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When the court is satisfied that a foreign award is enforceable,[1] [1] That is, when the court is of the view that none of the grounds set out in section 48 of the Arbitration and Conciliation Act, 1996 are attracted. Show More it becomes a decree of the court and can be executed. Per Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2001) 6 SCC 356, the Arbitration and Conciliation Act, 1996 (“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:
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) (“Noy Vallesina”), 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: –
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 judgement the alternative argument, that is, was the petition within limitation even assuming that Article 137 applied? It answered yes and reasoned that:
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[2] [2] 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 (Excerpted). Show More applies. It said that a foreign award is stamped as a decreeCiting Shriram EPC Ltd. v. Rioglass Solar SA, (2018) 18 SCC 313 (“Shriram EPC”). and is enforced and executed in the same proceeding in two stages– first enforcement and then execution.[4] [4] Citing Thyseen Stahlunion v. Steel Authority of India, (1999) 9 SCC 334 and Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2001) 6 SCC 356 (“Fuerst”). 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., O.S.A. No. 52 of 2008, and Compania Naviera ‘SODNOC’ v. Bharat Salt Refineries Ltd., AIR 2007 Mad. 251].
The court distinguished Noy Vallesina by reasoning that: