A foreign award cannot be executed without an order in favour of the petitioner under section 48. There is a fundamental difference between a domestic award under Part-I and a foreign award under Part-II. Under section 2(7), an award made under Part-I of the Act is considered as a domestic award. Section 36 of the Act, which falls within Part-I reads as under :
"36. Enforcement.- Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court."
Thus, a domestic award is enforceable under the Code of Civil Procedure as if it were a decree of the Court, without anything more subject to the time for making an application to set aside the award having expired or such application, if made, having been refused. In other words, it is not necessary for a party seeking enforcement of the 16 CHS1304.10 award to obtain any further orders from the Court before enforcing the same.
Bombay High Court
Mitsui O.S.K. Lines Limited vs Orient Ship Agency Pvt. Ltd on 17 January, 2012
Bench: S.J. Vazifdar
1. The petitioner seeks a declaration and order that it is not required to renew a bank guarantee dated 10th December, 2002 and that the bank guarantee stands discharged.
2 CHS1304.10
2. By an order dated 14th July, 2010, I dismissed the Chamber Summons on the basis of the previous orders which I considered myself bound by. I held that there were no change in circumstances which would justify my taking a contrary view or modifying the orders.
The petitioner challenged this order in Appeal No.631 of 2011. The Division Bench, by an order and judgment dated 8th November, 2011, inter-alia, held that after the previous orders, which I considered myself bound by had been passed, the arbitral tribunal made an award on 2nd February, 2009; that the present application for modification or cancellation of the interim order passed under section 9 of Arbitration & Conciliation Act, 1996 (hereinafter referred to as the Act), was made after the award was made and that, therefore, the effect of the award ought to have been taken into consideration while considering the application and that I had proceeded on an admittedly wrong assumption that the award had been challenged under section 34 of the Act and that the proceedings were pending. The Division Bench also held that the fact of the pendency of the proceedings under section 48 adopted by the petitioner for enforcement of the foreign award would also have to be considered. The order was, therefore, by consent, set 3 CHS1304.10 aside and remitted for de novo consideration and decision in accordance with law. All the contentions available to the parties were kept open.
3. As the matter has been heard de novo, it would be convenient to set out the previous orders although they were set out in detail in the said order dated 14th July, 2011, which was set aside by the Division Bench.
4. The petitioner is a shipping line and the respondent is its agent. Pursuant to an agreement dated 1st April, 1964, the respondent imported various containers into India between 28th November, 1999 and 26th November, 2001. The respondent imported the containers into India without payment of custom duty by availing of the benefits of an exemption notification dated 16th March, 1994 read with a public notice dated 4th October, 2005, which exempted the containers imported into India from customs duty and an additional duty of customs provided that the importer executed bonds binding himself to re-export the said containers within six months from the date of their imports. The respondent executed several bonds to avail of the said 4 CHS1304.10 benefits of the notification and the public notice. 5(A) The petitioner filed Arbitration Petition No.156 of 2002 against the respondent seeking certain orders and directions with respect to certain bank accounts and the amounts lying therein and for an order restraining the respondent from detaining the petitioner's containers. (B) The petition was disposed of by an order dated 17th October, 2002, passed with the consent of the parties which provided, inter- alia, as follows :-
"i) Pending the arbitral proceedings, the operation of bank account No.4400053-1 with the Mumbai Branch of the Sumitomo Bank and on account No.26084 opened by the Respondent with the Bank of Baroda, Ballard Estate Branch, shall remain frozen. The aforesaid accounts shall not be operated in any manner.
ii) The Petitioners undertake that in respect of the containers belonging to them which are lying at various ports in India or elsewhere, within the custody or control of the Respondents, the Petitioner shall furnish a Bank Guarantee within a period of four weeks from today so as to secure the amounts of the bonds which have been filed by the Respondents with the Customs Authorities together with an additional amount of 10% over and above the amount of the bonds. The Bank Guarantee shall be of the Hongkong and Shanghai Banking Corporation and shall be furnished in favour of and to the satisfaction of the Prothonotary & Senior Master.
