(1)
RAKESH KUMAR AGARWALLA AND ANOTHER..... Vs.
NATIONAL LAW SCHOOL OF INDIA UNIVERSITY, BENGALURU AND OTHERS...... Respondent D.D
21/09/2020
Facts: The National Law School of India University, Bengaluru (NLSIU) was required to obtain a recommendation from the Academic Council before conducting the National Law Aptitude Test (NLAT) for admission to its five-year integrated B.A.LL.B (Hons.) Programme for the academic year 2020-21. However, NLSIU issued an admission notification for NLAT on September 3, 2020, without such a recommendation...
(2)
SAGUFA AHMED AND OTHERS..... Vs.
UPPER ASSAM PLYWOOD PRODUCTS PVT. LIMITED AND OTHERS...... Respondent D.D
18/09/2020
Facts:The appellants in this case filed an appeal before the Appellate Tribunal against the NCLT's order after a delay of more than 45 days. The Appellate Tribunal dismissed the appeal along with the application for condonation of delay. The appellants then approached the Supreme Court seeking to revive the appeal.Issues:Whether the delay in filing the appeal could be condoned by the Appellat...
(3)
B. SANTOSHAMMA AND ANOTHER ..... Vs.
D. SARALA AND ANOTHER .....Respondent D.D
18/09/2020
Facts:The vendor and vendee entered into an agreement for the sale of a 300 sq. yard land for a total consideration of Rs. 75,000.The vendee paid Rs. 45,000 as part of the consideration, and the total amount was supposed to be paid within 45 days.Subsequently, the vendor executed a registered deed of conveyance in favor of another party ('P') for 100 sq. yards of the land covered by the ...
(4)
TRUSTEES OF H.C. DHANDA TRUST ........ Vs.
STATE OF MADHYA PRADESH AND OTHERS ......Respondent D.D
17/09/2020
Facts: The appellant, H.C. Dhandra Trust's Executors/Trustees, passed a resolution to transfer and vest immovable properties to beneficiaries through a Deed of Transfer. However, they later executed a Deed of Assent with stamp duty of Rs. 200, giving their assent to complete the title and vest it absolutely in favor of the beneficiaries. The Collector of Stamps treated this Deed of Assent as ...
(5)
M/S. MSD REAL ESTATE LLP ........ Vs.
THE COLLECTOR OF STAMPS AND ANOTHER ......Respondent D.D
17/09/2020
Facts: M/S. MSD Real Estate LLP (the appellant) was involved in a property transaction where a deficit stamp duty demand and a penalty were imposed by the Collector of Stamps. The appellant contested the penalty amount, leading to litigation. The Supreme Court later modified the penalty, reducing it to half of the original amount. The appellant paid the reduced penalty and fulfilled the stamp duty...
(6)
PAPPU DEO YADAV ........ Vs.
NARESH KUMAR AND OTHERS ......Respondent D.D
17/09/2020
Facts: The appellant, a 20-year-old data entry operator, suffered a permanent disability of amputation of his right hand. The disability was initially assessed as 89%, but the Claims Tribunal and the High Court re-assessed it to be 45%. Compensation was awarded for loss of earning capacity, but future prospects were denied. The appellant appealed to the Supreme Court seeking proper assessment of d...
(7)
JUGUT RAM ........ Vs.
THE STATE OF CHHATTISGARH ......Respondent D.D
16/09/2020
Facts: The appellant, Jugut Ram, was convicted by the lower courts under Section 302 IPC for murder based on an assault he committed using a lathi. The victim succumbed to his injuries one day after the incident. The appellant appealed the conviction and sentence to the Supreme Court of India.Issues: The appropriate application of Section 304 (Part II) IPC in cases where the assault was carried ou...
(8)
NEETU KUMAR NAGAICH ........Appellant Vs.
THE STATE OF RAJASTHAN AND OTHERS ......Respondent D.D
16/09/2020
Facts: The case pertains to the death of the deceased, initially sought to be passed off as accidental or suicidal due to depression. The filing of the FIR under Section 302 of the Indian Penal Code (IPC) was delayed and only done reluctantly after the petitioner and her husband approached higher authorities. Despite a long pendency of investigation, the respondents insisted on the accidental natu...
(9)
GOVERNMENT OF INDIA ........ Vs.
