Supreme Court of the State of New York had already passed judgement on June 6,1995 directing enforcement of the award which would now be foreign judgement. The respondent has, in fact, filed a suit in the Bombay High Court on the basis of the foreign judgement which suit was Filed in 1996 and service was effected on the appellant only in 1997.
Detailing his objections Mr, Ganesh said :
He read the objects and reasons of the Foreign Awards Act, Definition of `foreign Award’ is given in Section 2 of that Act and also Articles I and 11 of the New York Convention of Recognition and Enforcement of Foreign Awards which is schedule to the Foreign Awards Act. Argument was that Foreign Awards Act is inapplicable as it is not a `foreign award’.
(b) That this Hon’ble Court be pleased to pass a decree in terms of the said Foreign Judgmentorated 8th January, 1991 delivered by the Supreme Court of Nassau, USA as confirmed by the Appellate Division of the Supreme Court of New York dated 20th September, T.993.”
Thus, the argument was that when respondents have themselves filed suit on the basis of theforeign judgement, they could not have recourse to Foreign Awards Act. It was the foreignjudgment in which the award merged which would now hold the field. In support of this submission reference was made to a decision of this Court in Badat & Company v…East India Trading Co. [1964] 4 SCR 19, This judgement, in our view, is not applicable in the present case. If read out of context, it may appear to be a so applicable but it is not so. In this case, dispute arose between Badat & Co., an Indian firm and East Indian Trading Company, a Private Ltd. Company incorporated under the laws of the State of New York in USA for supply of turmeric by the Indian firm to the foreign company. Parties had agreed to do business on the terms of the American Spice Trade Association Under the rules of the Association all questions and controversies and all claims arising under the contract shall be submitted to and settled by arbitration. American company invoked the arbitration agreement. It- obtained two exparte awards totalling US $18748. American Company then adopted proceedings in the Supreme Court of the State of New York to have the said awards confirmed and judgment entered thereon. Judgment confirming the awards was pronounced on April 13, 1950. American company thereupon instituted the suit in the Bombay High Court on January 14, 1954, Suit Was substantially based on the foreignjudgment and in the alternative on the two awards given by a domestic tribunal functioning in New York, Indian firm raised number of pleas in defence. It was submitted that Indian firm was not residing within the limits of the original jurisdiction of the Bombay High Court or carry on business therein and the High Court had ho jurisdiction to entertain the suit. It was not disputed that the Indian firm on the date of the suit had ceased to reside or carry on business within the limits of the civil jurisdiction of the Bombay High Court. The matter could have rested at that but this court proceeded to examine the position regarding the enforcement of foreign awards andforeign judgments based upon awards. It referred to the provisions of the Arbitration (Protocol and Convention) Act, 1937 and observed that it was common ground that the provisions of that Act were not applicable to the awards in question. It said that apart from the provisions of that Act, foreign awards and foreign judgments based upon awards were enforceable in India on the same grounds and in the same circumstances on which they were enforceable in England under the common law on grounds of justice, equity and good conscience. This Court then examined the law on the subject in England and said that there was conflict of opinion on a number of points concerning the enforcement of foreign awards and judgments based uponforeign awards. However, certain propositions appear to be clear and these were stated as under :
Thus, as held in Renusagar’s case [1984] 4 SCC 679, Foreign Awards Act is a complete Code in itself providing for all the possible contingencies in relation to foreign awards. Once it is held that an award is a foreign award, the provisions of the Foreign Awards Act would apply and where the conditions for enforcement Of such an award exist as mentioned in Section 7 of this Act, the Court shall order the award to be filed and shall proceed to pronounce judgmentgranting award and upon the judgment so pronounced, decree shall follow. It is not material for the purpose of enforcement of a foreign award under the Foreign Awards Act that in any other country than India, a judgment has already been passed by a Court of competent jurisdiction in terms of that award. A parry may have other remedy for filing a suit passed on a foreignjudgment but that will not oust jurisdiction of the Court to enforce a foreign award under theForeign Awards Act. Provisions as contained in Sections 13 and 1.4 of the Code of Civil Procedure (for short, the `Code’) would apply when a suit is brought on a foreign award. Under Section 44A of the Code, there is a provision for execution of decrees passed by Courts in reciprocating territory. Explanation 1 to this section defines “reciprocating territory” to mean any country or territory outside India which the Central Government may, by notification, in the Official Gazette, declare to be a reciprocating territory for the purposes of this section, Reciprocating territory specified in Section 44A of the Code may hot be same as that specified in clause (b) of Section 2 of the Foreign Awards Act. We are not called upon to decide in the present proceedings what is the effect of the judgment given on the award in question in the United States and how the fiigh Court would proceed in the matter when a suit has been filed on the basis of the judgment. The argument that the foreign award has merged in the judgmentof the Supreme Court of the State of New York has, therefore, to be rejected.
Let us examine this argument of Mr, Ganesh that foreign award required registration from another angle, He said that the foreign award has already merged in the foreign judgment on the basis of which Mukesh has brought suit in the Bombay High Court. A foreign judgmentdoes not require registration as the process of suit having been decreed on that basis will have to be gone through. When a decree is passed by the Court, it does not require registration in view of clause (vi) of subjection (2) of Section 17 of the Registration Act. A decree or order of a court affecting the rights mentioned in Section 17(l)(b) and (c) Would not require registration. It would, however, require registration where the decree or order on the basis of compromise affects the immoveable property other than that which is the subject matter of the suit or proceeding. Even a decree passed by the foreign court execution of which is sought under Section 44A of the Code of Civil Procedure would not require registration. That being the position, we are of the view thatforeign award under the provisions of the Foreign Awards Act does not require registration under the Registration Act: In any case, in the present case the award creates a right to obtain transfer and closing documents which as regards Indian properties and businesses are yet to be executed by D.M. Harish & Co., Chartered Accountants. Decision of this Court in Mrs. Tehmi P. Sidhwa, case [1974] 2 SCC 579, as rightly pointed by Mr Dholakia. learned counsel appearing for the respondents, would be fully applicable and the argument that the award required registration has to be rejected on this ground as well.