5 CHS1304.10 iii) In respect of the containers which have been imported over a period of three years immediately prior to the termination of the agency of the Respondents, it is agreed that the Respondents shall within a period of two weeks from today furnish to the Petitioners a statement containing:- (a) the container number (b) the date of import and (c) the date of re- export. In respect of such of the containers as aforesaid, which have not been re-exported within a period of six months from the date of import as required by law, the Petitioners shall furnish an additional Bank Guarantee so as to cover the amount of the bonds furnished by the Respondents to the Customs Authorities in respect of the said containers. The aforesaid Bank Guarantee shall be furnished within a period of two weeks from the date on which the Respondents furnish the said statement to the Petitioners. The Bank Guarantee shall be furnished to the Prothonotary & Senior Master and shall be of the Hongkong and Shanghai Banking Corporation. iv) The Petitioners undertake to this Court through learned counsel that in view of the Respondents being held liable by the Customs Authorities in respect of the re-export of containers beyond the stipulated period permissible in law and in the event of the Respondents being required to discharge any liability towards the Customs Authorities, the Petitioners shall, within a period of one week of being informed by the Respondents of such adjudication by the Customs Authorities with relevant documents in support thereof, pay over to the Respondents such amounts as the Respondents have been held liable to pay towards meeting the Customs liabilities. v) A formal undertaking recording the aforesaid terms shall be filed before this Court by the Petitioners within a period of two weeks from today.
vi) It is also agreed that the Respondents shall forward copies of any show cause notice that may be received by the Respondents from the Customs Authorities, to the Petitioners' agent in India, Mitsui India Pvt. Ltd., together with copies of any other communication or demand that may be received from the Customs relevant to the transactions which have been entered into between the Petitioner and the Respondents. vii) The Respondents shall release to the Petitioners all the 6 CHS1304.10 containers which are lying at various Ports in India and/or under the control of the Respondents within a period of two weeks of the Petitioners furnishing the first of the aforesaid Bank Guarantees mentioned in clause (ii) above and an undertaking as set out in clause (v) above."
(C) In an application for speaking to the minutes of the order, the learned judge by an order dated 1st November, 2002 recorded that there were a total 1316 containers and that the value of the bonds was Rs.5,85,31,000/-. Directions were passed regarding release of the containers subject to the compliance of the order dated 17th October, 2002 including the requirement of furnishing the bank guarantee. The order recorded that it was agreed that the bank guarantee is to be kept alive till the disposal of the arbitration petition or further orders of the Court.
6. The bank guarantee was accordingly furnished on 10th December, 2002.
7. The petitioner had filed Arbitration Petition No.474 of 2003 for the same reliefs as are claimed in this Chamber Summons. The petition was disposed of by an order dated 9th December, 2003, which reads as under :-
7 CHS1304.10 "The learned counsel for the petitioner seeks leave to withdraw the petition with liberty to move afresh after producing proof of export of all the containers or cancellation of the bonds. He further states that in the mean while, the petitioner would renew the bank guarantee. In view of this statement, petition allowed to be withdrawn with liberty as above." (emphasis supplied)
8. It is admitted that all the bonds have not been discharged till date. One bond remains outstanding.
9. The petitioner thereafter filed Arbitration Petition No.470 of 2004, seeking the same reliefs viz. a declaration that it is not required to renew the bank guarantee in respect of the entire amount in pursuance of the earlier orders of this Court. It must be noted that even at that stage, there remained outstanding a bond, which continues to remain outstanding. The petition was disposed of by an order dated 7th December, 2004. After referring to the previous orders of the Court, the learned Judge held as under :- "2. ..............................................However, it is an admitted position that all the containers are not re-exported. It is also an admitted position before me that all the bonds which are given by the respondent to the customs authorities are not yet discharged. The learned counsel for the petitioner however contends that in view of the fact that large number of containers are already re-exported, the bank guarantee for the entire amount should not be liable to be renewed and correspondingly the said amount of bank guarantee should be 8 CHS1304.10 reduced. On the basis of the aforesaid contention he contends that the orders passed by this Court on 17.10.2002 read with the order dated 1.11.2002 should be modified."
"4. The petitioner has moved the present petition without compliance of the said contingency prescribed in the order dated 9.12.2003. It is an admitted position that all the containers are not exported nor all the bonds are cancelled. In my view, in light of the order dated 9.12.2003, it is not possible to accept the prayer of the petitioner for modification of the bank guarantee and/or reduction in the amount of bank guarantee at this stage. It is also not possible in the proceeding under section 9 of the Arbitration and Conciliation Act, 1996 to determine and/or re-work out the actual amount of the bond which is balance to be discharged and/or the liability which may fall on the respondent with the non-compliance with the requirement of the re-export of the said containers." (emphasis supplied)
10. The petitioner challenged the order by filing Appeal No.795 of 2004. The appeal was dismissed by an order dated 21st December, 2004. The Division Bench however, granted the petitioner liberty as follows :-
"2. However, this will not preclude the appellants from moving the Arbitral Tribunal in the pending arbitration proceedings for partial discharge of the Bank Guarantee furnished by the appellants pursuant the orders of this Court. We also clarify that if any order is passed by the Arbitral Tribunal discharging the Bank Guarantee in part, the Prothonotary and Senior Master of this Court shall act upon the direction of the Arbitral Tribunal."
11. The petitioner filed an application before the arbitral tribunal pursuant to the liberty granted by the Division Bench. On 20th 9 CHS1304.10 October, 2008, the arbitral tribunal recorded that the petitioner had withdrawn its claim for an interim award.
Mr.Zaiwala had, on the earlier occasion, submitted that the petitioner did so in view of an objection taken by the respondent to the effect that such an application must be made to the High Court. This is not reflected in the order of the arbitral tribunal. Even assuming that the respondent took such a stand, there is no explanation why the petitioner withdrew the application before the arbitral tribunal, despite the specific order of the Division Bench dated 21st December, 2004.
12. It is admitted that even today, a bond is outstanding and that all the containers have not been exported. In my order dated 14th July, 2011, I held that in view of the above orders, unless and until all the bonds are discharged, the bank guarantee cannot be reduced, much less discharged and that the fact that the Customs authorities have now concluded the proceedings and demanded a duty of less than Rs. 50.00 lacs would not entitle me to ignore these orders.
13. The disputes and differences between the parties were referred to arbitration. An award has now been made in favour of the 10 CHS1304.10
petitioner. The petitioner has filed a petition under section 48 of the Arbitration and Conciliation Act, 1996 for enforcement of the award as it is a foreign award.
14. I will presume, as submitted by Mr. Zaiwala, that the observation of the Division Bench that all the contentions are kept open and the direction that the matter be heard de novo entitles the petitioner to re-argue the points raised on it's behalf at the hearing, which resulted in the order dated 14th July, 2011.
15. There is nothing, however, that pursuades me to take a different view, leaving aside the question of the award having been passed. I will deal with the effect of the award as directed by the Division Bench later. However, absent the award, I am not pursuaded to arrive at a different conclusion from the one I arrived at on the basis of the previous orders. In other words, I see no reason to take a view, different from the one taken by the learned Judges who passed the orders which I found myself bound by earlier and with which I also find myself in complete agreement with especially in view of the stand taken by the petitioner which I will refer to later. 11 CHS1304.10
16. Mr. Zaiwala, however, raised two further contentions during the hearing.
17. Mr. Zaiwala firstly submitted that as only one bond remains outstanding, the claim made by the Customs thereunder is crystallized at about Rs.47 lakhs, and an award has now been made in the plaintiff's favour in the sum of about Rs.23.00 crores, which is enforceable, it is inequitable to compel the petitioner to continue the bank guarantee in a sum of Rs.5,85,31,000/-.
18. The submission is not well founded either on facts or in law.
19. The bonds were furnished to the Customs authorities by the respondent. The containers would not have been permitted to be taken by the petitioner, but for the guarantee it consented to furnish as recorded in the order dated 17th October, 2002. Mr. Zaiwala wanted to establish before the Court that the Customs do not have any claim under the bonds in excess of a sum of Rs.47 lakhs. The easiest way in which this could be established was by issuing notice to the Customs 12 CHS1304.10 authorities to confirm the same. Any finding in this regard and any observation to this effect would involve the contention of the Customs authorities if not their rights itself. For some inexplicable reason, the petitioner vehemently resisted any notice to the Customs authorities to appear before the Court. No logical explanation was offered by the petitioner for resisting the same.
20. In paragraph 14 of the order dated 14th July, 2011, I observed: "The easiest thing for the petitioner to do is to have the bond discharged by furnishing security to the satisfaction of the customs authorities. It is difficult to understand why the petitioner did not do so, if according to it there is no further liability in respect of the said containers. It was not suggested by Mr.Zaiwalla that the petitioner cannot do so. I am unable to understand the petitioner's reluctance to do so and its insistence of repeatedly taking out applications for the same reliefs".
Even today, the petitioner refuses to take any steps to have the bond discharged. No explanation is offered for refusing to do so. The Court's suggestion to issue notice to the Customs authorities so that the issue is conclusively set at rest, was met with a blunt and emphatic refusal stating that the petitioner is not bound to do so, does not agree to do so and will not do so. I see no reason then to accept the petitioner's contention as correct. If the petitioner is confident that the 13 CHS1304.10 Customs authorities will not make a claim of over Rs.47 lakhs, I would have expected the petitioner itself to make an application to have them appear in the proceedings to confirm the same.