VEDANTA LIMITED (FORMERLY CAIRN INDIA LTD.), AND OTHERS ......Respondent
Sections, Acts, Rules and Articles Mention:
Section 47 and 49 of the Arbitration and Conciliation Act, 1996
Limitation Act, 1963 - Article 137 and 136
Section 44, 46, 47, and 48 of the Arbitration and Conciliation Act, 1996
New York Convention on the Recognition and Enforcement of Foreign Awards, 1958 - Arts. IV & V
Section 43 of the Arbitration and Conciliation Act, 1996
Section 36 of the Arbitration and Conciliation Act, 1996
Subject:
Arbitration and Conciliation Act, 1996 – Enforcement of Foreign Awards – Limitation and Public Policy Grounds
Headnotes:
Facts:
The case involves the enforcement of a foreign award in India. The dispute arose in an international commercial arbitration, and the award was rendered in a foreign country. The party seeking enforcement filed a petition under Sections 47 and 49 of the Arbitration and Conciliation Act, 1996, seeking recognition and enforcement of the foreign award in India.
Issues:
Whether the limitation for filing an enforcement petition for a foreign award is governed by Indian law?
What is the scope of judicial intervention based on public policy grounds in the enforcement of foreign awards in India?
Whether the amendments to Section 48 of the Arbitration and Conciliation Act, 1996, have retrospective application?
Whether the foreign award is in conflict with the public policy of India?
Held:
The limitation for filing an enforcement petition for a foreign award under Sections 47 and 49 of the Arbitration and Conciliation Act, 1996, is governed by Indian law. The Indian Arbitration Act does not specify a specific period of limitation for filing such applications. Therefore, the general law of limitation, i.e., Article 137 of the Limitation Act, 1963, applies, which prescribes a three-year limitation period from the date when the right to apply accrues.
The enforcement court, while deciding on recognition and enforceability of a foreign award, does not sit in appeal over the findings of the seat court. The enforcement court has a limited power to refuse enforcement only if the conditions mentioned in Section 48 of the Act are met. The enforcement court's primary purpose is to enforce the foreign award and not to correct errors or review the merits of the award.
The amendments made to Section 48 of the Arbitration and Conciliation Act, 1996, by Act 3 of 2016, are substantive amendments and are considered prospective. The amendments narrowed the definition of "public policy" by adding specific criteria, and they do not have retrospective application.
The foreign award cannot be refused enforcement on the grounds that it is contrary to the basic notions of justice or in violation of the substantive public policy of India. The enforcement court is not permitted to review the merits of the arbitral award, and such matters fall within the purview of the seat court.
The Court dismissed the appeal and held that the foreign award could be enforced in India as it was not found to be in conflict with the public policy of India.
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JUDGMENT
INDEX
I
Background Facts
2
II
Relevant Terms of the Production Sharing Contract
3
III
Genesis of Dispute
8
IV
Challenge to the Award before the Seat Courts at Kuala Lumpur
13
V
Submissions on behalf of the Appellants
15
VI
Submissions on behalf of the Respondents
22
VII
Discussion and Analysis
28
Part A
Limitation for filing an enforcement/ execution petition of a foreign award under Section 47 of the 1996 Act
28
Part B
Scheme of the 1996 Act for enforcement of New York Convention awards
37
Part C
Whether the Malaysian Courts were justified in applying the Malaysian law of public policy while deciding the challenge to the foreign award?
44
Part D
Whether the foreign award is in conflict with the Public Policy of India?
54
Indu Malhotra, J. - Leave granted.
The present Civil Appeal has been filed by the Government of India to challenge the Judgment and Order dated 19 February 2020 passed by the Delhi High Court, wherein the application under Section 48 of the Arbitration and Conciliation Act, 1996 being LA. No. 3558 of 2015 filed by the Government of India has been dismissed; the Application filed under Section 47 read with 49 being O.M.P. (EFA) (Comm) 15 of 2016 for the enforcement of the foreign award by the Respondents, and the LA. No. 20149 of 2014 for condonation of delay in filing the execution petition by the Respondents were allowed.
