Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO(OS) NO. 205/2000
Reserved on : April 02, 2009
Date of Decision : July 10, 2009
National Agricultural Marketing Federation of India Ltd.
...Appellant
Mr.Shanti Bhushan, Sr. Advocate
Through :
and Mr. T.K. Ganju, Sr. Advocate,
with Mr. A.T. Patra, Mr. Ajay K.
Thacker, Ms. Roopa Dayal and
Ms. Aradhna Patra, Advocates.
Versus
Alimenta S.A. .....Respondent
Through : Mr. Mr. S.K. Dholakia, Sr.
Advocate, with Mr. Shailendra
Swarup, Ms. Bindu Saxena, Ms.
Aparajita Swarup, Ms. Neha Khattar
ad Mr. Vyom Bansal, Advocates.
CORAM:
HON'BLE MR. JUSTICE MUKUL MUDGAL
HON'BLE MR. JUSTICE VIPIN SANGHI
1. Whether the Reporters of local papers may be allowed to see
the judgment? YES
2. To be referred to the Reporter or not? YES
3. Whether the judgment should be reported in the Digest? YES
FAO (OS) No.205/2000 Page 1 of 38
JUDGMENT
: MUKUL MUDGAL,J.
th
1. This is an appeal against the order dated 28 January, 2000
passed in Suit No. 1885/1993 by the learned Single Judge
pronouncing a judgment on applications no. 1540/1996 and
2562/1996 filed by the appellant under Section 5 of the Foreign
Awards (Recognition and Enforcement) Act, 1961 (hereinafter
referred to as „the Foreign Awards Act‟) by which the objections
th
preferred by the appellant to the award dated 15 November, 1989
by the Federation of Oil Seeds and Fats Association Ltd. (for short
„FOSFA‟) were dismissed and the petition was allowed.
2. Sh. S.K. Dholakia, the learned Senior Counsel for the
respondent has raised a preliminary objection to the
maintainability of the appeal in the present form. For this
purpose, he has relied upon the provisions of Section 6 of the
Foreign Awards Act to contend that the appeal can lie only on the
issue that the decree consequent to the judgment of the learned
Single Judge is in excess of or not in accordance with the award.
He has submitted that save and except the above pleas, no other
FAO (OS) No.205/2000 Page 2 of 38
grounds are available to the appellant. Section 6 of the said Act,
reads as follows: -
“6. Enforcement of foreign award .—(1) Where the
Court is satisfied that the foreign award is enforceable
under this Act, the Court shall order the award to be
filed and shall proceed to pronounce judgment
according to the award.
(2) Upon the judgment so pronounced a decree shall
follow, and no appeal shall lie from such decree except
in so far as the decree is in excess of or not in
accordance with the award.
(emphasis supplied)”
3. Mr. Shanti Bhushan, the learned Senior counsel appearing
on behalf of the appellant, in reply to the above preliminary
objection has submitted that the appeal is under sub section 2 of
Section 6 of the Foreign Awards Act read with Section 10 of the
Delhi High Court Act, 1966 and is thus also under the Letters
Patent jurisdiction of this Court. He has further submitted that
while an appeal against a decree, subsequent to the
pronouncement of the judgment by the learned Single Judge may
be barred under Section 6 to the extent proscribed in sub-section
(2), nevertheless, such a judgment is certainly appealable under
the letters patent jurisdiction of this Court. He has, therefore,
submitted that the Foreign Awards Act consciously makes a
FAO (OS) No.205/2000 Page 3 of 38
difference between a „judgment‟ and the „decree‟ and the court
must give a meaningful effect to the said legislative intent. His
plea is based upon the premise that no party can be left remediless
and if the judgment is flawed then it would be a travesty of justice
if an error in such a judgment is not amenable to correction in
appeal. He has, in particular, relied upon Section 17 and 39 of the
Arbitration Act, 1940 (hereinafter referred to as to „the Arbitration
Act, 1940‟) which read as follows: -
“17. Judgment in terms of award .—Where the Court
sees no cause to remit the award or any of the matters
referred to arbitration for reconsideration or to set aside
the award, the Court shall, after the time for making an
application to set aside the award has expired, or such
application having been made, after refusing it, proceed
to pronounce judgment according to the award, and
upon the judgment so pronounced a decree shall follow,
and no appeal shall lie from such decree except on the
ground that it is in excess of, or not otherwise in
accordance with the award.
39. Appealable orders .—(1) An appeal shall lie from
the following orders passed under this Act (and from no
others) to the Court authorized by law to hear appeals
from original decrees of the Court passing the order:
An order—
(i) superseding an arbitration;
(ii) on an award stated in the form of a
special case;
(iii) modifying or correcting an award;
(iv) filing or refusing to file an arbitration
agreement;
(v) staying or refusing to stay legal
proceedings where there is an arbitration
agreement;
(vi) setting aside or refusing to set aside an
award:
FAO (OS) No.205/2000 Page 4 of 38
Provided that the provisions of this section shall not
apply to any order passed by a Small Cause Court.
(2) No second appeal shall lie from an order passed in
appeal under this section, but nothing in this section
shall affect or take away any right to appeal to the
Supreme Court.”
4. He has submitted that Section 17 of the Arbitration Act,
1940 is analogous and similar to Section 6 of the Foreign Awards
Act in so much as it restricts the nature of the appeal against the
decree to the issue of whether such a decree is in excess or not in
accordance with the award. He has further relied on Section 39 of
the Arbitration Act, 1940 to submit that inspite of the existence of
Section 17 restricting the scope of the appeal against a decree to a
limited extent under Section 39, the provision of appeal was
specifically made available against the judgment of the learned
Single Judge setting aside or refusing to set aside an award. It is
submitted that in the present appeal, admittedly appeal to a
Division Bench is not against the decree made under sub section 2
of Section 6 of the Foreign Awards Act but against the
order/judgment made under sub section 1 of Section 6 and as
such, it is not an appeal circumscribed by the provisions of said
sub section 2 of Section 6.
FAO (OS) No.205/2000 Page 5 of 38
5. He thus submitted that the analogy discernible from the
Arbitration Act, 1940 makes it evident that since an appeal against
the judgment of the learned Single Judge affirming the award and
dismissing the objections was available in respect of such
judgments affirming the award under the 1940 Arbitration Act, a
similar appeal should also inferred to be inferred to be available
under the Foreign Awards Act.
6. Mr. Shanti Bhushan has also relied upon Section 9 of the
Foreign Awards Act, which reads as follows: -
“9. Saving .—Nothing in this Act shall—
( a ) prejudice any rights which any person
would have had of enforcing in India of any
award or of availing himself in India of any
award if this Act had not been passed; or
( b ) apply to any award made on an arbitration
agreement governed by the law of India.”
7. He, therefore, submits that even if it is assumed that Section
6 of the Foreign Awards Act is construed according to the pleas of
the learned counsel for the respondent, nevertheless, in view of the
provisions of Section 9 of the Foreign Awards Act, an appeal
would still be maintainable. He has submitted that the Foreign
Awards Act, as per the mandate of Section 9(b) will not apply to
FAO (OS) No.205/2000 Page 6 of 38
an award made on an arbitration agreement governed by the law
of India and for this purpose has relied upon the judgment of the
Hon‟ble Supreme Court in the case of National Thermal Power
Corporation vs. The Singer Company and others AIR 1993 SC
998 . He has pointed out various provisions of the Agreement
between the parties to submit that the contract was signed in
Delhi, shipment was to be from Saurashtra Port and letters of
credit were to be released by a Bank in India and was to be
received by the Bombay officer prior to the arrival of the loaded
goods. He submitted that the contract clearly indicated that the
contract was to be performed in India. He, therefore, submitted
that since the contract was to be performed in India, the provisions
of the contract, in so far as it pertained to the payment to be made
outside India and the plea of the respondent that the English law
applied, would make such an award contrary to the public policy
of India and thus challengeable in this Court in appeal. His plea is
based on the premise that the Foreign Awards Act does not apply
to any award made on an Arbitration Agreement governed by the
law of India and this was evident from a perusal of the various
clauses of the Agreement between the parties.
FAO (OS) No.205/2000 Page 7 of 38
8. Mr. Shanti Bhushan has also placed reliance on paragraphs
14, 38 and 52 of the aforesaid judgment in the case of NTPC
(supra) which read as under: -
“14. The expressed intention of the parties is generally
decisive in determining the proper law of the contract.
The only limitation on this rule is that the intention of
the parties must be expressed bona fide and it should
not be opposed to public policy. In the words of Lord
Wright:
“...where there is an express statement by the
parties of their intention to select the law of the
contract, it is difficult to see what qualifications
are possible, provided the intention expressed is
bona fide and legal, and provided there is no
reason for avoiding the choice on the ground of
public policy....”
Vita Food Products Inc. v. Unus Shipping Co. Ltd.,
(1939) AC 277, 290(PC).
38. An award is 'foreign' not merely because it is made
in the territory of a foreign State, but because it is made
in such a territory on an arbitration agreement not
governed by the law of India. An award made on an
arbitration agreement governed by the law of India,
though rendered outside India, is attracted by the saving
clause in Section 9 of the Foreign Awards Act and is,
therefore, not treated in India as a 'foreign award'.
52. All substantive rights arising under the agreement
including that which is contained in the arbitration
clause are, in our view, governed by the laws of India.
In respect of the actual conduct of arbitration, the
procedural law of England may be applicable to the
extent that the ICC Rules are insufficient or repugnant
to the public policy or other mandatory provisions of
the laws in force in England. Nevertheless, the
jurisdiction exercisable by the English courts and the
applicability of the laws of that country in procedural
matters must be viewed as concurrent and consistent
with the jurisdiction of the competent Indian courts and
FAO (OS) No.205/2000 Page 8 of 38
the operation of Indian laws in all matters concerning
arbitration in so far as the main contract as well as that
which is contained in the arbitration clause are
governed by the laws of India.”
9. In particular, emphasis has been placed on paragraph 52 of
the said judgment by Sh. Shanti Bhushan to contend that the
principle laid down in the above paragraphs applied squarely to
the facts of the present case and consequently, the agreement was
clearly governed by the law of India, thereby making the Foreign
Awards Act inapplicable. He, thus, said that once the Foreign
Awards Act was inapplicable, the bar under Section 6 of the
Foreign Awards Act was not applicable in appeal, certainly
maintainable under Section 10 of the Delhi High Court Act.
10. The learned senior counsel submitted that the appeal is
maintainable, de hors and inspite of the provisions of sub section 2
of Section 6 of the Foreign Awards Act. Provisions of Section 6 of
the Foreign Awards Act are pari-materia with Section 17 of the
Arbitration Act, 1940. Inspite of such provision in Section 17 of
the Arbitration Act, 1940, that “no appeal shall lie from such
decree, except on the ground that it is in excess or not otherwise in
accordance with the Award”; a judgment and order rejecting the
FAO (OS) No.205/2000 Page 9 of 38
objections to enforce and award occasioning such decree is
appealable even if there is no separate order refusing to set aside
the Award and the order is a composite one. In that view of the
matter, there is no reason why an order under sub section 1 of
Section 6 ordering the Award to be filed and proceeding to
pronounce judgment according to the Award cannot be appealed
against merely because a decree has followed upon such
judgment. In fact, sub-section 2 of Section 6 of the Foreign
Awards Act is no different from the provisions of Section 17 of
the Arbitration Act, 1940. It is no doubt true that the Arbitration
Act, 1940 itself in Section 39(1) (vi) provides for an appeal
against the order refusing to set aside an Award. This however,
does not bring in any material difference. It is only when there is
no express provision of appeal in the relevant statute that the
provision of Letters Patent/ High Court Act are resorted to. The
learned Senior counsel further submitted that even in the absence
of any provision like Section 39(1) (vi) of the Arbitration Act,
1940, appeal from an order under sub section 1 of Section 6 of the
Foreign Awards Act passed by learned Single Judge of the High
Court shall lie to a Division Bench under Letters Patent and/or
FAO (OS) No.205/2000 Page 10 of 38
under Section 10 of the Delhi High Court Act. The Hon‟ble
Supreme Court has in fact, in the case of Vanita M Khanolkar
1998 (1) SCC 500 gone to the extent of holding that an appeal
under Letters Patent Appeal or an Act, establishing a High Court,
unless expressly excluded by the Statute will lie, even if the
Statute otherwise bars an appeal; thus mere barring of an appeal in
a Statute without expressly excluding Letters Patent Appeal will
not necessarily exclude a Letters Patent Appeal. It is held therein
that “it is well settled that any statutory provision barring an
appeal or revision cannot cut across the constitutional power of
the High Court. Even the power flowing from the paramount
charter under which the High functions would not get excluded
unless the statutory enactment concerned expressly excludes
appeals under the Letters Patent”. The said judgment has been
approved by a Constitution Bench of 5 Hon‟ble Judges of the
Hon‟ble Supreme Court in the case of P.S. Sathappan vs.
Andhra Bank Ltd. reported in AIR 2004 SC 5152 . Even in 1953,
a bench of 3 Hon‟ble Judges in National Sewing Thread Co. Ltd. ,
reported in AIR 1953 SC 357 held that when a question is stated
to be referred to an established Court, without more than ordinary
FAO (OS) No.205/2000 Page 11 of 38
incidents of procedure of that Court including the right to appeal
from its decision will get attracted. Accordingly, Clause 15 of the
Letters Patent was held applicable to decisions of the Single Judge
of the High Court exercising jurisdiction under the Trade Marks
Act, even though under the said Act, no such appeal was provided.
In fact, even in the case of Shah Babulal Khimji reported in AIR
1981 SC 1786 a judgment of the bench of three Hon‟ble Judges
also supports the view that right of appeal under Letters Patent is
not affected by other statutory provisions relating to appeal.
Parliament is conscious of such legal position and accordingly
while providing for a bar of an appeal against an order passed in
second appeal, Section 100A CPC expressly stipulates as under:
“Notwithstanding anything contained in any Letters Patent
for any High Court or in any other instrument having the
force of law or in any other law for the time being
inforce…..”
In the absence of such express bar even against a Letters
Patent Appeal, Appeal would have been maintainable under
Letters Patent even against a second Appellate Order.
11. In reply to the pleas of Mr. Shanti Bhushan as to the
maintainability of the appeal, Sh. S.K. Dholakia, the learned
FAO (OS) No.205/2000 Page 12 of 38
Senior counsel for the respondent submitted in rejoinder that it is
necessary to peruse Section 2(2) i.e. the definition of „decree‟;
Section 2(9) i.e. the definition of „judgment and Order 20 of the
Code of Civil Procedure, providing for judgments and decree. He
first dealt with the plea of Mr. Shanti Bhushan about the
Agreement being governed by the laws of India and has pointed
out clause 11 of the Agreement between the parties which reads as
follows: -
“11 Other terms/conditions as per FOSFA 20
contract terms.”
12. He has consequently relied upon clauses 18 and 20 of the
FOSFA contract terms which read as follows: -
“18. DOMICILE: This contract shall be deemed to
have been made in England and the construction,
validity and performance thereof shall be governed in
all respects by English law. Any dispute arising out of
or in connection therewith shall be submitted to
arbitration in accordance with the Rules of the
Federation. The serving of proceedings upon any party
by sending same to their last known address together
with leaving a copy of such proceedings at the offices
of the Federation shall be deemed good service, rule of
law or equity to the contrary notwithstanding.
19. U.L.I.S. The Uniform Law on Sales and the
Uniform Law on Formation to which effect is given by
the Uniform Laws on International Sales Act, 1967
shall not apply to this contract.
20. ARBITRATION: Any dispute arising out of
this contract, including any question of law arising in
FAO (OS) No.205/2000 Page 13 of 38
connection therewith, shall be referred to arbitration in
London (or elsewhere if so agreed) in accordance with
the Rules of Arbitration and Appeal of the Federation
of Oils, Seeds and Fats Association Limited, in force at
the date of this contract and of which both parties
hereto shall be deemed to be cognizant.
Neither party hereto, nor any person claiming
under either of them in respect of any such dispute until
such dispute shall first have been heard and determined
by the arbitrators, umpire or Board of Appeal (as the
case may be) in accordance with the Rules of
Arbitration and appeal of the Federation, and it is
hereby expressly agreed and declared that the obtaining
of any Award from the arbitrators, umpire or Board of
Appeal (as the case may be), shall be condition
precedent to the right of either party hereto or of any
person claiming under wither of them to bring any
action or other legal proceedings against the either of
them in respect of any such dispute.
(emphasis supplied)”
13. Mr. Dholakia submits that these clauses make it clear that
the English Law was expressly made applicable and the arbitration
was required to take place in London as per rules of arbitration
and appeal of the FOSFA. He, therefore, stated that it was not
open to the appellants to contend that inspite of such specifically
expressed intention of the parties; the agreement was governed by
the laws of India. He further submitted that in the case of
Alimenta S A vs. NAFED 1987 (1) SCC 615 which was an
appeal against the order of the learned Single Judge of this Court,
the issue of applicability of FOSFA-20 was clearly settled by the
FAO (OS) No.205/2000 Page 14 of 38
Hon‟ble Supreme Court in the following terms set out in
paragraphs 7 and 12 of the judgment which reads as follows: -
“7. We may at first deal with the appeal preferred by
the appellant NAFED relating to the first contract. The
question is whether by Clause 11 in the first contract,
the arbitration clause in FOSFA-20 contract can be said
to have been incorporated into the contract. It is now
well established that the arbitration clause of an earlier
contract can, by reference, be incorporated into a later
contract provided, however, it is not repugnant to or
inconsistent with the terms of the contract in which it is
incorporated. Mr. G. Ramaswamy, learned Additional
Solicitor General appearing on behalf of the appellant,
has strenuously urged that the High Court was wrong in
holding that the arbitration clause in the FOSFA-20
contract was incorporated into the first contract by
virtue of the incorporation clause. He has drawn our
attention to the second illustration at page 46 of Russell
on Arbitration, Twentieth Edition. The illustration
refers to the decision of Lord Esher M.R. in Hamilton
& Co. v. Mackie & Sons [1889] 5 TLR 677 (C.A.). We
have looked into that decision as much reliance has
been placed thereon on behalf of NAFED. In that case a
bill of lading contained the words "all other terms and
conditions as per charter-party", The charterparty
contained an arbitration clause. It was contended on
behalf of the ship-owners that the arbitration clause in
the charterparty was incorporated into the bill of lading.
In overruling the said contention Lord Esher M.R.
Observed:
Where there was in a bill of lading such a condition as
this, 'all other conditions as per charterparty', it had
been decided that the conditions of the charterparty
must be read verbatim into the bill of lading as though
they were there printed in extenso. Then if it was found
that any of the conditions of the charterparty on being
so read were inconsistent with the bill of lading they
were insensible, and must be disregarded. The bill of
lading referred to the charterparty, and therefore, when
the condition was read in, 'All disputes under this
charter shall be referred to arbitration,' it was clear that
that condition did not refer to disputes arising under the
FAO (OS) No.205/2000 Page 15 of 38
bill of lading, but to disputes arising under the
charterparty. The condition therefore was insensible,
and had no application to the present dispute, which
arose under the bill of lading.
12. Relying upon the decision in The Annefield (1935
All ER Rep 863) , it is submitted on behalf of the
appellant that the arbitration clause in FOSFA-20
contract is not germane to the subject-matter of the first
contract and, accordingly, it was not incorporated into
the first contract. We are unable to accept the
contention. It has already been noticed earlier that there
has been a long continued practice in England that the
arbitration clause is not incorporated into the bill of
lading by general words, unless it is explicitly done in
clear words either in the bill of lading or in the
charterparty. In the instant case, we are not, however,
concerned with a charterparty and a bill of lading
contract. Even assuming that the subject-matters of
FOSFA-20 contract and the f.o.b. contract are different,
we do not think that any question as to the germaneness
of the arbitration clause to the subject-matter would be
relevant. It has been found by the learned Judge of the
High Court that the Manager of NAFED, who had
signed the first contract, was aware of the terms of the
FOSFA-20 contract including the arbitration clause
contained therein. It is, therefore, manifestly clear that
by the incorporation of Clause 11 in the first contract,
the appellant intended to incorporate into it the
arbitration clause of FOSFA-20 contract. Thus where,
as in the instant case, the parties are aware of the
arbitration clause of an earlier contract, the subject-
matter of which is different from the contract which is
being entered into by them, incorporates the terms of
the earlier contract by reference by using general
words, we do not think there would be any bar to such
incorporation merely because the subject-matters of the
two contracts are different, unless, however, the
incorporation of the arbitration clause will be insensible
or unintelligible, as was in Hamilton & Co. v. Mackie &
Sons , (1889 (5) TLR 677) (supra). In the instant case,
the arbitration clause in FOSFA-20 contract will fit in
the first contract. In other words, it will not be either
insensible or unintelligible. In our opinion, therefore,
the High Court was right in holding that the arbitration
FAO (OS) No.205/2000 Page 16 of 38
clause in FOSFA-20 contract was incorporated into the
first contract. (Emphasis supplied)”
It is submitted that the Hon‟ble Supreme court had settled
the issue that FOSFA-20 was incorporated into the contract in the
present case and FOSFA-20 contract clearly provides for the
applicability of the English Law and the arbitration at London.
14. It was submitted that the Preamble to the Rules of
Arbitration clearly provided as follows: -
“Any Dispute arising out of a contract subject to these
Rules, including any questions of law arising in
connection therewith shall be referred to arbitration in
London (or elsewhere if so agreed) which shall be
carried out in accordance with the Arbitration Act,
1950, 1975 and 1979 or any statutory modification re-
enactment thereof for the time being in force.”
Consequently, Section 9 of the Foreign Awards Act was
wholly inapplicable in view of the express conditions agreed upon
by the parties about the applicability of the English Law and the
situs of the Arbitration in London. That in the case of National
Thermal Power Corporation (supra) , there was an express
stipulation that laws of India would apply whereas the stipulation
is to the contrary in the present contract and consequently the said
judgment is wholly inapplicable. Hence, the Arbitration Act, 1940
FAO (OS) No.205/2000 Page 17 of 38
does not apply to the current appeal. The Foreign Awards Act
constitutes a complete code and provides for all contingencies in
relation to foreign awards made in pursuance to the New York
Convention to which it applies as held by the Hon‟ble Supreme
Court in the case of Renusagar Power Compant Ltd. Vs. General
Electric Co., (1984) 4 SCC 679 and Harendra H. Mehta Vs.
Mukesh H. Mehta, (1995) 5 SCC 108 . The Foreign Awards Act
was enacted to give effect to the New York Convention and,
hence, has to be read in the spirit and purpose of the said
Convention to which India is a signatory. The main aim of the
convention was to provide a framework for speedy settlement of
international disputes and thus encourage international trade and
commerce as has also been held in the case of ONGC Vs.
Western Co. of North America, (1987) 1 SCC 496 and
Renusagar Power Co. Ltd. Vs. General Electric Co., (1994) Supp
(1) SCC 644 .
15. The learned senior counsel for the respondent submitted that
the appeal is maintainable on limited grounds in view of sub
section 2 of Section 6 of the Foreign Awards Act. Sub section 2
of Section 6 of the Foreign Awards Act furnishes the grounds on
FAO (OS) No.205/2000 Page 18 of 38
which an appeal lies against the judgment of a Single Judge. Sub
section 2 of Section 6 states that no appeal shall lie except in so far
as the decree is in excess of or not in accordance with the Award.
The Memorandum of Appeal filed by the Appellant itself states as
follows:
“Appeal under Section 6 (2) of the Foreign Awards
Act read with Section 10 of the Delhi High Court Act
against the judgment of Hon‟ble Mr. Justice K.
Ramamoorthy of this Hon‟ble Court dated 28/01/2000
passed in Suit No. 1885(A) of 1993.”
Thus, in view of the above, the present appeal is limited
only to the two grounds provided under sub section 2 of Section 6
of the Foreign Awards Act.
16. He further submitted that the contention is misconceived
that under Clause 10 of the Letters Patent (Lahore), an appeal lies
from an order of a Single Judge of the High Court to a Division
Bench of that Court. This argument overlooks the provision of
Clause 37 of the same Letters Patent, which reads as follows:
“37. Powers of Indian Legislatures Preserved- And we do further
ordain and declare that all the provisions of these Our Letters
patent are subject to the legislative powers of the Governor-
General in Council under Section Seventy One of the Government
of India Act, 1915 and also of the Governor-General in cases of
emergency under section Seventy Two of that Act, and may be in
all respects amended and altered thereby.”
FAO (OS) No.205/2000 Page 19 of 38
He submitted that this Clause has been interpreted in the
following cases by the Hon‟ble Court:
1. UOI Vs. Mohindra Supply Co. AIR 1962 SC 256;
2. State of West Bengal Vs. Gourangalal Chatterjee, (1993) 3 SCC
1 and;
3. Milkfood Ltd. Vs. M/s GMC Ice Cream (P) (2004) 7 SCC 288;
4. Milkfood Ltd. Vs. M/s GMC Ice Cream (P) LPA No.492/2008
th
decided on 17 February, 2003 by the Delhi High Court.
17. In this context he submitted that the Foreign Awards Act is
a special legislation and the Delhi High Court Act and the Civil
Procedure Code are both general law. It is well settled that special
legislation would keep away the application of general law. In the
instant case the matter of appeal against decree on Foreign Award
is specifically dealt with by sub section 2 of Section 6 of the
Foreign Awards Act. The Foreign Awards Act is a special
legislation dealing with enforcement of foreign awards and
therefore the general law dealing with Appeals i.e. Section 10 of
the Delhi High Court Act would have no application.
18. After having considered the rival pleas of Mr. Shanti
Bhushan and Mr. Dholakia, I am of the view that there is merit in
the preliminary objections raised by Sh.S.K. Dholakia about the
maintainability of this appeal in the present form. An analysis of
FAO (OS) No.205/2000 Page 20 of 38
Section 6 shows that once the Court is satisfied that the foreign
award is enforceable under the Foreign Awards Act, which the
learned Single Judge has already held by pronouncing a judgment
affirming the Award, a decree follows as per sub-Section (2) and
no appeal lies from a decree except to contend in appeal that the
decree is in excess of or not in accordance with the award. In
order to consider the plea of Mr. Shanti Bhushan that the appeal
apart from being under sub section 2 of Section 6 of the Foreign
Awards Act is also under Section 10 of the Delhi High Courts Act
and under the letters patent jurisdiction of this Court, and is thus
maintainable, it is necessary to consider the interplay of the
Foreign Awards Act vis-à-vis the Delhi High Courts Act. This
Court is consequently required to notice the position of law laid
down by the Hon‟ble Supreme Court in the case of Renusagar
Power Co. Ltd. (supra) and Harendra H. Mehta vs. Mukesh H.
Mehta (supra) wherein it has been held that the Foreign Awards
Act was enacted to give effect to the New York Convention and
the spirit and purpose of the said Convention was to provide the
framework for the speedy settlement of the international dispute
and thus encourage international trade and commerce as held by
FAO (OS) No.205/2000 Page 21 of 38
the Hon‟ble Supreme Court in the case of ONGC vs. Western
Co. of North America (supra) and Renusagar Power Co. Ltd. vs.
General Electric Co. (supra) .
19. Clause 37 of the Letters Patent indicates that the power of
the Indian Legislature has been preserved and such Letters Patent
is subject to the legislative power exercised by the Parliament.
For this purpose, reference has been made to the decisions in the
case of UOI vs. Mohindra Supply Co. (supra) ; State of West
Bengal vs. Gourangalal Chatterjee (supra) and Milkfood Ltd.
vs. M/s. GMC Ice Cream (P) (supra).
20. Furthermore, this Court cannot lose sight of the fact that the
Foreign Awards Act being a special legislation and the Delhi High
Court Act and the Civil Procedure Code being general legislations,
special legislation has to prevail.
21. In so far as the plea of Mr. Shanti Bhushan, that no party
can be left remediless is concerned, the legislative wisdom appears
to be that such an opportunity is fully available before the learned
Single Judge, but in order to ensure expeditious disposal of the
international commercial disputes, an appellate remedy is only
FAO (OS) No.205/2000 Page 22 of 38
confined to the two grounds referred to in sub-section 2 of Section
6 of the Act.
22. We are also unable to agree with the analogy sought by Mr.
Shanti Bhushan under the provisions of Section 17 and 39 of the
Arbitration Act, 1940 (hereinafter referred to as „the 1940 Act‟).
Undoubtedly, Section 17 of the 1940 Act does indicate that it is
parimateria with the Section 6 of the Act. But in our view, the
fact that Section 39 of the 1940 Act specifically provided for an
appeal without any restrictions, clearly indicates that the analogy,
far from helping the case set up by the appellant, in fact goes
contrary to the plea set up by Mr. Shanti Bhushan. The very fact
that a provision such as Section 39 is not to be found in the
Foreign Awards Act clearly indicates the legislative intention of
circumscribing the scope of the appeal.
23. In our view, the plea of Mr. Shanti Bhushan that Section 9
of the Foreign Awards Act indicates that the Award was governed
by the law of India is wholly unsustainable. The reliance on the
judgment in the case of NTPC (supra) is inappropriate as the said
judgment dealt with an award where the Agreement expressly
provided that the laws of India would apply. In the present case,
FAO (OS) No.205/2000 Page 23 of 38
the agreement between the parties and in particular Section 11 of
the Agreement indicates that FOSFA-20 was to be applied.
Clause 18 of the FOSFA, terms and conditions, clearly indicated
that the Contract was deemed to be made in England and was
specifically stated to be governed in all respects by English law.
In fact subsequent to the judgment of the Hon‟ble Supreme Court
in the case of Alimenta S.A. vs. NAFED (supra) arising from the
present dispute, this argument is no longer open to be raised by the
appellant as the Hon‟ble Supreme Court in paragraph 12 of the
said judgment has clearly held that the arbitration clause in
FOSFA-20 was incorporated into the present contract. Since the
FOSFA-20 contract clearly provided for the applicability of
English law and the arbitration in England, this plea is devoid of
any merit whatsoever and is accordingly rejected. Further reliance
on Section 9 is also unwarranted as sub-section 1 of Section 9 only
speaks of enforcement of an award and not its appealability.
24. Mr. Shanti Bhushan has lastly relied upon the decision in
the case of Vanita M. Khanolkar vs. Pragna M. Pai 1998 (1)
SCC 500 and a subsequent judgment of the Hon‟ble Supreme
Court in the case of P.S. Sathappan (Dead) by L.Rs vs. Andhra
FAO (OS) No.205/2000 Page 24 of 38
Bank Ltd. and others AIR 2004 SC 5152 which approved the
above judgment. The following position of law has been relied
upon by Mr.Shanti Bhushan: -
“it is well settled that any statutory provision barring
an appeal or revision cannot cut across the
constitutional power of the High Court. Even the
power flowing from the paramount charter under
which the High Court functions would not get
excluded unless the statutory enactment concerned
expressly excludes appeals under the Letters Patent.”
25. Reliance has also been placed on the judgment of National
Sewing Thread Co. Ltd. AIR 1953 SC 357 to contend that in the
absence of an express bar even against the letters patent appeal,
the appeal would have been maintainable under letters patent,
even against the second appellate order and consequently there is
no bar in respect of the present appeal.
26. Mr. Dholakia appearing on behalf of the respondent,
however, has relied upon the judgment of the Division Bench of
this Court in the case of RITES Limited vs. JMC Projects
th
(India) Ltd. in FAO(OS) No. 173/2007 decided on 18 March,
2009 which had considered the plea relating to the effect of
Vanita’s case (supra). He has inter alia also relied upon the case
of UOI Vs. Mohindra Supply Co. AIR 1962 SC 256; State of
FAO (OS) No.205/2000 Page 25 of 38
West Bengal Vs. Gourangalal Chatterjee, (1993) 3 SCC 1;
Milkfood Ltd. Vs. M/s GMC Ice Cream (P) (2004) 7 SCC 288;
Milkfood Ltd. Vs. M/s GMC Ice Cream (P) LPA No.492/2008
th
decided on 17 February, 2003. He has submitted that in RITES
Ltd. vs. JMC Projects (supra), a Division Bench of this Court
while considering the effect of the plea based upon Vanita’s case
had rejected it with the following reasoning: -
13. “ The Division Bench also referred to Section 39
of the Arbitration Act 1940 (old Act) which also
contained a similar phraseology. Section 39(1)
of the old Act stated“ “An appeal shall lie from
the following orders passed under this Act (and
from no others)..…. ”. Section 39 of the old Act
was interpreted by the Supreme Court in Union
of India V. Mohindra Supply Co ., AIR 1962
SC 256. The Division bench quoted the relevant
extracts from the Supreme Court decision in
Mohindra Supply Co .(supra). From the
opening words of para 5 of the decision in
Mohindra Supply Co. , it is evident that the
Supreme Court was considering the issue
“ whether the right to appeal under the Letters
Patent is at all restricted by Section 39 Sub-
sections (1) and (2) ”. The Supreme Court in
Mohindra Supply Co . held as follows:-
“5………….Under section 39(1) , an
appeal lies from the orders specified
in that sub-section and from no
others. The legislature has plainly
expressed itself that the right of
appeal against orders passed under
the Arbitration Act may be exercised
only in respect of certain orders. The
right to appeal against other orders is
expressly taken away. If by the
express provision contained in
FAO (OS) No.205/2000 Page 26 of 38
section 39(1) , a right to appeal from
a Judgment which may otherwise be
available under the Letters Patent is
restricted, there is no ground for
holding that clause (2) does not
similarly restrict the exercise of
appellate power granted by the
Letters Patent……..”
14. In para 6, the Supreme Court held:-
“6……….If the order is not one
falling within Section 39(1), no
appeal will evidently
lie…………………..But the right to
appeal is a creature of statute; no
litigant has an inherent right to
appeal against a decision of a Court.
……”
15. While dealing with Section 104 C.P.C, on
which great stress has been laid by the learned
counsel for the appellant, the Supreme Court held in
Para 14:-
“The intention of the legislature in
enacting sub-section (1) of section
104 is clear : the right to appeal
conferred by any other law for the
time being in force is expressly
preserved. This intention is
emphasised by section 4 which
provides that in the absence of any
specific provision to the contrary,
nothing in the Code is intended to
limit or otherwise affect any special
jurisdiction or power conferred by or
under any other law for the time
being in force. The right to appeal
against judgments (which did not
amount to decrees) under the Letters
Patent, was therefore not affected by
section 104(1) of the Code of Civil
Procedure, 1908.”
FAO (OS) No.205/2000 Page 27 of 38
16. The Supreme Court also dealt with the
legislative history of the law relating to arbitration
and in Para 16 held as follows:-
“16. Prior to 1940 the law relating to
contractual arbitration (except in so
far as it was dealt with by the
Arbitration Act of 1899) was
contained in the Code of Civil
Procedure and certain orders passed
by courts in the course of arbitration
proceedings were made appealable
under the Code of 1877 by section
588 and in the Code of 1908 by
section 104 . In 1940, the legislature
enacted Act X of 1940, repealing
schedule 2 and section 104(1) ,
clauses (a) to (f) of the Code of Civil
Procedure, 1908, and the Arbitration
Act of 1899. By section 39 of the
Act, a right of appeal was conferred
upon litigants in arbitration
proceedings only from certain orders
and from no others and the right to
file appeals from appellate orders
was expressly taken away by sub-
section 2 and the clause in section
104 of the Code of 1908 which
preserved the special jurisdiction
under any other law was not
incorporated in section 39 . The
section was enacted in a form which
was absolute and not subject to any
exceptions. It is true that under the
Code of 1908, an appeal did lie under
the Letters Patent from an order
passed by a single Judge of a
Chartered High Court in arbitration
proceedings even if the order was
passed in exercise of appellate
jurisdiction, but the was so, because,
the power of the Court to hear
appeals under a special law for the
time being in operation was
expressly preserved.
