2019 Bom Nobel v. Dharni

NOBEL-N-928-2017.
DOC
Jsn
IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
NOTICE NO. 928 OF 2017

IN
EXECUTION APPLICATION NO.25 OF 2017
Nobel Resource Ltd. …Applicant /

Claimant
Vs.
Dharni Sampda Private Ltd. … Respondent
Mr. Chetan Kapadia with Ms. Manini Bharati, Ms. Aparjita Sinha
and Mr. Siddharth Ranade, i/b. Trilegal for Applicant.
Mr. Vikram Nankani, Senior Advocate with Mr. Sanjay Jain, Mr.
Ashish Rao, Mr. Sajal Yadav, Ms. Ruchita Patel and Mr.
Mitul Shah i/b Karan K. Vyas for Respondent.
CORAM: R.I. CHAGLA, J.
ORDER RESERVED ON 26TH AUGUST, 2019
ORDER PRONOUNCED ON 18TH NOVEMBER, 2019
O R A L O R D E R:-
1. This Notice has been filed by the Applicant under Order XXI,
Rule 22 of the Code of Civil Procedure, 1908 (“CPC”) in respect of
foreign award dated 13th July, 2016 (“the foreign award”) passed
at Singapore. The Applicant has sought leave of this Court to
execute the foreign award. The Notice has been contested by the
Judgment Debtor / Respondent and the objections are heard in
this Notice without the requirement of filing a separate Petition
1/40
::: Uploaded on - 18/11/2019 ::: Downloaded on - 20/11/2019 00:48:33 :::
NOBEL-N-928-2017.DOC
under Section 48 of the Arbitration and Conciliation Act, 1996 (“the
said Act”). The foreign award has been passed by the Sole
Arbitrator appointed in accordance with Singapore International
Arbitration Centre, SIAC Rules in arbitration initiated by the
Applicant under Clause 14 of the Deed of Agreement dated 7th
June, 2013 against the Respondent.
2. The foreign award which is sought to be enforced by the
Applicant directs the Respondent to pay :-
(a) EUR 290,920.70, USD 3570,333.49 and GBP

36,162.41 due and owing under the Deed of Agreement
dated 7th June, 2013 and alternatively damages in the
same amount;
(b) Basic Interest (Basic Interest) in the sums of USD

5751.71 plus EUR 4284.78 plus GBP 573.84 till the
date of the Statement of Claim (27th October, 2014)
and from 28th October, 2014 until the later of the final
New York banking day of December, 2014 or the date of
full settlement of the remaining Outstanding Dues;
(c) Default interest in the sums of USD 100,181.49 plus

EUR 8919.23 plus GBP 1,120.33 till the date of the
Statement of Claim (27th October, 2014) until the
settlement of the remaining Outstanding Dues,
Outstanding Interest and Basic Interest;
2/40
(d) USD 924,877.65 as the Applicant’s legal costs and

expenses;
(e) SGD 88,308.29 as reimbursement of the advance

on costs paid by the Applicant to the SIAC.
3. Before adverting to the objections raised by the Respondent
to the Notice, it would be appropriate to set out a brief background
of facts which culminated in the foreign award.
4. In 2008, the Applicant, Respondent and one Taurian
Manganese (“Taurian”) executed two agreements namely
Purchase Contract dated 22nd January, 2008 for sale and
purchase of manganese and the loan agreement dated 3rd July,
2008 by which the Applicant advanced a loan to the Respondent.
5. Since there were dues owed by the Respondent to the
Applicant under the Purchase Contract and Loan Agreement, the
Applicant, Respondent and Taurian entered into two agreements
namely Cargo Repayment Agreement under which the
Respondent admitted its liability to repay the amount USD
2,97,364 which was due to the Applicant for cargo loss or mark
loss and which stipulated monthly repayment of the cargo loss by
the Respondent and the loan repayment agreement under which
3/40
the Respondent admitted its liability to repay the amount USD
1,518,655.29 and EURO 1,200,000 and stipulated monthly
repayment of the same.
6. Thereafter, the amount due and payable by the Respondent
to the Applicant under the aforementioned agreements were
crystallized under a single agreement viz. the Deed of Agreement
dated 7th June 2013. Under the Deed of Agreement, the
Respondent has admitted its debts due to the Applicant and
promised to pay in agreed installments. Under the recitals of the
Deed of Agreement the parties have categorically agreed and
confirmed the amount payable by the Respondent to the Applicant
which is mentioned in Clause 3 of the Deed of Agreement. It has
stipulated monthly repayment of the aforementioned dues till such
amounts mentioned therein were repaid in full. It is further
provided in Clause 7(b) of the said Deed of Agreement that in the
event of default, the entire amount shall become payable. Clause
10 of the Deed of Agreement provides that the Deed of Agreement
constitutes the entire agreement between the parties and
supersedes all prior oral and written negotiations / agreement
between the parties. Further, under Clause 14(b) of the said Deed
of Agreement all disputes under the Deed of Agreement have
4/40
been referred to the Arbitration Proceedings at Singapore to be
governed by the SIAC Rules.
7. The Respondent made payments under the Deed of
Agreement till 2013 and thereafter committed defaults on its
payments under the said Deed of Agreement. Accordingly, the
claimant initiated the arbitration proceedings as provided under
Clause 14 of the Deed of Agreement before the SIAC.
8. It appears that during the arbitration proceedings certain
events pertaining to the evidence of one Mr. Anurag Bhatnagar
which have been relied upon by the Respondent in raising its
objection to the enforceability of the foreign award are required to
be referred herein to below :
(a) Certain procedural orders had been issued by the
Arbitrator which included submission of list of witnesses
by the parties. The Respondent submitted its list of
witnesses with the Arbitrator on 9th January, 2015 and
in which list the name of Mr. Anurag Bhatnagar, an Ex-
employee of the Applicant / Claimant was included. It
appears that in the defence raised by the Respondent
to the claim of the Claimant, an oral agreement was
5/40
pleaded and reliance was placed on such oral
agreement for contending that the parties viz. Mr.
Bhatnagar for the Claimant and Mr. Bajla for
Respondent had agreed that the aforementioned written
agreement viz. Cargo Repayment Agreement and the
Loan Repayment Agreement was not to be acted upon.
Mr. Bhatnagar, was claimed to be aware of the
representations and proposals made by the Claimant to
the Respondent prior to the execution of the Deed of
Agreement as well as Repayment Agreement.
(b) On 9th January, 2015, the Claimant through its
Advocate Reed Smith PTE LLP addressed a letter to
Mr. Bhatnagar which has been relied upon by the
Respondent to contend that Mr. Bhatnagar was
threatened of grave legal consequences and accused
of fraud, deception and conspiracy if he deposed in
favour of the Respondent and was called upon to give
witness statement on the Claimant’s behalf.
(c) On 11th January, 2015, a procedural order came
to be passed by the Arbitral Tribunal recording inter alia
6/40
the claim of the parties that they would be sharing the
witness statements by 16th January, 2015 and directing
the parties to exchange the witness statements by 5
p.m. on 16th January, 2015.
(d) On 21st January, 2015, Mr. Bhatnagar, through
its Advocate Mayer Brown JSM, replied to the letter of
the claimant’s Advocate dated 9th January, 2015 taking
offence to the language and the tenor of the said letter.
It has been stated in the said letter that if the claimant’s
Advocate had contacted the Respondent, they would
have learnt that no witness statement had been given to
the Respondent. The Advocate for Mr. Bhatnagar has
confirmed that the written agreements entered into
between the Claimant and the Respondent are valid
and binding and that there was never any “side
agreement” that the written agreements were not legally
enforceable. It is further stated that a written statement
of Mr. Bhatnagar shall be prepared which will be issued
to both Claimant and the Respondent in the Singapore
Arbitration.
7/40
(e) On 28th January, 2015, the Claimant’s Advocate
replied to the aforementioned letter dated 21st January,
2015 of the Advocate of Mr. Bhatnagar and contended
that their prior letter had not made any defamatory
statement and / or threats against Mr. Bhatnagar and
that the Claimant’s Advocate would be grateful if Mr.
Bhatnagar would respond in detail to the allegations
contained in the amended statement of defence.
(f) On 2nd February, 2015, the Advocates for Mr.
Bhatnagar reiterated Mr. Bhatnagar’s position that there
was no side agreement or representation that the
Claimant would not take steps to enforce the repayment
agreements or that they were otherwise a sham.
(g) On 12th February, 2015, a letter was addressed
by the Advocates for the Claimant to the Advocate for
Mr. Bhatnagar, wherein Mr. Bhatnagar was requested to
respond to the very serious allegations made by the
Respondent in the amended statement of defence.
(h) On 25th February, 2015, the Advocates for Mr.
Bhatnagar has although referring to threat of criminal
8/40
proceedings by the Claimant’s Advocates which was
stated to continue to remain as well as threat of legal
recourse against Mr. Bhatnagar, they have requested
the Claimant’s Advocate to provide copies of the
supporting documentation together with the copies of
the witness statements served by the parties. This
would be required for the Advocates for Mr. Bhatnagar
to prepare his written statement which will be issued to
both the parties in the arbitration.
(i) On 17th March, 2015, the Advocates for Mr.
Bhatnagar addressed an email to the Advocates for the
Claimant reiterating Mr. Bhatnagar’s intention to give
written statement to both parties.
(j) On 18th March, 2015, the Arbitral Tribunal
passed procedure order No.11 recording that the
Claimant have served witness statement on 11th March,
2015 and granting the Respondent time till 24th March,
2015 to file their witness statement. The schedules has
been laid down by the Arbitral Tribunal for the Claimant
to file their responsive statement by 7th April, 2015 and
9/40
the response witness statement of the Respondent shall
be submitted within one week of the Claimant’s witness
response statement being served upon the
Respondent. The opening statements were to be
submitted by 21st April, 2015 and the oral / evidentary
hearing is re-fixed and to take place from 28 to 30th
April, 2015.
(k) On 24th March, 2015, the Respondent’s
Advocate served the witness statement of Mr. Bhajla.
Thereafter, no response witness statement was filed by
the Respondent to the Claimant’s witness statement.
(l) On 13th April, 2015, the Advocates for Mr.
Bhatnagar addressed an email to both the Claimant and
Respondent informing them that Mr. Bhatnagar would
be in position to issue written statement to both parties
by the following week. The Advocates for the Claimant
responded to this email requesting confirmation on
when Mr. Bhatnagar witness statement could be
expected and the availability of Mr. Bhatnagar to lead
evidence on either 29 or 30th April, 2015.
10/40
(m) The Advocates for the Respondent on 14th April,
2015 addressed an email to the Arbitral Tribunal of the
prospect of Mr. Bhatnagar providing a witness
statement which according to them would be potentially
influenced and prejudiced by the Claimant. However, in