———————————————————————————————————————————————————————
“Moreover, an examination of the relevant provisions of this Act (Foreign Awards Act) and theArbitration Act, 1940 will show that the schemes of the two Acts are not identical and as will be pointed out at the appropriate stage there are various differences which have a material bearing on the question under consideration and as such decisions on similar or analogous provisions contained in the Arbitration Act may not help in deciding the issue arising under the Foreign Awards Act because just as the Arbitration Act, 1940 is a consolidating enactment governing all domestic awards the Foreign Awards Act constitutes a complete code by itself providing for all possible contingencies in relation to foreign awards made pursuant to agreements to which Article II of the Convention applies.”
Thus, as held in Renusagar’s case [1984] 4 SCC 679, Foreign Awards Act is a complete Code in itself providing for all the possible contingencies in relation to foreign awards. Once it is held that an award is a foreign award, the provisions of the Foreign Awards Act would apply and where the conditions for enforcement Of such an award exist as mentioned in Section 7 of this Act, the Court shall order the award to be filed and shall proceed to pronounce judgment granting award and upon the judgment so pronounced, decree shall follow. It is not material for the purpose of enforcement of a foreign award under the Foreign Awards Act that in any other country than India, a judgment has already been passed by a Court of competent jurisdiction in terms of that award. A parry may have other remedy for filing a suit passed on a foreign judgment but that will not oust jurisdiction of the Court to enforce a foreign award under the Foreign Awards Act. Provisions as contained in Sections 13 and 1.4 of the Code of Civil Procedure (for short, the `Code’) would apply when a suit is brought on a foreign award. Under Section 44A of the Code, there is a provision for execution of decrees passed by Courts in reciprocating territory. Explanation 1 to this section defines “reciprocating territory” to mean any country or territory outside India which the Central Government may, by notification, in the Official Gazette, declare to be a reciprocating territory for the purposes of this section, Reciprocating territory specified in Section 44A of the Code may hot be same as that specified in clause (b) of Section 2 of the Foreign Awards Act. We are not called upon to decide in the present proceedings what is the effect of the judgment given on the award in question in the United States and how the fiigh Court would proceed in the matter when a suit has been filed on the basis of the judgment. The argument that the foreign award has merged in the judgment of the Supreme Court of the State of New York has, therefore, to be rejected.
Main stress of Mr. Ganesh has been on the plea that the award is bad for non-compliance with the provisions of Chapter XX-C of the Income Tax Act, 1961 (for short, the `IT Act’}. Chapter XX-C confers on the Central Government (through Income-tax Department) primitive right to purchase an immovable property for the amount of “apparent consideration”, where the Appropriate Authority (constituted under the IT Act) finds that such “apparent consideration” is 15% or more below the fair market value of the property. Chapter XX-C gives the Income-Tax Department statutory right of purchase of irnrnoveable property in respect of which the parties have entered into an “agreement for transfer” within the meaning of Section 269 UA(a) of the IT Act. Section 269 UC requires that if an “agreement for transfer” has been entered into, the parties must thereupon reduce it to writing and file the requisite statement in the prescribed form with the Appropriate Authority, thereby enabling the Appropriate Authority to consider the transaction and then to decide whether or not to exercise its statutory power of compulsory purchase. Rule 48 L (2) of the Income Tax Rules, 1962 lays down that the statement under Section 269UC must be furnished within 15 days from the date Of the entering into the “agreement for transfer”. Failure to comply with this statutory requirement attracts criminal sanctions user Section 276 AB, The term “transfer” has been given a wide meaning under Section 269 UA (f). It was submitted that the purpose behind the insertion of these provisions is to ensure that each and every transaction concerning “transfer” of “immoveable property” (which terms are very widely defined in Section 269 UA(f) and Section 269 U A(d) of the IT Act) comes under the scrutiny of the Appropriate Authority as only then can there be a check on proliferation of uncounted money. It is stated that this Chapter was introduced in order to tackle the extremely grave problem of rampant tax evasion and generation of black money which is then utilised for acquisition of immoveable properties at prices which are shown to be far below their real market value.
The mere fact that the documents of conveyance/exchange/lease are to be executed subsequently in pursuance of the said “agreement for transfer” is of no relevance or consequence at ail. In fact, such documents of conveyance can be executed only if and after the requisite no objection certificate (NOG) under the provisions of Chapter XX-C is issued. The scheme of Chapter XX-C is that once an “agreement for transfer” has been entered into, the parties have to mandatoriiy comply with the requirements of Chapter XX-C and are prohibited from effecting “transfer” of the property without first complying with the provisions of Chapter XX-C, that is to say, filing the Section 269 UC statement within the specified time and obtain the requisited NOG from the Appropriate Authority. It was submitted that the Only situation in which Chapter XX-C does not apply is where the transfer of property takes place without such an agreement ever having been reached arid without the volition of the owner, such as, for example, when the property is sold by auction under a Court’s order. Conversely, whenever there te an “agreement for transfer” as defined under Chapter XX-C, which has beeti entered into between trie parties, Chapter XX-C would be applicable in all force.
——————————————————————————————————————————————————————-
CASE NO.: Appeal (civil) 4006 of 1995 PETITIONER: HARENDRA H MEHTA ANID ORS. RESPONDENT: MUKESH H. MEHTA AND ORS DATE OF JUDGMENT: 13/05/1999 BENCH: D P. WADHWA & SANTOSH HEGDE JUDGMENT: