Enforcement of Judgments 2019

Last Updated August 07, 2019

India

Law and Practice

Author



ZBA is a specialist law firm headquartered in Mumbai, providing international quality Indian law advice to Indian and overseas clients. The partners and team of lawyers are admitted to practice in India and the UK, and many have training and experience in other jurisdictions. The firm provides dedicated niche expertise in admiralty, capital markets, corporate, dispute resolution, financing, foreign investment, projects and infrastructure, insolvency and restructuring, and regulatory matters. The disputes practice has been involved in numerous ground-breaking disputes that have influenced several legal precedents, with international implications. The team covers areas such as civil fraud and asset recovery, general corporate and commercial disputes, lender enforcement and debt recovery, insolvency and enforcement work, maritime and shareholder disputes, and investor-state arbitration.

In the case of a company limited by shares, the assets of the company are found in a schedule to the balance sheet, which can be publicly accessed online from the registrar of companies upon payment of a fee. It is not easy to identify the assets of a partnership or a sole proprietorship, as there is no requirement under Indian law for public disclosure.

As an aid to the execution of a judgment, Order 21 rule 41 of the Code of Civil Procedure, 1908 (“CPC”) empowers the court to order and direct the judgment debtor to disclose on affidavit its assets for satisfying the decree. Under this provision, the Court may also direct the party to file an affidavit stating the particulars of all the assets available to them.

Attachment of Assets

Pre-judgment attachment is permissible under Order 38 Rule 5 of the CPC, which empowers the court to attach the property of the defendant in circumstances where the court is satisfied that the defendant is disposing of its property with a view to obstructing or delaying the execution of any decree that may be passed against it. 

In Raman Tech. & Process Engg. Co. & Anr. v. Solanki Traders [2008] 2 SCC 302, the Supreme Court ruled that the plaintiff first has to establish a good prima facie case. The court must be satisfied that the defendant intends to obstruct or delay the execution of any decree that may be passed against it and that it is likely to dispose of assets or remove them from the limits of the court. 

In practice, the court first calls upon the defendant to furnish security for the claim; if such security cannot be furnished, then the property of the defendant is attached. 

The only legal means to identify a party’s assets in India is to apply to the court for an order for disclosure of assets, subsequent to the commencement of proceedings.

There are a wide variety of judgments in India. A final judgment is known as a decree under the CPC. Section 2 (2) of the CPC defines a ‘decree’ as a formal expression of an adjudication, which conclusively determines the rights of the parties. It may be either preliminary or final. Section 2 of the CPC also defines an ‘order’ as the formal expression of any decision of a Civil Court that is not a decree. 

The definition of a judgment under Section 2 is a statement given by the judge in support of a decree and order. Within these two categories, there may be further distinctions, according to the relief which is sought by the parties. 

Different types of judgments are rendered in civil suits and are typically regulated by the relief sought. For instance, Order XX of the CPC lists some of the different types of decrees that can be passed in a civil suit, as follows:

  • decree for recovery of immovable property (Rule 9); 
  • decree for delivery of immovable property (Rule 10);
  • decree (and order thereafter) that may direct payment by instalments (Rule 11);
  • decree for possession of immovable property and mesne profits (Rule 12); 
  • decree for dissolution of partnership; and
  • decree in a suit for partition of property or separate possession of a share therein.

In addition, Indian procedural law also recognises a decree on admission (Order XII Rule 6 of the CPC), and an ex parte decree (Order IX Rule 6 of the CPC).

Section 51 of the CPC envisages five modes for executing a decree, namely: 

  • by delivery of any property specifically decreed; 
  • by attachment and sale of any property;
  • by arrest and detention of the judgment debtor in prison;
  • by appointing a receiver; and
  • in such other manner as the nature of the relief may require.