FAO (OS) No.205/2000 Page 28 of 38
17. There is in the Arbitration Act no
provision similar to section 4 of the
Code of Civil Procedure which
preserves powers reserved to courts
under special statutes. There is also
nothing in the expression "authorised
by law to hear appeals from original
decrees of the Court" contained in
section 39(1) of the Arbitration Act
which by implication reserves the
jurisdiction under the Letters Patent
to entertain an appeal against the
order passed in arbitration
proceedings. Therefore, in so far as
Letters Patent deal with appeals
against orders passed in
arbitration proceedings, they must
be read subject to the provisions of
section 39 (1) and (2) of the
Arbitration Act .
18. Under the Code of 1908, the right
to appeal under the Letters patent
was saved both by section 4 and the
clause contained in section 104(1) ,
but by the Arbitration Act of 1940,
the jurisdiction of the Court under
any other law for the time being in
force is not saved; the right of
appeal can therefore be exercised
against orders in arbitration
proceedings only under section 39 ,
and no appeal (except an appeal to
this Court) will lie from an
appellate order.
19. There is no warrant for assuming
that the reservation clause in section
104 of the Code of 1908 was as
contended by counsel for the
respondents, "superfluous" or that its
"deletion from section 39(1) has not
made any substantial difference" :
the clause was enacted with a view to
do away with the unsettled state of
the law and the cleavage of opinion
FAO (OS) No.205/2000 Page 29 of 38
between the Allahabad High Court
on the one hand and Calcutta,
Bombay and Madras High Courts on
the other on the true effect of section
588 of the Code of Civil Procedure
upon the power conferred by the
Letters Patent. If the legislature
being cognizant of this difference
of opinion prior to the Code of
1908 and the unanimity of opinion
which resulted after the
amendment, chose not to include
the reservation clause in the
provisions relating to appeals in
the Arbitration Act of 1940, the
conclusion is inevitable that it was
so done with a view to restrict the
right of appeal within the strict
limits defined by section 39 and to
take away the right conferred by
other statutes. The Arbitration Act
which is a consolidating and
amending Act, being substantially
in the form of a code relating to
arbitration must be construed
without any assumption that it was
not intended to alter the law
relating to appeals. The words of
the statute are plain and explicit
and they must be given their full
effect and must be interpreted in
their natural meaning,
uninfluenced by any assumptions
derived from the previous state of
the law and without any
assumption that the legislature
must have intended to leave the
existing law unaltered. In our view
the legislature has made a
deliberate departure from the law
prevailing before the enactment of
Act X of 1940 by codifying the law
relating to appeals in section 39 .”
(emphasis supplied)
FAO (OS) No.205/2000 Page 30 of 38
17. It is, therefore, clear that no appeal could be
maintained from an order of the Court passed under
the old Act, by resort either to the Letters Patent or
Section 104 CPC, unless the same fell within
Section 39 of the old Act, even though the order
passed by the Court may qualify as being a
“judgment” within the meaning ascribed to that
term in Shah Babulal Khimji (supra). The Act,
having adopted the same terminology in so far as it
defines the scope of the right to appeal against the
orders of the Court passed under the Act, as used in
the old Act, in our view the decision in Mohindra
Supply Co. (supra) is squarely applicable, and resort
cannot be had by the appellant to either the Letters
Patent or Section 104 of the CPC to maintain the
present appeal.
18. The Division Bench in Canbank Financial
Services Ltd (supra) also took note of the decision
of a Full Bench of this Court in Union of India v. A.
S. Dhupia , AIR 1972 Delhi 108 which held that
Section 10(1) of the Delhi High Court Act 1966
provides only a forum of appeal. It cannot be
construed to mean that Section 10(1) of the Delhi
High Court Act confers an unfettered right of appeal
without any limitation on a party. The Full Bench
held:
“….The Act is a specific Code
dealing with the arbitration matters
and Section 39(1) is a special
provision indicating the orders which
alone are appealable. It is wrong,
therefore, to say that Section 10 of
the Act of 1966 which only provides
for a forum of appeal is special
provision and will override Section
39(1) of the Act…”
19. The Division Bench in Canbank Financial
Services Ltd (supra) also took notice of another
decision of a Division Bench of this Court in
Banwari Lal Radhey Mohan, Delhi v. The Punjab
State Co-operative Supply and Marketing
Federation Ltd., AIR 1983 Delhi 402, which in turn
had considered the decision of the Supreme Court in
FAO (OS) No.205/2000 Page 31 of 38
Shah Babulal Khimji (supra). In Banwari Lal
(supra), the Division Bench held as follows:-
“Section 39 of the Arbitration Act in
terms says that no other orders would
be appelable except those specified
in the section. Therefore, on the
ratio of Shah Babulal Khimji’s case ,
which approves the rule enunciated
by the Judicial committee of the
Privy Council in Chowdry’s case ,
(1882) 10 1nd App 4, it has to be
held that no appeal is competent
from the judgment under appeal
before us. Indeed, if we are to read
paras 33 and 34 of the judgment in
Shah Babulal Khimji’s case it would
become apparent that the Supreme
Court while upholding the right of
first appeal against judgment of a
Trial Judge from orders from which
appeal is permissible under Section
39 of the Arbitration Act impliedly
also held that the provisions of
Section 39 of the Arbitration Act
would apply in appeals from orders
from which appeal is permissible
under Section 39 or was
impermissible. Their Lordships in
Shah Babulal Khimji’s case, a
decision rendered by a Division
Bench of the Supreme Court
comprising of three Hon‟ble Judges,
noticed with approval the decision of
the Supreme Court in the Mohindra
Supply Co.’s case, AIR 1962 SC
256, given by a Bench of four
Hon'ble Judges. As noticed earlier,
maintainability of an appeal from
an order amounting to a judgment
from which appeal is not
permissible on a reading of Section
39 of the Arbitration Act was
specifically ruled out in Mohindra
FAO (OS) No.205/2000 Page 32 of 38
Supply Co.’s case. We are bound
by that decision.”
(emphasis supplied).”
27. In my view, the above judgment squarely deals with Vanita
M. Khanolkar’s case (supra) cited by Sh. Shanti Bhushan and we
are bound by the view taken in the above Division Bench
judgment and are, therefore, unable to accede to the plea of Mr.
Shanti Bhushan relying on Vanita M. Khanolkar’s case. This
Court cannot lose sight of the fact that in respect of the Arbitration
Act of 1940 the Hon‟ble Supreme Court in Mohinder Supply
Co.’s case clearly held that the exercise of the Letters Patent
jurisdiction in respect to appeals in arbitration cases is subject to
Section 39 of the Arbitration Act, 1940.
28. There are two aspects which arise in this matter. One is the
right of appeal and the second is the scope of appeal. A combined
reading of Section 17 and Section 39 of the Arbitration Act, 1940
is than an appeal lies against an order making the award a rule of
the court, but the scope of hearing before the appellate court is
restricted to whether the judgment of the learned Single Judge
(and the administrative act of the Registrar in drawing a decree in
FAO (OS) No.205/2000 Page 33 of 38
terms of the judgment of the learned Single Judge) is in excess of
or not in accordance with the award.
29. The Full Bench judgment of this Court in Milkfood Food
Ltd. vs. M/s. GMC Icre Creams (P) Ltd. & Ors. in LPA No.
th
492 of 1998 decided on 17 February, 2003 and as approved by
the Supreme Court in Milkfood Ltd. vs. M/s. GMC Ice Cream
(P) Ltd. JT 2004 (4) SC 393 holds that no appeal lies except on
the subject matters provided under Section 39. The Milkfood
decision follows the line of reasoning of the Constitution Bench
decision of the Supreme Court in Mohindra Supply’s case . These
judgments hold that where no appeal is provided under the Special
Act i.e. the Arbitration Act, 1940 then the appeal cannot be filed
under the Letters Patent as there is no express provision in the
Arbitration Act, 1940 which preserves such jurisdiction. The
conclusion is inevitable that it was done with a view to restrict the
right of appeal in arbitration proceedings within the strict limits
defined by Section 39 of the Arbitration Act, 1940 and to take
away the rights conferred by other statutes.
30. A reading of sub section 2 of Section 6 of the Foreign
Awards Act does not bar or prohibit the filing of an appeal but
FAO (OS) No.205/2000 Page 34 of 38
only restricts the scope thereof. In fact, sub section 2 of Section 6
does not bar an appeal but in fact allows an appeal, though
restricting its scope. Therefore, as there is no bar in filing of an
appeal, the decisions of Mohindra Supply’s case and Milkfood
case will not bar the filing of an appeal before the Division Bench
under sub section 2 of Section 6 of the Foreign Awards Act but it
is evident that the appeal can only be filed limited to the ground
that the decree was in excess of or not in accordance with the
award.
th
31. The learned Single Judge by his order dated 28 January,
2000 pronounced a judgment and allowed the petition which inter
alia prayed for the following reliefs: -
(a) to order that the Award of arbitration dated
th
15 November, 1989 and/confirmed by the Appeal
Award dated 14.9.90 by the Board of Appeal of
Federation of Oil Seeds and Fats Association Ltd.
(FOSFA) (Annexure B & C hereto) be filed in this
Hon‟ble Court.
(b) pronounce judgment according to the Award
and pass a decree upon judgment being so
pronounced.
The learned Single Judge allowed the petition after
dismissing the applications filed by the appellant and thereby
FAO (OS) No.205/2000 Page 35 of 38
directed the Registry to prepare a decree in terms of the above
order.
32. In my view, the Foreign Awards Act, 1961 applies to the
award and the dispute in question. The Foreign Awards Act
constitutes a complete code and provides for all contingencies in
relation to foreign awards made in pursuance of the New York
Convention to which it applies. Section 6 of the Foreign Awards
Act provides that the appeal against a decree is limited only to the
two grounds provided under sub section 2 of Section 6. The
initial part of the said sub-section 2 provides that upon the
judgment so pronounced, a decree shall follow which had to be
read in conjunction with sub-section 1 of the Section 6. A perusal
of Section 6 clearly postulates that once the Court is satisfied that
the foreign award is enforceable under this Act, the Court, that is,
the Single Judge, shall order the Award to be filed and proceed to
pronounce judgment according to the award and upon the
judgment so pronounced, a decree shall follow. The appeal
against such decree prepared after the judgment has been
pronounced would be limited to the grounds mentioned in sub-
section 2 of Section 6. However, when sub section 2 of Section 6
FAO (OS) No.205/2000 Page 36 of 38
specifically limits the scope of the appeal even against the decree,
and does not refer to the appealability of the judgment, to permit
the judgment to be appealed against by resort to the Letters Patent
jurisdiction would defeat the legislative mandate of the limited
nature of appeal provided by sub section 2 of Section 6, that too
only against the decree on specified grounds. Thus, this Court is
unable to accede to the plea of Sh. Shanti Bhushan that the fact
that an appeal against the judgment has not been mentioned in
Section 6 should lead to an inference that such an appeal against
the judgment was permitted under the Letters Patent jurisdiction.
In my view, the exclusion of appeal against a judgment in Section
6 is a considered omission by the legislature and this Court cannot
accept the plea that such an omission implied the maintainability
of an appeal beyond the Act. When both judgment and decree are
mentioned in sub-section 2 of Section 6 and yet an appeal is only
provided in a constricted manner against the decree alone, there
cannot be a better indication of the legislative intent to exclude
any appeal against the judgment.
33. It would be an extremely anomalous situation if the decree
was to be appealable in a limited manner under the Foreign
FAO (OS) No.205/2000 Page 37 of 38
Awards Act and the judgment could, under the Letters Patent
jurisdiction, be appealed without reservations. This, in my view,
would completely defeat the legislative intent which was to give
effect to the New York Convention for the speedy settlement of
international disputes.
34. Accordingly, there is no merit in the pleas of Mr. Shanti
Bhushan. The preliminary objections of Mr. Dholakia succeed
and the appeal is consequently dismissed as not maintainable on
pleas of merits sought to be raised, particularly when it was not
urged before us during arguments that the appeal falls within the
restricted scope of sub section 2 of Section 6 of the Foreign
Awards Act i.e. that the decree was in excess of or not in
accordance with the Award.
