company a party to it. The Court held that effectively, the arbitral tribunal has not granted any relief against the company, therefore, it was not a necessary party.

The Court further rejected the argument that petitioner no. 2 ought to have made the company a party to the proceedings as the company was jointly liable to pay the cost to it. The Court held that the award holder is entitled to proceed against a single party provided it does not recover the amount more than it is entitled to if a separate proceeding is taken out against the other joint party.

The Court further rejected the objection regarding the maintainability on the ground that NCLT held that the petitioner is not a financial creditor of the respondent. The Court held that the list of objections under Section 48 is an exhaustive list and the objection regarding the non-maintainability of the insolvency petition is not a ground mentioned under Section 48 of the Act.

The Court further rejected the argument that the respondent has an award of much higher value in its favour, therefore, the present petition would be non-maintainable. The Court held that the respondent has no award in its favour, the award is only in favour of the company over which the respondent may have a beneficial interest.

Accordingly, the Court allowed the petition and held the award to be enforceable as a decree of the Court.

Case Title: NCC Infrastructure Holdings Ltd and Anr. v. TAQA India Power Ventures Pvt. Ltd. Arb. O.P. (Comm. Div) Nos. 410 and 412 of 2021.

Date: 11.01.2022

Citation: 2022 LiveLaw (Mad) 232

Counsel for the Petitioner: Mr. R.Murari, Senior Advocate with Mrs. Hema Srinivasan

Counsel for the Respondent: Mr. Satish Parasaran, Senior Advocate with Mr. P. Giridharan.

Click Here To Read/Download Order

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