I. Background Facts
In 1993, the Government of India was desirous of exploring and developing the petroleum resources in the Ravva Gas and Oil Fields (lying 10 to 15 kms offshore in the Bay of Bengal), for which a global competitive tender was floated to invite bids. Pursuant thereto, Videocon International Ltd. and Command Petroleum Holdings NV, the predecessors of the Respondents submitted their bid to develop the Ravva Field along with other bidders. The contract for this petroleum development was to be given on a production sharing basis through a Production Sharing Contract.
On 28.10.1994, the Production Sharing Contract (the "PSC") was executed between the Government of India and the following parties to commercially explore and develop the Ravva Oil and Gas Field:
(a) Command Petroleum (India) Pvt. Ltd, an Australian Company established under the laws of the State of New South Wales, which has since been renamed as Cairn Energy India Pty. Ltd;
(b) Ravva Oil (Singapore) Pty. Ltd, a company established under the laws of Singapore;
(c) Videocon Industries Limited, a company established under the laws of India; and
(d) Oil and Natural Gas Corporation Ltd (ONGC).
The PSC was for a period of 25 years, and the development and exploration of the Ravva Field was to be conducted in terms of the 'Ravva Development Plan'. As per Articles 11.1 and 11.2 of the PSC, Addendums 1 and 2 to the Rvva Development Plan were annexed to the PSC as Appendix F. The Respondents were required to carry out Petroleum Operations in the Ravva Field as per the said Plan. The Ravva Development Plan inter alia contemplated the drilling of 19 oil and 2 gas wells in the Ravva Field.
II. Relevant Terms of the Production Sharing Contract
The dispute between the Parties emanates from Article 15 of the PSC which inter alia provides for the recoverability of Base Development Costs ("BDC") incurred by the Respondents-Claimants for the development of the Ravva Field. The relevant clauses of the PSC are extracted hereinbelow :
(i) Article 11.2 of the PSC reads as :
"11.2 Ravva Development Plan
Appendix F to this contract shall constitute the approved development plan for the Existing Discoveries (hereinafter to as "the Ravva Development Plan"). The Ravva Development Plan shall be deemed to have been approved by the Managing Committee."
(ii) The Proposed Development Plan for the Ravva Field (including Addendums 1 and 2), which was accepted by the Parties as the approved Ravva Development Plan, states as follows :
Ravva Field Development Drilling
Estimated Average Well Cost (in US dollars)
TOTAL COST OF AVERAGE WELL $ 2.430.000
Attachment 10
Ravva Field Development Capital Costs
ITEM
COST US $ million
Development of R10 and R17 Blocks Oil and Associated Gas Reserves
Drill and Complete 19 Wells
SPM and Tanker Loading Line
Four Platforms
Production/Injection Pipelines to/from Shore Infield Flowlines
Onshore Oil Process Facilities
Onshore Oil Storage
Gas Treatment and Compression Water Injection
Gas Lift Pipeline and Compression Project Management etc
201.1
Development of R1,7,9 Non-Associated Gas Reserves
Drill and Complete 2 Wells One Monopod Tower
Production Pipeline to Shore Onshore Gas Treatment Plan
16.9
TOTAL
218.0
Note: This would be the project, as further defined in the Development Plan, which would be the subject of the cost variation condition. The cost stated includes Import Duty but does not include expenditures related to exploration and appraisal or field abandonment. The difference between the US $218 million total and the estimated US $ 236 million total project capital cost quoted in Section 1 of the accompanying letter is the US $ 18 million abandonment cost. " (emphasis supplied)
(iii) Article 15.5 of the PSC provides for the procedure of recovery of Development Costs incurred by the Respondents in the exploration, discovery and production of oil and gas from the Ravva Oil and Gas Field. Article 15.5 is extracted hereinbelow:
"Article 15
RECOVERY OF COSTS FOR OIL AND GAS
15.1
15.2
15.3
15.4
15.5 Recovery of Development Costs and 5% Cost Cap
(a) Development Costs incurred by the Contractor in the Contract Area shall be aggregated, and the Contractor shall be entitled to recover out of Cost Petroleum the aggregate of such Development Costs at the rate of one hundred percent (100%) per annum.