Other remedies in execution of a judgment are found in Rules 30-36 of Order XXI of the CPC. These provide for the following: 

  • for decree of payment of money – execution by detention in civil prison, attachment and sale of property, or both;
  • for a decree relating to specific movable property or a share in specific movable property – execution by seizure and delivery of the movable property. However, if the movable property is of such nature that it cannot be conveniently removed from the ground, then the property can be left in the custody of a custodian, as specified under Order 21 Rule 43A';   
  • for a decree for restitution of conjugal rights – execution by making a periodical payment;
  • if the decree is in respect of the execution of a document or the endorsement of a negotiable instrument – execution by preparing the document in the prescribed form;
  • if the decree relates to the delivery of immovable property, a court has the power to attach the property and sell the property or a sufficient portion thereof to satisfy the decree. After such attachment the first step is issuing a proclamation of sale; and
  • if the decree is in respect of the delivery of immovable property when in the occupancy of a tenant, a copy of the warrant must be affixed in some conspicuous place on the property, and a proclamation to the occupant must be made.

Garnishee proceedings are also contemplated by Order 21 Rule 46 of the CPC. A garnishee order is passed by an executing court directing or ordering a garnishee not to pay money to the judgment debtor since the latter is indebted to the garnisher (decree holder). It is an order of the court to attach money or goods belonging to the judgment debtor in the hands of a third person. The third party is known as the 'Garnishee' and the court's order is known as a Garnishee Order. It is a remedy available to the decree holder. This order may be made by order of the court to holders of funds (ie, a third party) that no payments have to be made until the court authorises them. The purpose of the order is to protect the interest of the decree holder. 

Order 21 Rule 46D expresses that, in cases where the debt belongs to a third person, the court may order such third person to appear and state the nature and particulars of the claim, and give him an opportunity to challenge such claim.

As regards insolvency proceedings, in Mobilox Innovations Private Limited v. Kirusa Software Private Limited, 2018 (1) SCC 353, the Supreme Court held that insolvency proceedings are not intended to be a substitute for debt recovery. Therefore, a judgment creditor may not be entitled to invoke insolvency proceedings on the basis of an unsatisfied judgment. In other words, a decree holder cannot invoke insolvency proceedings.

The time taken to execute a judgment in India is flexible, and depends on where the asset of the judgment debtor is located and what form it takes. For instance, the attachment of a bank account in a metro city in India will be easier and quicker than the attachment or sale of immovable property of the judgment debtor located in the interiors of India, where the decree will have to be transferred to the local court for execution.

Order XXI Rule 41 of the CPC empowers Indian courts to call upon the judgment debtor to disclose on affidavit all assets owned by it. The disclosure of assets by the judgment debtor is a preliminary step in aid of execution. The court may orally examine the judgment debtor as to the debts owed by him/her, and shall make an order for the attendance and examination of such judgment debtor or officer or other person. Where a decree for the payment of money has remained unsatisfied for a month, the judgment debtor shall be required to file an affidavit stating the particulars of his/her assets.

In any case in which a decree is passed ex parte against a defendant, the defendant may apply to the court under Order IX Rule 13 to set it aside; if he satisfies the court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the court shall make an order setting aside the decree against him.

An ex parte decree passed against a defendant can be set aside under Order IX Rule 13 if it is proved to the court that the summons was not duly served or that the defendant was prevented due to sufficient cause from appearing. An ex parte decree will not be set aside merely on the ground that there was an irregularity in the service of summons, if it is satisfied that the defendant had notice of the date of hearing and had sufficient time to appear and answer the plaintiff's claim. In Parimal v. Veena alias Bharti (2011) 3 SCC 545, the Supreme Court ruled that “sufficient cause" means that the party had not acted in a negligent manner or there was a want of bona fides on its part in view of the facts and circumstances of a case, or the party cannot be alleged to have been "not acting diligently" or "remaining inactive". The expression ‘sufficient cause’ has been liberally construed by the Supreme Court in cases where there is no negligence nor want of bonafides on the part of the applicant (see Bhivchandra Shankar More v. Balu Gangaram More & Ors, 2019 (7) SCALE 551).

In principle, all judgments are enforceable. However, certain assets of the judgment debtor are immune from execution, as expressed under Section 60 of the CPC. The exemptions are based on reasonable and equitable grounds. For instance, monies invested in a Public Provident Fund, stridhan of a married woman, etc, are immune under Section 60.

