LMJ INTERNATIONAL LTD.versusSLEEPWELL INDUSTRIES CO. LTD.

                          [2019] 4 S.C.R. 617                             617


                   LMJ INTERNATIONAL LTD.                                 A
                                  v.
              SLEEPWELL INDUSTRIES CO. LTD.
           (Special Leave Petition (Civil) No. 540 of 2018)
                        FEBRUARY 20, 2019                                 B
      [A. M. KHANWILKAR AND AJAY RASTOGI, JJ.]
       Arbitration and Conciliation Act, 1996 – s. 48 – Parties entered
into separate contracts for sale of Non-Basmati Parboiled Rice,
Thailand origin– Contract governed by GAFTA 48 and disputes
                                                                          C
were to be resolved by Arbitration 125 as per GAFTA 125 in London
– Dispute arose – Arbitral Tribunal passed two separate awards –
Respondent filed two execution cases (pertaining to contract-I and
contract-II) u/Part-II of the 1996 Act before the High Court for
enforcement of the foreign arbitral award – Petitioner’s objection
regarding the maintainability of the subject foreign awards rejected      D
– Special Leave Petitions (pertaining to contract-I & II) filed by the
petitioner– Dismissed– Single Judge in the execution petition held
that the subject foreign awards were deemed to be decrees and hence
enforceable –Order upheld by the Division Bench – Petitioner then
filed review application in the execution case – Dismissed –
                                                                          E
Petitioner filed G.As. in the respective execution cases, objecting
the enforceability of the foreign awards – Rejected – On appeal,
held: Grounds urged by the petitioner in the earlier round regarding
the maintainability of the execution case could not have been
considered in isolation and de hors the issue of enforceability of the
subject foreign awards – Scheme of s.48 does not envisage                 F
piecemeal consideration of the issue of maintainability of the
execution case concerning the foreign awards, in the first place;
and then the issue of enforceability thereof – Subject application
filed by the petitioner deserves to be rejected, being barred by
constructive res judicata – After an interim order was passed in favour
                                                                          G
of the respondent permitting withdrawal of part of the amount
deposited in the High Court in relation to the execution of the subject
foreign awards, the petitioner lost no time in changing the name of
the company within three days thereafter–Petitioner also changed
its registered office address and had no compunction in moving the
                                                                          H
                                  617
618            SUPREME COURT REPORTS                         [2019] 4 S.C.R.


A     NCLT, Kolkata to prevent the respondent from enjoying the fruits
      of the subject awards, and saying so brazenly in the petition filed
      by it u/s.10 of the I & B Code – Conduct of the petitioner is indicative
      of an attempt to overreach this Court – High Court considered every
      aspect of the grounds urged by the petitioner and the view so
      expressed is a possible view – Exemplary costs, quantified at
B
      Rs.20,00,000/- be paid to the respondent – Registrar (OS), Calcutta
      High Court to encash the FDs lying deposited in the credit of the
      concerned stated execution case and, after obtaining the RBI’s
      permission forthwith, remit the entire amount, including the interest
      accrued in US Dollars, to the respondent – Principles of res judicata
C     – Insolvency & Bankruptcy Code, 2016 – s.10.
            Dismissing the Special Leave Petitions, the Court
             HELD: 1.1 The petitioner contends that on the earlier
      occasion, the objections were limited to the questions of
      maintainability of the execution case on grounds as were urged
D     at the relevant time and not in reference to the enforceability of
      the subject foreign awards as such. This argument, to say the
      least, is an attempt to indulge in hair-splitting and nothing more.
      It is an argument in desperation only to protract the execution of
      the foreign award on untenable grounds. Indeed, the petitioner
E     had not filed any formal application to raise the issue of
      maintainability of the execution case but the Court had permitted
      the petitioner to orally urge “all available grounds”. The Judge
      had then reproduced the five points, which alone were orally urged
      on behalf of the petitioner through its counsel. The High Court
      examined the said grounds which, obviously, were transcending
F     in the realm of enforceability of the subject foreign awards. In
      the special leave petitions filed before this Court, the petitioner
      had articulated questions of law and the grounds also in reference
      to the scope of Section 48 of the Arbitration and Conciliation Act,
      1996, which included the enforceability of the subject foreign
G     awards. Additionally, the Single Judge of the High Court vide
      order date 17th March, 2015 had made it amply clear that the
      subject foreign awards were deemed to be decrees, which
      presupposes that the same were enforceable. That order came
      to be upheld by the Division Bench whilst disposing of the appeals
      preferred by the petitioner. These orders have become final and
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  LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                       619
                     CO. LTD.

have not been challenged by the petitioner. The petitioner             A
thereafter unsuccessfully resorted to the remedy of review before
the High Court. Even the order passed in review petition has
become final. [Para 13] [638-D-H; 639-A]
       1.2 The grounds urged by the petitioner in the earlier round
regarding the maintainability of the execution case could not have     B
been considered in isolation and de hors the issue of enforceability
of the subject foreign awards. For, the same was intrinsically
linked to the question of enforceability of the subject foreign
awards. In any case, all contentions available to the petitioner in
that regard could and ought to have been raised specifically and,
if raised, could have been examined by the Court at that stage         C
itself. The scheme of Section 48 of the Act, does not envisage
piecemeal consideration of the issue of maintainability of the
execution case concerning the foreign awards, in the first place;
and then the issue of enforceability thereof. Whereas, keeping in
mind the legislative intent of speedy disposal of arbitration          D
proceedings and limited interference by the courts, the Court is
expected to consider both these aspects simultaneously at the
threshold. Taking any other view would result in encouraging
successive and multiple round of proceedings for the execution
of foreign awards. Such a situation cannot be countenanced
keeping in mind the avowed object of the Arbitration and               E
Conciliation Act, 1996, in particular, while dealing with the
enforcement of foreign awards. For, the scope of interference
has been consciously constricted by the legislature in relation to
the execution of foreign awards. Therefore, the subject
application filed by the petitioner deserves to be rejected, being     F
barred by constructive res judicata, as has been justly observed
by the High Court in the impugned judgment. [Para 14]
[639-B-F]
      1.3 The conduct of the petitioner is indicative of an attempt
to overreach this Court. For, after an interim order was passed        G
in favour of the respondent, permitting withdrawal of part of the
deposited amount, the petitioner lost no time in changing the
name of the company within three days thereafter on 23rd April,
2018. The petitioner also changed its registered office address
on 26th April, 2018 and had no compunction in moving the NCLT,
Kolkata on 27 th April, 2018 to prevent the respondent from            H
620            SUPREME COURT REPORTS                      [2019] 4 S.C.R.