(b) Notwithstanding the provisions of Article 15.5 (a) and subject to the remaining provisions of this Article 15.5, the Contractor shall not, for the purposes only of determining the volume of Petroleum to which Contractor shall be entitled under Article 15.1 as Cost Petroleum, claim as Contract Costs Contractor's Development Costs incurred after the Effective Date in connection with Development operations under the Ravva Development Plan which exceed Contractor's Base Development Costs (as hereinafter defined) by more than five percent (5%).
(c) For the purpose of this Article 15.5 "Contractor's Base Development Costs" means costs incurred after the Effective Date relating to the construction and/or establishment of such facilities as are necessary to produce, process, store and transport Petroleum from within the Existing Discoveries, in order to enable Crude Oil production of 35,000 BOPD in accordance with the Ravva Development Plan plus such costs as are allowed pursuant to Section 3.3of the Accounting Procedure. Such costs shall include, but not be limited to costs incurred in relation to the following facilities and matters in connection therewith, such as:
(i) Offshore tanker loading facilities for tankers up to 120,000 DWT;
(ii) Wellhead platforms capable of supporting up to total of 24 development wells;
(iii) Follow lines necessary to transport well fluids ashore for processing;
(iv) Process facilities onshore for processing up to 40,000 Barrels of fluid per day;
(v) Storage facilities with a nominal capacity of 500,000 Barrels;
(vi) Facilities to allow injection of water into the reservoirs for the purposes of reservoir pressure maintenance;
(vii) Construction of an onshore supply base to support production operations;
(viii) Environmental studies;
(ix) Geophysical, geological and petroleum engineering studies;
(x) The drilling of nineteen (19) Development Wells and two (2) Gas Production Wells;
(xi) Facilities for developing, transporting and processing NANG;
(xii) Project insurance; and
(xiii) Project Management.
The Parties agree that for the purposes of this Article 15.5 the Contractor's Base Development Costs shall be the sum of US $188.98 million (as indicated in the August 1993 Addendum to the Ravva Development Plan.)
.
(i) Having regard, inter alia, to the matters referred to in Article 15.5(d), the Parties agree as follows:
(i) Costs relating to Site Restoration and exploration and appraisal drilling shall not be subject to the limit on Contractor's Development Costs as provided in Article 15.5(b);
(ii) the costs of developing the reserves and/or potential reserves and/or Satellite Fields referred to in Article 15.5(d) (i) shall not be subject to the limit on Contractor's Development Costs as provided in Article 15.5(b) notwithstanding that the development of such reserves and/or potential reserves and/or Satellite Fields may include shared flow lines, injection lines, gas-lift lines and other facilities with those constructed as part of the Ravva Development Plan;
(iii) In the event that the Contractor's Base Development Costs are exceeded by more than five per cent (5%) as a result of:
(aa) delays in carrying out the Development Operations referred to in Article 15.5(d) (Hi) due to delay in obtaining necessary approval;
(bb) material changes to the Ravva Development Plan necessitated by Contractor's review of data provided to the Companies by the Government and/or ONGC after the Effective Date pursuant to Article 8.1) (iv), where the Companies are able to establish that had such data been available prior to the Effective Date in the Companies, acting reasonably, would have included such changes in the Ravva Development Plan;
(cc) a material change to the international market conditions referred to in Article 15.5(d)(v);
(dd) the range of physical reservoir characteristics being materially different from the ranges for such characteristics on which the Ravva Development Plan has been based;
(ee) a variation to the Ravva Development Plan approved by the Management Committee; or
(ff) an event of force majeure as provided in Article 32;
Then the Management Committee shall, at the request of the operator, in a meeting convened under Article 6,7, promptly consider what, if any, increase should be made to the Contractor's base Development Costs to fairly reflect the circumstances in the question PROVIDED THAT in the case of delays referred to in Article 15.5 (e)(ii)(aa) the Management Committee shall not be obliged to consider any increase where such delay has been caused by the Contractor's failure to act in a diligent manner.
(e) In the event that:
(i) There is any dispute between the parties, whether or to what extent, a circumstance referred to in Article 15.5(e) (Hi) has arisen, or resulted in the Contractor's Base Development Costs being exceeded by more than five percent (5%); or
(ii) The Management Committee is unable to agree whether an increase should be made to the Contractor's Base Development Costs, or is unable to agree on the amount of any such increase; then at any time after thirty (30) days from the date of the Management Committee meeting referred to in Article 15.5(e)(iii),any Party shall be at liberty to refer the matter to a sole expert for decision in accordance with the provisions of Article 34.2." (emphasis supplied)
(iv) Article 33 of the PSC provides the law applicable to the PSC, and reads as under:
"Article 33: APPLICABLE LAW AND LANGUAGE OF THE CONTRACT
"33.1 Indian Law to Govern
Subject to the provisions of Article 34.12 this Contract shall be governed and interpreted in accordance with the laws of India.