21. It is important to note that the correctness or otherwise of any claim by the Customs cannot be considered in these proceedings. The only aspect which is relevant is whether the Customs authorities, in fact, are willing to state that they have no claim over Rs.47 lakhs. As I noted earlier, the petitioner had filed Arbitration Petition No.470 of 2004 for the same reliefs which was disposed of by an order dated 7th December, 2004. The learned Judge observed :
"It is also not possible in the proceeding under section 9 of the Arbitration and Conciliation Act, 1996 to determine and/or re-work out the actual amount of the bond which is balance to be discharged and/or the liability which may fall on the respondent with the non-compliance with the requirement of the re-export of the said containers."
22. I respectfully agree with these observations. Any determination of this question by this Court in the absence of the Customs authorities would be futile and a waste of time for whatever the respondent may say, or the Court may determine would not bind the Customs authorities. If, for any reason, the Customs authorities make a claim in 14 CHS1304.10 excess of Rs.47 lakhs in respect of the bonds, one of which has admittedly not been discharged, the respondent would be left without any security.
Mr. Kamat, on the other hand, fairly stated that the respondent would not oppose the application if the Customs authorities confirmed that they have no claim under the bonds and the respondent in respect of the said containers/transaction.
23. Mr. Zaiwala's first submission is, therefore, liable to be rejected for it proceeds on the erroneous basis that the Customs authorities do not have claim and will not make a claim for more than Rs.47 lakhs.
24. The first submission is not well founded for it also proceeds on the erroneous basis that the award is enforceable as on date even though the petitioner's petition under section 48 for the enforcement thereof is pending.
25. The fact that the award has been passed by itself would not entitle the petitioner to the reliefs sought at this stage as the award is not enforceable in law by the petitioner against the respondent. Mr. 15 CHS1304.10 Zaiwala's submission that the award has become final under the Japanese law to which it was subject and can, therefore, be executed in India even before the petition under section 48 is decided is contrary to the provisions of the Act.
26. A foreign award cannot be executed without an order in favour of the petitioner under section 48. There is a fundamental difference between a domestic award under Part-I and a foreign award under Part-II. Under section 2(7), an award made under Part-I of the Act is considered as a domestic award. Section 36 of the Act, which falls within Part-I reads as under :
"36. Enforcement.- Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court."
Thus, a domestic award is enforceable under the Code of Civil Procedure as if it were a decree of the Court, without anything more subject to the time for making an application to set aside the award having expired or such application, if made, having been refused. In other words, it is not necessary for a party seeking enforcement of the 16 CHS1304.10 award to obtain any further orders from the Court before enforcing the same.
27. In the present case, the award in favour of the petitioner is a foreign award. A foreign award falls within Part-II of the Act. Sections 46, 47, 48 and 49, which fall within Part-II read as under :- "46. When foreign award binding.- Any foreign award which would be enforceable under this Chapter shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in India and any references in this Chapter to enforcing a foreign award shall be construed as including references to relying on an award.
47. Evidence.- (1) The party applying for the
enforcement of a foreign award shall, at the time of the application, produce before the Court-
(a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;
(b) the original agreement for arbitration or a duly certified copy thereof; and
(c) such evidence as may be necessary to prove that the award is a foreign award.
(2) If the award or agreement to be produced under sub- section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into England certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India.
17 CHS1304.10 Explanation.- In this section and all the following sections of this Chapter, "Court" means the principal civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction over the subject-matter of the award if the same had been the subject-matter of a suit, but does not include any civil Court of a grade inferior to such principal civil Court, or any Court of Small Causes.
48. Conditions for enforcement of foreign awards.- (1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the Court proof that -
(a) the parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(c) the award deals with a difference not
contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to
arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or
(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
18 CHS1304.10 (e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
(2) Enforcement of an arbitral award may also be refused if the Court finds that -
(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or
(b) the enforcement of the award would be contrary to the public policy of India.
Explanation.- Without prejudice to the generality of clause (b) of this sub-section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.
(3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.
49. Enforcement of foreign awards.- Where the Court is satisfied that the foreign award is enforceable under this Chapter the award shall be deemed to be a decree of that Court."