( MUKUL MUDGAL)
JUDGE
July 10, 2009
sk
FAO (OS) No.205/2000 Page 38 of 38
+ FAO(OS) NO. 205/2000
Reserved on : April 02, 2009
Date of Decision : July 10, 2009
National Agricultural Marketing Federation of India Ltd.
...Appellant
Mr.Shanti Bhushan, Sr. Advocate
Through :
and Mr. T.K. Ganju, Sr. Advocate,
with Mr. A.T. Patra, Mr. Ajay K.
Thacker, Ms. Roopa Dayal and
Ms. Aradhna Patra, Advocates.
Versus
Alimenta S.A. .....Respondent
Through : Mr. Mr. S.K. Dholakia, Sr.
Advocate, with Mr. Shailendra
Swarup, Ms. Bindu Saxena, Ms.
Aparajita Swarup, Ms. Neha Khattar
ad Mr. Vyom Bansal, Advocates.
CORAM:
HON'BLE MR. JUSTICE MUKUL MUDGAL
HON'BLE MR. JUSTICE VIPIN SANGHI
1. Whether the Reporters of local papers may be allowed to see
the judgment? YES
2. To be referred to the Reporter or not? YES
3. Whether the judgment should be reported in the Digest? YES
FAO (OS) No.205/2000 Page 1 of 38
JUDGMENT
: MUKUL MUDGAL,J.
th
1. This is an appeal against the order dated 28 January, 2000
passed in Suit No. 1885/1993 by the learned Single Judge
pronouncing a judgment on applications no. 1540/1996 and
2562/1996 filed by the appellant under Section 5 of the Foreign
Awards (Recognition and Enforcement) Act, 1961 (hereinafter
referred to as „the Foreign Awards Act‟) by which the objections
th
preferred by the appellant to the award dated 15 November, 1989
by the Federation of Oil Seeds and Fats Association Ltd. (for short
„FOSFA‟) were dismissed and the petition was allowed.
2. Sh. S.K. Dholakia, the learned Senior Counsel for the
respondent has raised a preliminary objection to the
maintainability of the appeal in the present form. For this
purpose, he has relied upon the provisions of Section 6 of the
Foreign Awards Act to contend that the appeal can lie only on the
issue that the decree consequent to the judgment of the learned
Single Judge is in excess of or not in accordance with the award.
He has submitted that save and except the above pleas, no other
FAO (OS) No.205/2000 Page 2 of 38
grounds are available to the appellant. Section 6 of the said Act,
reads as follows: -
“6. Enforcement of foreign award .—(1) Where the
Court is satisfied that the foreign award is enforceable
under this Act, the Court shall order the award to be
filed and shall proceed to pronounce judgment
according to the award.
(2) Upon the judgment so pronounced a decree shall
follow, and no appeal shall lie from such decree except
in so far as the decree is in excess of or not in
accordance with the award.
(emphasis supplied)”
3. Mr. Shanti Bhushan, the learned Senior counsel appearing
on behalf of the appellant, in reply to the above preliminary
objection has submitted that the appeal is under sub section 2 of
Section 6 of the Foreign Awards Act read with Section 10 of the
Delhi High Court Act, 1966 and is thus also under the Letters
Patent jurisdiction of this Court. He has further submitted that
while an appeal against a decree, subsequent to the
pronouncement of the judgment by the learned Single Judge may
be barred under Section 6 to the extent proscribed in sub-section
(2), nevertheless, such a judgment is certainly appealable under
the letters patent jurisdiction of this Court. He has, therefore,
submitted that the Foreign Awards Act consciously makes a
FAO (OS) No.205/2000 Page 3 of 38
difference between a „judgment‟ and the „decree‟ and the court
must give a meaningful effect to the said legislative intent. His
plea is based upon the premise that no party can be left remediless
and if the judgment is flawed then it would be a travesty of justice
if an error in such a judgment is not amenable to correction in
appeal. He has, in particular, relied upon Section 17 and 39 of the
Arbitration Act, 1940 (hereinafter referred to as to „the Arbitration
Act, 1940‟) which read as follows: -
“17. Judgment in terms of award .—Where the Court
sees no cause to remit the award or any of the matters
referred to arbitration for reconsideration or to set aside
the award, the Court shall, after the time for making an
application to set aside the award has expired, or such
application having been made, after refusing it, proceed
to pronounce judgment according to the award, and
upon the judgment so pronounced a decree shall follow,
and no appeal shall lie from such decree except on the
ground that it is in excess of, or not otherwise in
accordance with the award.
39. Appealable orders .—(1) An appeal shall lie from
the following orders passed under this Act (and from no
others) to the Court authorized by law to hear appeals
from original decrees of the Court passing the order:
An order—
(i) superseding an arbitration;
(ii) on an award stated in the form of a
special case;
(iii) modifying or correcting an award;
(iv) filing or refusing to file an arbitration
agreement;
(v) staying or refusing to stay legal
proceedings where there is an arbitration
agreement;
(vi) setting aside or refusing to set aside an
award:
FAO (OS) No.205/2000 Page 4 of 38
Provided that the provisions of this section shall not
apply to any order passed by a Small Cause Court.
(2) No second appeal shall lie from an order passed in
appeal under this section, but nothing in this section
shall affect or take away any right to appeal to the
Supreme Court.”
4. He has submitted that Section 17 of the Arbitration Act,
1940 is analogous and similar to Section 6 of the Foreign Awards
Act in so much as it restricts the nature of the appeal against the
decree to the issue of whether such a decree is in excess or not in
accordance with the award. He has further relied on Section 39 of
the Arbitration Act, 1940 to submit that inspite of the existence of
Section 17 restricting the scope of the appeal against a decree to a
limited extent under Section 39, the provision of appeal was
specifically made available against the judgment of the learned
Single Judge setting aside or refusing to set aside an award. It is
submitted that in the present appeal, admittedly appeal to a
Division Bench is not against the decree made under sub section 2
of Section 6 of the Foreign Awards Act but against the
order/judgment made under sub section 1 of Section 6 and as
such, it is not an appeal circumscribed by the provisions of said
sub section 2 of Section 6.
FAO (OS) No.205/2000 Page 5 of 38
5. He thus submitted that the analogy discernible from the
Arbitration Act, 1940 makes it evident that since an appeal against
the judgment of the learned Single Judge affirming the award and
dismissing the objections was available in respect of such
judgments affirming the award under the 1940 Arbitration Act, a
similar appeal should also inferred to be inferred to be available
under the Foreign Awards Act.
6. Mr. Shanti Bhushan has also relied upon Section 9 of the
Foreign Awards Act, which reads as follows: -
“9. Saving .—Nothing in this Act shall—
( a ) prejudice any rights which any person
would have had of enforcing in India of any
award or of availing himself in India of any
award if this Act had not been passed; or
( b ) apply to any award made on an arbitration
agreement governed by the law of India.”
7. He, therefore, submits that even if it is assumed that Section
6 of the Foreign Awards Act is construed according to the pleas of
the learned counsel for the respondent, nevertheless, in view of the
provisions of Section 9 of the Foreign Awards Act, an appeal
would still be maintainable. He has submitted that the Foreign
Awards Act, as per the mandate of Section 9(b) will not apply to
FAO (OS) No.205/2000 Page 6 of 38
an award made on an arbitration agreement governed by the law
of India and for this purpose has relied upon the judgment of the
Hon‟ble Supreme Court in the case of National Thermal Power
Corporation vs. The Singer Company and others AIR 1993 SC
998 . He has pointed out various provisions of the Agreement
between the parties to submit that the contract was signed in
Delhi, shipment was to be from Saurashtra Port and letters of
credit were to be released by a Bank in India and was to be
received by the Bombay officer prior to the arrival of the loaded
goods. He submitted that the contract clearly indicated that the
contract was to be performed in India. He, therefore, submitted
that since the contract was to be performed in India, the provisions
of the contract, in so far as it pertained to the payment to be made
outside India and the plea of the respondent that the English law
applied, would make such an award contrary to the public policy
of India and thus challengeable in this Court in appeal. His plea is
based on the premise that the Foreign Awards Act does not apply
to any award made on an Arbitration Agreement governed by the
law of India and this was evident from a perusal of the various
clauses of the Agreement between the parties.
FAO (OS) No.205/2000 Page 7 of 38
8. Mr. Shanti Bhushan has also placed reliance on paragraphs
14, 38 and 52 of the aforesaid judgment in the case of NTPC
(supra) which read as under: -
“14. The expressed intention of the parties is generally
decisive in determining the proper law of the contract.
The only limitation on this rule is that the intention of
the parties must be expressed bona fide and it should
not be opposed to public policy. In the words of Lord
Wright:
“...where there is an express statement by the
parties of their intention to select the law of the
contract, it is difficult to see what qualifications
are possible, provided the intention expressed is
bona fide and legal, and provided there is no
reason for avoiding the choice on the ground of
public policy....”
Vita Food Products Inc. v. Unus Shipping Co. Ltd.,
(1939) AC 277, 290(PC).
38. An award is 'foreign' not merely because it is made
in the territory of a foreign State, but because it is made
in such a territory on an arbitration agreement not
governed by the law of India. An award made on an
arbitration agreement governed by the law of India,
though rendered outside India, is attracted by the saving
clause in Section 9 of the Foreign Awards Act and is,
therefore, not treated in India as a 'foreign award'.
52. All substantive rights arising under the agreement
including that which is contained in the arbitration
clause are, in our view, governed by the laws of India.
In respect of the actual conduct of arbitration, the
procedural law of England may be applicable to the
extent that the ICC Rules are insufficient or repugnant
to the public policy or other mandatory provisions of
the laws in force in England. Nevertheless, the
jurisdiction exercisable by the English courts and the
applicability of the laws of that country in procedural
matters must be viewed as concurrent and consistent
with the jurisdiction of the competent Indian courts and
FAO (OS) No.205/2000 Page 8 of 38
the operation of Indian laws in all matters concerning
arbitration in so far as the main contract as well as that
which is contained in the arbitration clause are
governed by the laws of India.”
9. In particular, emphasis has been placed on paragraph 52 of
the said judgment by Sh. Shanti Bhushan to contend that the
principle laid down in the above paragraphs applied squarely to
the facts of the present case and consequently, the agreement was
clearly governed by the law of India, thereby making the Foreign
Awards Act inapplicable. He, thus, said that once the Foreign
Awards Act was inapplicable, the bar under Section 6 of the
Foreign Awards Act was not applicable in appeal, certainly
maintainable under Section 10 of the Delhi High Court Act.
10. The learned senior counsel submitted that the appeal is
maintainable, de hors and inspite of the provisions of sub section 2
of Section 6 of the Foreign Awards Act. Provisions of Section 6 of
the Foreign Awards Act are pari-materia with Section 17 of the
Arbitration Act, 1940. Inspite of such provision in Section 17 of
the Arbitration Act, 1940, that “no appeal shall lie from such
decree, except on the ground that it is in excess or not otherwise in
accordance with the Award”; a judgment and order rejecting the
FAO (OS) No.205/2000 Page 9 of 38
objections to enforce and award occasioning such decree is
appealable even if there is no separate order refusing to set aside
the Award and the order is a composite one. In that view of the
matter, there is no reason why an order under sub section 1 of
Section 6 ordering the Award to be filed and proceeding to
pronounce judgment according to the Award cannot be appealed
against merely because a decree has followed upon such
judgment. In fact, sub-section 2 of Section 6 of the Foreign
Awards Act is no different from the provisions of Section 17 of
the Arbitration Act, 1940. It is no doubt true that the Arbitration
Act, 1940 itself in Section 39(1) (vi) provides for an appeal
against the order refusing to set aside an Award. This however,
does not bring in any material difference. It is only when there is
no express provision of appeal in the relevant statute that the
provision of Letters Patent/ High Court Act are resorted to. The
learned Senior counsel further submitted that even in the absence
of any provision like Section 39(1) (vi) of the Arbitration Act,
1940, appeal from an order under sub section 1 of Section 6 of the
Foreign Awards Act passed by learned Single Judge of the High
Court shall lie to a Division Bench under Letters Patent and/or
FAO (OS) No.205/2000 Page 10 of 38
under Section 10 of the Delhi High Court Act. The Hon‟ble
Supreme Court has in fact, in the case of Vanita M Khanolkar
1998 (1) SCC 500 gone to the extent of holding that an appeal
under Letters Patent Appeal or an Act, establishing a High Court,
unless expressly excluded by the Statute will lie, even if the
Statute otherwise bars an appeal; thus mere barring of an appeal in
a Statute without expressly excluding Letters Patent Appeal will
not necessarily exclude a Letters Patent Appeal. It is held therein
that “it is well settled that any statutory provision barring an
appeal or revision cannot cut across the constitutional power of
the High Court. Even the power flowing from the paramount
charter under which the High functions would not get excluded
unless the statutory enactment concerned expressly excludes
appeals under the Letters Patent”. The said judgment has been
approved by a Constitution Bench of 5 Hon‟ble Judges of the
Hon‟ble Supreme Court in the case of P.S. Sathappan vs.