the context of the correspondence generated by the
Claimant’s lawyers in relation thereto, they have stated
that the same is of “little value save for unnecessary
posturing”.
(n) The Arbitral Tribunal responded to the Advocate
for the Respondent’s email by inviting comments from
the Claimant as to whether it intended to submit Mr.
Bhatnagar’s witness statement without making the
witness available for Cross examination. The Arbitral
Tribunal also noted that depending on the Claimant’s
response the Tribunal will decide as to whether Mr.
Bhatnagar’s witness statement should be admitted and
what weight should be given to it, if admitted.
(o) On 15th April, 2015, the Advocates for Claimant
responded to the Arbitral Tribunal that the background
11/40
to the Respondent naming Mr. Bhatnagar as one of its
key witnesses is unclear. The Respondent had not
disclosed any correspondence pertaining to the same.
They have stated that the Advocates for the
Respondent was attempting to exclude any and all
evidence from any other party who alleges was a party
to the oral agreements. They have stated that the main
defence of the Respondent in the arbitration being
based on Mr. Bhajla’s witness statement viz. the
statement of oral agreements between himself and Mr.
Bhatnagar.
(p) On 15th April, 2015, the Arbitral Tribunal issued
procedural Order No.15 regarding the arrangement for
the calling of Mr. Bhatnagar as witness by both the
parties. The witness or his lawyers was not to be
communicated unilaterally and endeavor should be
made to send joint letters to his lawyers or otherwise
copy to the other side and no letters should make any
threats. Mr. Bhatnagar must also agree to be cross
examined on his statement.
12/40
(q) By an email dated 24th April, 2015, the
Advocates for Mr. Bhatnagar forwarded a signed
statement of Mr. Bhatnagar to the Claimant and the
Respondent as well as the arbitrator. The Arbitrator
admitted the witness statement of Mr. Bhatnagar
subject to cross examination by the Respondent. This
was pursuant to the several emails exchanged between
the Advocates for the Claimant and the Respondent as
well as the Advocate for Mr. Bhatnagar regarding
inclusion of Mr. Bhatnagar witness statement which was
provided to the Arbitrator. The Tribunal had requested
for the Respondent to respond to the Claimant’s request
to admit the evidence of Mr. Bhatnagar. The
Respondent’s response to the Arbitral Tribunal is in an
email dated 25th April, 2015. The primary conditions for
admitting Mr. Bhatnagar’s witness statement in
evidence was stated by the Respondent to be that the
Respondents should be allowed to adduce responsive
witness statement (s) to Mr. Bhatnagar’s statement, the
Respondent should have an opportunity to cross
examine Mr. Bhatnagar and that the Claimant’s
13/40
evidence including Mr. Bhatnagar’s examination closes
before the Respondent’s witness takes the stand.
(r) On 25th April, 2015 the Arbitral Tribunal issued
procedural order No.18 ruling that it would not admit the
statement of Mr. Bhatnagar as evidence unless the
Respondent is allowed the opportunity to test the
evidence by cross examination at an oral hearing. The
Tribunal further ruled that the Respondent could make
applications to the Tribunal at the appropriate time
seeking to adduce responsive witness statements to Mr.
Bhatnagar’s statement and that there was also scope
for witnesses to be interposed or for witnesses to be
recalled to give evidence after another witness has
given his evidence. This was followed by another
procedural order 19, on 27th April, 2015. The Arbitrator
reiterated that the evidence of Mr. Bhatnagar would not
be admitted unless the Respondent was allowed the
opportunity to cross examine Mr. Bhatnagar at an in-
person oral hearing. Further, given the importance of
the intended testimony, it would not be sufficient to
conduct the cross examination by video link.
14/40
(s) By an email issued by the Arbitral Tribunal on
27th April, 2015, the Tribunal proposed that it was
prepared to give directions that Mr. Bhatnagar may give
his evidence in Hong Kong on 4th May, 2015 and that
the Tribunal would be prepared to hear and rule on
application by the Respondent to recall Mr. Bajla to give
evidence in response to Mr. Bhatnagar.
(t) The Arbitral Tribunal held evidentiary hearings on
28th - 30th April, 2015. The Tribunal also heard
Advocates for the parties on the recording of evidence
of Mr. Bhatnagar.
(u) On 30th April, 2015, the Arbitral Tribunal issued
procedural order No.20 reiterating that Mr. Bhatnagar’s
witness statement will be admitted provided that an
opportunity is afforded to the Respondent to test his
evidence by cross examination. An in-person oral
hearing was fixed on 19th May, 2019 at the HKIAC for
Mr. Bhatnagar to give evidence.
(v) There were emails exchange between 4th and
8th May, 2015 on the logistics for conducting the cross
15/40
examination of Mr. Bhatnagar on 19th May, 2015. On
9th May, 2015, the Arbitral Tribunal addressed an email
stating that if the questioning of Mr. Bhatnagar as
witness cannot be reasonably completed on 19th May,
2015, the Tribunal would be willing to direct another
hearing date to take place for the remaining questions.
(w) Mr. Bhatnagar’s was cross examined by the
Respondent on 19th May, 2015 and the cross
examination was completed on that date.
9. Mr. Vikram Nankani, the learned Senior Counsel appearing
for the Respondent has submitted that the foreign award is in
gross contravention of the fundamental policy of India and in
conflict with the basic principles and notions of morality and justice
and hence contrary to the public policy of India. He has further
submitted that the manner in which the Arbitration Proceedings
were conducted by the Arbitrator undoubtedly indicates bias in
favour of the Claimant. He has submitted that the Arbitrator
instead of outright rejecting the witness statement of Mr.
Bhatnagar, a key and critical witness, and without dealing with the
question of admissibility of Mr. Bhatnagar’s evidence, based his
16/40
entire conclusion in not accepting the Respondent’s defence
solely on Bhatnagar’s witness statement. He has submitted that
no system concerning administration of justice can accept or
tolerate, including in India, criminal intimidation of a witness so as
to “procure” favourable evidence. He has submitted that like in any
adversarial system of dispensation of justice witness plays a
crucial role. The Supreme Court has quoted Benthem to say that,
witnesses are the “eyes and ears” of the case. He has submitted
that Mr. Bhatnagar’s testimony was important for the
Respondent’s defence and accordingly Mr. Bhatnagar was named
by the Respondent as witness. He has submitted that the events
immediately thereafter leave no doubt whatsoever that Mr.
Bhatnagar ultimately becoming a witness for the Claimant was as
a result of his being threatened by the Claimant with criminal
prosecution and on account of criminal intimidation. He has
submitted that the fact that the Respondent was allowed to and
got the opportunity to cross examine Mr. Bhatnagar was of no
consequence as ex-facie from the record, it can be seen that Mr.
Bhatnagar was an unreliable, influenced, threatened, tainted and
tutored witness as he was under intimidation and threat of criminal
prosecution and undue influence of the Claimant. He has
submitted that cross examination served no purpose and it was an
17/40
empty formality because any deviation in the answers by Mr.
Bhatnagar would be self incriminating. He has submitted that the
evidence of Mr. Bhatnagar was compromised and not truthful. The
Arbitrator has overlooked his own directions and after expressing
that he would decide the question of admissibility of Mr.
Bhatnagar’s statement, later made only a cursory and cavalier
observations in paragraph 325 of the Award that “There is nothing
in those assertions”.
10. He has submitted that under Section 48 (2) (b) (iii) of the
Arbitration and Conciliation Act, 1996, enforcement of an arbitral
award may be refused if the Court finds that enforcement of the
award would be contrary to public policy of India, i.e. award is in
conflict with the fundamental policy and basic notions of morality
and justice. He has submitted that by allowing the evidence of Mr.
Bhatnagar who was completely influenced, tainted and given
under threat and intimidation of criminal prosecution from the
Claimant is against the most basic principles of fair and
independent trial. In this context, he has relied upon the judgment
in the case of National Human Rights Commission Vs. The State
of Gujarat and Ors.1 in support his contention that, it is important
1 Writ Petition (Cri) No.109 of 2003 decided on 1st May,

