An award had been passed on 31 March 2017 in favour of Raffles India in a Singapore seated arbitration conducted under the rules of the Singapore International Arbitration Centre.
Raffles had applied for enforcement of this award in the Delhi High Court under Chapter-I, Part-II of the Arbitration and Conciliation Act, 1996.
Raffles and Educomp, both for-profit groups, partnered in an educational joint venture company. Their representatives co-managed a not-for profit society registered under the Societies Registration Act, 1860 running an engineering college. In 2015, Educomp wished to exit, leading to a share purchase agreement for Raffles to buy Educomp's shares in the joint venture. so that Raffles' representative could take complete control). The consideration of the agreement also factored in the value of the society. Under the agreement Educomp was supposed to ensure the resignation of its representatives in the society (so that Raffles’ representatives had full control) but failed to do so, breaching the agreement.
Raffles initiated arbitration and won damages. The arbitrator declined specific performance. Educomp did not challenge the award but resisted Raffles’ enforcement on public policy grounds. It argued that the agreement improperly gave a for-profit entity control over a non-profit society and monetized the society’s membership.
Educomp’s objections were rejected, and the award was held enforceable in law. The matter was directed to be placed before appropriate bench for taking further steps in the enforcement petition.
Mere violation of a statutory enactment or a piece of subordinate legislation is not a violation of “public policy of India” or “fundamental principles of Indian law”. An objection based on those grounds:
Fundamental policy of Indian law is:
Indian law doesn’t restrict for-profit entities from incorporating not-for-profit societies. Their incorporation does not violate any foundational legal principle. No express prohibition exists against foreign nationals being society members and, quite apart, their involvement in the affairs of a charitable society in Indian is not contrary to public policy.
Categories: All India Council for Technical Institution | Conditions for Enforcement of Foreign Awards | Cruz City | Enforcement | Enforcement of Foreign Awards | Foreign Award | Fundamental Policy of Indian Law | Gemini Bay | New York Convention | Public Policy of India | Section 48 (2) (b) ACA | Section 48 ACA | Shri Lal Mahal | Societies Registration Act | Ssangyong | Vijay Karia