A     enjoying the fruits of the subject awards, and saying so brazenly
      in the petition filed by it under Section 10 of the I & B Code.
      Strikingly, attention of this Court was invited to these facts by
      the respondent by moving a formal application. The petitioner
      has not offered any explanation, much less a plausible one. On
      this count also, the special leave petitions deserve to be rejected.
B
      [Para 15] [639-G-H; 640-A-B]
             1.4 Any other argument of the petitioner not examined,
      including on merits of the enforceability of the subject foreign
      awards. Even if it were to be done so, we would have agreed with
      the High Court that the grounds urged by the petitioner to
C     question the enforceability of the subject foreign awards are
      untenable, not being within the purview of Section 48 of the Act.
      The High Court has considered every aspect of the grounds urged
      by the petitioner; and the view so expressed by the High Court
      in reference to each of the points considered by it is a possible
D     view. The High Court has correctly noted the limited scope for
      interference in the matter of foreign awards under Section 48 of
      the Act, keeping in view the principles enunciated by this Court.
      The High Court has justly noted that the attempt of the
      petitioner was to call upon the executing court to have a re-look
      at the award. That cannot be countenanced. All the relevant
E     documents submitted to buttress the claim of the respondent
      before the Arbitral Tribunal, have been adverted to in the award
      and the findings reached in the award are based on the
      interpretation and meaning given to the said documents. That
      can be discerned from the discussion and findings recorded by
F     the Arbitral Tribunal in the award under consideration.
      [Para 16] [640-B-F]
            1.5 The Arbitral Tribunal has considered all aspects of the
      matter and even if it has committed any error, the same could, at
      best, be a matter for correction by way of appeal to be resorted
G     to on grounds as may be permissible under the English Law, by
      which the subject arbitration proceedings are governed. Court
      may not be understood to have expressed any opinion on the
      correctness of those issues. In view of the above, the amount
      towards the exemplary costs, quantified at an aggregate amount

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  LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                      621
                     CO. LTD.

of Rs.20,00,000/- (Rupees Twenty Lakh only) be paid to the            A
respondent within six weeks from today. The Registrar (OS),
Calcutta High Court is directed to forthwith encash the FDs
lying deposited in the credit of the concerned stated execution
case and, after obtaining the Reserve Bank of India’s
permission forthwith, remit the entire amount, including the
                                                                      B
interest accrued in US Dollars, to the respondent. That shall be
done within eight weeks from today and compliance report be
submitted in the Registry of this Court within two weeks
thereafter. The above directions shall be complied with by the
Registrar (OS), Calcutta High Court, irrespective of any order
passed by any other Court/Tribunal in India. [Paras 17-19]            C
[646-D-H; 647-A]
      Shri Lal Mahal Ltd. v. Progetto Grano SPA (2014) 2
      SCC 433 : Renusagar Power Company Ltd. v. General
      Electric Co. (1994) 1 Suppl. SCC 644 : [1993] 3 Suppl.
      SCR 22; Oil & Natural Gas Corporation Ltd. v. Saw               D
      Pipes Ltd. (2003) 5 SCC 705 : [2003] 3 SCR 691 –
      referred to.
                           Case Law Reference
      (2014) 2 SCC 433             referred to           Para 8
                                                                      E
      [1993] 3 Suppl. SCR 22       referred to           Para 8
      [2003] 3 SCR 691             referred to           Para 8


       CIVIL APPELLATE JURISDICTION : Special Leave Petition
                                                                      F
(Civil) No. 540 of 2018.
      From the Judgment and Order dated 22.08.2017 of the High
Court at Calcutta in G.A. No. 3306 of 2016
                                WITH
      Special Leave Petition (Civil) No. 5493 of 2019.                G

      A.K. Sinha, Sr. Adv., Vikas Sethi, Sanandha Mukherjee, Deepak
Goel, Advs. for the Petitioner.
       Shyam Divan, Sr. Adv., Rakesh Sinha, Pinaki Addy, Shailendra
Jain, Chira Ranjan Addy, Advs. for the Respondent.
                                                                      H
622             SUPREME COURT REPORTS                           [2019] 4 S.C.R.


A           The Judgment of the Court was delivered by
             A.M. KHANWILKAR, J. 1. These special leave petitions
      emanate from the judgment and orders dated 22nd August, 2017 passed
      by the High Court at Calcutta in G.A. No.3306/2016 in E.C. No.487/2013
      and dated 9th July, 2018 in G.A. No.3307/2016 in E.C. No.488/2013,
B     respectively. The special leave petitions pertain to two execution petitions
      filed by the respondent – award holder concerning two separate foreign
      awards. Since the questions raised in both these petitions are overlapping,
      the same are being answered together.
             2. The parties had entered into separate contracts for sale of Non
C     Basmati Parboiled Rice, Thailand origin, on the terms and conditions
      specified in the contracts. The contract contained a stipulation that the
      quantity would be final at the Port of loading as per the official weight
      certificate issued by SGS at the cost of the seller, meaning thereby the
      respondent. The consignments were shipped by the seller as per the
      said contract. The contract was an FOB contract and the goods were
D
      meant for the Government of People’s Republic of Bangladesh. The
      contract in “other terms” envisage that on terms and conditions not in
      contradiction with the stipulated terms of contract shall be governed by
      GAFTA 48 and disputes to be resolved by Arbitration 125 as per GAFTA
      125 in London. The buyer had opened letters of credit on different
E     dates and the consignments were shipped by the seller. For each single
      shipment, invoices had been issued by the seller in accordance with the
      addendum to the contract. Shorn of unnecessary details, be it noted that
      some dispute arose regarding the inferior quality of rice and non-release
      of the payment towards the invoices raised by the seller in respect of
      certain shipment, which eventually became the subject matter of
F
      arbitration proceedings. The respondent, on 28th July, 2011, invoked the
      arbitration clause and eventually appointed Mr. R. Barber as its
      Arbitrator. As the petitioner failed to respond, the respondent requested
      GAFTA to appoint an arbitrator on their behalf in accordance with GAFTA
      Arbitration Rules 125. GAFTA duly appointed Mr. R. Eikel as the
G     second Arbitrator on 22nd September, 2011. On 25th June, 2012 GAFTA
      appointed Mr. C. Debattista as the third Arbitrator and Chairman of the
      Tribunal.
             3. The respondent filed its claim submissions dated 11th May, 2012
      in the two independent arbitration proceedings, concerning contract-I
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   LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                             623
            CO. LTD. [A. M. KHANWILKAR, J.]

and contract-II, respectively. These claim submissions came to be filed       A
after giving various opportunities to the petitioner. Resultantly, the
Arbitral Tribunal passed two separate awards in relation to the
concerned contracts, being Arbitration Case No.14/456 (pertaining to
contract-I) and Arbitration Case No.14/457 (pertaining to contract-II).
Be it noted that the Arbitral Tribunal proceeded ex-parte against the
                                                                              B
petitioner as, despite notice, the petitioner refused to participate in the
arbitration proceedings. Neither did it file any statement of defence or
counterclaim nor did it adduce any evidence.
        4. On 19th November, 2013, the respondent filed two execution
cases, being Execution Case No.487/2013 (pertaining to contract-I) and
Execution Case No.488/2013 (pertaining to contract-II), under Part-II         C
of the Arbitration and Conciliation Act, 1996 (for short “the Act”),
before the High Court at Calcutta for enforcement of the foreign
arbitral awards. The learned Single Judge of the High Court passed a
common order in the said execution cases rejecting the objection
purportedly regarding the maintainability of the subject foreign awards       D
vide judgment and order dated 4th December, 2014. The learned Single
Judge noted that the petitioner did not file any affidavit or formal
application to oppose the execution case, but chose to raise objections
orally, only through his counsel, before the Court. The Single Judge noted
the objections of the petitioner. The Court also noted that the Court
ought to be satisfied that the foreign award was enforceable and must         E
record its satisfaction in that regard, consequent to which, in view of
Section 48 of the Act, the award shall be deemed to be a decree of the
Court. The learned Single Judge then went on to record the five
objections taken on behalf of the petitioner through its counsel, which
read thus:                                                                    F
      “The first objection raised is that no prayer for declaration has
      been made in the application that the foreign award is enforceable.
      It is submitted that unless prayer is made seeking a declaration as
      to the enforcement of the award, the Court cannot assume
      jurisdiction. In this regard the learned Senior Counsel has referred    G
      to a Single Bench decision of the Bombay High Court in the case
      of Toepfer International Asia Pvt. Ltd. versus Thapar Ispat Ltd.,
      reported in 2000 (1) Arb. LR 230 (Bombay) paragraph 19.
      The second objection is that a civil suit is pending between the
      parties in which there is a categorical observation both by the         H
624            SUPREME COURT REPORTS                             [2019] 4 S.C.R.


A           learned Single Judge as well as the Division Bench that any action
            taken by the parties to the suit during the pendency of the suit
            shall be subject to and abide by the result of the suit. It is submitted
            that a cross appeal was preferred by the decree-holder and this
            observation of the learned Single Judge was not interfered with
            and accordingly the execution application is premature and unless
B
            the suit is decided, the award does not attain its finality.
            The third objection is that the arbitration clause has not been
            properly invoked. It is submitted that arbitration clause is a
            two-tier clause. Before the arbitration clause could be invoked,
            the parties are required to first make an attempt to amicably settle
C           their disputes and only upon failure, the parties could refer their
            disputes to the arbitration as per GAFTA clause for rice and
            arbitration rules 125. It is submitted that there is no averment in
            the petition that before invoking the arbitration clause there was
            any attempt to settle the disputes amicably. Since this stage has
D           not been reached, the invocation of Arbitration Clause is void ab
            initio. In this regard, the learned Senior Counsel has referred to
            an unreported decision of a single Bench of this Court in AP 112
            of 2008 [Waidhan Engineering & Industries Private Limited vs.
            The Board Of Trustees For The Port Of Kolkata] decided on 5th
            May 2010.
E
            The fourth objection is that even if it is assumed for the sake of
            argument that this amicable settlement was not followed, even
            then Rule 3.1 was not followed with regard to the appointment of
            the sole Arbitrator. It is submitted that it was incumbent upon the
            decree-holder to inform the respondent about the appointment of
F           a sole arbitrator and it was only on refusal to accede to such
            request that other procedures prescribed under the rules shall
            follow.
            The fifth and the last objection appears to be that the nominee
            arbitrator of the respondent was appointed de hors the provisions
G           of GAFTA Rules and accordingly the procedure adopted is
            irregular from the very beginning and the award is not enforceable.”
            5. After considering the rival submissions, the Court rejected the
      aforementioned objections on the finding that the legislative intent

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   LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                             625
            CO. LTD. [A. M. KHANWILKAR, J.]

underlying the Act was to circumscribe the supervisory role of the Court      A
in arbitral proceedings and that it predicated limited interference.
Further, it went on to observe that the objections raised by the petitioner
were in a quagmire of despondency and a desperate attempt to resist
the enforceability of an enforceable award rather than being any real
challenge thrown towards the maintainability of the said petition. These
                                                                              B
observations would assume relevance because in the special leave
petitions filed against the said common judgment dated 4th December,
2014, the questions of law and grounds articulated resonate with the
objections taken by the petitioner regarding the subject foreign awards
being enforceable or otherwise. To wit, the questions of law and grounds
urged in Special Leave Petition (Civil) No.5612 of 2015 (pertaining to        C
contract-I) read thus:
      “QUESTIONS OF LAW :
        That the following questions of law of general and public
      importance arise for consideration of his Hon’ble Court :-
                                                                              D
      i) Whether any order in an execution proceeding can be passed
      before the Court is called upon to decide and declare that the
      award is enforceable?
      ii) Whether any declaration as to the enforceability of a foreign
      award is to be sought by the award holder before seeking to             E
      enforce the foreign award?
      iii) Whether a foreign award which arises out of an arbitration
      agreement which is under challenge in a properly instituted civil
      suit, can be put to execution before the suit is heard and disposed
      of?                                                                     F
      iv) Whether valid and proper invocation of the arbitration clause
      is a pre-requisite before seeking to enforce the foreign award
      arising out of the arbitration agreement between the parties?
      v) Whether in a two-tier arbitration mechanism, it is necessary to
      exhaust the first-tier (i.e. negotiation) before proceeding to for-     G
      mally commence the reference?
      vi) Whether the executing Court can assume jurisdiction without
      there being a declaration as to the enforcement of the foreign
      award?
                                                                              H
626      SUPREME COURT REPORTS                           [2019] 4 S.C.R.


