KOCH NAVIGATION INC.versusHINDUSTAN PETROLEUM CORPN. LTD.

A                       KOCH NAVIGATION INC.
                                       v.
               HINDUSTAN PETROLEUM CORPN. LTD.

                           SEPTEMBER 7, 1989
B         . [SABYASACHI MUKHARJI AND B.C. RAY, JJ.]

         Foreign Awards (Recognition and Enforcement) Act, 1961:
    Enforcement of foreign award-Costs of referenc,,_Entitlement to--
    Whether permissible.

C       The appellant company had chartered their vessel to the respon-
  dent for carrying oil from Arabian Gulf to India under a charter party.
  Disputes and differences arose between the parties and the matter was
  referred to a single arbitrator in London, as stipulated in the charter
  party. The arbitrator awarded a certain sum to be paid by the respon-
D dent to the appellant, with interest. The arbitrator further awarded to
  the appellant the cost~ of the reference, which were to be taxed in the
  event of disagreement. The respondent paid only the principal sum and
  failed and neglected to pay interest, the appellant's cost of reference to
  arbitration, and the cost of the award. The appellant filed an applica-
  tion under the Foreign Awards (Recognition & Enforcement) Act, 1961
  in the High Court of Bombay. The learned Single Judge of the High
E Court directed the respondent to pay interest and costs of the award so
  awarded by the arbitrator and also cost of the petition. The learned
  Judge however rejected the ·appellant's prayer for the cost of re-
  ference to arbitration, and also rejected the applicant's prayer that in
  the alternative liberty should be reserved in respect of the said prayer.
F The appellant preferred an appeal before the Division Bench. During
  the pendency of this appeal the appellant's costs of reference to arbitra-
  tion as awarded by the arbitrator were taxed and a taxation certificate
  was produced at the time of hearing of the appeal. The Division Bench
                                                                               -
  held that at the time when the petition was filed, there had heen no
  agreement upon or reference for taxing. of such costs, it appeared that
  the application to have the costs taxed was made only after the appeal
G was filed; and as such no order could be made directing the respondent
  to make payment to the appellant of the. costs so taxed.

        Before this Court it was urged on behalf of the respondent that
  there was no scope for addition to the award, and the award had to be
H executed as it was, and the costs of reference had not been awarded.


                                       70
                 KOCH NAVIGATION v. HINDUSTAN PETROLEUM                      71

          Allowing the appeal, this Court,
                                                                                  A
          HELD: (1) Foreign awards, as it manifests, are executable in this
    country under the provisions of the Foreign Award• (Recognition &
    Enforcement) Act, 1961. The Act was passed to give effect to the con-
    vention on the recognition and enforcement of foreign arbitrator's
    award., [74F]                                                                 B

          (2) It is obvious that since the Act was calculated and designed to
    subserve the cause of facilitating international trade and promotion
    thereof by providing for speedy settlement of disputes arising in such
    trade through arbitration, any expression or phrase occurring therein
    should receive, consistent with it• literal and grammatical sense, a
    liberal construction. [7SB]                                                   c
         Renusagar Power Co. Ltd. v; General Electric Co. & Anr., [1985]
    1 SCR 432, referred to.

           (3) The Court agrees that the award must be executed as it             D
    is and there is 110 scope for any addition to any award. But the
    award to be executed must be properly construed and given effect to.
    If the award is ambiguous, the court has jurisdiction to determine what
    it means. [7SC]

          (4) In the instant case, the award is not ambiguous. The award,         E
    read properly, means, so far as costs of the reference are concerned,
    that it was an award upon certain conditions, i.e. the award stipulated
    that the costs of reference will be paid. The costs of such reference were,
    however, directed to be determined either by agreement between the
    parties and in case there was no agreement or disagreement, to be
    taxed. [7SE]                                                                  F

          (S) Law, justke and equity in the facts and the circumstances of
    this case, enjoin that the appellant should have such costs. The appel-
    lant has taken all po!isible. steps that could be taken in the situation
    contemplated by the award. The appellant has written for agreement
"   about the costs of reference. The respondent did not agree. The appel- G
    lant took steps to have the cost• taxed in London, and the costs have
    been taxed. [7SH; 76A]

         (6) There is no evidence of the delay or Jaches on the part of
    the appellant, as such, which would disentitle the appellant to such
    w•.~I                                                                         H
     72         SUPREME COURT REPORTS                 [1989] Supp. 1 S.C.R.