Andhra Bank Ltd. reported in AIR 2004 SC 5152 . Even in 1953,
a bench of 3 Hon‟ble Judges in National Sewing Thread Co. Ltd. ,
reported in AIR 1953 SC 357 held that when a question is stated
to be referred to an established Court, without more than ordinary
FAO (OS) No.205/2000 Page 11 of 38
incidents of procedure of that Court including the right to appeal
from its decision will get attracted. Accordingly, Clause 15 of the
Letters Patent was held applicable to decisions of the Single Judge
of the High Court exercising jurisdiction under the Trade Marks
Act, even though under the said Act, no such appeal was provided.
In fact, even in the case of Shah Babulal Khimji reported in AIR
1981 SC 1786 a judgment of the bench of three Hon‟ble Judges
also supports the view that right of appeal under Letters Patent is
not affected by other statutory provisions relating to appeal.
Parliament is conscious of such legal position and accordingly
while providing for a bar of an appeal against an order passed in
second appeal, Section 100A CPC expressly stipulates as under:
“Notwithstanding anything contained in any Letters Patent
for any High Court or in any other instrument having the
force of law or in any other law for the time being
inforce…..”
In the absence of such express bar even against a Letters
Patent Appeal, Appeal would have been maintainable under
Letters Patent even against a second Appellate Order.
11. In reply to the pleas of Mr. Shanti Bhushan as to the
maintainability of the appeal, Sh. S.K. Dholakia, the learned
FAO (OS) No.205/2000 Page 12 of 38
Senior counsel for the respondent submitted in rejoinder that it is
necessary to peruse Section 2(2) i.e. the definition of „decree‟;
Section 2(9) i.e. the definition of „judgment and Order 20 of the
Code of Civil Procedure, providing for judgments and decree. He
first dealt with the plea of Mr. Shanti Bhushan about the
Agreement being governed by the laws of India and has pointed
out clause 11 of the Agreement between the parties which reads as
follows: -
“11 Other terms/conditions as per FOSFA 20
contract terms.”
12. He has consequently relied upon clauses 18 and 20 of the
FOSFA contract terms which read as follows: -
“18. DOMICILE: This contract shall be deemed to
have been made in England and the construction,
validity and performance thereof shall be governed in
all respects by English law. Any dispute arising out of
or in connection therewith shall be submitted to
arbitration in accordance with the Rules of the
Federation. The serving of proceedings upon any party
by sending same to their last known address together
with leaving a copy of such proceedings at the offices
of the Federation shall be deemed good service, rule of
law or equity to the contrary notwithstanding.
19. U.L.I.S. The Uniform Law on Sales and the
Uniform Law on Formation to which effect is given by
the Uniform Laws on International Sales Act, 1967
shall not apply to this contract.
20. ARBITRATION: Any dispute arising out of
this contract, including any question of law arising in
FAO (OS) No.205/2000 Page 13 of 38
connection therewith, shall be referred to arbitration in
London (or elsewhere if so agreed) in accordance with
the Rules of Arbitration and Appeal of the Federation
of Oils, Seeds and Fats Association Limited, in force at
the date of this contract and of which both parties
hereto shall be deemed to be cognizant.
Neither party hereto, nor any person claiming
under either of them in respect of any such dispute until
such dispute shall first have been heard and determined
by the arbitrators, umpire or Board of Appeal (as the
case may be) in accordance with the Rules of
Arbitration and appeal of the Federation, and it is
hereby expressly agreed and declared that the obtaining
of any Award from the arbitrators, umpire or Board of
Appeal (as the case may be), shall be condition
precedent to the right of either party hereto or of any
person claiming under wither of them to bring any
action or other legal proceedings against the either of
them in respect of any such dispute.
(emphasis supplied)”
13. Mr. Dholakia submits that these clauses make it clear that
the English Law was expressly made applicable and the arbitration
was required to take place in London as per rules of arbitration
and appeal of the FOSFA. He, therefore, stated that it was not
open to the appellants to contend that inspite of such specifically
expressed intention of the parties; the agreement was governed by
the laws of India. He further submitted that in the case of
Alimenta S A vs. NAFED 1987 (1) SCC 615 which was an
appeal against the order of the learned Single Judge of this Court,
the issue of applicability of FOSFA-20 was clearly settled by the
FAO (OS) No.205/2000 Page 14 of 38
Hon‟ble Supreme Court in the following terms set out in
paragraphs 7 and 12 of the judgment which reads as follows: -
“7. We may at first deal with the appeal preferred by
the appellant NAFED relating to the first contract. The
question is whether by Clause 11 in the first contract,
the arbitration clause in FOSFA-20 contract can be said
to have been incorporated into the contract. It is now
well established that the arbitration clause of an earlier
contract can, by reference, be incorporated into a later
contract provided, however, it is not repugnant to or
inconsistent with the terms of the contract in which it is
incorporated. Mr. G. Ramaswamy, learned Additional
Solicitor General appearing on behalf of the appellant,
has strenuously urged that the High Court was wrong in
holding that the arbitration clause in the FOSFA-20
contract was incorporated into the first contract by
virtue of the incorporation clause. He has drawn our
attention to the second illustration at page 46 of Russell
on Arbitration, Twentieth Edition. The illustration
refers to the decision of Lord Esher M.R. in Hamilton
& Co. v. Mackie & Sons [1889] 5 TLR 677 (C.A.). We
have looked into that decision as much reliance has
been placed thereon on behalf of NAFED. In that case a
bill of lading contained the words "all other terms and
conditions as per charter-party", The charterparty
contained an arbitration clause. It was contended on
behalf of the ship-owners that the arbitration clause in
the charterparty was incorporated into the bill of lading.
In overruling the said contention Lord Esher M.R.
Observed:
Where there was in a bill of lading such a condition as
this, 'all other conditions as per charterparty', it had
been decided that the conditions of the charterparty
must be read verbatim into the bill of lading as though
they were there printed in extenso. Then if it was found
that any of the conditions of the charterparty on being
so read were inconsistent with the bill of lading they
were insensible, and must be disregarded. The bill of
lading referred to the charterparty, and therefore, when
the condition was read in, 'All disputes under this
charter shall be referred to arbitration,' it was clear that
that condition did not refer to disputes arising under the
FAO (OS) No.205/2000 Page 15 of 38
bill of lading, but to disputes arising under the
charterparty. The condition therefore was insensible,
and had no application to the present dispute, which
arose under the bill of lading.
12. Relying upon the decision in The Annefield (1935
All ER Rep 863) , it is submitted on behalf of the
appellant that the arbitration clause in FOSFA-20
contract is not germane to the subject-matter of the first
contract and, accordingly, it was not incorporated into
the first contract. We are unable to accept the
contention. It has already been noticed earlier that there
has been a long continued practice in England that the
arbitration clause is not incorporated into the bill of
lading by general words, unless it is explicitly done in
clear words either in the bill of lading or in the
charterparty. In the instant case, we are not, however,
concerned with a charterparty and a bill of lading
contract. Even assuming that the subject-matters of
FOSFA-20 contract and the f.o.b. contract are different,
we do not think that any question as to the germaneness
of the arbitration clause to the subject-matter would be
relevant. It has been found by the learned Judge of the
High Court that the Manager of NAFED, who had
signed the first contract, was aware of the terms of the
FOSFA-20 contract including the arbitration clause
contained therein. It is, therefore, manifestly clear that
by the incorporation of Clause 11 in the first contract,
the appellant intended to incorporate into it the
arbitration clause of FOSFA-20 contract. Thus where,
as in the instant case, the parties are aware of the
arbitration clause of an earlier contract, the subject-
matter of which is different from the contract which is
being entered into by them, incorporates the terms of
the earlier contract by reference by using general
words, we do not think there would be any bar to such
incorporation merely because the subject-matters of the
two contracts are different, unless, however, the
incorporation of the arbitration clause will be insensible
or unintelligible, as was in Hamilton & Co. v. Mackie &
Sons , (1889 (5) TLR 677) (supra). In the instant case,
the arbitration clause in FOSFA-20 contract will fit in
the first contract. In other words, it will not be either
insensible or unintelligible. In our opinion, therefore,
the High Court was right in holding that the arbitration
FAO (OS) No.205/2000 Page 16 of 38
clause in FOSFA-20 contract was incorporated into the
first contract. (Emphasis supplied)”
It is submitted that the Hon‟ble Supreme court had settled
the issue that FOSFA-20 was incorporated into the contract in the
present case and FOSFA-20 contract clearly provides for the
applicability of the English Law and the arbitration at London.
14. It was submitted that the Preamble to the Rules of
Arbitration clearly provided as follows: -
“Any Dispute arising out of a contract subject to these
Rules, including any questions of law arising in
connection therewith shall be referred to arbitration in
London (or elsewhere if so agreed) which shall be
carried out in accordance with the Arbitration Act,
1950, 1975 and 1979 or any statutory modification re-
enactment thereof for the time being in force.”
Consequently, Section 9 of the Foreign Awards Act was
wholly inapplicable in view of the express conditions agreed upon
by the parties about the applicability of the English Law and the
situs of the Arbitration in London. That in the case of National
Thermal Power Corporation (supra) , there was an express
stipulation that laws of India would apply whereas the stipulation
is to the contrary in the present contract and consequently the said
judgment is wholly inapplicable. Hence, the Arbitration Act, 1940
FAO (OS) No.205/2000 Page 17 of 38
does not apply to the current appeal. The Foreign Awards Act
constitutes a complete code and provides for all contingencies in
relation to foreign awards made in pursuance to the New York
Convention to which it applies as held by the Hon‟ble Supreme
Court in the case of Renusagar Power Compant Ltd. Vs. General
Electric Co., (1984) 4 SCC 679 and Harendra H. Mehta Vs.
Mukesh H. Mehta, (1995) 5 SCC 108 . The Foreign Awards Act
was enacted to give effect to the New York Convention and,
hence, has to be read in the spirit and purpose of the said
Convention to which India is a signatory. The main aim of the
convention was to provide a framework for speedy settlement of
international disputes and thus encourage international trade and
commerce as has also been held in the case of ONGC Vs.
Western Co. of North America, (1987) 1 SCC 496 and
Renusagar Power Co. Ltd. Vs. General Electric Co., (1994) Supp
(1) SCC 644 .
15. The learned senior counsel for the respondent submitted that
the appeal is maintainable on limited grounds in view of sub
section 2 of Section 6 of the Foreign Awards Act. Sub section 2
of Section 6 of the Foreign Awards Act furnishes the grounds on
FAO (OS) No.205/2000 Page 18 of 38
which an appeal lies against the judgment of a Single Judge. Sub
section 2 of Section 6 states that no appeal shall lie except in so far
as the decree is in excess of or not in accordance with the Award.
The Memorandum of Appeal filed by the Appellant itself states as
follows:
“Appeal under Section 6 (2) of the Foreign Awards
Act read with Section 10 of the Delhi High Court Act
against the judgment of Hon‟ble Mr. Justice K.
Ramamoorthy of this Hon‟ble Court dated 28/01/2000
passed in Suit No. 1885(A) of 1993.”
Thus, in view of the above, the present appeal is limited
only to the two grounds provided under sub section 2 of Section 6
of the Foreign Awards Act.