A     vii) Whether the execution of the foreign award was premature
      before the outcome of the civil suit filed by the appellant?
      viii) Whether the invocation of the arbitration clause was properly
      done by the award-holder?
      ix) Whether the Arbitral Tribunal rightly applied the rules,
B     principles and practice of GAFTA Arbitration Rules while
      delivering the foreign award?
      x) Whether an award-holder can seek to apply for execution of a
      foreign award without first complying with the conditions laid
      down in Section 48 of the 1996 Act?
C
      xi) Whether a foreign award can be said to be enforceable merely
      upon production of original award and a duly certified copy of the
      arbitration agreement?
      xii) Whether it is necessary to file a formal application under
D     Section 48 of the 1996 Act to resist the foreign award or
      objections as to the enforceability of a foreign award can be made
      even otherwise?
      xiii) Whether recourse to Section 49 of the Arbitration &
      Conciliation Act, 1996 can be taken without satisfying the test laid
      down in Section 48 of the 1996 Act?
E
      xiv) Whether the executing court can pass any order in aid of
      execution despite the pendency of a properly instituted civil suit
      which challenges the very basis of a purported foreign award?
      xv) Whether the executing court an substantive pass orders in
F     the execution ignoring the pendency of the civil suit and the
      observation of the Division Bench of the Calcutta High Court to
      the effect that “any action taken by the parties to the suit during
      its pendency shall be subject to and abide by the result of the suit?
      xvi) Whether the executability of the foreign award can be
G     decided without allowing the award debtor to file its affidavit or
      its objection in writing to defend a purported foreign award?
      xvii) Whether any interim order can be passed in favour of a
      party relying upon a purported foreign award without going into at
      all the objections raised by the petitioner?
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LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                               627
         CO. LTD. [A. M. KHANWILKAR, J.]

  GROUNDS                                                                    A
  a) For that the impugned order is untenable in law and facts of the
  present case.
  b) For that the impugned order has been passed without giving
  any opportunity to the petitioner to file its affidavit or put its
  objection in writing to the executability of the foreign award.            B

  c) For that the impugned order has been passed by a Single Judge
  of the Calcutta High Court totally ignoring the effect of the
  observation and finding of an order passed by another Single Judge
  of the Hon’ble High Court duly affirmed by the Division Bench
  arise out of a previously instituted civil suit.                           C

  d) For that there was no prima facie case in favour of the
  respondent and no interim order could have been granted to the
  respondent.
  e) For that the High Court erred in failing to call upon the               D
  petitioner to file its affidavit on merits and to raise its objection in
  writing to the executability of the foreign award?
  f) For that the High Court erred in holding that the affidavit
  disclosing the Bank Accounts filed by the petitioner in terms of
  the order dated 18.09.2014 gave a very bleak picture about the
                                                                             E
  financial condition of the petitioner.
  g) For that the High Court failed to appreciate that the
  decree-holder/respondent had not met or satisfied the test laid
  down in Sections 47 and 48 of the Arbitration & Conciliation Act,
  1996.
                                                                             F
  h) For that the High Court failed to appreciate the purport and
  the scope of the Arbitration & Conciliation Act, 1996 and misdi-
  rected itself in law and in fact.
  i) For that the High Court failed to appreciate that the impugned
  order will cause create hardship and inconvenience and would               G
  affect the day-to-day business of the petitioner.
  j) For that the High Court erred in holding that sufficient
  opportunity was given to the petitioner to deal with the
  maintainability of the execution proceeding.”
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628            SUPREME COURT REPORTS                          [2019] 4 S.C.R.


A            6. The aforementioned special leave petition came to be dismissed
      on 27th February, 2015. Similarly, the special leave petition filed by the
      petitioner, being SLP(C) No.6682 of 2015 (pertaining to contract-II
      involving similar questions and grounds), was dismissed on 17th August,
      2015.
B            7. Later on, when the matter proceeded before the Single Judge
      of the High Court in the execution petition, the Court noted that it had
      already held in its earlier order dated 4th December, 2014, that the
      subject foreign awards were deemed to be decrees and hence
      enforceable, whilst rejecting the objections of the petitioner in both the
      cases with regard to the maintainability of the execution petition. The
C     learned Single Judge directed the petitioner to examine its Principal
      Officer. The petitioner preferred an appeal against the said decision
      dated 17th March, 2015 which came to be disposed of by the Division
      Bench vide common order dated 1st December, 2015. These orders have
      been allowed to attain finality. The petitioner then filed a review
D     application in the execution case. The same was dismissed by the learned
      Single Judge of the High Court on 8th June, 2015, holding that the review
      application was a ploy to reopen the matter which had attained finality
      after the rejection of the special leave petitions. After the rejection of
      the review application, the petitioner was advised to file G.A.
      Nos.3306/2016 and 3307/2017 in the respective execution cases,
E     purporting to raise objections regarding the enforceability of the foreign
      awards in terms of Section 48 of the Act. We may refer to the
      application filed in G.A. No.3306/2016 as to the grounds on which the
      objection regarding enforceability of the foreign awards came to be
      resurrected. The relevant extract thereof reads thus:
F           “74. The said purported award dated April 10, 2013 is not
            enforceable, interalia, being vitiated by fraud and/or corruption as
            morefully stated above. The particulars of fraud and corruption
            are, without prejudice to the order challenges to enforceability of
            the purported award, summarized hereinbelow:-
G           (a) The award holder with intent to deceive and/or to perpetrate
            fraud on the petitioner actively concealed the factum of filing the
            suit being C.S.No.196 of 2011 (Sleepwell Industries Ltd. Vs. Bank
            of Baroda) for US$ 382,348.90 before the Arbitral Tribunal and
            procured the purported Award including the said sum for, Arbitral
H           Tribunal.
LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                             629
         CO. LTD. [A. M. KHANWILKAR, J.]

