High Court of Bombay; single-judge bench, G. S. Kulkarni J; decided on 13 November 2019

When the court is satisfied that a foreign award is enforceable^[17], it becomes a decree of the court and can be executed. As per Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. (2001) 6 SCC 356, the ACA contemplates a single proceeding for deciding enforceability, and then its execution in that proceeding.

What is the limitation to file such a single proceeding was the main question in this case–three years under Article 137 of the Limitation Act, 1963, or twelve years, under Article 136?

This question arose mainly because of these facts:

(i)  The awards were of the years 2006, 2007 and 2008, in favor of Imax.

(ii)  On 27 July 2008, with some delay, E-City applied to the High Court of Bombay to set these foreign awards aside.

(iii)  The court condoned delay on 10 June 2013 and also ruled that the set-aside applications were maintainable.

(iv)  Imax went to the Supreme Court, which first stayed the set-aside proceedings, but on 10 March 2017, dismissed the set-aside applications ruling that the High Court of Bombay had no jurisdiction.

(v)  Imax then filed the petition to enforce and execute the awards on 02 April 2018. No application to condone delay was filed.

Also, a single judge of the High Court of Bombay in Noy Vallesina Engineering Spa v. Jindal Drugs Limited 2006 SCC OnLine Bom 545 (D. R. Deshmukh J), after reconsidering the issue of limitation in detail had already ruled that if the court is yet to record its satisfaction that the award is enforceable, limitation for enforcement would be governed by Article 137 (that is, three years from the date when the right to apply accrues).

In these facts, and based on law set out in Noy Vallesina, E-City argued that:

(i)  Article 137 applied.

(ii)  The right to apply accrued and the limitation started to run, as soon as the awards were published (for even after proceedings are filed to challenge the foreign awards, the decree-holder can file proceedings for enforcement).

(iii)  Imax ought to have filed an application seeking condonation of delay, which it did not.

This is how the court dealt with the arguments.

It first set out an underlying tone observing that the ACA requires broader interpretation, particularly in cases of enforcement of foreign award.

It then took up in the judgment the alternative argument, that is, was the petition within limitation even assuming that Article 137 applied? It answered yes and reasoned that:

(i)  Even if the delay in filing the Section 34 application had not been condoned from 27 June 2008 until 10 June 2013, it cannot be said that this application was not pending. This is so because once the delay was condoned, it would relate to the day the petition was filed, that is, 27 June 2008 [citing to Delhi Development Authority v. Amita Nand Aggarwal 2008 (1) Arb. LR 588 (Delhi), where the Delhi High Court ruled that the date of filing was the original date, and not the date when it was re-filed after removing the objections].

(ii)  Considering the provisions of the ACA before the 2015 amendment (with effect from 23 October 2015), filing a set-aside application under Section 34 of the ACA amounted to the stay of the award.

(iii)  The substantive cause of action, therefore, arose only on 10 March 2017 when the Supreme Court held the set aside application as not maintainable.

After dealing with the alternative argument, the court then considered as to which provision of the Limitation Act, 1963 applied for enforcing a foreign award, Article 136 or Article 137?

It ruled that Article 136 applies^[18]. [18] (Excerpted) The limitation is twelve years for the execution of any decree (other than a decree granting a mandatory injunction) or order of any civil court. Limitation starts to run when the decree or order becomes enforceable. Show More It said that a foreign award is stamped as a decree^[19] [19] Citing to Shriram EPC Ltd. v. Rioglass Solar SA, (2018) 18 SCC 313. Show More and is enforced and executed in the same proceeding in two stages– first enforcement and then execution^[20]. [20] Citing to Thyseen Stahlunion v. Steel Authority of India, (1999) 9 SCC 334 and Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2001) 6 SCC 356. Show More Therefore, “Article 136 … would surely become applicable”.

The court also cited two decisions of a single-judge bench of the Madras High Court, which had ruled that Article 136 would apply [Compania Naviera v. Bharat Refineries Ltd., OSA No. 52 of 2008 dated 01/08/2008; Compania Naviera ‘SODNOC’ v. Bharat Salt Refineries Ltd., AIR 2007 Mad. 251]

The court distinguished Noy Vallesina by reasoning that:

(i) Even by applying Article 137, the petition is not barred by limitation.

(ii)  Applying the law laid down in Fuerst, and Shriram EPC, the court cannot overlook the prayers which are combined for enforcement and execution.

(iii)  A broader view is required to be taken to advance the object and intention of the ACA and not a technical approach that the petition is time-barred because the application for condonation of delay was not filed, and the delay was not condoned.

The Supreme Court has further clarified in Shriram EPC that the expression foreign award is “stamped as a decree” used in Fuerst, which means “regarded as a decree.”