16. He further submitted that the contention is misconceived
that under Clause 10 of the Letters Patent (Lahore), an appeal lies
from an order of a Single Judge of the High Court to a Division
Bench of that Court. This argument overlooks the provision of
Clause 37 of the same Letters Patent, which reads as follows:
“37. Powers of Indian Legislatures Preserved- And we do further
ordain and declare that all the provisions of these Our Letters
patent are subject to the legislative powers of the Governor-
General in Council under Section Seventy One of the Government
of India Act, 1915 and also of the Governor-General in cases of
emergency under section Seventy Two of that Act, and may be in
all respects amended and altered thereby.”
FAO (OS) No.205/2000 Page 19 of 38
He submitted that this Clause has been interpreted in the
following cases by the Hon‟ble Court:
1. UOI Vs. Mohindra Supply Co. AIR 1962 SC 256;
2. State of West Bengal Vs. Gourangalal Chatterjee, (1993) 3 SCC
1 and;
3. Milkfood Ltd. Vs. M/s GMC Ice Cream (P) (2004) 7 SCC 288;
4. Milkfood Ltd. Vs. M/s GMC Ice Cream (P) LPA No.492/2008
th
decided on 17 February, 2003 by the Delhi High Court.
17. In this context he submitted that the Foreign Awards Act is
a special legislation and the Delhi High Court Act and the Civil
Procedure Code are both general law. It is well settled that special
legislation would keep away the application of general law. In the
instant case the matter of appeal against decree on Foreign Award
is specifically dealt with by sub section 2 of Section 6 of the
Foreign Awards Act. The Foreign Awards Act is a special
legislation dealing with enforcement of foreign awards and
therefore the general law dealing with Appeals i.e. Section 10 of
the Delhi High Court Act would have no application.
18. After having considered the rival pleas of Mr. Shanti
Bhushan and Mr. Dholakia, I am of the view that there is merit in
the preliminary objections raised by Sh.S.K. Dholakia about the
maintainability of this appeal in the present form. An analysis of
FAO (OS) No.205/2000 Page 20 of 38
Section 6 shows that once the Court is satisfied that the foreign
award is enforceable under the Foreign Awards Act, which the
learned Single Judge has already held by pronouncing a judgment
affirming the Award, a decree follows as per sub-Section (2) and
no appeal lies from a decree except to contend in appeal that the
decree is in excess of or not in accordance with the award. In
order to consider the plea of Mr. Shanti Bhushan that the appeal
apart from being under sub section 2 of Section 6 of the Foreign
Awards Act is also under Section 10 of the Delhi High Courts Act
and under the letters patent jurisdiction of this Court, and is thus
maintainable, it is necessary to consider the interplay of the
Foreign Awards Act vis-à-vis the Delhi High Courts Act. This
Court is consequently required to notice the position of law laid
down by the Hon‟ble Supreme Court in the case of Renusagar
Power Co. Ltd. (supra) and Harendra H. Mehta vs. Mukesh H.
Mehta (supra) wherein it has been held that the Foreign Awards
Act was enacted to give effect to the New York Convention and
the spirit and purpose of the said Convention was to provide the
framework for the speedy settlement of the international dispute
and thus encourage international trade and commerce as held by
FAO (OS) No.205/2000 Page 21 of 38
the Hon‟ble Supreme Court in the case of ONGC vs. Western
Co. of North America (supra) and Renusagar Power Co. Ltd. vs.
General Electric Co. (supra) .
19. Clause 37 of the Letters Patent indicates that the power of
the Indian Legislature has been preserved and such Letters Patent
is subject to the legislative power exercised by the Parliament.
For this purpose, reference has been made to the decisions in the
case of UOI vs. Mohindra Supply Co. (supra) ; State of West
Bengal vs. Gourangalal Chatterjee (supra) and Milkfood Ltd.
vs. M/s. GMC Ice Cream (P) (supra).
20. Furthermore, this Court cannot lose sight of the fact that the
Foreign Awards Act being a special legislation and the Delhi High
Court Act and the Civil Procedure Code being general legislations,
special legislation has to prevail.
21. In so far as the plea of Mr. Shanti Bhushan, that no party
can be left remediless is concerned, the legislative wisdom appears
to be that such an opportunity is fully available before the learned
Single Judge, but in order to ensure expeditious disposal of the
international commercial disputes, an appellate remedy is only
FAO (OS) No.205/2000 Page 22 of 38
confined to the two grounds referred to in sub-section 2 of Section
6 of the Act.
22. We are also unable to agree with the analogy sought by Mr.
Shanti Bhushan under the provisions of Section 17 and 39 of the
Arbitration Act, 1940 (hereinafter referred to as „the 1940 Act‟).
Undoubtedly, Section 17 of the 1940 Act does indicate that it is
parimateria with the Section 6 of the Act. But in our view, the
fact that Section 39 of the 1940 Act specifically provided for an
appeal without any restrictions, clearly indicates that the analogy,
far from helping the case set up by the appellant, in fact goes
contrary to the plea set up by Mr. Shanti Bhushan. The very fact
that a provision such as Section 39 is not to be found in the
Foreign Awards Act clearly indicates the legislative intention of
circumscribing the scope of the appeal.
23. In our view, the plea of Mr. Shanti Bhushan that Section 9
of the Foreign Awards Act indicates that the Award was governed
by the law of India is wholly unsustainable. The reliance on the
judgment in the case of NTPC (supra) is inappropriate as the said
judgment dealt with an award where the Agreement expressly
provided that the laws of India would apply. In the present case,
FAO (OS) No.205/2000 Page 23 of 38
the agreement between the parties and in particular Section 11 of
the Agreement indicates that FOSFA-20 was to be applied.
Clause 18 of the FOSFA, terms and conditions, clearly indicated
that the Contract was deemed to be made in England and was
specifically stated to be governed in all respects by English law.
In fact subsequent to the judgment of the Hon‟ble Supreme Court
in the case of Alimenta S.A. vs. NAFED (supra) arising from the
present dispute, this argument is no longer open to be raised by the
appellant as the Hon‟ble Supreme Court in paragraph 12 of the
said judgment has clearly held that the arbitration clause in
FOSFA-20 was incorporated into the present contract. Since the
FOSFA-20 contract clearly provided for the applicability of
English law and the arbitration in England, this plea is devoid of
any merit whatsoever and is accordingly rejected. Further reliance
on Section 9 is also unwarranted as sub-section 1 of Section 9 only
speaks of enforcement of an award and not its appealability.
24. Mr. Shanti Bhushan has lastly relied upon the decision in
the case of Vanita M. Khanolkar vs. Pragna M. Pai 1998 (1)
SCC 500 and a subsequent judgment of the Hon‟ble Supreme
Court in the case of P.S. Sathappan (Dead) by L.Rs vs. Andhra
FAO (OS) No.205/2000 Page 24 of 38
Bank Ltd. and others AIR 2004 SC 5152 which approved the
above judgment. The following position of law has been relied
upon by Mr.Shanti Bhushan: -
“it is well settled that any statutory provision barring
an appeal or revision cannot cut across the
constitutional power of the High Court. Even the
power flowing from the paramount charter under
which the High Court functions would not get
excluded unless the statutory enactment concerned
expressly excludes appeals under the Letters Patent.”
25. Reliance has also been placed on the judgment of National
Sewing Thread Co. Ltd. AIR 1953 SC 357 to contend that in the
absence of an express bar even against the letters patent appeal,
the appeal would have been maintainable under letters patent,
even against the second appellate order and consequently there is
no bar in respect of the present appeal.
26. Mr. Dholakia appearing on behalf of the respondent,
however, has relied upon the judgment of the Division Bench of
this Court in the case of RITES Limited vs. JMC Projects
th
(India) Ltd. in FAO(OS) No. 173/2007 decided on 18 March,
2009 which had considered the plea relating to the effect of
Vanita’s case (supra). He has inter alia also relied upon the case
of UOI Vs. Mohindra Supply Co. AIR 1962 SC 256; State of
FAO (OS) No.205/2000 Page 25 of 38
West Bengal Vs. Gourangalal Chatterjee, (1993) 3 SCC 1;
Milkfood Ltd. Vs. M/s GMC Ice Cream (P) (2004) 7 SCC 288;
Milkfood Ltd. Vs. M/s GMC Ice Cream (P) LPA No.492/2008
th
decided on 17 February, 2003. He has submitted that in RITES
Ltd. vs. JMC Projects (supra), a Division Bench of this Court
while considering the effect of the plea based upon Vanita’s case
had rejected it with the following reasoning: -
13. “ The Division Bench also referred to Section 39
of the Arbitration Act 1940 (old Act) which also
contained a similar phraseology. Section 39(1)
of the old Act stated“ “An appeal shall lie from
the following orders passed under this Act (and
from no others)..…. ”. Section 39 of the old Act
was interpreted by the Supreme Court in Union
of India V. Mohindra Supply Co ., AIR 1962
SC 256. The Division bench quoted the relevant
extracts from the Supreme Court decision in
Mohindra Supply Co .(supra). From the
opening words of para 5 of the decision in
Mohindra Supply Co. , it is evident that the
Supreme Court was considering the issue
“ whether the right to appeal under the Letters
Patent is at all restricted by Section 39 Sub-
sections (1) and (2) ”. The Supreme Court in
Mohindra Supply Co . held as follows:-
“5………….Under section 39(1) , an
appeal lies from the orders specified
in that sub-section and from no
others. The legislature has plainly
expressed itself that the right of
appeal against orders passed under
the Arbitration Act may be exercised
only in respect of certain orders. The
right to appeal against other orders is
expressly taken away. If by the
express provision contained in
FAO (OS) No.205/2000 Page 26 of 38
section 39(1) , a right to appeal from
a Judgment which may otherwise be
available under the Letters Patent is
restricted, there is no ground for
holding that clause (2) does not
similarly restrict the exercise of
appellate power granted by the
Letters Patent……..”
14. In para 6, the Supreme Court held:-
“6……….If the order is not one
falling within Section 39(1), no
appeal will evidently
lie…………………..But the right to
appeal is a creature of statute; no
litigant has an inherent right to
appeal against a decision of a Court.
……”
15. While dealing with Section 104 C.P.C, on
which great stress has been laid by the learned
counsel for the appellant, the Supreme Court held in
Para 14:-
“The intention of the legislature in
enacting sub-section (1) of section
104 is clear : the right to appeal
conferred by any other law for the
time being in force is expressly
preserved. This intention is
emphasised by section 4 which
provides that in the absence of any
specific provision to the contrary,
nothing in the Code is intended to
limit or otherwise affect any special
jurisdiction or power conferred by or
under any other law for the time
being in force. The right to appeal
against judgments (which did not
amount to decrees) under the Letters
Patent, was therefore not affected by
section 104(1) of the Code of Civil
Procedure, 1908.”
FAO (OS) No.205/2000 Page 27 of 38
16. The Supreme Court also dealt with the
legislative history of the law relating to arbitration
and in Para 16 held as follows:-
“16. Prior to 1940 the law relating to
contractual arbitration (except in so
far as it was dealt with by the
Arbitration Act of 1899) was
contained in the Code of Civil
Procedure and certain orders passed
by courts in the course of arbitration
proceedings were made appealable
under the Code of 1877 by section
588 and in the Code of 1908 by
section 104 . In 1940, the legislature
enacted Act X of 1940, repealing
schedule 2 and section 104(1) ,
clauses (a) to (f) of the Code of Civil
Procedure, 1908, and the Arbitration
Act of 1899. By section 39 of the
Act, a right of appeal was conferred
upon litigants in arbitration
proceedings only from certain orders
and from no others and the right to
file appeals from appellate orders
was expressly taken away by sub-
section 2 and the clause in section
104 of the Code of 1908 which
preserved the special jurisdiction
under any other law was not
incorporated in section 39 . The
section was enacted in a form which
was absolute and not subject to any
exceptions. It is true that under the
Code of 1908, an appeal did lie under
the Letters Patent from an order
passed by a single Judge of a
Chartered High Court in arbitration
proceedings even if the order was
passed in exercise of appellate
jurisdiction, but the was so, because,
the power of the Court to hear
appeals under a special law for the
time being in operation was
expressly preserved.