  (b) The award holder with an intent to deceive the petitioner, made      A
  a promise without any intention of performing it.
  (c) By its letter and mail both dated February 14, 2011 the award
  holder accepted that it has sent inferior quality of rice and promised
  that it will send its inspectors to Bangladesh for joint inspection of
  the inferior quality of rice sent by it and forwarded the passports      B
  of its inspectors for obtaining VISA and agreed that it will accept
  90% payment provisionally against their export bill of exchange
  and that balance 10% will be paid after joint inspection and
  settlement of claim towards the inferior goods supplied by the
  award holder.
                                                                           C
  (d) However, as soon as the 90% payment was released by the
  petitioner, as agreed between the parties, the award holder refused
  to send its representative for joint inspection and finalization of
  the claim and allegedly claimed that the inspection held at loading
  port was final and with an intent to deceive and/or to perpetrate
  fraud on the petitioner demanded the balance 10% amount of the           D
  bill of exchange.
  (e) The award holder made a suggestion as to a fact that if the
  petitioner accept the Bill of Exchange for the inferior quality of
  goods and pays 90% of the bill amount, it will depute its
  representatives for joint inspection and the balance 10% will be         E
  settled after such joint inspection and finalization of the claim,
  which was not true and which the award holder did not believe it
  to be true.
  (f) The award holder with an intent to deceive the petitioner
  procured the purported award in respect of 2.22% of the total            F
  amount due under the three consignments actively concealing that
  it has neither raised any invoice on the petitioner for all the three
  consignments nor did it make any claim under the subsisting Letters
  of Credit through which the entire payments were made in respect
  of the first two consignments and further that it has not raised any     G
  Bill of Exchange for the balance 2.22% in respect of the third
  consignment sent through vessel M.V. Tu Man Gang.
  (g) The award holder with an intent to perpetrate fraud on the
  petitioner gave a wrong email address to GAFTA and correct
  email address was given by its mail dated January 11, 2013 and
                                                                           H
630      SUPREME COURT REPORTS                           [2019] 4 S.C.R.


A     February 12, 2013 after close of arbitration proceedings by the
      arbitral tribunal by its mail dated December 17, 2012.
      (h) The award holder with an intent to perpetrate fraud on the
      petitioner suggested as a fact, which was not true and which the
      award holder did not believe to be true that the balance 2.22% or
B     US$ 10/- per MT shall be payable on the basis that “certificate of
      inspection at the time of loading shall be final as to quality” by
      suppressing the addendum to the contract dated December 7,
      2010, which provided that “the balance amount at the rate of US$
      10/- per MT will be payable after receipt of quality inspection
      report at destination port and in the process, the award holder
C     procured a purported award for the amount US$ 137,148.20.
      (i) The award holder with an intent to perpetrate fraud on the
      petitioner actively concealed from the arbitral tribunal that in
      respect of the third consignment being the consignment sent
      through the vessel MV Tu Man Gang, the balance 10% of their
D     invoice amounting to US$ 382,348.90 was to be settled after
      inspection and finalization and by doing so, the award holder
      procured a purported award for the sum of US$ 382,348.90.
      (j) The award holder with an intend to deceive the petitioner and
      to perpetrate fraud on the petitioner deliberately suppressed from
E     the purported Arbitral tribunal that the award holder in its letters
      dated June 10, 2011 and July 11, 2011 had admitted its liability and
      agreed to pay demurrage charges on vessel Tu Man Gang to the
      extent of US$ 20,921,88. The petitioner is unable to disclose other
      particulars of fraud till disclosure of fuller and better particulars
F     by the award holder. The petitioner craves leave to file a
      supplementary affidavit upon such disclosure of fuller and better
      particulars by the award holder.
      75. In the premises, the purported award holder was in conflict
      with the Public Policy of India as the same was induced or affected
G     by fraud and hence enforcement of the purported award holder
      be refused and/or the same should be held as unenforceable.
      76. Without prejudice to the aforesaid and/or in addition thereto,
      the purported award is not enforceable, interalia, on the following
      grounds:-
H
LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                             631
         CO. LTD. [A. M. KHANWILKAR, J.]

  A-1 The contract between the parties dated 25th October 2010             A
  provides as follows:
  “All other terms and conditions not in contradiction with the above
  as per GAFTA 48 Arbitration as per GAFTA 12 in London.
  ARBITRATION
                                                                           B
  All disputes in connection with this contract or the execution
  thereof shall be settled amicably by friendly negotiations between
  the two parties. If no settlement can be reached, the case in dispute
  shall then be submitted GAFTA, LONDON for arbitration as per
  GAFTA clause for rice and amendment if any and Arbitration
  Rule 125".                                                               C

  A copy of the GAFTA 125 is annexed hereto and marked “OO”.
  A copy of the GAFTA No.48 is annexed hereto and marked “PP”.
  A-2. On a perusal GAFTA No.48, it is apparent that it is a standard
  form of contract to be filled up in detail and is to be signed by the    D
  parties. In the instant case, the petitioner did not sign any contract
  with the award holder in GAFTA No.48. In view of the above,
  there was no contract between the parties herein in terms of and/
  or on the basis of GAFTA Form No.48.
  A-3 However, the purported award was passed on the basis of              E
  GAFTA No.48. Therefore, the arbitral procedure was not in
  accordance with the agreement of the parties and the award is
  not enforceable under Section 48 (1)(d) of the said Act.
  B-1. Assuming but not admitting that GAFTA No.48 was
  applicable, the same could not be applied if in contradiction with       F
  the agreement dated October 25, 2010. The agreement as
  amended by the Addendum dated December 7, 2-010 provided
  that “….. balance amount of US$10 Per Mt will be payable after
  receipt of quality inspection report of destination port.”
  B-2. However, the purported award was passed on the basis of             G
  clause 5 of GAFTA No.48 providing “Certificate of Inspection at
  time of loading shall be final as to quality”.
  B-3. Therefore, the arbitral procedure was not in accordance with
  the agreement of the parties and hence, the said purported award
  is not enforceable.                                                      H
632      SUPREME COURT REPORTS                            [2019] 4 S.C.R.


A     C-1. By a mail dated September 19, 2011, the Award holder
      informed the petitioner to appoint its arbitrator within three days
      therefrom and informed that on failing to do so, they will request
      GAFTA to appoint an Arbitrator on behalf of the petitioner.
      However, by a communication dated February 29, 2012 Mr. Bardia
      on behalf of the award holder informed GAFTA that he has
B
      received a purported letter dated September 22, 2011 from GAFTA
      appointing one Mr. R. Eikel as arbitrator on behalf of the petitioner
      in case No.14-456 and requested to appoint Arbitrator in Case
      No.14-457.
      C-2. The time to appoint arbitrator by the petitioner was to expire
C     on September 22, 2011. Only after that, the award holder was
      entitled to make an application to GAFTA to appoint an Arbitrator.
      Appointment of Mr. R. Eikel by GAFTA on September 22, 2011
      without any application by the award holder was irregular and not
      binding on the petitioner. In any event and as the award holder by
D     its letter dated September 19, 2011 wanted the petitioner to appoint
      its Arbitrator within 3 days therefrom and as in computing the 3
      days period the date of issuance being September 19, 2011 was to
      be excluded, no appointment of any Arbitrator, either of Mr. R.
      Eikel or otherwise, could not be made by GAFTA on September
      22, 2011 and such alleged appointment is bad being contrary to
E     the agreement between the parties and is not and cannot be binding
      on the petitioner.
      C-3. Since the Arbitrator on behalf of the petitioner was not
      appointed in accordance with the procedure agreed, the
      composition of the arbitral tribunal was not in accordance with
F     the agreement of the parties and the purported award cannot be
      enforced and its enforcement should be refused.
      D-1. The purported award provides that –
      “6.20 : The Tribunal THEREFORE FINDS THAT Buyers, with
G     respect to Cl.6.1 of the GAFTA Sampling Rules No.124 were
      obliged to provide a certificate of analysis latest 14 days after that
      message dated 5 February 2011, therefore, latest 20 February
      2011.
      6.21: The date of default shall therefore, be one day later, the 21
      February, 2011 and SO WE DO FIND”.
H
LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                              633
         CO. LTD. [A. M. KHANWILKAR, J.]

  D-2. The GAFTA Arbitration Rules provide that a claimant can              A
  give a notice of his intention to refer a dispute to arbitration within
  the time limits prescribed therein. In the case of non-payment of
  amount, a Notice of Reference cannot be issued beyond 60 days
  from the date the dispute has arisen. A claimant can initiate
  arbitration proceeding or appoint an Arbitrator before expiry of
                                                                            B
  the time limit.
  D-3. The Notice of Arbitration was given and Arbitrator on its
  behalf was appointed by the award holder by two letters both
  dated July 28, 2011. Therefore, the Notice of Arbitration and
  appointment of Arbitrator was ex facie time barred under the
  Arbitration Rules of GAFTA and/or Agreement between the                   C
  parties.
  D-4. Further, GAFTA 124 does not find any place in the agreement
  between the parties and is wholly inapplicable in the instant case.
  D-5. Therefore, the arbitral procedure and also appointment of            D
  arbitrators was not in accordance with the agreement of the parties
  and also not in accordance with law applicable, and hence, the
  said purported Award was not enforceable.
  E-1 By a mail dated September 19, 2012, the arbitral tribunal allowed
  the award holder to file its further claim submissions till close of      E
  business of that date. No opportunity was given to the petitioner
  to file its defence submission. By a mail dated November 23,
  2012 GAFTA requested the award holder as to whether address
  of the petitioner submitted by the award holder was correct. By a
  mail dated December 17, 2012, the Tribunal closed arbitration
  proceedings. By mails dated January 11, 2013 and February 12,             F
  2013 the award holder submitted the correct email address of the
  petitioner to GAFTA, i.e. after close of arbitration proceedings.
  E-2. Therefore, the petitioner herein was not given proper notice
  of the appointment of the arbitrator. The petitioner was not given
  proper notice of the arbitral proceedings. The petitioner was unable      G
  to present its case. In the premises, the purported award is not
  enforceable.
  F-1. From the mail of GAFTA dated September 26, 2012, it is
  clear that GAFTA can only accept hardcopies towards pleadings.
                                                                            H
634             SUPREME COURT REPORTS                            [2019] 4 S.C.R.


A           From the mail dated September 25, 2012 of GAFTA, it appears
            that hardcopy of the claim submission was filed by the award
            holder on September 24, 2012, though the time limit was September
            19, 2012.
            F-2. In the premises, the arbitral procedure was not in accordance
B           with the law applicable and enforcement of the purported award
            should be refused.
            G-1. A Civil suit being C.S. No.185 of 2011 filed by the petitioner
            against the award holder challenging the purported notices both
            dated July 28, 2011 referring the alleged disputes to Arbitration
C           and appointment of Arbitrator is pending disposal. In the said suit
            an order dated September 9, 2011 was passed by an Hon’ble
            Single Judge directing that any action taken by the parties to the
            suit shall be subject to and abide by the result of the suit. The said
            order was upheld by the Hon’ble Division Bench dismissing the
            Cross-Objection by the Award holder. The suit is still pending.
D           The award holder did not challenge the order dated September
            28, 2012 passed by a Division Bench of this Hon’ble Court
            dismissing both the appeals and the two cross objections. Having
            not done so, the award holder accepted that the observations made
            by the learned Single Judge to the effect that “any action taken by
E           the parties to the suit shall be subjected to and abide by the results
            of the suit” would affect the enforcement of any award, which
            would be passed by the Arbitral Tribunal.
            G-2. In the premises, the purported award did no and could not
            attain finality and hence not yet enforceable.”
F            8. The learned Single Judge of the High Court (Executing Court)
      was once again called upon to consider the objections regarding
      enforceability of the subject foreign awards. At the outset, it has noted
      that such a challenge was not maintainable after the rejection of the
      objections in the first round had attained finality with the dismissal of the
G     special leave petitions by this Court. It held that the objections now taken
      would be hit by the principles of res judicata. Despite that, the Court
      proceeded to examine the objections on merit and opined that the same
      were not falling within the purview of conflict with the public policy of
      India as such. On the other hand, it was an attempt to invite the Court to
      have a second look at the foreign awards. That could not be
H
    LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                             635
             CO. LTD. [A. M. KHANWILKAR, J.]

