1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2562 OF 2006

M/S. CENTROTRADE MINERALS AND

METALS INC. …APPELLANT

VERSUS

HINDUSTAN COPPER LTD. ...RESPONDENT

WITH

CIVIL APPEAL NO.2564 OF 2006

J U D G M E N T

R.F. Nariman, J.

1. This matter comes to this Bench after two previous forays to this Court.

2. The appellant before us, in Civil Appeal No.2562 of 2006, is a U.S.

Corporation who had entered into a contract for sale of 15,500 DMT of

copper concentrate to be delivered at the Kandla Port in the State of

Gujarat, the said goods to be used at the Khetri Plant of the respondent

Hindustan Copper Ltd. (hereinafter referred to as “HCL”/ “the

respondent”), who is the appellant in the other Civil Appeal No.2564 of

2006. After all consignments were delivered, payments had been made

in accordance with the contract. However, a dispute arose between the

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parties as regards the quantity of dry weight of copper concentrate

delivered. Clause 14 of the agreement contained a two-tier arbitration

agreement by which the first tier was to be settled by arbitration in India.

If either party disagrees with the result, that party will have the right to

appeal to a second arbitration to be held by the ICC in London. The

appellant M/s Centrotrade Minerals and Metals Inc. (hereinafter referred

to as “Centrotrade”/ “the appellant”) invoked the arbitration clause. By

an award dated 15.06.1999 the arbitrator appointed by the Indian

Council of Arbitration made a Nil Award. Thereupon, Centrotrade

invoked the second part of the arbitration agreement, as a result of

which Jeremy Cook QC, appointed by the ICC, delivered an award in

London, dated 29.09.2001, in which the following amounts were

awarded:

“27. For the above reasons I THEREFORE AWARD

and ADJUDGE that

(1) HCL do pay Centrotrade the sum of $152,112.33,

inclusive of interest to the date of the Award in respect

of the purchase price for the first shipment.

(2) HCL do pay Centrotrade the sum of $15,815.59,

inclusive of interest to the date of this Award in respect

of demurrage due on the first shipment.

(3) HCL, do pay Centrotrade the sum of $284,653.53,

inclusive of interest to the date of this Award in respect

of the purchase price on the second shipment.

(4) HCL do pay Centrotrade their legal costs in this

arbitration in the sum of $82,733 and in addition the

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costs of the International Court of Arbitration, the

Arbitrator's fees and expenses totalling $29,000.

(5) HCL do pay Centrotrade compound interest on the

above sums from the date of this Award at 6% p.a. with

quarterly rests until the date of actual payment.”

3. Even before Jeremy Cook QC could deliver his award, HCL, during the

pendency of the proceedings before the arbitrator in London, filed a suit

in the Court at Khetri, in the State of Rajasthan, challenging the

arbitration clause. By an Order dated 27.04.2000, in a revision petition

filed against the Order of the Khetri Court, the High Court at Rajasthan

restrained the appellant from taking further steps in the London

arbitration, pending hearing and disposal of the revision petition. This

ad interim ex parte stay granted by the High Court was ultimately

vacated by the Supreme Court only on 08.02.2001. Meanwhile, we are

reliably informed that Mr. Cook, the learned arbitrator, referred the

matter of stay of the parties from proceeding with the London arbitration

to the ICC Court, which then decided that the arbitrator could continue

with the arbitral proceedings.

4. When the said award dated 29.09.2001 was sought to be enforced by

Centrotrade in India, a learned Single Judge of the Calcutta High Court,

after considering the objections of HCL, dismissed the Section 48

petition filed by HCL, as a result of which the aforesaid foreign award

became executable in India. However, a Division Bench of the Calcutta

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High Court, by its judgment dated 28.07.2004, held that an appeal would

be maintainable inasmuch as the London award could not be said to be

a foreign award, but that a two-tier arbitration clause would be valid.

However, since the Indian award and the London Award, being

arbitration awards by arbitrators who had concurrent jurisdiction, were

mutually destructive of each other, neither could be enforced, as a result

of which the appeal was allowed and the judgment of the learned single

Judge was set aside.

5. At this juncture, the matter came to a Division Bench of this Court. Two

separate judgments were delivered by S.B. Sinha, J. and Tarun

Chatterjee, J. reported in Centrotrade Minerals & Metals Inc. v.

Hindustan Copper Ltd. (2006) 11 SCC 245. After setting out the facts

of the case, S.B. Sinha,J. held that a two tier clause of the kind

contained in clause 14 of this agreement is non est in the eye of law and

would be invalid under Section 23 of the Indian Contract Act. In this view

of the matter, the foreign award could not enforced in India and

Centrotrade’s appeal was therefore dismissed, the appeal filed by HCL

being allowed. Tarun Chatterjee, J. set out four questions in paragraph

134 as follows:

“134. We have heard Mr Sarkar, learned Seni or

Counsel appearing for Centrotrade and Mr Debabrata

Ray Choudhury, learned Senior Counsel for HCL. I

have also examined the entire material on record

including the arbitration agreement, the awards and

5

judgments of the Division Bench as well as the learned

Single Judge. Before us, the following issues were

raised by the learned counsel for the parties for decision

in the appeals:

(1) Whether the second part of clause 14 of the

agreement providing for a two-tier arbitration was valid

and permissible in India under the Act?

(2) If it is valid, on the interpretation of clause 14 of the

agreement, can it be said that the ICC arbitrator sat in

appeal against the award of the Indian arbitrator?

(3) Whether the ICC award is a foreign award or not?

(4) Whether HCL was given proper opportunity to

present its case before the ICC arbitrator?”

6. These questions were answered by stating that the two-tier arbitration

process was valid and permissible in Indian law; that the ICC arbitrator

sat in appeal against the award of the Indian arbitrator; that the ICC

award was a foreign award; but that since HCL was not given a proper

opportunity to present its case before the ICC arbitrator, Centrotrade’s

appeal would have to be dismissed and HCL’s appeal allowed.

7. The matter then came on a reference before a 3-Judge bench of this

Court and is reported in Centrotrade Minerals & Metal Inc. v.

Hindustan Copper Ltd. (2017) 2 SCC 228. The reference order was

referred to in paragraph 1 of the judgment of Lokur,J., as follows:

“These appeals have been referred [Centrotrade

Minerals & Metals Inc. v. Hindustan Copper Ltd., (2006)

11 SCC 245] to a Bench of three Judges in view of a

difference of opinion between the two learned Judges

of this Court. The controversy is best understood by

referring to the proceedings recorded on 9-5-2006:

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Hon'ble Mr Justice S.B. Sinha pronounced his

Lordship's judgment of the Bench comprising his

Lordship and Hon'ble Mr Justice Tarun Chatterjee.

Leave granted. For the reasons mentioned in the signed

judgment, civil appeal arising out of SLP (C) No. 18611

of 2004 filed by M/s Centrotrade Minerals and Metal

Inc., is dismissed and civil appeal arising out of SLP (C)

No. 21340 of 2005 (actually 2004) preferred by

Hindustan Copper Ltd. is allowed. In the peculiar facts

and circumstances of the case, the parties shall pay and

bear their own costs. Hon'ble Mr Justice Tarun

Chatterjee pronounced his Lordship's judgment

disposing of the appeals in terms of the signed

judgment. In view of difference of opinion, the matter is

referred to a larger Bench for consideration. The

Registry of this Court shall place the matter before the

Hon'ble the Chief Justice for constitution of a larger

Bench.

The decisions rendered by Sinha and Chatterjee, JJ.

are reported as Centrotrade Minerals & Metals

Inc. v. Hindustan Copper Ltd. [Centrotrade Minerals &

Metals Inc. v. Hindustan Copper Ltd., (2006) 11 SCC

245]”

Paragraph 5 of the aforesaid judgment set out the two questions that

arose in this case as follows:

“5. The issues that have arisen for our consideration, as

a result of the difference of opinion between the learned

Judges, are as under:

(1) Whether a settlement of disputes or differences

through a two-tier arbitration procedure as provided for

in Clause 14 of the contract between the parties is

permissible under the laws of India?

(2) Assuming that a two-tier arbitration procedure is

permissible under the laws of India, whether the award

rendered in the appellate arbitration being a “foreign

award” is liable to be enforced under the provisions of

Section 48 of the Arbitration and Conciliation Act, 1996

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at the instance of Centrotrade? If so, what is the relief

that Centrotrade is entitled to?