33.2 Law of India Not to be Contravened
Subject to Article 17.1 nothing in this Contract shall entitle the Contractor to exercise the rights, privileges and powers conferred upon it by this Contract in a manner which will contravene the laws of India." (emphasis supplied)
(v) Article 34.12 of the PSC reads as under :
"Article 34: Sole expert, conciliation and arbitration
"34.1...
34.2 References to Sole expert
Matters which, by the terms of this contract, the Parties have agreed to refer to a sole expert and any other matter, which the Parties may agree to so refer, shall be referred to an independent and impartial person of international standing with relevant qualifications and experience, appointed by agreement between the Parties. Any sole expert appointed shall be acting as an expert, and not as an arbitrator, and the decision of the sole expert on matters referred to him shall be final and binding on the Parties, and not subject to arbitration. If the Parties are unable to agree on a sole expert, the matter may be referred to arbitration.
34.3 Unresolved Disputes
Subject to the provisions of this Contract, the Parties hereby agree that any matter, unresolved dispute, difference or claim, which cannot be agreed or settled amicably within twenty one (21) days may be submitted to a sole expert (where Article 34.2 applies), or otherwise to an arbitral tribunal for final decision as hereinafter provided.
34.12 Venue and Law of Arbitration Agreement
The venue of sole expert, conciliation or arbitration proceedings pursuant to this Article, unless the Parties otherwise agree, shall be Kuala Lumpur, Malaysia and use the English Language. In so far as practicable, the Parties shall continue to implement the terms of this Contract notwithstanding the initiation of arbitral proceedings and any pending claim or dispute. Notwithstanding the provisions of Article 33.1 the arbitration agreement contained in Article 34 shall be governed by the laws of England." (emphasis supplied)
III. Genesis of the Dispute
(i) The PSC contained a Development Plan for the "Existing Discoveries" known as the Ravva Development Plan. The scheme of the PSC was that the Claimants would incur the costs of the petroleum operations, and were entitled to recover their costs from the petroleum produced. The Government and the
Claimants would receive their respective share in the ratio fixed under the PSC.
(ii) Article 15 of the PSC provided for recovery of costs for oil and gas; Article 15.1 is a general provision with respect to contract costs; Article 15.2 to 15.4 pertain to exploration costs. The disputes have arisen on the interpretation of Article 15.5 which pertains to Development Costs. Article 15.5(c) defines the Contractor's Base Development Costs, and enumerates a list of facilities and other matters required to be constructed by the Claimants. The Contractor's Base Development Costs were the costs incurred after the effective date, relating to the construction and / or establishment of such facilities as are necessary to produce, process and transport petroleum within the "Existing Discoveries" in order to enable crude oil production of 35,000 Barrels of Oil Per Day ("BOPD") in accordance with the Ravva Development Plan. The facilities included the construction of offshore tanker loading facilities for tankers upto 120,000 DWT; wellhead platforms capable of supporting upto a total of 24 Development Wells; process facilities; storage facilities with a nominal capacity of 500,000 Barrels; the drilling of 19 Development Wells and 2 Gas Production Wells, etc. Article 15.5(b) and (c) recorded the Agreement between the parties that the Contractor's Base Development Costs shall be the "sum of US $ 188.98 million plus five percent".
It was envisaged that the production profile of 35,000 BOPD would be reached after about two years, and the said production figure would be maintained as a plateau production for 6 years thereafter. A total field production life of 14 years was estimated.