countenanced in view of the limited jurisdiction under Section 48 of the       A
Act, considering the decisions cited at the Bar by both sides highlighting
the distinction between the approach to be adopted while examining the
question of enforceability of the foreign award and the domestic award,
as delineated by this Court in Shri Lal Mahal Ltd. Vs. Progetto Grano
SPA1, Renusagar Power Company Ltd. Vs. General Electric Co.2,
                                                                               B
and Oil & Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd.3. In
addition, the High Court went on to observe that the petitioner, having
failed to participate in the arbitration proceedings despite the opportunity
given to it and having notice of such proceedings, could not be heard to
make a grievance that the respondent - award holder did not produce
the relevant documents before the Arbitral Tribunal. On the other hand,        C
the Court held that the respondent - award holder had placed all the
relevant documents/materials before the Arbitral Tribunal and more
particularly, because the subsequent correspondence between the
parties disclosed very clearly that the respondent had categorically
denied its obligation to produce any quality inspection report at the Port
                                                                               D
of destination. It also noted that the Arbitral Tribunal had jurisdiction to
decide the issue one way or the other and in the present case, it had so
decided. The High Court also noted that the petitioner had not alleged
any fraud or bias against the Arbitral Tribunal as such. From the
grievance of the petitioner, even if taken at its face value, it did not
warrant interference under Section 48 of the Act. In substance, the            E
learned Single Judge after adverting to the settled legal position and the
factual matrix of the case on hand, concluded that the objections of the
petitioner, regarding enforceability of the subject foreign award, were
devoid of merit and thus rejected the same.
       9. Aggrieved, the petitioner has once again approached this Court       F
by way of the instant special leave petitions, broadly reiterating the
objections taken before the High Court. In that, the subject foreign awards
are vitiated by fraud; the awards are contrary to the terms of the
contract and thus violative of Section 28(3) of the Act; the Arbitral
Tribunal has considered an issue in respect of which there is no
pre-existing dispute; the Arbitral Tribunal has made out a new case which      G
was not even made out by the claimant in the statement of claim; the
subject foreign awards are not supported by reason and are in violation
1
  (2014) 2 SCC 433
2
  1994 Supp. (1) SCC 644
3
  (2003) 5 SCC 705                                                             H
636            SUPREME COURT REPORTS                           [2019] 4 S.C.R.


A     of natural justice and in contravention of the fundamental policy of
      Indian law; and the Executing Court considering the application under
      Section 48 of the Act has acted as a First Court of appeal and assumed
      powers under Order 41 Rule 33 of CPC and sustained the arbitral award
      by supplying new reasons and facts, which is not the basis on which the
      impugned awards have been passed.
B
             10. The respondent, on the other hand, has urged that the
      application filed by the petitioner was not maintainable as it was hit by
      the principles of res judicata, issue estoppel and cause of action
      estoppel and principles analogous thereto. The respondent has also
      invited our attention to the conduct of the petitioner which was
C     indicative of an attempt to overreach the Court. In that, after the interim
      order was passed by the Court on 20th October, 2018, permitting the
      respondent to withdraw part of the amount deposited in the High Court
      in relation to the execution of the subject foreign awards, the petitioner
      changed its name on 23rd April, 2018 from LMJ International Ltd. to Sri
D     Munisuvrata Agri International Limited. It then changed its registered
      office from Hemanta Basu Sarani to British India Street on or about
      26th April, 2018. The petitioner then, without any compunction, proceeded
      to file a petition under Section 10 of the Insolvency and Bankruptcy
      Code, 2016 before NCLT, Kolkata on 27th April, 2018 so as to invoke a
      moratorium against the release of any further amount to the respondent,
E     in the event the respondent succeeded in the present petitions. The
      purpose for which the petitioner invoked NCLT proceedings is, in fact,
      manifest from the averments in the petition filed by the petitioner before
      the NCLT itself, claiming that the objective of initiating the corporate
      insolvency process was to prevent the respondents from receiving the
F     proceeds. All these developments have been brought on record by the
      respondent. The same were not disclosed by the petitioner on its own,
      which it was obliged to do in law. For this reason alone, contends the
      respondent, no indulgence should be shown to the petitioner.
             11. On merits, it is submitted that the grounds urged by the
G     petitioner would not come within the purview of Section 48 of the Act,
      which is very narrow and does not require the Court to have a second
      look at foreign awards. The grounds, at best, could be urged by the
      petitioner in the appeal to be filed against the foreign award governed by
      English Laws (UK Arbitration Act, 1996). The petitioner has allowed

H
   LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                              637
            CO. LTD. [A. M. KHANWILKAR, J.]

