Bhatia International Limited vs Vitol S.A. Geneva

M.C. Garg, J.—This Review Petition has been filed by the petitioner who is aggrieved of the order passed by this court in having allowed the Civil Revision filed by the respondent and holding that in view of the Clause-19 of the Agreement reached between the parties for referring that the dispute to arbitration and which arbitration resulted in foreign award, do not permit filing of objections to the award u/s 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") in Indian Court, in as much as three conditions of the exclusion Clauses do not allow any of the parties to file an objection to the award. The only exclusion which were agreed between the parties were approaching the Indian Courts. After the dispute arose between the parties, the matter was referred to arbitration. The arbitration took place outside India and the award was also given outside India, thus it is a foreign award. As per Clause-19 of the Arbitration Agreement, the award except for the conditions given in the exclusion Clauses were to be governed by the foreign law and not by the Indian law.

After the arbitration concluded, award was given against M/s. Bhatia International Limited vide award dated 17th of January, 2011. Vitol S.A. Geneva, Switzerland also filed an application for enforcement of the award in Bombay. After the notice was issued, the petitioner filed objections before the District Judge, Indore u/s 34 of the Act. The respondent received a notice of the aforesaid objections. The respondent instead of filing reply to the objections preferred to file an application u/s 151 of C.P.C. wherein it was pointed out that the objections were not maintainable as the filing of the objection was not covered by exclusion Clause-19 of the Agreement which is reproduced hereunder for the sake of reference.

Governing Law and Arbitration

This contract is to be governed by and to be construed in accordance with English Law.

Any controversy, dispute or claim whatsoever arising out of or in connection with this contract or the breach thereof shall be referred to arbitration in London before a panel of three arbitrators, one to be appointed by each party and one by two arbitrators so appointed.

For the avoidance of doubt, this will not prevent either party from taking proceedings in any other jurisdiction to obtain security or ancillary relief or to enforce any order or award.

Since the 6th Additional District Judge, Indore dismissed the application filed by Vitol S.A. u/s 151 of C.P.C., the respondent filed a revision before this Court u/s 115 of C.P.C. The revision was filed keeping in view the order passed by the 6th Additional District Judge, Indore in having continued with the proceedings qua objections filed by the petitioner u/s 34 of the Act which apparently were not maintainable in view of Clause-19 of the Arbitration Agreement reached between the parties.

No doubt, the order impugned arises out of an order passed on the application filed by the respondent u/s 151 of C.P.C. The purpose of filing that application was only to bring on record the opposition to the application filed u/s 34 of the Arbitration and Conciliation Act, 1996.

The objection to filing of the application u/s 34 of the Arbitration and Conciliation Act, 1996 was on the basis of Clause-19 of the Agreement which provided that Part-1 of the Indian Arbitration and Conciliation Act would only apply in three situations i.e. when the application is moved to obtain security or ancillary relief or to enforce any order or award, which was not the case.

In these circumstances, the objections taken by the petitioner that no revision lies against the order passed u/s 151 of C.P.C., though taken in reply to the revision petition, but was not pressed at the time of hearing of the arguments cannot be of any help to the case of the petitioner in this revision petition. The judgments relied upon by the learned counsel for the petitioner i.e. National Highway authority of India Vs. Oriental Structure Engineers Ltd. - Gammon India Ltd. (JV), ; M/s. Anuptech Equipments Private Ltd. Vs. M/s. Ganpati Co-op. Housing Society Ltd. and others, ; National Aluminium Co. Ltd. Vs. M/s. Pressteel and Fabrications Pvt. Ltd. and another reported in AIR 2005 SC 1514 are of no application in the facts of this case.

Moreover, at this juncture, it is also to mention that the Advocate who argued the matter on behalf of the petitioner at the time of hearing of the arguments on the revision petition did not press the point that the revision was not maintainable.

Another issue which needs consideration is as to whether this Court as High Court is not entitled to treat the petition filed u/s 115 of C.P.C. basically assailing the maintainability of the objection to an foreign award in an Indian Court in terms of the powers available to this Court under Article 226 /227 of Constitution of India in the light of Clause-19 of the Arbitration Agreement.

On that issue, there are number of judgments which permits this Court to treat the petition filed u/s 115 of C.P.C. as a petition under 227 of Constitution of India.

In Appeal (Civil) no. 5807/2005 decided on 19/09/2005 (Col. Anil Kok (Retd.) Vs. Municipal Corporation, Indore),, it has been observed by the Hon''ble Apex Court that:

The respondents originally filed a revision invoking Section 115 of the CPC (for short ''the Code'') before the High Court challenging the order of the first appellate court. In view of a decision rendered by that High Court that no revision u/s 115 of the Code could be entertained against an order of injunction since the order was purely interlocutory in nature, the respondents herein sought a conversion of their revision into a petition under Article 227 of the Constitution of India. This prayer was allowed by the High Court which decided to treat the proceedings as one under Article 227 of the Constitution of India. It is challenging that order that the petitioner before us has filed Special Leave Petition(C) No. 11771 of 2003.

The question is: Is there is a ground for review?

If the judgment that was passed was against the statute, or against binding precedent or in excess of the jurisdiction of the Court or was contrary to record, a review would lie.

The matter at best seems to be one of an error of labels, first, at the subordinate stage, and then at the High Court stage.

Section 151 does not confer any power as such. If only recognizes the inherent powers of a Court and also clarifies that the other provisions of the Code will not come in the way of exercising inherent powers in order to prevent abuse of the process of the Court or to make such orders as may be necessary for the ends of justice.

In the present case, even during the arguments in review, nothing was shown how objections to the foreign award would be maintainable before the Civil Court at Indore, and more so when proceedings for enforcement were pending in Mumbai. If that be so, the order dismissing the application of the foreign party and continuing with the objections was patently wrong and was liable to be set aside by the High Court. Even if a Civil Revision u/s 115 was technically not appropriate, and a petition under Article 227 of the Constitution of India would have been preferable, the power under Article 227 was there, and was wide enough to enable this Court to set aside a patently wrong order. Judgment delivered in the case of Nawab Shaqafath Ali Khan and Others Vs. Nawab Imdad Jah Bahadur and Others, is direct in point. Relevant portion of this judgment is reproduced herein under for the sake of reference:

If the High Court had the jurisdiction to entertain either an appeal of a revision application or a writ petition under Article 226 and 227 of the Constitution of India, in a given case if, subject to fulfillment of other conditions, could even convert a revision application or a writ petition into an appeal or vice versa in exercise of its inherent power. Indisputably, however, for the said purpose, an appropriate case for exercise of such jurisdiction must be made out.

In view of the aforesaid observations, present Review Petition is dismissed in limine.