2009.
18/40
for a witness to be fair and independent. He has further relied
upon the case of Mahendar Chawla Vs. Union of India2 in support
of his contention that witnesses are important players in the
judicial system who help the judges in arriving at correct factual
findings. He has submitted that a witness statement ought to be
independent, unbiased and free from any kind of influence, threat
and intimidation. It is only an unbiased and independent witness
who can ensure a fair trial. He has submitted that when in the
facts of a particular case, there are glaring facts and records to
show that the witness was visibly and ex-facie influenced and
intimidated by threat of criminal prosecution, the Court ought to
discard and ignore the testimony of any such witness. He has
submitted that admission of such tainted and influenced evidence
of a witness would lead to an unfair conduct of a trial and that is in
conflict with the basic principles and notions of morality and
justice. He has submitted that any award which is passed by
following any practice or procedure which is so unfair and
unreasonable that it shocks the conscience of the Court is liable to
be set aside by a Court exercising jurisdiction under Section 48 of
the Act. He has relied upon the Supreme Court decision in the
case of Ssangyong Engineering & Construction V. National
2 Writ Petition (Cri) No.156 of 2016 : 2018 SCC Online SC

2679.
19/40
Highways Authority of India3 confirming the ratio of the judgment in
the case of Associate Builders V. Delhi Development Authority 4
which has held that arbitral awards that shock the conscience of
the Court can be refused enforcement.
11. He has submitted that despite the Respondent in
correspondence as well as closing submissions made a
categorical submission that Mr. Bhatnagar’s objectivity was
seriously and irreversibly prejudiced by the Claimant’s solicitors
indulging in a slugfest of allegations with Mr. Bhatnagar and his
lawyers and that the evidence of Mr. Bhatnagar was evidently
influenced by the Claimant, the foreign award has only stated that
“There is nothing is those assertions”. He has submitted that the
learned Arbitrator in taking the evidence of Mr. Bhatnagar on
record, inspite of such glaring evidence of threat, intimidation and
influence of the Claimant over Mr. Bhatnagar, demonstrates bias
towards the Claimant. He has submitted that any prudent person
in the face of such evident instance of threat and intimidation
would have required greater degree of corroborative evidence on
part of the influenced witness to even consider the admissibility or
the truthfulness of such evidence. He has submitted that the
3 Civil Appeal No.4779 of 2019; 2019 SCC Online SC 677.

4 (2015) 3 SCC 49.
20/40
foreign award being against basic notions of morality and justice
and tainted by bias of the learned Arbitrator ought to be refused to
be enforced by this Court.
12. Mr. Kapadia, the learned Counsel for the Claimant has
submitted that the contentions of the Respondent regarding the
effect of the Arbitrator taking on record Mr. Bhatnagar’s evidence
is squarely covered by the ratio laid down by the Supreme Court
in Shri Lal Mahal Ltd. v. Progetto Grano Spa5. He has submitted
that in the case before the Supreme Court there was a challenge
to the enforceability of a foreign award and it was held that
consideration of inadmissible evidence or rejecting evidence on a
binding nature are merely procedural defects. Such procedural
defects are not grounds for refusing enforcement under Section
48 of the Act. In that case, the award debtor had challenged the
award on the ground that the Tribunal had wrongly taken into
consideration a report which was inadmissible. Rejecting this
contention, the Supreme Court held that even if the Tribunal
wrongly admitted certain evidence while rejecting other relevant
evidence, such an error would not bar the enforcement of the
award. The Supreme Court has held that at the enforcement
5 (2014) 2 Supreme Court Cases 433.
21/40
stage, the Court is not permitted to take a “second look” at the
award as the Court does not exercise appellate jurisdiction nor
does it inquire whether an error has been committed while
rendering the award. He has submitted that this Court would be
precluded from entering into an inquiry on this issue of
admissibility of Mr. Bhatnagar’s evidence by the Arbitrator. He has
further relied upon the judgment of this Court in M/s. Louis
Dreyfus Commodities Suisse S.A. V. Sakuma Exports Ltd. 6. In that
case the award debtor had contended that the Tribunal had not
given it an equal opportunity of oral hearing and the expert report
relied upon by the award debtor had not considered by the
Tribunal. Rejecting both contentions, this Court reiterated that the
Section 48 does not permit a “second look” at the award and even
if the Arbitral Tribunal has improperly considered or rejected
evidence, it would not be a ground for refusing enforcement of the
award. This would at best be a procedural defect and mere
procedural defects cannot be a ground for refusal of enforcement
of a foreign award particularly, as in the present case, the foreign
award recorded that the documentary evidence corroborated the
testimony of the so called “coerced” witness.
6 2015 SCC Online Bom 5006 : (2015) 6 Bom CR 258.
22/40
13. He has further placed reliance upon the decision of the
Delhi High Court in Cruz City 1 Mauritius Holdings v. Unitech Ltd. 7
which has drawn applicable principles from decisions of various
Courts in other New York convention countries which have held
that the objections to enforcement on the ground of public policy
must be such that offend the core values of a member’s national
policy which it cannot be expected to compromise. Once it is
accepted that the Arbitral Tribunal had the jurisdiction and was
competent to decide the issues between the parties, no challenge
to the merits of the decision ought to be entertained. He has
submitted that the objections to enforcement on the ground of
violation of public policy may include drastic serious national
policy matters such as trading in elephant tusks from India and the
sale of peacock meat from India. He has submitted that this would
certainly not encompass contentions of the nature raised by the
Respondent (on appreciation of evidence). He has submitted that
it is settled law in common law countries including India that the
arbitral tribunal is the sole judge of the weight, materiality and
credibility of the evidence and there can be no-reappreciation of
evidence at the enforcement stage. He has relied upon decision of
the Supreme Court in Zahira Habibulla v. State of Gujarat & Ors. 8
7 239 (2017) DLT 649.