A         (7) Under the Act, if an application is filed for decree in terms of
     the award, the court in upholding the award ought to grant a decree in
     terms 'of the award and~ not substract any portion thereof. Smce11he
     award directed costs of appellant's reference to be paid as is mutually
     agreed upon or as taxe,d, the Division Bench ought to have passed an
     order for cost• as taxed. \[76H; 77 AJ
B
          ·CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3838
     of 1989.

          From the Judgment and Order dated 12.10.1987 of the Bombay
     High Court in Appeal No. 244 of 1983.
c        C.S. Vaidyanathan, S.R. Bhat and K.V. Mohan for the
     Appellant.

           M.S. Ganesh for the Respondent.

D          The Judgment of the Court was delivered by

           SABYASACHI MUKHARJI, J, Special leave grnnted.

           This is an appeal from the judgment and order dated October 12,
     1987 of the Division Bench of the High Court of Bombay. The appel-
E    !ant had chartered their vessel 'KRISTEL' to the respondent for carry,
     ing oil from Arabian Gulf to India under a charter party, dated 30th
     November, 1979. Clause 40(a) of the charter party provided that the
     charter shall be construed and the relations between the parties shall
     be determined in accordance with the English Law. Clause 40(b) of the
     charter party provided that any dispute arising under the charter party
F    shall be decided by the English Courts but that either party may elect,
     in writing, to have the dispute referred to the arbitration of a single
     arbitrator in London in accordance with the (English) Arbitration Act,
     1950.

           Disputes and differences arose between the parties, and they
C)   appointed one Mr. Robert William Reed of the Baltic Exchange and
     of 28, Reddons Road, Beckenham, Kent BR 3 ILZ to be the sole
     arbitrator. The parties appeared before the arbitrator represented by
     their respective Solicitors and counsel. The arbitrator made his award
     on 28th July, 1982 which contained, inter alia, as follows:

H                "I AWARD AND ADJUDGE that the Charterers do
KOCH NAVIGATION v. HINDUSTAN PETROLEUM [MUKHARJI, J.]                   73

            forthwith pay the Owners the sum of U.S. $ 291,822.00            A
            (United States Dollars two hundred and ninetyone
            thousand eight hundred and twenty-two only) together
            with interest at the rate of 15 per cent per annum as from
            20th June, 1980, to the date of this my Final Award in full
            and final settlement of the matters at issue in the
            Reference.                                                       B

            I FURTHER AWARD AND ADJUDGE that the Char-
            terers do bear and pay their own and the Owners' costs of
            the Reference (the latter to be taxed in the event of dis-
            agreement) and that the Charterers do bear and pay the
            cost of this my Final Award which I hereby tax and settle at
            E4,684 including my disbursements. Provided always that
                                                                             c
            if in the first instance the Owners shall have paid the said
            cost of this my Award, then they shall be entitled to an
            immediate refund from the Charterers of the sum so paid."

      As mentioned hereinbefore, the arbitrator awarded the cost of          D
reference to be taxed in the event of disagreement. The respondent
paid only the principal sum and failed and neglected to pay any
interest on it and the appellant's cost of reference to arbitration and
the cost of the award. Pursuant to section 20 of the English Arbitration
Act, 1950 a sum directed to be paid by the award shall carry interest as
from the date of the award at the same rate as the judgment date. It         E
appears that from 8t.h June, 1982 the interest rate on judgment debt in
England was 14% per annum.