For the present, we propose to address only the first

question and depending upon the answer, the appeals

would be set down for hearing on the remaining issue.

We have adopted this somewhat unusual course since

the roster of business allowed us to hear the appeals

only sporadically and therefore the proceedings before

us dragged on for about three months.”

Since the first question was answered in the affirmative, the Court

concluded:

“Conclusion

48. In view of the above, the first question before us is

answered in the affirmative. The appeals should be

listed again for consideration of the second question

which relates to the enforcement of the appellate

award.”

8. This is how the appeals have been listed again for consideration of the

second question, which relates to enforcement of the London award.

9. Shri Gourab Banerjee, learned senior counsel appearing on behalf of

Centrotrade, has taken us through the record and has relied strongly on

this Court’s recent judgment in Vijay Karia v. Prsymian Cavi E Sistemi

SRL 2020 (3) SCALE 494. He then referred in detail to the portions of

the award which dealt with the natural justice aspect of the case, as well

as the judgment of the Single Judge of the Calcutta High Court which

dealt with the same. He then read out to us Chatterjee J’s views

contained in Centrotrade [2006] (supra) and contended that ample

opportunity had been given by the arbitrator to HCL to present its case,

8

but that HCL, having an Indian award in its pocket, wanted somehow to

abort the London arbitration proceedings. It first filed the suit that has

been referred to, and obtained ex parte ad interim stay against parties

from proceeding in the arbitration on 27.04.2000, which was vacated by

the Supreme Court only on 08.02.2001. Jeremy Cook QC afforded as

many as six opportunities to HCL to present its case and bent over

backwards by extending time for filing of submissions and documents

several times, and even considered documents that were filed by HCL

after the last deadline had been extended, and then passed the award.

He, therefore, attacked Chatterjee J’s judgment, stating that it was

factually incorrect when it stated that a fair opportunity had not been

given to HCL to present its case. Several other judgments both Indian

and foreign were cited by Shri Banerjee in support of his submission.

Apart from relying heavily on the judgment in Vijay Karia (supra), he

relied upon the approach to a Section 48 proceeding by quoting from

Redfern and Hunter on International Arbitration 6

th

Edn. and Merkin and

Flannery on the Arbitration Act, 1996.

10. Shri Harin P. Raval, learned senior counsel appearing on behalf of HCL,

has taken a preliminary submission that the only point of difference

between S.B. Sinha,J. and Tarun Chatterjee,J. was on whether the two-

tier arbitration clause was valid in law. Once that point had been

answered, the question of being unable to present one’s case, not

9

having been decided by S.B. Sinha, J., was not referred to the larger

bench as there was no difference of opinion between the learned

Judges on this aspect and therefore this aspect cannot now be

adjudicated upon. Even otherwise, he argued, basing his submissions

on a list of dates and a paper book of documents filed before this Court

for the first time, to show that as a matter of fact once the arbitrator had

extended time, the last extension being till 12.09.2001, he ought to have

allowed further time in which, apart from legal submissions furnished,

documents could have been furnished in support of HCL’s case. This is

particularly in view of the fact that on 11.09.2001, a terrorist attack had

taken place in New York as a result of which globally, there was

disruption of transport and communication, and therefore it was very

difficult for HCL to send documents within the requisite time. He argued

that had such documents been seen, there can be no doubt that this

one-sided award might well have been in his client’s favour, as a result

of which serious prejudice had been caused to his clients. Even

otherwise, he argued that the issue of jurisdiction was to be taken as a

preliminary question before the learned arbitrator, after which further

proceedings were to take place. This was never done by the learned

arbitrator. Also, the learned arbitrator in proceeding with the arbitration

despite the ex parte ad interim stay being granted by an Indian court

10

resulted in his client being unable to present his case before the

arbitrator.

11. Having heard learned senior advocates for both parties, it is first

necessary to set out the portions of the award dated 29.09.2001 which

deal with the aspect of HCL being unable to present its case before the

learned arbitrator. The learned arbitrator, after referring to the Rajasthan

High Court proceedings and the Supreme Court’s vacation of the stay,

then found:

“7. As set out in paragraph 6 above, HCL, by a series of

letters to the International Court of Arbitration and to

me, in my capacity as arbitrator, maintained that any

arbitration commenced under the second paragraph of

Clause 14 of the contract is null and void and until

August 2001, refused to participate in it, even though

they were invited by me to do so without prejudice to

their jurisdictional objections. Despite this stance, Fox

& Mandal were at all times consulted about the

procedural aspects of this arbitration, were asked for

their submissions in relation to the procedure, progress

and substance of the dispute, received copies of all

correspondence passing between Centrotrade and

myself and of all submissions made and have been

given every opportunity to take any point which they

wished to take in their defence. By Orders made on 20

th

December 2000, 19

th

January 2001 and 3

rd

May 2001,

I directed that Centrotrade serve submissions and

supporting evidence, followed by HCL's Response and

evidence in support, with a right in Centrotrade to put in

a reply in accordance with a clear timetable. When no

Defence Submissions or supporting evidence was

served by HCL within the time prescribed, I sent them a

fax on 30

th

July 2001,giving them one last opportunity

to inform me by return of any intention on their part to

put in a Defence and to seek an extension of time for

doing so.

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8. Following a further fax on 9

th

August 2001, in which I

informed the parties that I was proceeding with the

Award, on 11

th

August I received a fax from Fox &

Mandal requesting an extension of time of one month to

put in a defence. On 16

th

August I ordered that any

submissions in support of an application for an

extension of time for a defence and any submissions on

the substantive merits of the dispute, together with any

evidence relied on in relation to the application and any

submissions should be received by me by 31

st

August

2001, in the absence of which I would not give them any

consideration. On 27

th

August Fox & Mandal sought a

further 3 weeks’ extension of time for making their

submissions and serving supporting evidence. I allowed

a final extension for these submissions and evidence

until 12

th

September 2001. Seventy - five pages of

submissions were received by me on 13

th

September

2001, without any supporting evidence or any

justification for not complying with my earlier orders. No

grounds were put forward for any application for an

extension of time for putting in Defence submissions.

Indeed no formal application was made for an extension

of time to do so. HCL have therefore not attempted to

justify their earlier stance nor to give me any reason for

considering their submissions on the merits which are

made out of time. Centrotrade have objected to these

submissions contending that they are inadmissible

because of HCL’s persistent breaches of my orders.

Nonetheless, though not bound to do so because of

their belated nature, I have considered those

submissions and taken them fully into account in

making this Award. I made plain in my orders that no

further material provided thereafter would be taken into

account, and I have not done so.

9. In their submissions HCL maintained their arguments

as to lack of jurisdiction and the invalidity of this London

Arbitration but without prejudice to that, put forward

submissions both on the jurisdictional arguments, the

nullity of the second paragraph of the Arbitration clause

in the contract and on the merits of the dispute. It is clear

that this dispute can be determined on the documents

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turning, as it does essentially on points of construction

of the contract and matters of Indian law.”

(emphasis supplied)

Ultimately, the arbitrator awarded costs for the London proceeding,

declining to award costs for the arbitration that had taken place in India.

12. The learned Single Judge of the Calcutta High Court, while dealing with

the objections as to breach of natural justice, dismissed the aforesaid

objections as follows:

“Mr. Roy Choudhury then submits that in view of

Section 48(1)(b) of the Act, the award is not

enforceable, as neither notice of appointment of

arbitrator was given to the respondent, nor was it given

opportunity to present its case. The arbitrator followed

the ICC Arbitration and Conciliation Rules, though they

were not mentioned by the parties in the arbitration

agreement, hence in view of Section 48(1)(b) of the Act

the award was not enforceable.

Mr. Sarkar replies that the respondent was given all

opportunities to present its case, but it showed total

non-cooperation with the arbitrator. The arbitral

procedure followed by the arbitrator does not militate

against the arbitration agreement.

I find that the petitioner approached the ICC

International Court of Arbitration on February 22

nd

,

2000. The respondent filed a suit in the Court of Civil

Judge, Junior Division, Khetry on March 28

th

2000; it wanted to stop the second arbitration in terms

of the arbitration agreement. The arbitrator was

appointed on June 7

th

, 2000. Till August 2001 the

respondent maintained that the second part of the

arbitration agreement being against the public policy of

India, the arbitration through the ICC International Court

of Arbitration was not permissible. On this ground the

respondent refused to participate in the arbitral

proceeding. It took the matter upto the Apex Court.