8 (2004) 4 SCC 158
23/40
which has held that the question of whether a witness has told the
truth or not is a matter of assessment of evidence.
14. He has submitted that in the present case the Respondent
had been given ample opportunity to cross examine the witness
and it was only then that Mr. Bhatnagar’s evidence was admitted.
He has submitted that given the narrow scope of interference
permitted under Section 48 of the Act and the Respondent having
failed to establish its case before the Arbitral Tribunal after being
given adequate opportunity of doing so cannot be permitted to
reagitate the issue on which the Arbitral Tribunal has rendered a
finding on merits corroborated by contemporaneous documentary
evidence. Further, no appeal has been preferred against the
foreign award in the Court having appropriate jurisdiction and the
award has attained finality on merits.
15. He has submitted that assuming that the scope of inquiry
under Section 48 of the Arbitration Act permits an examination of
the admissibility / weight of a witness testimony, the testimony of
Mr. Bhatnagar was demonstrably independent and corroborated
by contemporaneous documentary evidence. He has submitted
that the argument of the Respondent that Mr. Bhatnagar’s
24/40
evidence was coerced and / or compelled to give evidence in
favour of the Applicant against his will and volition cannot be
raised in respect of a witness who was according to both parties a
key protagonist for the transaction in question and who was
competent, relevant and subjected to cross examination. The
contention that Mr. Bhatnagar’s evidence was not admissible was
not part of the closing submissions of the Respondent or the
objections filed with this Court in the present proceedings. This
was raised for the first time during the oral submissions in the
present proceedings.
16. He has submitted that the only objection of the Respondent
to the testimony of Mr. Bhatnagar’s witness statement being taken
on record was never on the ground of so called threats / coercion
but was on the ground that he had not agreed to cross
examination; his statement was not introduced with the consent of
the Respondent and that the Respondent should be allowed to
adduce a responsive witness statement. He has submitted that it
has infact been stated by the Respondent in the email dated 14th
April, 2015, that the correspondence between the Claimant’s
advocates and Mr. Bhatnagar’s advocates has “little value save for
unnecessary posturing”. He has submitted that when Mr.
25/40
Bhatnagar was directly asked by the Respondent whether he was
acting under any threat, while leading his testimony, he strongly
denied the same. Thereafter, no further question on the alleged
threats / coercion was put to him. He has relied upon transcript of
cross examination at internal page 142, placitum 3 to 25 and
internal page 143, placitum 1 to 15 at pages 1816 and 1817 of
Volume VIII of the Respondent’s compilation in support thereof.
He has submitted that the Arbitrator has decided the issue of
admissibility of Mr. Bhatnagar’s evidence, in procedural order
No.18 dated 25th April, 2015 by allowing the primary conditions to
admissibility of Mr. Bhatnagar’s evidence in favour of the
Respondent by granting the Respondent an opportunity of cross
examination as well as permitting the Respondent to adduce
responsive witness statements. In the foreign award at paragraph
325, the Arbitral Tribunal has after appreciation of evidence
produced before it concluded that there was no substance to the
allegations of the Respondent that Mr. Bhatnagar had been
threatened to depose in favour of the Applicant. He has submitted
that this finding of fact which was arrived at by the Tribunal after
examination of evidence has attained finality and cannot be
reopened at the enforcement stage. The Respondent has neither
led any evidence in support of its allegations that Mr. Bhatnagar
26/40
had agreed to give evidence on its behalf nor did the Respondent
submit a response statement or recall its witness to rebut Mr.
Bhatnagar. It is not open now for the Respondent to dispute the
admissibility of evidence of Mr. Bhatnagar at the stage of
enforcement.
17. He has submitted that the Arbitral Tribunal has found that
Mr. Bhatnagar’s testimony was backed by contemporaneous
documentary evidence and his evidence was prepared by his own
lawyer rather than in consultation with the Applicant’s lawyer and
that he was an honest and reliable witness. Whereas on the other
hand, the Arbitral Tribunal found the Respondent’s witness Mr.
Bajla’s evidence to be over all unsatisfactory. He has submitted
that even assuming that Mr. Bhatnagar was infact a hostile
witness, the Supreme Court in its decision in Paramjit Singh v.
State of Uttarkhand9 has held that testimony of a hostile witness
cannot be effaced from the record and has to be scrutinized based
on contemporaneous evidence. He has further relied upon the
decision of the Supreme Court in Waman & Anr. v. State of
Maharashtra10 to contend that an interested witness is one who
9 2010 (10) SCC 439.
10 AIR 2011 SC 3327.
27/40
has an interest in the final outcome of the proceedings and such
testimony should be scrutinized with care and cannot be
disregarded solely on the basis of a relationship with a party. The
evidence must be recorded and thereafter weighed in accordance
with law. He has submitted that in any event the credibility or
otherwise of Mr. Bhatnagar as a witness does not affect the
enforceability of the award as it does not prove the Respondent’s
case of oral side agreement as Mr. Bajlas’s evidence was found to
be untruthful, contradictory and unsatisfactory
18. He has submitted that in clause 10 of the Deed of
Agreement, it was provided that the agreement constituted the
entire agreement and understanding between the parties and
superseded all prior oral communications, writings, agreements,
negotiations and discussions between the parties with respect to
the same. The Respondent’s case of the existence of an oral side
agreement between the Applicant and Respondent, the terms of
which having not been incorporated in the Deed of Agreement,
cannot be considered, as the Agreement constituted the entire
agreement. He has relied upon the decision of the Supreme Court
in the case of Joshi Technologies International Inc. v. Union of
28/40
India11 which has held that where there is an “entire agreement”
clause, the Court cannot look into any other document or
correspondence exchanged between the parties prior to signing
the agreement and even the so called understanding between the
parties is to be ignored if the same is contrary to what is expressly
recorded in the terms of the agreement. In this context he has also
relied upon the judgment of the English Court in Inntrepreneur
Pub Co. (Gl) V. East Crown Ltd12. In the present case, the Arbitral
Tribunal at paragraph 410 of the award held that even if its finding
as to the non-existence of an oral side agreement was wrong,
Clause 10 of the Deed of Agreement precluded the Respondent
from relying on such oral side agreement.
19. He has submitted that the vitiating of Mr. Bhatnagar’s
testimony does not discharge the Respondent’s burden to prove
that an oral side agreement existed and could be relied upon. He
has submitted that the Deed of Agreement signed by the parties
was a keenly negotiated document and could never be considered
to be a sham document as there would have been otherwise no
reason to enter into protracted negotiations on its terms. He has
11 2015 7 SCC 754.