      The award is enforceable under the Foreign Awards (Recogni-
tion & Enforcement) Act,1961 (hereinafter called 'the Act'). The
appellant filed an application under .the Act in the High Court of           F
Bombay, inter alia, contending for the judgment be pronounced and a
decree to be passed according to the award in favour of the appellant.
The learned Single Judge of the High Court by his judgment and order
dated 2 lst February, 1983 decreed in favour of the appellant and
directed the respondent to pay interest and costs of the award so
awarded 'by the arbitrator and also cost of the petition. The learned        G
Judge, however, rejected the appellant's prayer for the cost of refe-
rence to arbitration, and also rejected the applicant's prayer that in the
alternative liberty should be· reserved in respect of the said prayer. The
said prayer was made orally: but was refused by the learned Single
Judge because as he observed that he saw no reason to reserve such
liberty, as the appellant had not taken any steps.                           H.
    74         SUPREME COURT REPORTS                [ 1989] Supp. 1 S.C.R.

        Aggrieved by the said judgment and order dated 21st February,
A
  1983 the appellant preferred an appeal before the Division Bench of
  the High Court. During the pendency of the said appeal in the High
  Court the appellant's costs of reference to arbitration as awarded by
  the arbitrator were taxed because of the failure of the parties to agree
  and the taxed amount was £10,901.45 by the Taxing Master of the
B Supreme Court of Judicature, England. A taxation certificate dated
   19th December, 1984 was issued and the same was produced at the
  time of hearing of the appeal before the Division Bench. Before the
  Division Bench, cross-objections had been filed on behalf of the
  respondent. By judgment dated 12th October, 1987, the Division
  Bench of the High Court dismissed the respondent's cross-objections,
C and held that the o)lly point related to the refusal of the learned Single
  Judge to grant liberty to the appellant to file a separate petition upon
  the costs of the reference to arbitration being quantified. The Division
  Bench held that at the time when the petition was filed, there had been
   no agreeme)lt upon or reference for taxing of such costs, and as such it
  appears that the application to have the costs taxed was made only
D after the appeal was filed. No order could be made directing the
   respondent to make payment to the appellant of the costs so taxed.
   The Division Bench held that if the appellant was entitled to file a
   fresh petition.for such costs, it niight adopt such proceedings.

        Aggrieved thereby, the appellant has come up before this Court.
E We are unable to uphold the views of the Division Bench of the
  Bombay High Court that no order could have been made by the Divi-
  sion Bench directing the respondent to make payment to the appel-
  lant's costs so taxed. Foreign awards, as it manifests, are executable in
  this country under the provisions of the Act. The Act in question was
  passed to give effect to the convention on the recognition and enforce-
F ment offoreigp arbitrator's award. Section 6 of the Act is as follows:

                "Enforcement of Foreign Award: (1) Where the Court is
                satisfied that the Foreign award is enforceable under this
                Act, the court shall order the award to be filed and shall
                proceed to pronounce judgment according to the award.
G
                (2) Upon the judgment so pronounced, a decree shall fol-
                low and no appeal shall lie from such decree except in so far
                as the decree is in excess of or not in accordance with the
                award."

H         Thus foreign award is enforceable in India. In such a case the
'-   KOCH NAVIGATION v. HINDUSTAN PETROLEUM [MUKHARJI. J.J                   75

     Court i> obliged to direct that the award be filed and proceed to
                                                                                  A
     pronounce judgment according to the award. And upon the judgment
     so pronounced a decree shall follow. This Court had occasion to
     examine the purpose and terms of the Act in Renusagar Power Co.
     Ltd. v. General Electric Co. & Anr., [1985] 1SCR432. This Court held
     referring to the objects that the Act seeks to achieve speedy settlement
     of disputes arising from international trade through arbitration. The        B
     Act was enacted to give effect to the Newyork International Conven-
     tion on the Recognition and Enforcement of Foreign Awards to which
     India was a party. This Court noted that it is obvious that since the Act
     was calculated and designed to subserve the cause of facilitating inter-
     national trade and promotion thereof by providing for speedy settle-
     ment of disputes arising in such trade through arbitration, any expres-
     sion or phrase occurring therein should receive, consistent with its         c
     literal and grammatical sense, a liberal construction.