28. It is clear from section 47 that a party must apply for the enforcement of a foreign award. The other party is entitled to oppose the application for enforcement of the foreign award on the grounds 19 CHS1304.10 mentioned therein. The Court is entitled to refuse the enforcement of a foreign award on the grounds mentioned in section 48. The doubt, if any, in this regard is set at rest by section 49 which provides that it is only where the Court is satisfied that the foreign award is enforceable under Chapter I of Part-II that the award shall be enforceable as a decree of that Court. Thus, a foreign award is not enforceable as a decree till the Court, in an application for the enforcement of the foreign award, holds that it is enforceable under Chapter I of Part-II of the Act.
29. Section 48 negates the contention that a foreign award is enforceable merely because it has become final between the parties. Section 48(e) read with the other provisions in section 48 and also read with section 49 draws a distinction between an award becoming binding between the parties under the law of which that award was made and the enforceability of the award in India. Even if a foreign award has become binding between the parties under the law of which that award was made, it does not follow that the award is enforceable in India. The power of the Court to refuse enforcement of a foreign award under sections 47 and 48 is not annulled merely because an 20 CHS1304.10 award has become final between the parties. The term "or" before each of the clauses (b) to (e) of sub-section (1) of section 48 indicates that the Court may refuse enforcement of a foreign award on any of the grounds mentioned in clauses (a) to (e) of section 48(1). The power of the Court under section 48(1)(e) to refuse enforcement of a foreign award which has not become final is only one such independent ground. It is axiomatic, therefore, that the Court may refuse enforcement of a foreign award even if it has become binding on the parties under the law of which that award was made, on the grounds mentioned in clauses (a) to (d).
30. This view is fortified by sub-section (2) of section 48. The word "also" therein makes it clear that the enforcement of a foreign award may be refused on the grounds mentioned in section 48(2) even if the grounds under section 48(1) are not established by the party against whom the award was made.
31. This aspect is also answered against the petitioner by a judgment of a learned single Judge of this Court in Jindal Drugs Limited vs. Noy Vallesina Engineering SpA & Ors. 2002 (3) Bom.C.R. 21 CHS1304.10 554, where the learned Judge, after referring to the relevant provisions of the Act held as under :-
"A comparison of the provisions of section 48 and section 34 of the Act quoted above shows that the grounds on which a domestic Award can be challenged as also the grounds on which a party can resist enforcement of a foreign Award are identical. Thus, as and when enforcement of the Award is sought against the petitioner, it can resist the enforcement of the Award on the same grounds on which it could have challenged the Award under section 34 of the Act. Therefore, it cannot be said that the petitioner has no remedy of challenging the Award. It is a settled principle of law that in construing statutes one has to adhere to the ordinary meaning of the words used and to the grammatical construction unless that is at variance with the intention of the legislature to be collected from the scheme of the statute itself or leads to any manifest absurdity or repugnancy. It appears from the reading of the Act that in so far as the challenge and eforceability is concerned, there are different schemes for a domestic Award and a foreign Award. The Act provides for a direct challenge to a domestic Award (section 34). A domestic Award is enforceable as a decree passed by a Civil Court, after the period provided for challenging the same is over, and in case it is challenged, after the challenge fails (section 36). Whereas, in so far as a foreign Award is concerned, it is not enforceable in India unless the Court finds that it is enforceable. For that purpose, the party which seeks its enforcement has to make an application to the Court and has to satisfy the Court about its enforceability (section 49). It is only after the party satisfies the Court that a foreign Award becomes enforceable as a decree passed by a Civil Court (section 49). The Act, provides different remedies to persons, against whom a domestic Award is made and person against whom foreign Award is made. A person against whom a domestic Award is made, has to immediately approach the Court for challenging the same by making an application under section 34 of the Act otherwise the person in whose favour the Award has been made can execute the same as a decree. On the other hand, a person against whom a foreign Award has been made is not required to challenge the same, because it cannot be executed against him in India unless the Court finds that it is enforceable. He 22 CHS1304.10 can wait till the person in whose favour the foreign Award has been made, makes an application before the Court (section 47). Rule 803-E of Rule framed by this Court, provides for a notice to be issued to the person who is likely to be adversely affected by the proceeding. After receiving the notice from the Court, he can appear before the Court and submit his defence and resist the enforcement of the foreign Award against him. He can request the Court not to enforce the Award and in case he succeeds in satisfying the Court on one or more of the grounds mentioned in section 48 of the Act, the Court has to refuse to enforce the Award. As observed above, comparison of the provision of section 34 and section 48 of the Act shows that a person against whom a foreign Award has been made can resist the enforcement of the foreign Award against him on the same ground on which he could have, had it been provided, challenged the validity of the Award under section 34 of the Act. In the grounds on which the enforcement of a foreign Award can be resisted are identical. Thus, though the scheme of the Act provides different kind of remedies to the persons aggrieved by a domestic Award and a person aggrieved by a foreign Award, both the remedies are equally efficacious and adequate. It cannot be said that the Act does not provide an effective remedy to a person who is aggrieved by a foreign Award. Hence, there is, in my opinion, no need to construe the provisions of section 2(2) of the Act in any other manner."
32. Thus, even assuming that the award in favour of the petitioner has become binding under the laws of Japan under which it was made, it does not necessarily follow that the petitioners application under section 48 will be allowed on that ground alone. Much less, does it follow that by reason thereof, the award is to be deemed to be a decree of the Court even before the petition under section 48 filed by the petitioner is decided.
23 CHS1304.10
33. I am, in any event, bound to consider the effect of the award in the petitioner's favour although the same is not enforceable as on date. Even so, I see no reason to vary the petitioner's obligations as recorded in the previous orders of this Court. The petitioner derived benefit under the orders and has availed of the same. The petitioner sought and obtained from the respondents, a release of all the containers lying at various ports in India and/or under the control of the respondents in view of it having agreed to furnish the bank guarantees as mentioned in the order dated 17th October, 2002. The petitioner undertook that in respect of the containers belonging to them which were lying at various ports in India or elsewhere within the custody and control of the respondents, it would furnish a bank guarantee so as to secure the amounts of the bonds which had been filed by the respondents with the Customs authorities together with an additional amount of ten per cent over and above the amount of the bonds. The respondents were thus induced to give up a valuable right/ security in consideration of the petitioner having agreed to furnish the guarantee. At least one bond remains outstanding. There is still uncertainty about the claim that may be made by the Customs and the 24 CHS1304.10
extent to which the Customs authorities may enforce the bond. The petitioners contend that the claim of the Customs is now restricted to Rs.47 lakhs. I see no reason to accept the statement, especially when the petitioner has resisted so strongly even the appearance of the Customs authorities before the Court to state their stand. Even assuming that the stand of the Customs may be incorrect, there is no reason why the respondents should be exposed to such a claim by discharging the bank guarantees which were furnished by the petitioner to meet the claim. The respondents are not concerned with the consequences of an incorrect claim being made by the Customs authorities. There is also, as on date, uncertainty about the enforceability of the foreign award.
34. The balance of convenience is also clearly in favour of the respondents. I see no reason to compel the respondent to, in effect, give up a valuable security. The petitioner was only inclined to offer an assurance/undertaking to the Court to make good any loss that the respondents may suffer on account of any claim by the Customs authorities. A mere undertaking would not safeguard the respondents interests. The petitioner is a foreign company. Even assuming that 25 CHS1304.10 the undertaking is enforced, there is a possibility of the same taking an enormous amount of time, involving large expenses and effort. On the other hand, the petitioner is not likely to suffer any prejudice except to the extent of the commission that it is required to pay to keep the bank guarantee alive. The petitioner, however, chose to do so as recorded in the previous orders of the Court. It chose to do so and it derived enormous benefit thereby by the release of its containers.
35. Mr. Zaiwala then submitted that the previous orders of this Court requiring it to furnish the bank guarantee are void as Part-I of the Act does not apply to the parties.
36. This argument requires merely to be stated to be rejected. It is unfair and I am constrained to say, less than honest. I will assume that Part-I does not apply to the parties. It makes no difference. It must be remembered that the bank guarantee was issued by the petitioner in a petition filed by the petitioner under section 9 of the Act before the award was made. The petitioner sought and derived benefit on it's representations to the Court and to the respondent by offering to furnish the bank guarantees, thereby inducing the respondents to give 26 CHS1304.10 up a valuable right in respect of the containers. It ill lies in the mouth of the petitioner, therefore, after having derived benefit on the basis of it's representations and offers to contend that so far as it's obligations under the orders are concerned, the orders cease to operate. Even if the submission was well founded, the respondent would be entitled to restitution as a condition precedent. In other words, in that event, the petitioner must first bring back the containers and put the respondent in the same position as it was before the orders were passed. There is no such offer.
37. In the circumstances, the Chamber Summons is dismissed.
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