12 (2000) 2 Lloyd’s Rep. 611.
29/40
submitted that as the Respondent had failed to prove its defence
through both oral and documentary evidence in the arbitration.
20. He has submitted that the Respondent has for the first time
in sur-rejoinder attributed procedural / subject matter bias to the
Sole Arbitrator without pointing to a single circumstance which
would lead to bias and this was merely because the Respondent
disagreed with the Arbitrator’s finding. He has relied upon the
decision of the Andhra Pradesh High Court in the case of Y.S.
Vijaya v. Union of India & Ors.13 to contend that judicial bias can
only be raised when the arbitrator has a direct pecuniary or
proprietary connection with the subject matter of the dispute or the
parties. He has submitted that insofar as non-pecuniary bias
alleged against a Judge, the Courts in India have applied the test
of real likelihood of bias. This test is whether a reasonable person,
being in possession of the relevant information would have
thought that bias was likely. He has submitted that not a single
fact has been alleged by the Respondent on which it has based its
argument that the arbitrator was biased against it. He has
accordingly submitted that there is no merit in the objections
raised by the Respondent to the notice under Order XXI Rule 22
13 (2012) 4 ALT 334 (DB)
30/40
of the CPC and that the notice be allowed and leave be granted to
the Applicant to enforce the award in accordance with law.
21. Having considered the submissions, it appears that the
enforceability of the foreign award is objected to on the ground
that the foreign award is in contravention of the public policy of
India.
It would in this context be necessary to refer to Section 48

(2) of the Act which reads thus:
(2) Enforcement of an arbitral award may also be

refused if the Court finds that,
(a) ….
(b) the enforcement of the award would be contrary to the

public policy of India.
Explanation 1 - for the avoidance of any doubt, it is
clarified that an award is in conflict with the public policy of
India, only if, –
(i) ….
(ii) it is in contravention with the fundamental policy of

Indian law, or
(iii) It is in conflict with the most basic notions of

morality or justice.”
Explanation 2 – For the avoidance of doubt, the test as

to whether there is a contravention with the
31/40
fundamental policy of Indian Law shall not entail a

review on the merits of the dispute.
22. The Respondent has contended that the arbitrator had
accepted the witness statement of Mr. Bhatnagar (“Bhatnagar”)
without dealing with the issue of admissibility of the evidence and
had based his conclusion in not accepting the Respondent’s
defence solely on Bhatnagar’s witness statement. It is the further
contention of the Respondent that the Arbitrator had considered
the evidence of Bhatnagar despite the witness being an
unreliable, influenced, threatened, tainted and tutored witness as
he was under intimidation and threat of criminal prosecution and
undue influence of the Claimant. These contentions appear to be
the basis for objecting to the foreign award as being in gross
contravention of the fundamental policy of India and in conflict with
the principles and notions of morality and justice and hence
contrary to the Public Policy of India.
23. This objection of the Respondent to the enforceability of the
foreign award is nothing but a challenge to the admissibility of
evidence. The Supreme Court in Shri Lal Mahal Ltd. (Supra) has
held that an objection to the enforceability of a foreign award on
the ground that the Arbitrator considered inadmissible evidence is
32/40
merely a challenge to the procedural defects in the foreign award.
Such procedural defects are not a ground to refuse enforcement
under Section 48 of the Act. In the decision of Supreme Court in
Shri Lal Mahal Ltd. (Supra), it has been held that :-
45. Moreover, Section 48 of the 1996 Act does not give