There is presently no central register of all judgments. However, certain High Courts and tribunals have websites from which the entire transcript of all judgments have been available in electronic form for the last few years.

There is no record or register of judgments that are satisfied. Therefore, all transcripts of judgments in electronic form are maintained by certain High Courts and tribunals. 

The enforcement of foreign judgments in India falls into two categories: foreign judgments rendered from certain designated courts in reciprocating territories, and judgments pronounced by a foreign court from a non-reciprocating territory.

Reciprocating territories gazetted by the Indian Government under Section 44 A of the CPC are as follows:

  • the United Kingdom Aden;
  • Fiji;
  • the Republic of Singapore;
  • the Federation of Malaya;
  • Trinidad and Tobago;
  • New Zealand;
  • the Cook Islands and the Trust Territory of Western Samoa;
  • Hong Kong;
  • Papua and New Guinea; and
  • Bangladesh.

A judgment passed by a court in a designated reciprocating territory is to be enforced and executed in India as if it were passed by a local Indian court. The competent court for enforcement of a foreign judgment is the district court with jurisdiction to entertain the matter in dispute or a High Court exercising ordinary original civil jurisdiction on the subject matter of the dispute. A judgment from a court of a reciprocating territory can be enforced directly in India by filing an execution application. 

In contrast, a judgment pronounced by a court from a non-reciprocating territory is not entitled to automatic recognition and enforcement. The judgment creditor has to recommence proceedings in India by filing a civil suit on the foreign judgment. In such cases, the foreign judgment can only be relied on as evidence of the debt due to the claimant. In Marine Geotechnics LLC v/s Coastal Marine Construction & Engineering Ltd., 2014 (2) Bom CR 769, the Bombay High Court held that a holder of a decree from a non-reciprocating territory was not entitled to automatically enforce such judgment in India. Such a decree holder would have to file a suit on the foreign decree, or on the original underlying cause of action, or both, in a domestic Indian court of competent jurisdiction. 

However, in order to be conclusive and enforceable in India, any foreign judgment must not offend the traditional conflicts of law tests codified by Section 13 of the CPC, which provides as follows:

“A foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except, —

    1. Where it has not been pronounced by a Court of competent jurisdiction;
    2. Where it has not been given on the merits of the case;
    3. Where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is applicable;
    4. Where the proceedings in which the judgment was obtained are opposed to natural justice;
    5. Where it has been obtained by fraud;
    6. Where it sustains a claim founded on a breach of any law in force in India.”

Any foreign judgment will be subject to the conditions laid down in Section 13 of the CPC.

Only those foreign judgments that give rise to a money claim or a declaration of status and do not offend any of the provisions of Section 13 of the CPC are enforceable in India.

Interim orders such as injunctions or any pro-tem order or measure that is not a final judgment or decree will not be enforceable in India. Similarly, any judgment relating to taxes, fines or penalties or imposing any criminal liability is not enforceable in India. An ex parte judgment that is not on the merits of the case (ie, which does not independently assess the material and make findings on the issues at hand) will not be enforceable in India. English and Hong Kong summary judgments are – in principle – enforceable in India. A foreign judgment relating to immovable property will be enforceable only if the situs of the property is within its jurisdiction (see Duggamma and Ors. Vs. Ganeshayya and Ors, ILR 1964 KARNATAKA 609).

In China Shipping Co. Ltd. v. Lanyard Foods Ltd., 2007 (5) Bom CR 684, the Bombay High Court held that a defendant who chooses not to appear in the foreign proceedings despite being served runs the risk of an ex parte judgment in favour of the plaintiff, and it is a well-settled principle of law that even such a judgment would be a judgment given on merits if evidence is adduced on behalf of the plaintiff and judgment is based on a consideration of the evidence.

In the case of a decree passed by a reciprocating territory, the decree holder must file an application for execution of the foreign judgment or decree in the competent Indian court (ie, the relevant district court). A certified copy of the decree and a certificate from the superior court of the foreign country stating the amount, if any, that has been satisfied under the decree must also be submitted.

Following the application, the executing court will call on the judgment debtor to show cause against execution of the decree. At this stage, the judgment debtor is entitled to object to enforcement on the ground that the judgment offends any of the conditions specified in Section 13 of the CPC.

The various stages in an execution proceeding instituted in India in order to enforce a decree under Section 44A of the CPC are as follows:

  • application for execution – the decree holder must file an application for execution of the decree before the competent court;
  • notice to show cause – the court will then issue notice to the person against which execution is sought, requiring such person to show cause as to why the decree should not be executed;
  • no contest – if the person against which the decree is to be executed does not appear or show cause as to why the decree should not be executed, the court will recognise and enforce the foreign decree as if it were a judgment of the Indian court and will allow the decree holder to execute the judgment against the assets of the judgment debtor;
  • the decree holder can apply to the court to provide directions to the judgment debtor, instructing it to disclose any assets and liabilities. If these assets are disclosed, the court will proceed with the attachment and sale of such assets; and
  • in the case of a non-reciprocating territory, the judgment holder must file a suit on the foreign judgment or decree. Only once the suit is allowed can it be executed as a domestic decree in terms of Order 21 of the CPC.

Recognition and enforcement of an uncontested foreign judgment may take between three and 12 months. A contested action would take longer – between three and five years.

A nominal court fee is payable for the execution of foreign judgments from reciprocating territories. A foreign judgment from a non-reciprocating territory would need to be commenced as a suit, attracting court fees on an ad-valorem basis – typically 1% of the claim amount.

In principle, a foreign judgment that is final from a reciprocating territory under Section 44A of the CPC is entitled to enforcement in India, notwithstanding any appeal that is filed against it, unless the judgment has been stayed pending the outcome of the appeal.

In order to be enforceable in India, a foreign judgment must be rendered by a court of competent jurisdiction. Jurisdiction in this context has been held by the Supreme Court in R. Viswanathan v. Rukn-Ul-Mulk Syed Abdul Wajid, AIR 1963 SC 1, to mean competent in the international context. For this requirement to be satisfied, the foreign court should have assumed jurisdiction only on the ground that the defendant is residing or carrying on business in, or has submitted to, the jurisdiction of the foreign court. A foreign judgment that assumes jurisdiction over the defendant on any other basis will not be enforceable in India.

In Raj Rajendra Moloji Nar Singh Rao v. Shankar Saran & Ors, AIR 1962 SC 1737, the Supreme Court refused to enforce an ex parte decree rendered by a foreign court for the following reasons:

  • the respondents were not subjects of the foreign country;
  • they did not voluntarily appear in the court;
  • they did not contract to submit to the jurisdiction of the foreign court;
  • they were not the residents of that foreign country; and
  • they were not temporarily present in that State when the process was served on them.

Ramanathan Chettyar and Another v. Kalimuthu Pillay, AIR 1952 Cal. 508, sets out the circumstances in which the foreign court is said to have competent jurisdiction, as follows:

  • where the defendant is a subject of the country in which the judgment was passed; 
  • where the defendant is a resident of the country in which the action was commenced; 
  • where the defendant has filed a suit in the same forum in a previous case; 
  • where the defendant has voluntarily appeared; and 
  • where the defendant has contracted to submit himself to the jurisdiction of the foreign court.

In Satya v. Teja Singh, AIR 1975 SC 105, a husband was granted a divorce decree by an American court by misrepresenting the fact that he was living in the USA. The Supreme Court refused enforcement of the decree, owing to the fact that he was not a legitimate resident of the USA.

Service of proceedings in the foreign jurisdiction over the defendant must be valid in accordance with local laws.

Even though Section 13 of the CPC does not contemplate public policy as a ground to refuse enforcement of a foreign judgment, in Renusagar Power Plant Co Ltd v General Electric Co, AIR 1994 SC 860, the Supreme Court held that a foreign judgment that offends Indian public policy will not be enforced in India. This is a well-established principle of law, having also been upheld in Satya v. Teja Singh (cited above).

In Ssangyong Engineering & Constructions Co. Ltd v. National Highway Authority of India, Civil Appeal No. 4779 of 2019, the Supreme Court clarified that the ‘public policy’ defence would only be attracted if the judgment or award offended the “most basic notions of justice”, or when the conscience of the court is shocked by an infraction of fundamental notions or principles of justice.

A default judgment in India is, in principle, enforceable in India, provided the defendant was given adequate notice and opportunity to defend the case but chose not to and the judgment is on the ‘merits’, meaning that the foreign court did not mechanically decree the suit. In order for the foreign judgment to be on the ‘merits’, the foreign court must have applied its mind, evaluated the evidence and arrived at its findings. If these conditions are met, a default foreign judgment from a reciprocating territory will be entitled to recognition and enforcement in India.

In International Woollen Mills v. Standard Wool (U.K) Ltd, AIR 2001 SC 2134, it was held that the expression ‘judgment on merits’ implies it must have been passed after contest and evidence had been let in by both sides. An ex parte judgment in favour of the plaintiff may be deemed to be a judgment on merits only if some evidence is adduced by the plaintiff, and the judgment, however brief, is based on consideration of the evidence. However, if no evidence is adduced on behalf of the plaintiff and the suit is merely decreed because of the absence of the defendant, the judgment may not be regarded as being on the merits of the case.

The limitation period for the enforcement of a foreign judgment from a reciprocating territory is 12 years from the date of the judgment.

In contrast, the limitation period for suing on a foreign judgment from a non-reciprocating territory is three years from the date of the judgment.

As explained earlier, recognition and enforcement of a foreign judgement, can be opposed on any of the grounds listed in Section 13 of the CPC as also if the same offends Indian public policy. Section 13 of the CPC, is a codification of the English conflicts of law test that regulates the recognition and enforcement of foreign judgements in India.

Under Section 34 (3) of the Arbitration & Conciliation Act, 1996 (the “Act”), a domestic arbitral award is entitled to execution as if it were a decree of the court, unless it is challenged in court within 90 days of receipt. The grounds for setting aside a domestic award are found in Section 34 of the Act, which for the most part mirrors Article 34 of the UNCITRAL Model law, and is discussed in detail below. It is important to note that the mere filing of an application to challenge an award in India does not operate as a stay of the award, nor suspend its execution. As a condition to the grant of a stay order, the court may direct the challenging party to deposit the money awarded into the court. Any application challenging the setting aside of an award must be disposed of by the court expeditiously, within 12 months.

There are four categories of arbitral awards in India.

  • First, purely domestic arbitration awards. These relate to awards between two Indians seated in India. In a purely domestic arbitration, an additional ground under Section 34 (2A) of the Act is available for setting aside the award, namely patent illegality appearing on the face of the award.
  • The second category is awards passed in an international commercial arbitration, which is defined under Section 2 (1) (f) of the Act as an Indian-seated arbitration where one of the parties is an entity or person that is not resident in India. The grounds for challenging an award published in an ‘international commercial arbitration’ are found in Section 34 of the Act, which, other than the patent illegality challenge, mirrors Article 34 of the UNCITRAL Model Law.
  • The third category of awards in India is foreign awards rendered outside India, in a New York Convention Contracting state as notified by the Indian government under Part II Chapter 1 of the Act. The grounds for resisting enforcement of a New York Convention Award in India are found in Section 48 of the Act, which is identical to Article V of the New York Convention, 1958. Unlike domestic awards or awards rendered in an international commercial arbitration seated in India, Section 48 of the Act makes available an additional ground for the challenge of a New York Convention award, namely that the award has not yet become binding on the parties, or has been set aside or suspended by the curial court (see Section 48 (1) (e) of the Act.) A further difference is that, unlike a domestic award or an award rendered in an international commercial arbitration seated in India, a New York Convention award is not automatically regarded as a decree of the Indian court 90 days after the publication of the award – a foreign award will only be regarded as a decree of the Indian court if it meets the conditions specified for enforcement under Section 48 of the Act.
  • A fourth category of awards contemplated by Indian law is found in Part II Chapter II of the Act, namely Geneva Convention awards. Geneva Convention awards apply to those states that are not parties to the New York Convention. The grounds for challenging a Geneva Convention award are wider and more generous than those under the New York Convention. In particular, Section 57(3) of the Act provides that a Geneva Convention award may not be enforced in India if under the lex arbitri an additional ground for challenge is available that, if satisfied, would render the award unenforceable in the foreign court.