(iii) The Contractor's Base Development Costs were agreed on certain assumptions and / or factors set out in Article 15.5(d), including the range of physical reservoir characteristics not being materially different from the ranges on which the Ravva Development Plan was based,
(iv) There are specific exclusions contained in Article 15.5(e)(i) and (ii), and sub-Article (e)(iii) which set out the circumstances in which the agreed amount of the Contractor's Base Development Costs may be increased by the Management Committee; or in default by an expert, as provided in the dispute resolution clause,
(v) During the working of the PSC, the production rate of 35,000 BOPD was achieved in 1997-1998. By 1998-1999, when the complete extent of the reserves in the Ravva Field was known, the Claimants requested the Government of India to permit an increased production of 50,000 BOPD. This increase was approved by the Management Committee on 25.03.1998, and by the Government on 01.04.1999. By 1999-2000, the increased rate of production at 50,000 BOPD was achieved. This rate of production was maintained till 2008-2009, after which it decreased to 40,000 BOPD. The oil fields were found to be enormously profitable for both parties,
(vi) The Claimants submitted that by 1999-2000, they had incurred Development Costs to the tune of about US $ 220 million to achieve the production rate of 35,000 BOPD. The Claimants sought that the 'cap' in Article 15.5 should be increased accordingly. After 1999-2000 and until 2007-2008, the Claimants incurred Development Costs totalling a further US $ 278 million, which they contended that they were entitled to recover as Cost Petroleum, since the 'cap' would no longer apply post 1999-2000.
The Claimants claimed that they were entitled to more than US $ 264.35 million with respect to Development Costs incurred in 1994-1995 until 2008-2009.
(vii) On the other hand, the Government contended that all the Development Costs claimed by the Claimants were incurred in connection with the Ravva Plan, and were subject to the 'cap' on such costs as provided by Articles 15.5(b) and (c), notwithstanding the increased quantity of production. The exceptions, were however not subject to the 'cap', and were properly recovered from Cost Petroleum under Article 15.5(a) which totalled to US $ 65.95 million,
(viii) The Government contended that the work contemplated by the Ravva Plan, as per Article 15.5(c) was not completed till 1999-2000, when only 14 wells had been drilled; the remaining 7 wells stipulated in Article 15.5(c)(xi) were drilled by 2007-2008. Consequently, the 'cap' on the Contractor's Base Development Costs would apply to the whole of the costs incurred till 2007-2008, and not the costs incurred till 1999-2000. The Claimants were not entitled to claim more than the Cost Petroleum agreed at US $ 198.43 million plus US $ 65.95 million (towards exceptions),
(ix) The Government raised counter claims equivalent to the amounts which the Claimants had claimed as Cost Petroleum, in excess of the agreed amount of US $ 198.43 million plus US $ 65.95 million,
(x) On 18.08.2008, the disputes were referred to arbitration under Article 34 of the PSC. The Claimants nominated Mr. Andrew Berkeley as its nominee-arbitrator; the Government of India appointed Hon'ble Dr. Justice Adarsh Sein Anand (former Chief Justice of India) as its nominee-arbitrator. The nominee arbitrators appointed Rt. Hon'ble Sir Anthony Evans as the presiding arbitrator,
(xi) The tribunal passed the Award on 18.01.2011 inter alia holding that:
a) The Claimants constructed facilities which were necessary to produce, process, store and transport Petroleum within the Existing Discoveries to enable Crude Oil production of 35,000 BOPD. The Base Development Costs under Article 15.5(c) was to be interpreted with reference to the object of achieving a production profile of 35,000 BOPD, and the facilities contemplated to achieve that profile. The Claimants achieved the target of 35,000 BOPD by 1999-2000 by drilling of 14 wells, and incurred Development Costs of US $ 220,737,381.
Article 15.5(b) and (c) imposed a cap on the Development Costs to the agreed figure of US $ 188.98 million plus 5%. The Claimants were not entitled to recover Development Costs in excess of US $ 198.43 million in view of the cap provided under Article 15.5(c) of the PSC for the period 1994-95 to 1999-2000.
b) The Claimants had wrongly recovered US $ 22,307,381 in excess of the capped figure of US $ 198.43 million as Base Development Costs during the period 1994-95 to 1999-2000. The Government of India was entitled to be credited with the said amount in the fi D.D
16/09/2020
Facts: The case involves the enforcement of a foreign award in India. The dispute arose in an international commercial arbitration, and the award was rendered in a foreign country. The party seeking enforcement filed a petition under Sections 47 and 49 of the Arbitration and Conciliation Act, 1996, seeking recognition and enforcement of the foreign award in India.Issues:Whether the limitation for ...