an opportunity to have a “second look” at the foreign
award in the award enforcement stage. The scope of
inquiry under Section 48 does not permit review of the
foreign award on merits. Procedural defects (like
taking into consideration inadmissible evidence or
ignoring / rejecting the evidence which may be of
binding nature) in the course of foreign arbitration do
not lead necessarily to excuse an award from
enforcement on the ground of public policy.”
24. It is thus clear from the decision of the Supreme Court that
presuming there were procedural defects by taking into
consideration inadmissible evidence in the course of the foreign
arbitration, this does not lead necessarily to excuse the award
from enforcement on the ground of public policy. This decision of
the Supreme Court has been followed by this Court in M/s. Louis
Dreyfus Commodities Suisse S.A. (Supra), wherein this Court held
that Section 48 of the Act does not permit a “second look” at the
award and that even if the Arbitral Tribunal has improperly
considered or rejected evidence, it would not be a ground for
refusing the enforcement of the award.
33/40
25. It is well settled that the discretion of a Court to refuse to
enforce a foreign award at the request of a party is narrow and
limited. At the same time there is no absolute or open discretion
to reject the request for declining to enforce a foreign award. It is
only upon sufficient grounds being established that a Court is not
precluded from rejecting the request for declining the enforcement
of a foreign award. Further, it is also well settled that once it is
accepted that the Arbitral Tribunal has jurisdiction and was
competent to decide the issues between the parties, no challenge
to the merits of the award ought to be entertained.
26. In the context of contravention of Public Policy when it
comes to enforcement of a foreign award, it has been held by the
Delhi High Court in Cruz City 1 Mauritius Holdings (Supra), in
paragraph 96 as follows:-
96. It plainly follows from the above that a

contravention of a provision of law is insufficient to
invoke the defence of public policy when it comes to
enforcement of a foreign award. Contravention of any
provision of an enactment is not synonymous to
contravention of fundamental policy of Indian Law.
The expression fundamental policy of Indian law
refers to the principles and the legislative policy on
which Indian Statutes and laws are founded. The
expression “fundamental policy” connotes the basic
and substratal rationale, values and principles which
form the bedrock of laws in our country.
34/40
Thus, the fundamental policy of Indian Law in Section 48 of
the Act connotes the basic and substratal rationale, values and
principles which forms the bedrock of laws in India. It is only when
the foreign award is in contravention of that fundamental policy of
Indian Law, that its enforcement may be refused. The objection as
to enforcement of the foreign award on the ground of public policy
must be such that the foreign award offends the core values of a
member’s national policy, which it cannot be expected to
compromise. The learned Counsel for the Claimant is right in his
contention that violation of public policy includes drastic serious
national policy matters such as trading in elephant tusks from
India and the sale of peacock meat from India. Mere improper
admission of evidence by the Arbitrator as contended by the
Respondent cannot amount to a violation of public policy. It is
settled law in India that the Arbitral Tribunal is the sole judge of the
weight, materiality and credibility of the evidence and there can be
no-reappreciation of evidence at the enforcement stage.
27. The finding of the Arbitrator in paragraph 325 of the foreign
award after considering the issue on the question of admissibility
of Bhatnagar’s witness statement viz. “there is nothing in those
assertions” of Bhatnagar being threatened would be a finding of
35/40
fact arrived at by the Arbitrator after appreciation of evidence and
which finding has attained finality and cannot be reopened at an
enforcement stage. The Supreme Court in Zahira Habibulla
(Supra) has held that the question of whether a witness has told
the truth or not is a matter of assessment of evidence. It is not for
the Court at the enforcement stage to reappreciate the evidence
of the witness Bhatnagar who had given evidence in support of
the Claimant’s case and had subjected himself to cross
examination. Further, it appears that the Respondent’s objections
to the testimony of Bhatnagar has been recorded in its email
dated 25th April, 2015 viz. that Bhatnagar had not agreed to his
cross examination and that his statement was not introduced with
the consent of the Respondent as well as the Respondent should
be allowed to adduce responsive witness statement(s). From the
material on record, it appears that the Respondent had not
objected to the testimony of Bhatnagar on the ground of the so
called threats / coercion. The Respondent was mainly concerned
with its right to cross examine the witness Bhatnagar on his
statement which was in support of the Claimant. It appears that
the Respondent has not produced any material in support of its
contention that Bhatnagar was to be the Respondent’s witness
and / or agreed to give evidence in support of the Respondent’s
36/40
case. By merely including Bhatnagar’s name in the list of
witnesses filed by the Respondent with the Tribunal cannot lead to
a conclusion that Bhatnagar had agreed to give testimony in
support of the Respondent’s case. In fact it appears from the
email dated 25th January, 2015 that Bhatnagar had prior to the
filing of his witness statement confirmed that the agreements
relied upon by the Claimant were valid and binding and that there
was never any oral “side agreement” to the effect that these
agreements were not legally enforceable as contended by the
Respondent in their additional defence statement.
28. It is the contention of the Respondent that it has been well
settled that the foreign award passed by following a practice or
procedure which is so unfair and unreasonable that it shocks the
conscience of the Court is liable to be set aside by a Court
exercising jurisdiction under Section 48 of the Act. Reliance has
been placed upon the decisions of the Supreme Court in
Ssangyong Engineering & Construction (Supra) and Associate
Builders (Supra) in this context. However, this principle of law as
well as the relied upon decisions do not apply in the facts and
circumstances of the present case. In the present case, the
Arbitrator had followed the principles of natural justice in admitting
37/40
the witness statement of Bhatnagar subject to the Respondent’s
right of cross examination. In fact the allegation of the Respondent
of Bhatnagar having been threatened / coerced by the Claimant
which is contended to be apparent from its Advocates
correspondence is itself contrary to the Respondent’s own email
wherein it is stated that the very same correspondence between
the Claimant’s and Bhatnagar through their respective Advocates
have “little value save for unnecessary posturing”. The case now
put up by the Respondent that Bhatnagar’s witness statement
should have been disregarded on the ground that Bhatnagar was
an unreliable, influenced, threatened, tainted and tutored witness
as he was under intimidation and threat of criminal prosecution
and undue influence of the Claimant appears to be an
afterthought. This has now been contended despite the
Respondent having availed full opportunity of cross examination of
Bhatnagar. The Arbitrator has considered Bhatnagar to be a fair
and independent witness. The decision of the Supreme Court in
Mahendar Chawla (Supra) that witness are important players in
the judicial system who help the judges in arriving at correct
factual findings will apply to the witness Bhatnagar in the present
case.
38/40
29. The contention of the Respondent of procedural / subject
matter bias attributed to the Arbitrator in taking evidence of
Bhatnagar has been raised for the first time in the sur-rejoinder.
This contention is without any substance as no bias can be
attributed to the Arbitrator by merely admitting the witness
statement of Bhatnagar. Judicial bias has been considered in the
decision of the Andhra Pradesh High Court in the case of Y.S.
Vijaya (Supra). It has been held that judicial bias can arise only
when the arbitrator has a direct pecuniary or proprietary
connection with the subject matter of the dispute or the parties. In
the present case, the Arbitrator cannot be considered to have
demonstrated bias in favour of the Claimant which would be either
a judicial bias or a non-pecuniary bias and this contention on the
part of the Respondent also is made without any substance.
30. The Arbitrator has arrived at a conclusion that the
Respondent had failed to prove the defence through both oral and
documentary evidence. The foreign award has been passed on
the basis of documentary evidence and from an appreciation of
which a finding has been arrived at that the liability of the
Respondent to pay the Applicant is established. Although
submissions were made by the learned Counsel for the Claimant
39/40
on the Deed of Agreement constituting an entire agreement as
provided under Clause 10 of the Deed of Agreement and by virtue
of which the Court cannot look into any other document or
correspondence exchanged between parties prior to the signing of
the agreement, this Court cannot under Section 48 of the Act go
into issues on merits. Never the less the Arbitrator has considered
the Deed of Agreement to be an entire agreement which would
supersede any oral side agreements which have been pleaded in
the defence by the Respondent. In any event the foreign award
not being subjected to a challenge in the domestic country has
attained finality on merits.
31. In view of the above findings, the foreign award is
enforceable in India. The objection of the Respondent to the
enforceability of the foreign award is rejected. In view thereof, the
Notice under Order XXI Rule 22 of the CPC is made absolute by
granting leave to the Applicant to enforce the foreign award in
accordance with law.
( R. I. CHAGLA J. )
40/40