Under Section 34 (2) (b) and Section 48 (2) (a) of the Act, arbitral awards (domestic or foreign, respectively) rendered in respect of disputes that are regarded under Indian law as being incapable of settlement by arbitration will not be enforced. For instance, criminal offences, rent disputes, matters arising under trust law or rights in rem have been held to be inherently incapable of arbitration and consequently unenforceable (see Booze Allen & Hamilton Inc. v. SEBI Home Finance Ltd. (2011) 5 SCC 532).

Similarly, arbitral awards (domestic or foreign) that are in conflict with the public policy of India are unenforceable. The explanations to both Section 34 2(b) (ii) and Section 48(2) (b) make plain that the public policy defence cannot be used to revisit the merits of the case, and that the expression is to be narrowly construed as applying only to those cases that relate to fraud or where the award offends the basic notions of morality and justice.

Section 47 of the Act governs the process for the enforcement of a foreign arbitral award and mandates that the award holder produce the following before the court:

  • the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;
  • the original agreement for arbitration or a duly certified copy thereof;
  • such evidence as may be necessary to prove that the award is a foreign award;
  • an official translation into English if the award is in a foreign language; and
  • where a certified copy of the arbitration agreement is being filed, it should be certified by a notary public empowered to certify documents in the country of origin and countersigned by the Indian Consul with the seal of the consulate at the place where the original arbitration agreement is signed or located.

Section 36 of the Act governs the process for the enforcement of a domestic arbitral award. The only condition that needs to be satisfied by Section 36 of the Act is that enforcement of the award should not be stayed under Section 34 of the Act, and the 90-day period should have lapsed. It is worth noting that, subsequent to the amendments made to the Act in 2015, the filing of an application under Section 34 does not operate as an automatic stay of the award, as was previously the case. In Fuerst Day Lawson Ltd v. Jindal Exports Ltd., 2001 (6) SCC 356, the Supreme Court held that a foreign award can be executed as if it were a decree of a local court once the court determines that it is enforceable.

As mentioned before, any application to set aside a domestic award or an award rendered in an international commercial arbitration seated in India is made under Section 34(6) of the Act. Any such challenge to the award must be disposed of within one year. However, given the sheer volume of litigation in India, and depending on the degree of complexity and the ferocity of opposition, disputes of this nature can take between three and five years, including appeals. Similar considerations apply to the enforcement of foreign awards.

Section 34 of the Act, which mirrors Article 34 of the UNCITRAL Model Law, exhaustively lists the grounds for setting aside an award rendered in an Indian-seated arbitration. Section 48 of the Act regulates the enforcement of New York Convention awards and mirrors Article V of the New York Convention, with similar grounds to those contained in Section 34 of the Act (except the ‘patent illegality’ exception available only to pure domestic arbitration). Part III of the Act regulates Geneva Convention awards. Section 57 of the Act sets out conditions for the enforcement of a Geneva Convention award, and has additional grounds expressed under section 57 of the Act for setting aside a foreign award.

The general approach of the courts when faced with a challenge to an award is to support the award. In Bilendra Nath v. Mayank, 1994 6 SCC 117, the Supreme Court held that the court should approach an award with a desire to support it, if that is reasonably possible, rather than to annul it.

As regards Indian-seated arbitration, Section 36 of the Act provides that if an arbitral award is not set aside within 90 days of its publication, it is deemed to be a decree of the court and is enforceable as such. New York Convention Awards whose enforcement is governed by Section 48 of the Act are not final until they are recognised and enforced in India by a local court. Under Section 48 (3) of the Act, the Indian court may adjourn the enforcement proceedings to await the outcome of the appeal or application to set aside the award that is pending in the foreign court, or it may stay its proceedings and direct the party against whom the award is passed to furnish security for costs.