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Ultimately when it failed to obtain any order to stop the

arbitration, it filed its submissions running into seventy-

five pages. Though the papers reached the arbitrator

beyond the stipulated date, he has considered such

submissions. He, however, did not find any merit in the

case made out by the respondent. The arbitrator has

recorded that at every stage he consulted the

procedural aspects with the solicitors representing the

respondent. There is no proof that the respondent ever

objected to the rules and procedure followed by the

arbitrator or that the arbitrator followed a procedure not

contemplated in the agreement. It is apparent from the

award that all opportunities were given to the

respondent to present its case. I find no merit in the

contentions that notice regarding appointment of the

arbitrator was not given to the respondent or that the

terms of reference were settled behind its back. The

respondent had full knowledge of everything; it was

informed about everything. Hence I find no substance

in the grievance that the respondent was unable to

present its case or that procedure not contemplated by

the agreement of the parties was followed by the

arbitrator.”

13. In appeal, the Division Bench, in view of its finding that the award is not

a foreign award, declined to apply Section 50 of the Arbitration Act, 1996

(hereinafter referred to as “Arbitration Act”), and then stated that the

London award is declared to be inexecutable so long as the Indian Nil

Award stands. In view of this finding, it did not go into the natural justice

point argued by HCL.

14. In the first round in this court, S.B. Sinha,J. did not go into the natural

justice point, in view of his finding that the arbitration clause itself was

null and void. Chatterjee,J., after agreeing with Centrotrade’s case on

the arbitration clause, then went into issue no. 4 and held as follows:

14

“Issue 4

Whether HCL was given proper opportunity to present

its case before the ICC arbitrator?

164. Under Section 48(1)(b) enforcement of a foreign

award can be refused if:

“48. (1)(b) the party against whom the award is invoked

was not given proper notice of the appointment of the

arbitrator or of the arbitral proceedings or was

otherwise unable to present his case;” (emphasis

supplied)

165. In the case at hand, HCL had the knowledge of

appointment of the arbitrator. In fact, it had approached

the Indian courts to stall the ICC arbitral proceedings.

On a special leave petition filed by Centrotrade against

the order of the Rajasthan High Court staying the ICC

arbitral proceedings, an order was passed by this Court

by which the stay order of the Rajasthan High Court was

vacated on 8-2-2001 and directions were given for the

ICC proceedings to continue in accordance with law.

166. It is true, in his award, Mr Jeremy Lionel Cooke,

the ICC arbitrator has noted that he was appointed by

ICC on 7-6-2000 and that HCL refused to participate in

the arbitral proceedings on the ground that the second

arbitration clause in the contract was null and void. He

directed Centrotrade and HCL to file submissions and

supporting evidence through orders dated 20-12-2000,

19-1-2001 and 3-5-2001. However, HCL did not comply

with these orders. On 30-7-2001, he sent a fax to HCL

to find out whether they intended to file their defence.

He sent a further fax on 9-8-2001 informing them that

he was proceeding with the award. (emphasis supplied)

Then on 11-8-2001, the ICC arbitrator received a reply

seeking extension of time. He granted time till 31-8-

2001. He received another request from HCL's

representatives on 27-8-2001 for further extension of

time. He granted extension till 12-9-2001. He received

the first set of submissions filed by HCL, without

supporting evidence, on 13-9-2001. He considered

those submissions and took them into account while

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making the award. He has further recorded in his award

that:

“I made plain in my orders that no further material

provided thereafter would be taken into account, and I

have not done so.”

(emphasis supplied)

This last statement indicates that he received further

material from HCL, which he did not consider while

making the award. On the face of it, it seems that HCL

was given sufficient opportunity to present its case by

the arbitrator. However, this question must be looked

into from the then existing situation.

167. It must be noted that this Court vacated the stay

on the proceedings on 8-2-2001. The first direction of

the ICC arbitrator to the parties, after the order of this

Court on 8-2-2001, to serve submissions to him was

made on 3-5-2001 i.e. after a time gap of nearly 3

months. Cooperation of HCL was next requested only

on 30-7-2001 i.e. after a time gap of nearly 2 months.

Then the communication on 9-8-2001 stated that the

arbitrator was proceeding with the award. This time

there was a response from HCL. Upon these requests,

a time-limit of nearly one month ending on 12-9-2001

was given to HCL. The arbitrator received the first set

of submissions filed by HCL on 13-9-2001. Then he

made the award 16 days later on 29-9-2001. It seems

that between 13-9-2001 and 29-9-2001, he did receive

further material from HCL which he did not consider

while making the award on the ground that they were

received after the time-limit granted by him to HCL had

lapsed.

168. It is clear from the above layout of facts that there

have been delays in the arbitral proceedings right from

the beginning when Centrotrade approached ICC on

22-2-2000. Most of the delays were due to HCL's

refusal to participate in the proceedings. However,

there were some delays which cannot be related to

HCL's conduct. For instance, the period from 8-2-2001

when the order of this Court was made to 3-5-2001

when the first direction of the arbitrator was made. The

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whole arbitral proceeding was conducted in a manner

indicative of lack of urgency. Further, I find merit in the

submission of HCL that due to the total dislocation of air

traffic caused by the terrorist attack of 11-9-2001, the

materials sent by HCL to the ICC arbitrator reached

late. Under these circumstances, a delay of few days in

serving their submissions with supporting evidence,

after having accepted to participate in the arbitral

proceedings, seems excusable and should have been

excused. Considering the overall picture of the

circumstances and the delays, refusal of the arbitrator

to consider the material received by him after 13-9-2001

and before 29-9-2001, seems to be based on a frivolous

technicality. The arbitrator ought to have considered all

the material received by him before he made the award

on 29-9-2001. Considering the decisions in Hari Om

Maheshwari v. Vinitkumar Parikh [(2005) 1 SCC 379]

and Minmetal Germany GmbH v. Ferco Steel Ltd. [

(1999) 1 All ER (Comm) 315] it is true that where a party

is refused an adjournment and where it is not prevented

from presenting its case, it cannot, normally, claim

violation of natural justice and denial of a fair hearing.

However, in the light of the delays, some of which were

not attributable to HCL's conduct, it was only fair to

excuse HCL's lapse in filing the relevant material on

time. Therefore, it can be said that HCL did not get a

fair hearing and could not effectively present its case.

169. For the reasons aforesaid, I am of the view that

HCL could not effectively present its case before the

ICC arbitrator and therefore enforcement of the ICC

award should be refused in view of Section 48(1)(b) of

the Act. Accordingly, the judgment of the Division Bench

and also the judgment of the learned Single Judge of

the Calcutta High Court must be set aside and the

matter be remitted back to the ICC arbitrator for fresh

disposal of the arbitral proceedings in accordance with

law after giving fair and reasonable opportunity to both

the parties to present their cases before him. In view of

the fact that I have set aside the award of the ICC

arbitrator on the ground that HCL was unable to

effectively present its case before the ICC arbitrator, in

compliance with Section 48(1)(b) of the Act, I direct the

17

ICC arbitrator to pass a fresh award within three months

from the date of commencement of the fresh arbitral

proceedings.”

15. The law on the subject matter of Section 48(1)(b) of the Arbitration Act

has been laid down in a recent judgment of this Court in Vijay Karia

(supra). In paragraph 21 of the aforesaid judgment, this Court stated

that it was important to note that no challenge was made to the aforesaid

award under the English arbitration law, though available, just as in the

facts of the present case. This Court then set out the parameters of a

Section 48 challenge which reaches this Court as follows:

“24. Before referring to the wide ranging arguments on

both sides, it is important to emphasise that, unlike

Section 37 of the Arbitration Act, which is contained in

Part I of the said Act, and which provides an appeal

against either setting aside or refusing to set aside a

‘domestic’ arbitration award, the legislative policy so far

as recognition and enforcement of foreign awards is

that an appeal is provided against a judgment refusing

to recognise and enforce a foreign award but not the

other way around (i.e. an order recognising and

enforcing an award). This is because the policy of the

legislature is that there ought to be only one bite at the

cherry in a case where objections are made to the

foreign award on the extremely narrow grounds

contained in Section 48 of the Act and which have been

rejected. This is in consonance with the fact that India

is a signatory to the Convention on the Recognition and

Enforcement of Foreign Arbitral Awards, 1958

(hereinafter referred to as “New York Convention”) and

intends - through this legislation - to ensure that a

person who belongs to a Convention country, and who,

in most cases, has gone through a challenge procedure

to the said award in the country of its origin, must then

be able to get such award recognised and enforced in

India as soon as possible. This is so that such person

18

may enjoy the fruits of an award which has been

challenged and which challenge has been turned down

in the country of its origin, subject to grounds to resist

enforcement being made out under Section 48 of the

Arbitration Act. Bearing this in mind, it is important to

remember that the Supreme Court’s jurisdiction under

Article 136 should not be used to circumvent the

legislative policy so contained. We are saying this

because this matter has been argued for several days

before us as if it was a first appeal from a judgment

recognising and enforcing a foreign award. Given the

restricted parameters of Article 136, it is important to

note that in cases like the present - where no appeal is

granted against a judgment which recognises and

enforces a foreign award - this Court should be very

slow in interfering with such judgments, and should

entertain an appeal only with a view to settle the law if

some new or unique point is raised which has not been

answered by the Supreme Court before, so that the

Supreme Court judgment may then be used to guide

the course of future litigation in this regard. Also, it

would only be in a very exceptional case of a blatant

disregard of Section 48 of the Arbitration Act that the

Supreme Court would interfere with a judgment which

recognises and enforces a foreign award however

inelegantly drafted the judgment may be. With these

prefatory remarks we may now go on to the

submissions of counsel.”

The Court then went on to refer to Minmetals Germany GmbH v. Ferco

Steel Ltd. (1999) C.L.C. 647 in paragraph 59, and Jorf Lasfar Energy

Co. v. AMCI Export Corp. 2008 WL 1228930 in paragraph 61 as

follows:

“59. The English judgments advocate applying the test

of a person being prevented from presenting its case by

matters outside his control. This was done in Minmetals

Germany GmbH v. Ferco Steel Ltd. (1999) C.L.C. 647

as follows:

19

“In my judgment, the inability to present a case to

arbitrators within s.103(2)(c) contemplates at least

that the enforcee has been prevented from

presenting his case by matters outside his control.

This will normally cover the case where the

procedure adopted has been operated in a manner

contrary to the rules of natural justice. Where,

however, the enforcee has, due to matters within his

control, not provided himself with the means of

taking advantage of an opportunity given to him to

present his case, he does not in my judgment, bring

himself within that exception to enforcement under

the convention. In the present case that is what has

happened”

xxx xxx xxx

61. An application of this test is found in Jorf Lasfar

Energy Co. v. AMCI Export Corp. 2008 WL 1228930,

where the U.S District Court, W.D. Pennsylvania decided

that if a party fails to obey procedural orders given by the

arbitrator, it must suffer the consequences. If evidence is

excluded because it is not submitted in accordance with

a procedural order, a party cannot purposefully ignore

the procedural directives of the decision-making body

and then successfully claim that the procedures were

unfair or violative of due process. Likewise, in Dongwoo

Mann+Hummel Co. Ltd. v. Mann+Hummel GmbH

(2008) SGHC 275, the Singapore High Court held:

“145. A deliberate refusal to comply with a discovery

order is not per se a contravention of public policy

because the adversarial procedure in arbitration

admits of the possible sanction of an adverse

inference being drawn against the party that does

not produce the document in question in compliance

with an order. The tribunal will of course consider all

the relevant facts and circumstances, and the

submissions by the parties before the tribunal

decides whether or not to draw an adverse inference

for the non-production. Dongwoo also had the liberty

to apply to the High Court to compel production of

the documents under s 13 and 14 of the IAA, if it was

not content with merely arguing on the question of

20

adverse inference and if it desperately needed the

production by M+H of those documents for its

inspection so that it could properly argue the point

on drawing an adverse inference. However,

Dongwoo chose not to do so.

146. Further, the present case was not one where a

party hides even the existence of the damning

document and then dishonestly denies its very

existence so that the opposing party does not even

have the chance to submit that an adverse inference

ought to be drawn for non-production. M+H in fact

disclosed the existence of the documents but gave

reasons why it could not disclose them. Here,

Dongwoo had the full opportunity to submit that an

adverse inference ought to be drawn, but it failed to

persuade the tribunal to draw the adverse inference.

The tribunal examined the other evidence before it,

considered the submissions of the parties and

rightfully exercised its fact finding and decision

making powers not to draw the adverse inference as

it was entitled to do so. It would appear to me that

the tribunal was doing nothing more than exercising

its normal fact finding powers to determine whether

or not an adverse inference ought to be drawn.””

The Court finally summed up its conclusion on this aspect of the case,

as follows:

“76. Given the fact that the object of Section 48 is to

enforce foreign awards subject to certain well-defined

narrow exceptions, the expression “was otherwise

unable to present his case” occurring in Section

48(1)(b) cannot be given an expansive meaning and

would have to be read in the context and colour of the

words preceding the said phrase. In short, this

expression would be a facet of natural justice, which

would be breached only if a fair hearing was not given

by the arbitrator to the parties. Read along with the first

part of Section 48(1)(b), it is clear that this expression

would apply at the hearing stage and not after the award

has been delivered, as has been held in Ssangyong

21

(supra). A good working test for determining whether a

party has been unable to present his case is to see

whether factors outside the party’s control have

combined to deny the party a fair hearing. Thus, where

no opportunity was given to deal with an argument

which goes to the root of the case or findings based on

evidence which go behind the back of the party and

which results in a denial of justice to the prejudice of the

party; or additional or new evidence is taken which

forms the basis of the award on which a party has been

given no opportunity of rebuttal, would, on the facts of a

given case, render a foreign award liable to be set aside

on the ground that a party has been unable to present

his case. This must, of course, be with the caveat that

such breach be clearly made out on the facts of a given

case, and that awards must always be read supportively

with an inclination to uphold rather than destroy, given

the minimal interference possible with foreign awards

under Section 48.”

16. Shri Raval took exception to the interpretation of the word “otherwise”

occurring in Section 48(1)(b) and cited a Constitution Bench judgment

of this Court in Kavalappara Kottarathil Kochuni v. States of Madras

and Kerala (1960) 3 SCR 887, for the proposition that the expression

“otherwise” cannot be read ejusdem generis with words that precede it.

17. Kochuni’s case (supra) was concerned with the constitutional validity

of the Madras Marumakkathayam (Removal of Doubts) Act, 1955.

Section 2(b) of the aforesaid Act reads as follows:

“2. Notwithstanding any decision of Court, any sthanam

in respect of which:

(b) the members of the tarwad have been receiving

maintenance from the properties purporting to be

sthanam properties as of right, or in pursuance of a

custom or otherwise”

22

The Constitution Bench then held:

“The word “otherwise” in the context, it is contended,

must be construed by applying the rule of ejusdem

generis. The rule is that when general words follow

particular and specific words of the same nature, the

general words must be confined to the things of the

same kind as those specified. But it is clearly laid down

by decided case that the specific words must form a

distinct genus or category. It is not an inviolable rule of

law, but is only permissible inference in the absence of

an indication to the contrary. On the basis of this rule, is

contended, that the right or the custom mentioned in the

clause is a distinct genus and the words “or otherwise”

must be confined to things analogous to right or contract

such as lost grant, immemorial user etc. It appears to

us that the word “otherwise” in the context only means

“whatever may be the origin of the receipt of

maintenance”. One of the objects of the legislation is to

by-pass the decrees of courts and the Privy Council

observed that the receipt of maintenance might even be

out of bounty. It is most likely that a word of the widest

amplitude was used to cover even acts of charity and

bounty. If that be so, under the impugned Act even a

payment of maintenance out of charity would destroy

the character of an admitted sthanam which ex facie is

expropriatory and unreasonable.”

Given the object of the 1955 Act, the Constitution Bench was careful to

state that the word “otherwise” in the context only means “whatever may

be the origin of the receipt of maintenance”.

18. P. Ramanatha Aiyar’s Advanced Law Lexicon defines the expression

“otherwise” as follows:

“Otherwise. By other like means; contrarily; different

from that to which it relates; in a different manner; in

another way; in any other way; differently in other

respects in different respects; in some other like

capacity.”

23

The Law Lexicon then refers to an early judgment of Cleasby B. in

Monck v. Hilton 46 LJNC 167, in which it is stated as follows:

“As a general rule “otherwise” when following an

enumeration, should receive an ejusdem generis

interpretation (per CLEASBY, B. Monck v. Hilton, 46

LJMC 167, The words ‘or otherwise,’ in law, when used

as a general phrase following an enumeration of

particulars, are commonly interpreted in a restricted

sense, as referring to such other matters as are kindred

to the classes before mentioned.”

As has been held in paragraph 76 of Vijay Karia (supra), the context of

Section 48 is recognition and enforcement of foreign awards under the

New York Convention of 1958. Given the context of the New York

Convention, and the fact that the expression “otherwise” is susceptible

to two meanings, it is clear that the narrower meaning has been

preferred, which is in consonance with the pro-enforcement bias spoken

about by a large number of judgments referred to in Vijay Karia (supra).

Kochuni’s case (supra) dealing with an entirely different Act with a

different object cannot, therefore, possibly apply to construe this word

in the setting in which it occurs.

19. As a matter of fact, three earlier judgments of this Court, all under the

Arbitration Act, 1940, are also instructive. The ground on which a

domestic award could be set aside under Section 30 of the 1940 Act,

inter alia, was if the arbitrator misconducted himself or the proceedings.

It will be seen that “misconduct” as a ground for setting aside an award

24

is conceptually much wider than a party being unable to present its case

before the arbitrator, which is contained in Section 48(1)(b). Thus, in

Ganges Waterproof Works (P) Ltd. v. Union of India (1999) 4 SCC

33, this Court was faced with the legality and validity of the arbitration

proceedings, three grounds being raised as follows:

“2. Challenge to the legality and validity of the arbitration

proceedings has been laid on three grounds: firstly, that

the claimant-Union of India (respondent herein) filed an

additional statement accompanied by documents before

the arbitrator on 11-8-1982, which was the last day of

hearing, and that was taken into consideration by the

arbitrator without affording the petitioner an opportunity

for contesting the same or even delivering a copy thereof

to the petitioner; secondly, though no oral evidence was

adduced by any of the parties, yet the arbitrator has in

his award expressed having heard the evidence which

shows inapplication of mind to the record of the

proceedings and material available before the arbitrator;

and thirdly, that the arbitrator in the sitting held on 11-8-

1982 heard the parties hardly for five or seven minutes

in which limited time, no real hearing could have taken

place. It is submitted that the manner in which the

arbitrator has conducted himself, has resulted in violation

of the principles of natural justice and vitiated the

arbitration proceedings. Similar grounds were raised

before the learned Single Judge as also in the intra-court

appeal before the High Court and have been turned

down. Having heard the learned counsel for the parties,

we are also of the opinion that here too the petitioner

must meet the same fate.”

So far as the first ground was concerned, it was held that as a matter of

fact, nothing was filed by the Union of India on 11.08.1982 and the

additional statement and documents that were filed by the Union of India

before the learned arbitrator was way before on 31.05.1982. This being

25

so, and as no specific case was made out in an additional affidavit

before the learned single Judge supporting the plea that the additional

statement and documents that were furnished could not be effectively

dealt with by the appellant, plea no.1 was turned down. The third

contention was then disposed of as follows:

“6. The third and the last plea urged is equally devoid of

any merit. The burden of substantiating the averment

urged as an objection tantamounting to misconduct on

the part of the arbitrator or complaining of violation of

the principles of natural justice was on the petitioner. No

evidence was adduced to substantiate the plea. The

best person to depose as to what had actually

transpired at the hearing and whether the same was a

real hearing or an eyewash merely was the counsel who

actually made submissions on behalf of the petitioner

before the arbitrator. The least that was expected of the

petitioner was to have filed an affidavit of the counsel

before the Court. That was not done. No timely protest

was raised before the arbitrator. The hearing was

concluded on 11-8-1982 and the award was made on

23-8-1982. During these 12 days also, the petitioner-

Company never urged before the arbitrator that

submissions on its behalf were not permitted to be

made by the arbitrator. The learned Single Judge, as

also the Division Bench, have arrived at a finding that

the plea was an afterthought and certainly not

substantiated. We also do not find any reason to take a

view different from the one taken by the High Court.”

20. In Sohan Lal Gupta v. Asha Devi Gupta (2003) 7 SCC 492, this Court

dealt with the arbitrator misconducting the proceedings as follows:

“27. The arbitrator, as appears from the minutes of the

meeting, proceeded only on the documentary evidence.

No party appears to have presented oral evidence.

Thus, the question of cross-examination of the

witnesses appearing on behalf of the other parties did

26

not arise. Submissions must have been made by the

parties themselves. Ghanshyamdas Gupta does not

say that he had difficulty in appearing on 15-6-1976 or

any subsequent date and he had asked for an

adjournment. Even otherwise, a party has no absolute

right to insist on his convenience being consulted in

every respect. The matter is within the discretion of the

arbitrator and the Court will intervene only in the event

of positive abuse. (See Montrose Canned Foods

Ltd. [(1965) 1 Lloyd's Rep 597] ) If a party, after being

given proper notice, chooses not to appear, then the

proceedings may properly continue in his absence.

(See British Oil and Cake Mills Ltd. v. Horace Battin &

Co. Ltd. [(1922) 13 LI L Rep 443] )”

(emphasis supplied)

In a significant paragraph which foreshadowed the law as it is today, this

Court referred to the Minmetals (supra) judgment and held as follows:

“43. Furthermore, in this case Ghanshyamdas Gupta

expressly relinquished his right by filing an application

stating that he would withdraw his objection. Such

relinquishment in a given case can also be inferred from

the conduct of the party. The defence which was

otherwise available to Ghanshyamdas Gupta would not

be available to others who took part in the proceedings.

They cannot take benefit of the plea taken by

Ghanshyamdas Gupta. Each party complaining

violation of natural justice will have to prove the

misconduct of the Arbitration Tribunal in denial of justice

to them. The appellant must show that he was

otherwise unable to present his case which would mean

that the matters were outside his control and not

because of his own failure to take advantage of an

opportunity duly accorded to him. (See Minmetals

Germany GmbH v. Ferco Steel Ltd. [(1999) 1 All ER

(Comm) 315] ) This Court's decision in Renusagar

Power Co. Ltd. v. General Electric Co. [1994 Supp (1)

SCC 644 : AIR 1994 SC 860] is also a pointer to the

said proposition of law.” (emphasis supplied)

27

21. In Hari Om Maheshwari v. Vinitkumar Parikh (2005) 1 SCC 379, this

Court recorded the arguments of learned counsel appearing on behalf

of the appellant on the natural justice aspect of the case as follows:

“7. Shri Jaideep Gupta, learned Senior Counsel

appearing for the appellant herein contended that the

grounds on which the High Court has set aside the

award are not the grounds contemplated under Section

30 of the Act. He submitted that arbitration proceedings

having started in the year 1995 could not be completed

even in the year 1999, therefore, the High Court ought

not to have interfered with the award. He pointed out

that in Reference Case No. 313 of 1995 pertaining to

Deepa Jain the evidence had already concluded and

the explanation given by the respondent for not leading

evidence on 10-5-1999 was frivolous and the arbitrators

rightly did not entertain a prayer for granting a further

opportunity for leading evidence. Such a denial of a

further opportunity by the arbitrators would not be a

ground contemplated under Section 30 of the Act to set

aside the award. Hence, the courts below have gone

beyond the scope of Section 30 of the Act while allowing

petitions to set aside the arbitration awards.”

The learned Single Judge’s finding in the aforesaid case, which was

accepted by the Division Bench judgment on the facts of the case, is set

out in paragraph 12 of the said judgment as follows:

“12. It is the above award that was challenged under

Section 30 of the Arbitration Act, 1940 before the

learned Single Judge by the respondent which came to

be allowed by the learned Single Judge. While doing so

learned Single Judge observed:

“the cross-examination of M/s D. Jain and Co. was over

in 1997, the cross-examination of witness examined in

Shri Maheshwari's reference was completed on 8-4-

1999 and the arbitrators adjourned the matter to 10-5-

1999 and 11-5-1999 for the petitioner to lead his

28

evidence. However, it appears that the petitioner noted

a wrong date and therefore, he did not appear on 10-5-

1999. It is clear from the record that there is an

application submitted by the petitioner before the

arbitrators on 20-5-1999 regarding the mistake

committed by him in recording the date of hearing and

requested the arbitrators to give an opportunity to lead

the evidence. One can understand if the arbitrators

have after closing the matter for award delivered the

award immediately but since the arbitrators had not

delivered their award by 20-5-1999, they also did not

deliver their award immediately thereafter, but waited till

November 1999 to make their award, the arbitrators

could have easily permitted the petitioner to lead

evidence. I do not think that the arbitrators were justified

in denying the petitioner an opportunity to lead

evidence….”

This finding of the learned Single Judge has been

accepted by the Division Bench without any further

discussion.”

This Court then set aside the Single Judge’s judgment in language that

is even more appropriate today, given the object of the Arbitration Act,

1996, as follows:

“16. From the above it is seen that the jurisdiction of

the court entertaining a petition or application for

setting aside an award under Section 30 of the Act is

extremely limited to the grounds mentioned therein

and we do not think that grant or refusal of an

adjournment by an arbitrator comes within the

parameters of Section 30 of the Act. At any rate the

arbitrator's refusal of an adjournment sought in 1999

in an arbitration proceeding pending since 1995

cannot at all be said to be perverse keeping in mind

the object of the Act as an alternate dispute resolution

system aimed at speedy resolution of disputes.”

22. Shri Banerjee then referred to a number of judgments including

Cuckurova Holding A.S. v. Sonera Holding B.V. (2014) UKPC 15 of

29

the Privy Council. In this judgment, the Minmetals (supra) test was

referred to with approval as follows:

“31. Section 36(2)(c) is in the same terms as section

103(2)(c) of the Arbitration Act 1996 in England. They

reflect Article V(1)(b) of the New York Convention. In

Minmetals Germany GmbH v Ferco Steel Ltd [1999]

CLC 647, 658 Colman J said that the subsection

contemplates that the enforcee has been prevented

from presenting his case by matters outside his control,

which will normally cover the case where the procedure

adopted has been operated in a manner contrary to the

rules of natural justice. In Kanoria v Guinness [2006]

EWCA Civ 222 Lord Phillips CJ held in the Court of

Appeal that, on the ordinary meaning of section

103(2)(c), a party to an arbitration is unable to present

his case if he is never informed of the case he is called

upon to meet. He referred to the statements in

Minmetals referred to above with approval.

xxx xxx xxx

34. The general approach to enforcement of an award

should be pro-enforcement. See eg Parsons &

Whittemore Overseas Co Inc v Société Générale 508 F

2d 969 (1974) at 973:

“The 1958 Convention’s basic thrust was to liberalize

procedures for enforcing foreign arbitral awards … [it]

clearly shifted the burden of proof to the party defending

against enforcement and limited his defences to seven

set forth in Article V.”

In IPCO (Nigeria) v Nigerian National Petroleum [2005]

2 Lloyd’s Rep 326, Gross J said at para 11, when

considering the equivalent provision of the English

Arbitration Act 1996:

“… there can be no realistic doubt that section 103 of

the Act embodies a pre -disposition to favour

enforcement of New York Convention awards,

reflecting the underlying purpose of the New York

Convention itself …”

30

The Board agrees. There must therefore be good

reasons for refusing to enforce a New York Convention

award. The Board can see no basis upon which it

should refuse to enforce the award here if Cukurova

fails to show that it was unable to present its case for

reasons beyond its control.”

The Privy Council, on facts, then dealt with the natural justice

ground by rejecting it as follows:

“53. The approach of the Tribunal described above and

the reasoning in the First Partial Award shows that it

gave Cukurova every opportunity to develop its case.

The basis upon which the Tribunal reached its

conclusions is clear. As stated above, the Tribunal

indicated that it assumed Mr Berkmen’s evidence to be

true. It is therefore difficult to see on what grounds

Cukurova can properly complain. It is not suggested

that the Tribunal deliberately ignored Mr Berkmen’s

evidence. Although Cukurova submits that the outcome

of the arbitration would have been different if Mr

Berkmen had had an opportunity to be heard, it does

not identify on what basis. It is of course no part of the

role of the enforcing court to consider whether the

decision was correct either in law or on the facts.”

23. In Eastern European Engineering v. Vijay Consulting (2019) 1 LLR

1 (QBD), the Queen’s Bench Division dealt with the “inability to present

case” challenge by following Cukorova Holdings (supra) and

Minmetals (supra), and then concluding:

“89. It was also common ground that, as indicated as a

"given" by Lord Clarke in Cukorova at [53], the party

challenging the award must also demonstrate that the

outcome of the arbitration would have been different

had there been no breach of natural justice.”

31

Applying the test of “matters outside one’s control”, it was found that

VCL’s challenge on this ground was not outside its control as follows:

“98. In this specific context what VCL did not do (and

perfectly well could have done) was to raise with the

arbitrator the question of whether the form of his order

in fact shut them out from putting in a statement from Dr

du Toit Malan, or to make submissions as to why they

needed to get evidence from some other identified

person in order to respond to the submissions made.

Instead they chose to seek to challenge the decision on

the basis that they should be allowed to put in new

evidence which covered all issues, not simply in

response to Large 3. This decision to challenge on one

basis and not the other is a matter which was entirely

within VCL's control.

99. In those circumstances too I accept the submission

that the admission of Large 3 (or failure to allow

responsive evidence) would not have had an impact on

the result of the arbitration. The liability decision was

based on the earlier reports of Mr Large and other

witnesses. That is common ground. In relation to

quantum, the arbitrator's reliance upon Large 3 had the

effect of reducing the quantum awarded to EEEL (by

some €9 million). It therefore cannot be said that VCL

was prejudiced by Large 3. If it was prejudiced it was by

its failure to avail itself of the opportunity given it to

respond.” (emphasis supplied)

24. Jorf Lasfar (supra), referred to in paragraph 61 of Vijay Karia (supra),

is also instructive. This case deals with a specific plea relating to natural

justice in relation to a Tribunal’s procedural orders as follows:

“7. We disagree. AMCI was given a full and fair

opportunity to present its case. However, AMCI failed to

meet its obligations under the Tribunal's procedural

orders, 3 and suffered the consequences. It failed to

submit any witness statements by the deadline set forth

by the Tribunal. Rather, AMCI attempted to name Mr.

32

Thrasher as a witness after the deadline, and without

submitting a witness statement. AMCI submitted no

documentary evidence save a governmental report

indicating that coal was in short supply around the time

of the alleged breach.

xxx xxx xxx

9. The requirements of Procedural Order No. 4 are

clear, reasonable, and common in international

arbitration practice. There is no dispute that AMCI

understood what the Order required at the time. A party

cannot purposefully ignore the procedural directives of

a decision-making body, and then successfully claim

that the procedures were fundamentally unfair, or

violated due process. Under the circumstances, we find

that AMCI has failed to satisfy its burden to prove that

the arbitral process violated our basic notions of

fundamental fairness and justice. As such, AMCI

cannot avail itself of either the Article V(1)(b) defense or

the Article V(2)(b) defense.” (emphasis supplied)

25. Shri Banerjee then referred to two United States District Court

judgments. In Consorcio Rive v. Briggs of Cancun 134 F. Supp 2d

789, the US District Court, E.D. Louisiana, found that Briggs of Cancun,

the respondent before it, refused to participate in the arbitration due to

alleged criminal proceedings in Cancun. At the trial, David Briggs

(representative of the respondent therein) testified that he did not seek

alternative ways to appear at the hearings such as by way of telephone,

nor did he send a representative of the company to appear on behalf of

the company. In this fact situation, Article V(1)(b) of the New York

Convention was referred to, the court finding:

“26. Because Briggs of Cancun was continuously

informed of all hearing dates and was provided

33

sufficient opportunity to present witnesses and

evidence in defense of the action, Briggs of Cancun was

given proper notice of the arbitration proceedings.