2019 Bom Nobel v. Dharni

Încărcat de

Informații document

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

2019 Bom Nobel v. Dharni

Încărcat de

Drepturi de autor:

Formate disponibile

NOBEL-N-928-2017.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

NOTICE NO. 928 OF 2017

Nobel Resource Ltd. …Applicant /

CORAM: R.I. CHAGLA, J.

ORDER RESERVED ON 26TH AUGUST, 2019

ORDER PRONOUNCED ON 18TH NOVEMBER, 2019

Rule 22 of the Code of Civil Procedure, 1908 (“CPC”) in respect of

at Singapore. The Applicant has sought leave of this Court to

Judgment Debtor / Respondent and the objections are heard in

this Notice without the requirement of filing a separate Petition

under Section 48 of the Arbitration and Conciliation Act, 1996 (“the

Arbitrator appointed in accordance with Singapore International

Arbitration Centre, SIAC Rules in arbitration initiated by the

Applicant under Clause 14 of the Deed of Agreement dated 7th

June, 2013 against the Respondent.

2. The foreign award which is sought to be enforced by the

Applicant directs the Respondent to pay :-

(a) EUR 290,920.70, USD 3570,333.49 and GBP

(b) Basic Interest (Basic Interest) in the sums of USD

(c) Default interest in the sums of USD 100,181.49 plus

(d) USD 924,877.65 as the Applicant’s legal costs and

(e) SGD 88,308.29 as reimbursement of the advance

3. Before adverting to the objections raised by the Respondent

to the Notice, it would be appropriate to set out a brief background

of facts which culminated in the foreign award.

4. In 2008, the Applicant, Respondent and one Taurian

Manganese (“Taurian”) executed two agreements namely

Purchase Contract dated 22nd January, 2008 for sale and

purchase of manganese and the loan agreement dated 3rd July,

2008 by which the Applicant advanced a loan to the Respondent.

5. Since there were dues owed by the Respondent to the

Applicant under the Purchase Contract and Loan Agreement, the

Applicant, Respondent and Taurian entered into two agreements

namely Cargo Repayment Agreement under which the

Respondent admitted its liability to repay the amount USD

loss and which stipulated monthly repayment of the cargo loss by

the Respondent and the loan repayment agreement under which

the Respondent admitted its liability to repay the amount USD

1,518,655.29 and EURO 1,200,000 and stipulated monthly

repayment of the same.

6. Thereafter, the amount due and payable by the Respondent

to the Applicant under the aforementioned agreements were

crystallized under a single agreement viz. the Deed of Agreement

dated 7th June 2013. Under the Deed of Agreement, the

Respondent has admitted its debts due to the Applicant and

promised to pay in agreed installments. Under the recitals of the

Deed of Agreement the parties have categorically agreed and

confirmed the amount payable by the Respondent to the Applicant

which is mentioned in Clause 3 of the Deed of Agreement. It has

stipulated monthly repayment of the aforementioned dues till such

amounts mentioned therein were repaid in full. It is further

provided in Clause 7(b) of the said Deed of Agreement that in the

event of default, the entire amount shall become payable. Clause

10 of the Deed of Agreement provides that the Deed of Agreement

constitutes the entire agreement between the parties and

supersedes all prior oral and written negotiations / agreement

of Agreement all disputes under the Deed of Agreement have

been referred to the Arbitration Proceedings at Singapore to be

governed by the SIAC Rules.

7. The Respondent made payments under the Deed of

Agreement till 2013 and thereafter committed defaults on its

payments under the said Deed of Agreement. Accordingly, the

claimant initiated the arbitration proceedings as provided under