Section 31 of the Act prescribes that (unless otherwise agreed) the award must state the reasons on which it is based, and must be signed by all arbitrators and dated. The award must be signed and dated and specify the place of the award, and must deal with costs and interest as well. In Union of India v. Bright Power Projects, AIR 2015 SC 2749, the Supreme Court ruled that if the parties agreed that no interest shall be payable from the date of the cause of action to the date of the award, the tribunal is bound by the terms of the contract. In Campos Brothers Farms v. Mathru Bhumi Supply Chain Pvt Ltd, O.M.P.(EFA)(COMM.) 1/2017, the Delhi High Court refused the enforcement of a foreign award on the ground that the arbitrator had failed to furnish reasons in support of its conclusion, which according to the court was in violation of public policy. 

The Act statutorily clarifies that an award is in conflict with the public policy of India only if the making of the award was induced by fraud or corruption, or was offensive to the basic notions of morality or justice, or if the award is in contravention of the fundamental policy of Indian law. The Act expressly provides that the public policy exception cannot entail a review on the merits of the dispute. In Ssangyong Engineering & Constructions Co. Ltd v. National Highway Authority of India, Civil Appeal No. 4779 of 2019, the Supreme Court clarified that the ‘public policy’ defence would only be attracted if the judgment or award offended the “most basic notions of justice”, or when the conscience of the court is shocked by an infraction of the fundamental notions or principles of justice. In Renusagar Power Co v General Electric Co, AIR 1994 SC 860, the Supreme Court – whilst enforcing a New York Convention award – held that the expression "public policy" is to be narrowly construed. 

Section 34(2)(v) provides that an award can be challenged if the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, or if the procedure adopted was not in consonance with what was agreed by the parties. In Venture Global Engineering v. Satyam Computer Services Ltd. & Anr, AIR 2010 SC 3371, the Supreme Court held that the concealment of relevant and material facts that should have been disclosed to the tribunal was fraudulent, vitiating the award.

Under Section 43 of the Act, the law of limitation is made applicable to arbitration.

The limitation period of 12 years is applicable to domestic awards as they are regarded as a decree of the court (see Umesh Goel v. Himachal Pradesh Cooperative Group Housing Society Ltd, (2016) 11 SCC 313).

There have been varying judgments as to the computation of the period of limitation for foreign awards. In Noy Vallesina v. Jindal Drugs Limited, 2006 (5) BomCR 155, the Bombay High Court held that a foreign award would undergo a two-step process, as it is not a decree per se and would not be binding on parties unless a competent court finds it enforceable. Thus, the application for the enforcement of a foreign award would fall within the residual provision of the Schedule to the Limitation Act, attracting the three-year time limit. Upon enforcement of the foreign award as a decree of the court, the limitation period would be 12 years. In Compania Naviera ‘Sodnoc’ v. Bharat Refineries Ltd, AIR 2007 Mad 251, the Madras High Court ruled, in a contrary view, that a foreign award is already stamped as a decree and the party can apply for enforcement straight away, and would accordingly attract the 12-year time limit applicable to a decree holder. 

An application for setting aside a domestic award must be made within three months of the date of the award, as specified under Section 34 (3) of the Act. An extension of 30 days can be granted by the court if it is of the opinion that the applicant had sufficient cause for delay. 

ZBA

412, Raheja Chambers,
213 Nariman Point
Mumbai
400 021

+91 226743 5013 / +91 99206 68000

+9122 2283 3010

zarir@zba.co.in http://zba.co.in
Author Business Card

Law and Practice

Author



ZBA is a specialist law firm headquartered in Mumbai, providing international quality Indian law advice to Indian and overseas clients. The partners and team of lawyers are admitted to practice in India and the UK, and many have training and experience in other jurisdictions. The firm provides dedicated niche expertise in admiralty, capital markets, corporate, dispute resolution, financing, foreign investment, projects and infrastructure, insolvency and restructuring, and regulatory matters. The disputes practice has been involved in numerous ground-breaking disputes that have influenced several legal precedents, with international implications. The team covers areas such as civil fraud and asset recovery, general corporate and commercial disputes, lender enforcement and debt recovery, insolvency and enforcement work, maritime and shareholder disputes, and investor-state arbitration.

Compare law and practice by selecting locations and topic(s)

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.