calcutta high court

Calcutta High Court | While directing the enforcement of the Arbitral Award, a single-judge bench of Shekhar B. Saraf,* J., held that “the arbitrator’s view is sacrosanct and should not be substituted with an alternate view/opinion which this court may possibly have on re-appreciation of the evidence.”

Factual Matrix

In the instant matter, the petitioner and respondent came to an agreement where petitioner will carry respondent’s cargo of iron ores from Indian ports to the China’s main port. The commercial terms agreed between the parties contained an arbitral clause for arbitration to be conducted in Singapore. A dispute arose between the parties, when the petitioner incurred demurrage and detention charges due to delay in berthing of the cargo by the respondent. As a result, the petitioner initiated arbitration before the Singapore International Arbitration Centre.

The Arbitrator rejected the respondent’s contention that there was no valid contract between the parties as the parties only exchanged email which will not amount to consensus ad idem and passed a partial award in favour of the petitioner and held that there existed a valid contract.

The petitioner preferred the present application under S. 46 of the Arbitration and Conciliation Act, 1996 (the Act) read with Or. 21 of the Code of Civil Procedure, 1908 (CPC) before this Court for the enforcement of the award.

Moot Point

1. Whether there should be a refusal to enforce a foreign award?

2. Was there an agreement between the parties, which furthermore contained an arbitration clause?

Court’s Observation

While discussing the constraints and boundaries of the Court’s discretion while entertaining a plea regarding refusal to enforce a foreign award, the Court relied various judgments of the of the Supreme Court and reiterated that while exercising discretion under S. 48 of the Act regarding enforcement of foreign arbitral awards, the courts are precluded from:

1. re-appreciating evidence,

2. substituting their own view with that of the arbitrator, and

3. reviewing the matter afresh.

The Court stated that “to refuse enforcement, the evidence must be expressly forthcoming to indicate that there was no concluded contract between the petitioner and respondent, wherein the arbitrator has gone completely amiss in his duty.”

The Court observed in case when the Court came to conclusion that the arbitration agreement is lacking or no contract is concluded between the parties, the Court must refuse the enforcement of the Award and shall fall prey to S. 48(2)(a) and (b) of the Act.

1. S.48(2)(a) of the Act“for the subject matter of dispute not capable of settlement by arbitration under the law of India”;

2. S. 48(2)(b) of the Act“the enforcement of the award would be in conflict with the public policy of India as unilateral imposition of a contract upon an unwilling and unrelated party would be against the ‘most basic notions of justice’ and would shock the conscience of any court.”

The Court observed that while deciding whether there existed an arbitration agreement, the Court should observe that whether the Arbitrator had (i) examined the evidence upon proper application of mind, decided upon what constituted as the agreement and reviewed various communications and conduct of parties (ii) concluded that there was consensus ad idem between the parties based on an agreement.

The observed that when an Arbitrator has provided a determination after analyzing facts and applying law regarding existence of arbitration agreement, then “this court should not substitute its own view, replace that of the arbitrator and venture beyond this preliminary determination, unless it is manifestly evident that there existed no agreement.”

Court’s Verdict

In the light of facts and circumstances of the case, authorities cited and keeping in mind the law with regards to S. 48 of the Act, the Court held that there is no reason to contemplate that (i) no contract was concluded or no arbitration agreement which could have made, (ii) the present matter being incapable of settlement by arbitration in India, or (ii) shocked the conscience of the Court in light of forceful imposition of a contract not entered into by the parties.

Rejecting the respondent’s objection regarding enforceability of the award, the Court directed to enforce the award and execute the same as a decree of this court.

[Jaldhi Overseas Pte Ltd. v. Steer Overseas (P) Ltd., 2023 SCC OnLine Cal 1628, order dated 23-06-2023]

*Judgment by Justice Shekhar B. Saraf

Advocates who appeared in this case :

Mr. Tilak Bose, Sr. Adv., Mr. K. Thaker and Mr. Anurag Bagaria, Counsel for the Petitioner;

Mr. Joy Saha, Sr. Adv., Mr. Anuj Singh, Ms. Rashhmi Singhee, Mr. Aman Agarwal, Ms. Trinisha De and Mr. Siddhartha Roy, Counsel for the Respondent.

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