           The judgment has been pronounced in terms of the aforesaid and
     a decree has followed. The award enjoins, inter alia, "that the Char-
     terers do pay and bear their own costs and the owner's costs of refe-        D
     rence (the latter to be taxed in the event of disagreement). The judg-
     ment and decree which was pronounced in terms of the award did not
     direct any cost taxed or quantified of the reference to be paid. Indubit-
     ably, the costs of reference have been awarded. The award, read pro-
     perly, means, so far as costs of the reference are concerned, that it was
     an award upon certain conditions, i.e., the award stipulated that the        E
     costs of reference will be paid. The costs of such reference were,
     however, directed to be determined either by agreement between the
     parties and in case there was no agreement or disagreement, to be
     taxed. The parties have not been able to agree. It appears from the
     averments made in the pleadings before the High Court, there was no
     agreement as to the costs, and the steps were taken after the appeal         F
     was filed before the Division Bench to have the costs taxed. But there
     is no evidence of any delay or !aches on the part of the appellant, as
     such, which would disentitle the appellant to such costs. In that view of
     the matter this award can legitimately be considered as an award
     directing payment of costs upon the condition that these will be taxed
     on the failure of agreement or disagreement between the parties. The         G
     parties have failed to agree. The costs have been taxed and certified.
     There is no dispute as to the costs taxed or certified.

            We are of the opinion that law, justice and equity in the facts and
     the ·circumstances of this case, enjoin that the appellant should have
     such costs. The appellant has taken all possible steps that could be         H
    76         SUPREME COURT REPORTS                [1989] Supp. 1 S.C.R.       -
A   taken in the situation contemplated by the award. The appellant has
    written for agreement about the costs of reference. The respondent
    did not agree. The appellant took steps to have the costs taxed in
    Lond~n, and the costs have been taxed.


          On behalf of the respondent, several contentions were urged
B  mainly on the ground that there is no scope for addition to the award
   and the award had to be executed as it was and the costs of reference
   had not been awarded. We are in agreement with Mr. Ganesh that the
   award must be executed as it is and there is no scope for any addition
   to an_y award in executing a foreign award but the award to be execajed
   must be properly construed and given effect to. If the award is ambi-
   guous, the court has jurisdiction to determine what it means. In this
c case, the award is not ambiguous. It is clear that the costs of reference
   should be paid by the respondent, and that such costs should be paid as
   are determined by agreement between the parties and in case of failure
   of the agreement by the taxation, such costs have been taxed and were
    placed before the Division Bench before it pronounr~d its judgment.
[) Our attention was drawn to the decision in Re Becker Shil/an & Co.
   and Barry Bros., [1920] All E.R. 644, where it was held that where an
    umpire in making his award dealt with the costs of the award including
   the expenses of the hire of the room for the arbitration and shorthand
   ·note~ but made no order as to .the general costs of the parties to the
    reference, the court would not presume that he has exercised his dis-
E cretion .to make no order as to costs or that he has left them to be
    borne by the parties who incurred them, but will conclude that the
   question of costs has not been dealt with at all and, therefore, should
    remit the award to him for reconsideration.

        In our opinion, the said decision bas no application to the facts of
f this case. The instant appeal before us is not a case where the award
  has not dealt with the costs of reference, rather it has specifically dealt
  with the same. It has categorically provided that cost of reference is to
  be paid by the respondent. The award has stated that such cost should
  be agreed between the parties and in case there was no agreement,
  cost should be taxed. The award is clear and unambiguous and does
0 not leave this question undecided. In the circumstances, there is no
  scope of remission of this award or not enforcing what the arbitrator
  has awarded. Under the Act, if an application is filed for decree in
  terms of the award, the court in upholding the award ought to grant a
  decree in terms of the award and not substract any portion thereof.
  Since the award directed costs of appellant's reference to be paid as is
H mutually agreed upon or as taxed, the Division Bench ought to have
KOCH NAVIGATION v. HINDUSTAN PETROLEUM [MUKHARJI, J.)               77

passed an order for costs as faxed.                                       A

      We, therefore, direct that the award to be enforced and the costs
as mentioned hereinbefore should also be payable by the respondent.
The judgment and order of the High Court are modified to that extent.
In the facts and the circumstances of the case, we do not make any
order as to costs of this appeal.                                         B

R.S.S.                                                Appeal allowed.