ESCORTS LTD.versusUNIVERSAL TRACTOR HOLDING LLC

                       [2013] 2 S.C.R. 389


                         ESCORTS LTD.                                   A
                                 v.
           UNIVERSAL TRACTOR HOLDING LLC
      (Special Leave Petition (Civil) No. 35092 of 2012)
                        MARCH 13, 2013
                                                                        B
          [H.L. GOKHALE AND DIPAK MISRA, JJ.]

        Arbitration and Conciliation Act, 1996 - ss.48(1 )(e) and
  202 - New York ~tion, as adopted under the Act -
  Respondent-company and Escorts AMI were respectively                  C
. holding 49% and 51% shares in another company, "BCH"-
  Agreement whereby respondent sold its shareholding in BCH
  to Escorts AMI for a price to be paid in installments - Escorts
  AMI defaulted in payment of installments - Suit filed by
  respondent against Escorts AMI in a North Carolina Court in           D
  the United States - Consent order passed therein wherein both
  the parties agreed to refer the matter to arbitration - Arbitration
  followed by award in favour of the respondent - Respondent
  sought execution of that award by filing execution petition in
  India, since the Escorts AMI subsequently merged with the             E
  petitioner - Execution objected to by the petitioner, and those
  objections rejected by the High Court - Whether under the
   terms of agreement, it was necessary for the respondent to
   go for confirmation of the award in the concerned Court in
   United States and unless a confirmation of the award by the          F
   foreign Court was obtained, the award could not be executed
   in India - Held: Even as per the requirement of the US Law, a
   notice of three months is required to be given in case a party
   does not want the award to be enforced - In the instant case,
   the consent order clearly recorded that the award given by the       G
   arbitrator shall be final and binding on the parties - If the
   petitioner wanted to dispute it, it was required of them to have
   issued necessary notice which it had not done - The
   submission that the respondent ought to proceed for
                                 389                                    H
      390     SUPREME COURT REPORTS                (2013) 2 S.C.R.


 A confirmation of the award under the US Law and then come
   to India for execution is not tenable in view of the changed
   law and doing away of the rule of double excequatur - Federal
   Arbitration Act of U.S. - s. 9.
         Oil and Natural Gas Commission vs. Western Company
 8
     of North America (1987) 1 sec 496: 1987 (1) SCR 1024 and
     Harendra H. Mehta an Ors. Vs. Mukesh H. Mehta and Ors.
     (1995) 5 sec 108 - referred to.

      Russeel N. V. v. Oriental Commercial & Shipping Co.
C (U.K.) Ltd. and Others (1991) Vol. 2 Lloyd's Law Reports
  625 and Florasynth, Inc. v. Alfred Pickholz 750 F. 2d 171 - .
     referred to.

                          Case Law Reference:
D        1987 (1) SCR 1024        referred to             Para 5
         (1991) Vol. 2 LLR 625 .referred to               Para 7
         750 F. 2d 171            referred to             Para 7

E        (1995) 5 sec 108         referred to             Para 9

         CIVIL APPELLATE JURISDICTION : SLP (Civil) No.
     35092 of 2012.

      From the Judgment and Order dated 13.07.2012 of the
F High Court of Delhi at New Delhi in Exp. No. 372·of 2010.

        Parag P. Tripathi, Simran Mehta, Chanchal Kumar
     Ganguli, Yogita Sunari, Vipul Sharma for the Petitioner.

      Dharmendra Rautray, Tara Shahani, Meera Mathur for the
G Respondent.

         The following order of the Court was delivered

                               ORDER

H        1. This special leave petition seeks to challenge the
·ESCORTS LTD. v. UNIVERSAL TRACTOR HOLDING 391
                     LLC
judgment and order dated 13th July, 2012 passed by the                 A
learned Single Judge of the Delhi High Court in Execution
Petition No.372 of 2010.

       2. The short facts leading to this petition are this wise: The
respondent herein and Escorts Agri Machinery Inc., ("Escorts B
AMI") which was a subsidiary of the petitioner, were holding
following percentage of shares in another company, by name,
Beever Creek Holdings ("BCH"). The respondent held 49% of
shares and Escorts AMI held 51%. There was an agreement
between the two parties whereby the respondent sold its
shareholding in BCH for a price of Rs.1.2 Million Dollars which C
was to be paid in four installments. The Escorts AMI paid the
 first two installments but defaulted in. the payment of the other
 two. This led to a suit being filed by the respondent in the Wake
 Country Superior Court in the State of North Carolina, USA. A
 consent order was passed therein on 19th June, 2009, wherein D
 both the parties agreed to refer the matter to arbitration. The
 arbitration was followed by an award in favour of the respondent
 herein. The respondent sought the execution of that award by
 filing the aforesaid execution petition in India, since the Escorts
 AMI has subsequently merged with the petitioner herein. The E
 execution was objected to by the petitioner, and those
 objections have been rejected by the impugned order.
  Therefore, this special leave petition has been preferred by
  Escorts Limited.
                                                                       F
      3. The main submission of Mr. Parag Tripathi, learned
 senior counsel appearing for the petitioner is that under the
 terms of agreement, it was necessary for the respondent to go
 for confirmation of the award in the concerned Court in United
 States. He relied upon paragraphs 2 and 8 of the consent order        G
 dated 19th June, 2009. These two paragraphs read as under:
     "2. The case will be stayed from the date and time of entry
     of this Order until completion of arbitration between plaintiff
     and EAMI. Upon the issuance of a decision by the
                                                                       H
    392       SUPREME COURT REPORTS                 [2013] 2 S.C.R.


A         arbitrators, this Court may confirm and enter judgement
          upon such decision in accordance with the Federal
          Arbitration Act and may conduct such further proceedings
          as are necessary to resolve plaintiffs claims against
          Escorts Limited."
B
          "8. The plaintiff agree that entry of this order resolves
          defendants motion to dismiss. The Court shall retain
          jurisdiction for the purposes of entering an order
          confirming the arbitration decision pursuant to the Federal
          Arbitration Act."
c
       4. The submission of Mr. Tripathi is that unless a
  confirmation of the award by the foreign Court was obtained,
  the award could not be executed in India. He relied upon
  Section 9 of the Federal Arbitration Act of U.S. which reads
D as follows:

       "& 9. Award of arbitrators: confirmation; jurisdiction;
       procedure

        If the parties in their agreement have agreed that a
E       judgment of the court shall be entered upon the award
        made pursuant to the arbitration, and shall specify the court,
        then at any time within one year after the award is inade
        any party to the arbitration may apply to the court so
        specified for an order confirming the award, and thereupon
F      the court must grant such an order unless the award is
       vacated, modified, or corrected as prescribed in sections
        10 and 11 of this title. If no court is specified in the
       agreement of the parties, then such application maybe
       made to the United States court in and for the district within
G      which such award was made. Notice of the application
       shall be served upon the adverse party, and thereupon the
       court shall have jurisdiction of such party as though he had
       appeared generally in the proceeding. If the adverse party
       is a resident of the district within which the award was
H      made, such service shall be made upon the adverse party
ESCORTS LTD. v. UNIVERSAL TRACTOR HOLDING 393
                    LLC
    or his attorney as prescribed by law for service of notice A
    of motion in an action in the same court. If the adverse
    party shall be a nonresident, then the notice of the
    application shall be served by the marshal of any district
    within which the adverse party may be found in like manner
    as other process of the court."                            B

     5. Mr. Tripathi submitted that ultimately what one has to see
is whether the consent award was a binding one as required
under Section 48(1 )(e) of the Arbitration and Conciliation Act,
1996 and that unless a confirmation of the award was obtained,
the award could not be said to be binding and, therefore, not C
executable in India. Mr. Tripathi referred to and relied upon
paragraph 15 of the judgment of this Court in Oil and Natural
 Gas Commission Vs. Western Company of North America,
 (1987) 1 SCC 496, wherein this Court held that recognition and
 enforcement of the award will be refused if the award has not D
 become binding on the parties.

     6. Mr. Rautray, learned counsel appearing for the
respondent, on the other hand, pointed out that the relevant
Section of the Federal US Law is concerning the domestic E
awards and when it comes to foreign awards, there is a
separate chapter under the US Law and in that behalf he
referred to Section 202 of the said Act which reads as follows:

     "202. Agreement or award falling under the Convention
                                                                 F
            An arbitration agreement or arbitral award arising
     out of a legal relationship, whether contractual or not, which
     is considered as commercial, including a transaction,
     contract, or agreement described in section 2 of this title,
     falls under the Convention. An agreement or award arising G
     out of such a relationship which is entirely between citizens
     of the United States shall be deemed not to fall under the
     Convention unless that relationship involves property
     located abroad, envisages performance or enforcement
     abroad, or has some other reasonable relation with one H
     394       SUPREME COURT REPORTS                  [2013] 2 S.C.R.


 A         or more foreign states. For the purpose of this section a
           corporation is a citizen of the United States if it is
           incorporated or has its principal place of business in the
           United States."

        7. He pointed out that the requirement of this double
8
  excequatur has been removed in view of the provisions of the
  New York Convention which has been now adopted under the
  Arbitration and Conciliation Act, 1996. He further pointed out
  that even in England, this has been accepted. He referred to
  and relied upon the judgment in the case of Russeel N. V. V.
C Oriental Commercial & Shipping Co. (U.K.) Ltd. and Others,
  reported in (1991) Vol. 2 Lloyd's Law Reports 625. He referred
  to and relied upon an American judgment in the case of
  Florasynth, Inc. V. Alfred Pickholz. 750 F. 2d 171, to the same
  effect.
D
         8. The Oriental Commercial & Shipping Company's
     judgment (supra) refers to the commentary of Dr. Albert Jan
  van den Berg which noted the features emerging out of the New
  York Convention. It records that the burden of proving that the
E award is not enforceable lies on the party which has raised the
  issue. It also points out that if any such additional procedure is
  required to be followed, this will be a proceeding of no
  consideration or any substance. It will be a procedural addition
  resulting into further delay into getting the fruits of the award of
F the party which has succeeded.

        9. He also drew our attention to certain observations of this
  Court in paragraph 33 in Harendra H. Mehta and Ors. Vs.
  Mukesh H. Mehta and Ors., reported in (1995) 5 SCC 108. It
  was in a situation where a judgment had, in fact, been obtained
G before going for execution. However, the Court also observed
  that it was not material for the purpose of enforcement of a
  foreign award under the Foreign Awards Act that the award in
  any country other than India is made enforceable by a judgment.

H        10. We have noted the submissions of both the counsel
ESCORTS LTD. v. UNIVERSAL TRACTOR HOLDING 395
                    LLC
appearing for the parties. It is also material to note that even A
as per the requirement of the US Law, a notice of three months
is required to be given in case a party does not want the award
to be enforced. In the instant case, paragraph 7 of the consent
order clearly recorded that the award given by the arbitrator
shall be final and binding on the parties. If the petitioner wanted B
to dispute it, it was required of them to have issued necessary
notice which they had not done. The submission of Mr. Tripathy,
which was emphasised, was that the respondent ought to
 proceed for confirmation of the award under the US Law and
 then come to India for execution. In our considered view, the c
 said submission is not tenable in view of the changed law and
 doing away of the rule of double excequatur. We, therefore, see
 no error in the order passed by the learned Single Judge of
 the High Court. The special leave petition is, therefore,
 dismissed.
                                                                    D
  B.B.B.                                           SLP dismissed.