FAO (OS) No.205/2000 Page 28 of 38
17. There is in the Arbitration Act no
provision similar to section 4 of the
Code of Civil Procedure which
preserves powers reserved to courts
under special statutes. There is also
nothing in the expression "authorised
by law to hear appeals from original
decrees of the Court" contained in
section 39(1) of the Arbitration Act
which by implication reserves the
jurisdiction under the Letters Patent
to entertain an appeal against the
order passed in arbitration
proceedings. Therefore, in so far as
Letters Patent deal with appeals
against orders passed in
arbitration proceedings, they must
be read subject to the provisions of
section 39 (1) and (2) of the
Arbitration Act .
18. Under the Code of 1908, the right
to appeal under the Letters patent
was saved both by section 4 and the
clause contained in section 104(1) ,
but by the Arbitration Act of 1940,
the jurisdiction of the Court under
any other law for the time being in
force is not saved; the right of
appeal can therefore be exercised
against orders in arbitration
proceedings only under section 39 ,
and no appeal (except an appeal to
this Court) will lie from an
appellate order.
19. There is no warrant for assuming
that the reservation clause in section
104 of the Code of 1908 was as
contended by counsel for the
respondents, "superfluous" or that its
"deletion from section 39(1) has not
made any substantial difference" :
the clause was enacted with a view to
do away with the unsettled state of
the law and the cleavage of opinion
FAO (OS) No.205/2000 Page 29 of 38
between the Allahabad High Court
on the one hand and Calcutta,
Bombay and Madras High Courts on
the other on the true effect of section
588 of the Code of Civil Procedure
upon the power conferred by the
Letters Patent. If the legislature
being cognizant of this difference
of opinion prior to the Code of
1908 and the unanimity of opinion
which resulted after the
amendment, chose not to include
the reservation clause in the
provisions relating to appeals in
the Arbitration Act of 1940, the
conclusion is inevitable that it was
so done with a view to restrict the
right of appeal within the strict
limits defined by section 39 and to
take away the right conferred by
other statutes. The Arbitration Act
which is a consolidating and
amending Act, being substantially
in the form of a code relating to
arbitration must be construed
without any assumption that it was
not intended to alter the law
relating to appeals. The words of
the statute are plain and explicit
and they must be given their full
effect and must be interpreted in
their natural meaning,
uninfluenced by any assumptions
derived from the previous state of
the law and without any
assumption that the legislature
must have intended to leave the
existing law unaltered. In our view
the legislature has made a
deliberate departure from the law
prevailing before the enactment of
Act X of 1940 by codifying the law
relating to appeals in section 39 .”
(emphasis supplied)
FAO (OS) No.205/2000 Page 30 of 38
17. It is, therefore, clear that no appeal could be
maintained from an order of the Court passed under
the old Act, by resort either to the Letters Patent or
Section 104 CPC, unless the same fell within
Section 39 of the old Act, even though the order
passed by the Court may qualify as being a
“judgment” within the meaning ascribed to that
term in Shah Babulal Khimji (supra). The Act,
having adopted the same terminology in so far as it
defines the scope of the right to appeal against the
orders of the Court passed under the Act, as used in
the old Act, in our view the decision in Mohindra
Supply Co. (supra) is squarely applicable, and resort
cannot be had by the appellant to either the Letters
Patent or Section 104 of the CPC to maintain the
present appeal.
18. The Division Bench in Canbank Financial
Services Ltd (supra) also took note of the decision
of a Full Bench of this Court in Union of India v. A.
S. Dhupia , AIR 1972 Delhi 108 which held that
Section 10(1) of the Delhi High Court Act 1966
provides only a forum of appeal. It cannot be
construed to mean that Section 10(1) of the Delhi
High Court Act confers an unfettered right of appeal
without any limitation on a party. The Full Bench
held:
“….The Act is a specific Code
dealing with the arbitration matters
and Section 39(1) is a special
provision indicating the orders which
alone are appealable. It is wrong,
therefore, to say that Section 10 of
the Act of 1966 which only provides
for a forum of appeal is special
provision and will override Section
39(1) of the Act…”
19. The Division Bench in Canbank Financial
Services Ltd (supra) also took notice of another
decision of a Division Bench of this Court in
Banwari Lal Radhey Mohan, Delhi v. The Punjab
State Co-operative Supply and Marketing
Federation Ltd., AIR 1983 Delhi 402, which in turn
had considered the decision of the Supreme Court in
FAO (OS) No.205/2000 Page 31 of 38
Shah Babulal Khimji (supra). In Banwari Lal
(supra), the Division Bench held as follows:-
“Section 39 of the Arbitration Act in
terms says that no other orders would
be appelable except those specified
in the section. Therefore, on the
ratio of Shah Babulal Khimji’s case ,
which approves the rule enunciated
by the Judicial committee of the
Privy Council in Chowdry’s case ,
(1882) 10 1nd App 4, it has to be
held that no appeal is competent
from the judgment under appeal
before us. Indeed, if we are to read
paras 33 and 34 of the judgment in
Shah Babulal Khimji’s case it would
become apparent that the Supreme
Court while upholding the right of
first appeal against judgment of a
Trial Judge from orders from which
appeal is permissible under Section
39 of the Arbitration Act impliedly
also held that the provisions of
Section 39 of the Arbitration Act
would apply in appeals from orders
from which appeal is permissible
under Section 39 or was
impermissible. Their Lordships in
Shah Babulal Khimji’s case, a
decision rendered by a Division
Bench of the Supreme Court
comprising of three Hon‟ble Judges,
noticed with approval the decision of
the Supreme Court in the Mohindra
Supply Co.’s case, AIR 1962 SC
256, given by a Bench of four
Hon'ble Judges. As noticed earlier,
maintainability of an appeal from
an order amounting to a judgment
from which appeal is not
permissible on a reading of Section
39 of the Arbitration Act was
specifically ruled out in Mohindra
FAO (OS) No.205/2000 Page 32 of 38
Supply Co.’s case. We are bound
by that decision.”
(emphasis supplied).”
27. In my view, the above judgment squarely deals with Vanita
M. Khanolkar’s case (supra) cited by Sh. Shanti Bhushan and we
are bound by the view taken in the above Division Bench
judgment and are, therefore, unable to accede to the plea of Mr.
Shanti Bhushan relying on Vanita M. Khanolkar’s case. This
Court cannot lose sight of the fact that in respect of the Arbitration
Act of 1940 the Hon‟ble Supreme Court in Mohinder Supply
Co.’s case clearly held that the exercise of the Letters Patent
jurisdiction in respect to appeals in arbitration cases is subject to
Section 39 of the Arbitration Act, 1940.
28. There are two aspects which arise in this matter. One is the
right of appeal and the second is the scope of appeal. A combined
reading of Section 17 and Section 39 of the Arbitration Act, 1940
is than an appeal lies against an order making the award a rule of
the court, but the scope of hearing before the appellate court is
restricted to whether the judgment of the learned Single Judge
(and the administrative act of the Registrar in drawing a decree in
FAO (OS) No.205/2000 Page 33 of 38
terms of the judgment of the learned Single Judge) is in excess of
or not in accordance with the award.
29. The Full Bench judgment of this Court in Milkfood Food
Ltd. vs. M/s. GMC Icre Creams (P) Ltd. & Ors. in LPA No.
th
492 of 1998 decided on 17 February, 2003 and as approved by
the Supreme Court in Milkfood Ltd. vs. M/s. GMC Ice Cream
(P) Ltd. JT 2004 (4) SC 393 holds that no appeal lies except on
the subject matters provided under Section 39. The Milkfood
decision follows the line of reasoning of the Constitution Bench
decision of the Supreme Court in Mohindra Supply’s case . These
judgments hold that where no appeal is provided under the Special
Act i.e. the Arbitration Act, 1940 then the appeal cannot be filed
under the Letters Patent as there is no express provision in the
Arbitration Act, 1940 which preserves such jurisdiction. The
conclusion is inevitable that it was done with a view to restrict the
right of appeal in arbitration proceedings within the strict limits
defined by Section 39 of the Arbitration Act, 1940 and to take
away the rights conferred by other statutes.
30. A reading of sub section 2 of Section 6 of the Foreign
Awards Act does not bar or prohibit the filing of an appeal but
FAO (OS) No.205/2000 Page 34 of 38
only restricts the scope thereof. In fact, sub section 2 of Section 6
does not bar an appeal but in fact allows an appeal, though
restricting its scope. Therefore, as there is no bar in filing of an
appeal, the decisions of Mohindra Supply’s case and Milkfood
case will not bar the filing of an appeal before the Division Bench
under sub section 2 of Section 6 of the Foreign Awards Act but it
is evident that the appeal can only be filed limited to the ground
that the decree was in excess of or not in accordance with the
award.
th
31. The learned Single Judge by his order dated 28 January,
2000 pronounced a judgment and allowed the petition which inter
alia prayed for the following reliefs: -
(a) to order that the Award of arbitration dated
th
15 November, 1989 and/confirmed by the Appeal
Award dated 14.9.90 by the Board of Appeal of
Federation of Oil Seeds and Fats Association Ltd.
(FOSFA) (Annexure B & C hereto) be filed in this
Hon‟ble Court.
(b) pronounce judgment according to the Award
and pass a decree upon judgment being so
pronounced.
The learned Single Judge allowed the petition after
dismissing the applications filed by the appellant and thereby
FAO (OS) No.205/2000 Page 35 of 38
directed the Registry to prepare a decree in terms of the above
order.
32. In my view, the Foreign Awards Act, 1961 applies to the
award and the dispute in question. The Foreign Awards Act
constitutes a complete code and provides for all contingencies in
relation to foreign awards made in pursuance of the New York
Convention to which it applies. Section 6 of the Foreign Awards
Act provides that the appeal against a decree is limited only to the
two grounds provided under sub section 2 of Section 6. The
initial part of the said sub-section 2 provides that upon the
judgment so pronounced, a decree shall follow which had to be
read in conjunction with sub-section 1 of the Section 6. A perusal
of Section 6 clearly postulates that once the Court is satisfied that
the foreign award is enforceable under this Act, the Court, that is,
the Single Judge, shall order the Award to be filed and proceed to
pronounce judgment according to the award and upon the
judgment so pronounced, a decree shall follow. The appeal
against such decree prepared after the judgment has been
pronounced would be limited to the grounds mentioned in sub-
section 2 of Section 6. However, when sub section 2 of Section 6
FAO (OS) No.205/2000 Page 36 of 38
specifically limits the scope of the appeal even against the decree,
and does not refer to the appealability of the judgment, to permit
the judgment to be appealed against by resort to the Letters Patent
jurisdiction would defeat the legislative mandate of the limited
nature of appeal provided by sub section 2 of Section 6, that too
only against the decree on specified grounds. Thus, this Court is
unable to accede to the plea of Sh. Shanti Bhushan that the fact
that an appeal against the judgment has not been mentioned in
Section 6 should lead to an inference that such an appeal against
the judgment was permitted under the Letters Patent jurisdiction.
In my view, the exclusion of appeal against a judgment in Section
6 is a considered omission by the legislature and this Court cannot
accept the plea that such an omission implied the maintainability
of an appeal beyond the Act. When both judgment and decree are
mentioned in sub-section 2 of Section 6 and yet an appeal is only
provided in a constricted manner against the decree alone, there
cannot be a better indication of the legislative intent to exclude
any appeal against the judgment.
33. It would be an extremely anomalous situation if the decree
was to be appealable in a limited manner under the Foreign
FAO (OS) No.205/2000 Page 37 of 38
Awards Act and the judgment could, under the Letters Patent
jurisdiction, be appealed without reservations. This, in my view,
would completely defeat the legislative intent which was to give
effect to the New York Convention for the speedy settlement of
international disputes.
34. Accordingly, there is no merit in the pleas of Mr. Shanti
Bhushan. The preliminary objections of Mr. Dholakia succeed
and the appeal is consequently dismissed as not maintainable on
pleas of merits sought to be raised, particularly when it was not
urged before us during arguments that the appeal falls within the
restricted scope of sub section 2 of Section 6 of the Foreign
Awards Act i.e. that the decree was in excess of or not in
accordance with the Award.
( MUKUL MUDGAL)
JUDGE
July 10, 2009
sk
FAO (OS) No.205/2000 Page 38 of 38