27. The due process guarantee incorporated in article

V(1) (b) of the Convention requires that "an arbitrator

must provide a fundamentally fair hearing." Generica

Ltd., 125 F.3d at 1130. "A fundamentally fair hearing is

one that `meets "the minimal requirements of fairness"

adequate notice, a hearing on the evidence, and an

impartial decision by the arbitrator.'" Id. "[P]arties that

have chosen to remedy their disputes through

arbitration rather than litigation should not expect the

same procedures they would find in the judicial

arena." Id. Essentially, in exchange for the convenience

and other benefits obtained through arbitration, parties

lose "the right to seek redress from the court for all but

the most exceptional errors at arbitration." Dean v.

Sullivan, 118 F.3d 1170, 1173 (7th Cir.1997).

28. Consistent with the federal policy of encouraging

arbitration and enforcing arbitration awards, the

defense that a party was "unable to present its case"

raised pursuant to article V(1) (b) of the Convention is

narrowly construed. Parsons & Whittemore Overseas

Co. v. Societe Generale de L'Industrie du Papier, 508

F.2d 969, 975 (2d Cir.1974).

29. In the instant case, the Court finds that Briggs of

Cancun was not "unable to present its case," because

Briggs of Cancun could have participated by means

other than David Briggs's physical presence at the

arbitration. For instance, Briggs of Cancun could have

sent a company representative to attend; could have

sent its attorney to attend; or David Briggs could have

attended by telephone.

30. Moreover, the evidence indicates that Briggs of

Cancun did participate to the extent that it designated

an arbitrator and filed over 80 pages of legal argument

and documentation in support of its position. Because

Briggs of Cancun has brought forward no additional

information or evidence that it would have presented at

the arbitration if it had the opportunity to do so, the Court

34

finds that Briggs of Cancun did have an opportunity to

meaningfully participate in the arbitration.

xxx xxx xxx

33. For the foregoing reasons, the Court finds that

Briggs of Cancun's defense under article V(1) (b) of the

Convention must fail. The Court also specifically finds

that even if there was a valid arrest warrant pending

against David Briggs for some period of time, Briggs of

Cancun is not entitled to a defense under article V(1)

(b) of the Convention because Briggs of Cancun could

have participated through its Mexican attorney or

corporate representative or by telephone. Further,

Briggs of Cancun has not demonstrated that it was

prejudiced in any way by whatever restrictions the

alleged criminal action might have imposed, because it

has not pointed to exonerating evidence that it would

have presented, but could not, but for the filing of the

criminal Statement of Facts.”

26. In Four Seasons Hotels v. Consorcio Barr S.A. 613 Supp 2d 1362

(S.D. Fla. 2009), the U.S District Court, S.D. Florida, dealt with the

respondent, having discontinued its participation in the arbitral

proceedings just prior to the final evidential hearings, as follows:

“Moreover, regardless of the decision ultimately

reached by the Court of Appeals concerning the waiver

issue in the previous action to confirm the Partial

Arbitration Award, the issue of the Arbitral Tribunal’s

jurisdiction and the propriety of the anti-suit injunction

was to be conclusively decided one way or the other in

the action to confirm the Partial Arbitration Award. With

the jurisdictional and anti-suit injunction issues thus

decided, Consorcio’s withdrawal from the final

evidentiary hearing, the proceeding governing the

issuance of the Final Award, in an attempt to preserve

its right to contest jurisdiction, was futile. Consorcio’s

withdrawal was thus ineffective to preserve its right to

contest jurisdiction or the anti-suit injunction in the

35

appeal of the Partial Arbitration Award or in this action

to confirm the Final Award.

Given that Consorcio’s withdrawal from the arbitration

proceeding was unnecessary to preserve its rights

Consorcio was not precluded from or unable to present

its case. Even if Consorcio’s decision to withdraw from

the proceeding was taken based on a good faith

subjective belief that such action was necessary to

preserve its rights on appeal, such a misgiving did not

render Consorcio unable to present its case within the

meaning of Article V(1)(b). Therefore, Consorcio has

not met its burden of proving that Article V(1)(b) applies

as a defense.”

27. Shri Banerji then referred to a judgment of the Supreme Court of Hong

Kong, reported in Nanjing Cereals v. Luckmate Commodities XXI

Y.B. Com. Arb. 542 (1996). In paragraph 5 of the judgment the court

held:

“5. However, it appeared that the Defendants had had

ample opportunity to present their own evidence as to

quantum to the Tribunal, but by their own admission

they had failed to do so. In addition, regarding the issue

of whether I should exercise my discretion in refusing in

any case to set aside the Award, Mr. Chan conceded

that the fact that the final Award was lower than that

claimed by the Plaintiffs was against his clients.

xxx xxx xxx

7.…At all events, the Defendants maintain that they did

not submit their own figures to the Tribunal, though this

was clearly going to be an issue before the Tribunal,

nor, it appears, did they avail themselves of the

opportunity to submit them later. That decision was up

to them. They must now live with its consequences.

8. Their omission was similar to that of the Defendants

in another case, namely Qinghuangdao Tongda

Enterprise Development Co. v. Million Basic Co. Ltd.

[1993] 1 HKLR 173, where I held:-

36

"It is not accepted that the defendant had no opportunity

to present its case. On the contrary, the defendant

made full use of the ample opportunity given and only

complained after the proceedings had finally been

closed, having foregone the opportunity of asking for an

extension of those proceedings. All proceedings must

have a finite end."

9. In conclusion, I am not satisfied that the Defendants

have made out sufficient grounds for me to refuse leave

to enforce the Award under S.44 of the Arbitration

Ordinance. Even if they had made out sufficient

grounds, in my opinion this is a classic case where a

court should exercise its discretion to refuse to set aside

an award, due to the failure of the Defendants to

prosecute their own case properly by submitting their

own evidence to the Tribunal. The fact that the award

was lower than that sought by the Claimants is also a

powerful factor against exercising discretion not to

enforce.” (emphasis supplied)

28. Shri Banerjee then referred to a judgment to the Supreme Court of Italy

reported in De Maio Giuseppe v. Interskins Y.B. Comm. Arb. XXVII

(2002) 492. The Italian Supreme Court, in considering the ground

contained in Article V(1)(b) of the New York Convention held as follows:

“[5] "The first two grounds for appeal, which must be

examined together since they concern the same issues,

are unfounded. Art. V(1)(b) of the New York Convention

provides that the failure to communicate either the

arbitrator's appointment or the arbitral proceedings,

which makes it impossible to present one's case, is a

ground for refusing enforcement of the award. De Maio

maintains that it was unable to present its case because

it was given only fourteen days to appoint an arbitrator.

[6] "This Court deems that there was no violation of due

process as alleged by De Maio, and that one or more

missing pages on this issue in the Court of Appeal's

decision do not make this decision invalid. Since this is

37

a procedural defect, we can settle the issue directly,

independent of whether the lower decision failed to give

reasons on this issue, the more so as we deal here

exclusively with the interpretation and the application of

a procedural provision.

[7] "Art. V(1) provides that the party against whom the

award is invoked has the burden to prove the ground for

refusal of enforcement under letter (b), as well as the

other grounds in that paragraph. Further, we must

consider that, according to the spirit of the Convention,

the recognition of arbitral awards depends on specific

requirements which must be interpreted narrowly.

[8] "Since in the present case it is undisputed that

Interskins informed De Maio that it had appointed an

arbitrator, the reasons given in the lower decision,

which deems that this information and the time limit

[given to De Maio] guaranteed due process, suffice,

independent of a failure to give reasons on the

objections raised by De Maio.

[9] "Second, we must consider that the ground for

refusal under letter (b) concerns the impossibility rather

than the difficulty to present one's case. De Maio does

not argue and certainly does not prove that it could not

present its case when the arbitration was commenced

or while it was held.”

29. We now come to the facts of the present case. Shri Raval’s plea that

this Court cannot go into the question posed before it as there was no

difference of opinion on HCL being unable to present its case, Justice

Chatterjee J’s being the only judgment on this score, has no legs to

stand. The reference order that is extracted by us in paragraph 7 above,

and that is contained in paragraph 1 of the decision in Centrotrade

[2017] (supra), makes it clear that, “in view of difference of opinion, the

matter is referred to a larger bench for reconsideration”. That the

38

expression the matter was understood as meaning the entire matter and

not merely issue 1, is further made clear by paragraph 5 of the said

judgment as follows:

“For the present, we propose to address only the first

question and depending upon the answer, the appeals

would be set down for hearing on the remaining issue.

We have adopted this somewhat unusual course since

the roster of business allowed us to hear the appeals

only sporadically and therefore the proceedings before

us dragged on for about three months.”

Finally, the 3 Judge Bench concluded:

48. In view of the above, the first question before us is

answered in the affirmative. The appeals should be

listed again for consideration of the second question

which relates to the enforcement of the appellate

award.”

In this view of the matter, we have proceeded to examine the

correctness of Chatterjee J’s views.

30. Shri Raval has argued that the London arbitrator ought to have

determined the question of jurisdiction as a preliminary question, as he

himself had initially indicated, before going into the substantive issues

relating to the contract. We are afraid that this is an argument that has

never been raised earlier, and has been raised by Shri Raval here for

the first time. Even otherwise, and even if we were to go by the

documents that were submitted to us for the first time by Shri Raval, the

fax sent on 20.12.2000 by the arbitrator to the parties is incomplete.

Even otherwise, it speaks of issues of jurisdiction and Indian law having

39

to be addressed as a primary question before matters of substance

relating to the dispute on the contract. None of this clearly and

unequivocally shows that the learned arbitrator sought to take up the

plea as to jurisdiction as a preliminary objection which should be

decided before other matters. This plea of Shri Raval, being taken here

for the first time and for the reasons given by us, is devoid of substance.

31. Shri Raval then argued that HCL was unable to present its case as the

learned arbitrator did not heed the stay order of the Rajasthan High

Court dated 27.04.2000. First and foremost, the stay order of the

Rajasthan High Court was not and could not be directed against the

arbitrator – it was directed only against the parties to the proceeding.

Secondly, the learned arbitrator initially began the proceedings, after the

green signal given to him by the ICC Court to proceed with the

arbitration, by directing that the appellant serve submissions along with

supporting evidence, followed by the respondent’s response and

evidence on 19.01.2001. This, however, was reiterated only on

03.05.2001, by which time the Supreme Court had vacated the ad-

interim ex parte order on 08.02.2001. This plea taken by Shri Raval,

also taken before us for the first time, has no legs to stand on.

32. Shri Raval then strenuously argued that considering that the last

extension expired on 12.09.2001, the learned arbitrator ought to have

40

taken onboard two other bundles of documents and granted time for the

same, given the terrorist attack in New York on 11.09.2001.

33. The sequence of events, even from the documents presented by Shri

Raval for the first time, is that legal submissions were furnished after

11.09.2001 and received by the arbitrator’s office on 13.09.2001. The

arbitrator then stated that these submissions have been fully taken into

account in the award and that by 18.09.2001, there would be no scope

for any further material being supplied, as the publication of the award

will follow shortly. This was communicated by fax on 18.09.2001 by the

learned arbitrator to Fox & Mandal, the Attorneys of HCL. It is only

thereafter, on 19.09.2001, that a couriered letter is sent to the learned

arbitrator stating that Fox & Mandal would be deeply obliged if

documents contained in paper binder no.1 would also be taken into

account. It was then added that paper binder no.2, containing judgments

of the Courts of law and authorities are being sent separately and it may

take 7 to 10 days’ more time beyond 19.09.2001.

34. At this stage, it is important to point out that the learned arbitrator had

given a large number of opportunities to file documents and legal

submissions. On 03.05.2001 the learned arbitrator directed that the

appellant serve submissions along with supporting documents,

following the respondent’s response and evidence therein, with a right

in the appellant to put in a reply, in accordance with a clear time table

41

that was set out. On 30.07.2001, since no defence submissions or

supporting evidence was served by the respondent within the time

prescribed, the time was extended, giving the respondent one last

opportunity to put in their defence and to seek extension of time for so

doing. Until August 2001, it may be stated that respondent did not

participate in the arbitral proceedings, even though invited to do so. It is

only on 09.08.2001, when the learned arbitrator informed the parties that

he is proceeding with the award, that on 11.08.2001, the learned

arbitrator received a fax from Fox & Mandal, Attorneys for HCL,

requesting for an extension of one month’s time to put in their defence.

This was acceded to by the learned arbitrator on 16.08.2001, giving time

upto 31.08.2001. However, on 27.08.2001, Fox & Mandal sought for a

further three weeks’ extension of time, which was also granted by the

learned arbitrator, allowing a final extension of time until 12.09.2001.

Despite the fact that the legal submissions running into 75 pages were

submitted beyond time, that is only on 13.9.2001, in view of the

11.09.2001 attack in New York, the learned arbitrator received the same

and took the same into account despite being beyond time. It was only

on 29.09.2001 that the learned arbitrator then passed his award. Given

the aforesaid timeline, it is clear that the learned arbitrator was

extremely fair to the respondent. Having noticed that the respondent

wanted to stall the arbitral proceedings by approaching the Courts in

42

Rajasthan and having succeeded partially, at least till February 2001,

the conduct of the respondent leaves much to be called for. Despite

being informed time and again to appear before the Tribunal and submit

their response and evidence in support thereof, it is only after the

arbitrator indicated that he was going to pass an award that the

respondent’s attorneys woke up and started asking for time to present

their response. This too was granted by the learned arbitrator, by not

only granting extension of time, but by extending this time even further.

Finally, when the legal submissions of 75 pages were sent even beyond

the time that was granted, the learned Arbitrator took this into account

and then passed his award. This being the case, on facts we can find

no fault whatsoever with the conduct of the arbitral proceedings.

35. Justice Chatterjee, however, in his judgment, made several errors of

fact. First and foremost, in paragraph 166 of Centrotrade [2006]

(supra), the learned Judge quoted the penultimate line in paragraph 8

of the award, without even adverting to the line just before the aforesaid

line which indicated that the material that was received from HCL was

in fact taken into consideration while making the award, even beyond

the stipulated time of 12.09.2001. Secondly, in paragraph 167,

Chatterjee,J. conjectured that between 13

th

and 29

th

September, 2001,

the Arbitrator did receive further material from HCL which he did not

consider while making the award, on the ground that they were received

43

after the time limit granted by him to HCL. Factually, there is no

supporting material to show that any such further material was received

by the learned arbitrator, except documents that have been presented

by Shri Raval for the first time before us. They were clearly not before

Chatterjee,J. when this surmise was made by the learned Judge,

Further, the arbitrator cannot be faulted on this ground as, given the

authorities referred to by us hereinabove, the arbitrator is in control of

the arbitral proceedings and procedural orders which give time limits

must be strictly adhered to. In paragraph 168, the learned Judge then

said that given the attack in New York on 11.09.2001, the learned

arbitrator should have excused further delay and should not have acted

on frivolous technicalities. This approach of a Court enforcing a foreign

award flies in the face of the judgments referred to by us hereinabove.

Even otherwise, Chatterjee, J., refers to the judgment in Hari Om

Maheshwari (supra) as well as Minmetals (supra), but then does not

proceed to apply the ratio of the said judgments. Had he applied the

ratio of even these two judgments, it would have been clear that an

arbitrator’s refusal to adjourn the proceedings at the behest of one party

cannot be said to be perverse, keeping in mind the object of speedy

resolution of disputes of the Arbitration Act. Further, the Minmetals

(supra) test was not even adverted to by Chatterjee,J., which is that HCL

was never unable to present its case as it was at no time outside its

44

control to furnish documents and legal submissions within the time given

by the learned arbitrator. HCL chose not to appear before the arbitrator,

and thereafter chose to submit documents and legal submissions

outside the timelines granted by the arbitrator.

36. Even otherwise, remanding the matter to the ICC arbitrator to pass a

fresh award in paragraph 169, is clearly outside the jurisdiction of an

enforcing court under Section 48 of the 1996 Act.

37. For all these reasons, it is clear that Chatterjee, J.’s judgment cannot be

sustained. As a result, Centrotrade’s appeal, being Civil Appeal No.

2562 of 2006, is allowed. The judgment of Chatterjee,J is set aside.

HCL’s appeal, being Civil Appeal No. 2564 of 2006, is dismissed.

Resultantly, the foreign award, dated 29.09.2001, shall now be

enforced.

….……………………………J.

(R.F. Nariman)

….……………………………J.

(S. Ravindra Bhat)

….……………………………J.

(V. RAMASUBRAMANIAN)

New Delhi;

June 02, 2020.