the said awards to attain finality having failed to file such appeal. Even     A
the argument of fraud on the basis of the allegation that the relevant
documents were not brought to the notice of the Arbitral Tribunal by the
respondent – award holder, is baseless and only a subterfuge for
protracting the recovery of dues. In that, the respondent had produced a
swift message dated 3rd June, 2011 sent from the respondent bank to the
                                                                               B
petitioner bank and the subsequent correspondence between the parties
to which reference has been made by the Arbitral Tribunal while
deciding the matter. There is no allegation that the respondent concealed
the stated correspondence between the parties with a view to obtain an
arbitral award through fraud. The specific ground taken by the
petitioner was that the award holder, with intent to deceive, perpetuated      C
fraud on the petitioner. That is not enough to hold that the subject foreign
awards were unenforceable within the meaning of Section 48 of the
Act. The petitioner had sufficient notice of the arbitration proceedings
but it chose not to participate in the said proceeding for reasons best
known to it. Therefore, now it cannot turn around and make a grievance
                                                                               D
about non-consideration of any document. More so, the grievance is in
the nature of inviting the Executing Court to have a second look at the
award which is not the scope of Section 48 of the Act. The respondent
has also refuted the ground urged on behalf of the petitioner regarding
awarding of compound interest at the rate of 4% per annum calculated
at quarterly rests, being in conformity with the governing laws. The           E
respondent has also relied on the dictum in Shri Lal Mahal Ltd. (supra)
and Renusagar Power Company Ltd., (supra). The respondent has
also distinguished the judgments cited by the petitioner on the scope of
interference in domestic awards on the ground of its enforceability as
opposed to the foreign awards in the present cases. The respondent
                                                                               F
submits that these petitions be dismissed with exemplary costs and while
doing so, appropriate directions be issued to the Registrar (OS), High
Court at Calcutta to forthwith encash the FDs of approximately Rs.2
crores, in the credit of both the execution cases and forthwith remit the
entire receipts, including the accrued interest in US Dollars, to the
respondent, as was ordered earlier vide orders dated 5th January, 2018,        G
5th March, 2018 and 20th April, 2018, respectively, after obtaining prior
permission of the Reserve Bank of India in that regard. The respondent
also seeks direction against the petitioner for securing the deficit amount,
which would remain after appropriation of the amount under the FDs,
                                                                               H
638             SUPREME COURT REPORTS                            [2019] 4 S.C.R.


A     lying with the Registrar (OS), Calcutta High Court. The respondent would
      contend that such direction is necessary in the peculiar facts of the
      present case and to obviate any complication due to moratorium, as the
      petitioner has invoked proceedings under the Insolvency and Bankruptcy
      Code.
B           12. We have heard Mr. A.K. Sinha, learned senior counsel
      appearing for the petitioner and Mr. Shyam Divan, learned senior
      counsel appearing for the respondents.
             13. We first proceed to examine the preliminary issue as to whether
      it was open to the petitioner to raise grounds regarding enforceability of
C     the foreign awards despite the judgment of the High Court dated 4th
      December, 2014, rejecting the objections in the context of
      maintainability of the execution petition and which decision had attained
      finality consequent to rejection of the special leave petitions by this Court
      and including the review petition by the High Court. The petitioner
      contends that on the earlier occasion, the objections were limited to the
D     questions of maintainability of the execution case on grounds as were
      urged at the relevant time and not in reference to the enforceability of
      the subject foreign awards as such. This argument, to say the least, is an
      attempt to indulge in hair-splitting and nothing more. It is an argument in
      desperation only to protract the execution of the foreign award on
E     untenable grounds. Indeed, the petitioner had not filed any formal
      application to raise the issue of maintainability of the execution case but
      the Court had permitted the petitioner to orally urge “all available grounds”.
      The learned Judge had then reproduced the five points, which alone
      were orally urged on behalf of the petitioner through its counsel, as
      extracted in paragraph 4 above. The High Court examined the said
F     grounds which, obviously, were transcending in the realm of
      enforceability of the subject foreign awards. In the special leave
      petitions filed before this Court, the petitioner had articulated questions
      of law and the grounds also in reference to the scope of Section 48 of
      the Act which included the enforceability of the subject foreign awards.
G     That can be discerned from the close reading of Questions and Grounds
      in the previous SLPs, reproduced in paragraph 5 above. Additionally, the
      learned Single Judge of the High Court vide order date 17th March, 2015
      had made it amply clear that the subject foreign awards were deemed to
      be decrees, which presupposes that the same were enforceable. That
      order came to be upheld by the Division Bench whilst disposing of the
H
   LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                               639
            CO. LTD. [A. M. KHANWILKAR, J.]

appeals preferred by the petitioner. These orders have become final and         A
have not been challenged by the petitioner. The petitioner thereafter
unsuccessfully resorted to the remedy of review before the High Court.
Even the order passed in review petition has become final.
       14. Be that as it may, the grounds urged by the petitioner in the
earlier round regarding the maintainability of the execution case could         B
not have been considered in isolation and de hors the issue of
enforceability of the subject foreign awards. For, the same was
intrinsically linked to the question of enforceability of the subject foreign
awards. In any case, all contentions available to the petitioner in that
regard could and ought to have been raised specifically and, if raised,
could have been examined by the Court at that stage itself. We are of           C
the considered opinion that the scheme of Section 48 of the Act does not
envisage piecemeal consideration of the issue of maintainability of the
execution case concerning the foreign awards, in the first place; and
then the issue of enforceability thereof. Whereas, keeping in mind the
legislative intent of speedy disposal of arbitration proceedings and            D
limited interference by the courts, the Court is expected to consider both
these aspects simultaneously at the threshold. Taking any other view
would result in encouraging successive and multiple round of
proceedings for the execution of foreign awards. We cannot
countenance such a situation keeping in mind the avowed object of the
Arbitration and Conciliation Act, 1996, in particular, while dealing with       E
the enforcement of foreign awards. For, the scope of interference has
been consciously constricted by the legislature in relation to the
execution of foreign awards. Therefore, the subject application filed by
the petitioner deserves to be rejected, being barred by constructive res
judicata, as has been justly observed by the High Court in the impugned         F
judgment.
        15. There is an additional reason which dissuades us to show any
indulgence to the petitioner. We find force in the grievance made by the
respondent that the conduct of the petitioner is indicative of an attempt
to overreach this Court. For, after an interim order was passed in favour       G
of the respondent, permitting withdrawal of part of the deposited amount,
the petitioner lost no time in changing the name of the company within
three days thereafter on 23rd April, 2018. The petitioner also changed its
registered office address on 26th April, 2018 and had no compunction in
moving the NCLT, Kolkata on 27th April, 2018 to prevent the respondent
                                                                                H
640            SUPREME COURT REPORTS                          [2019] 4 S.C.R.


A     from enjoying the fruits of the subject awards, and saying so brazenly in
      the petition filed by it under Section 10 of the I & B Code. Strikingly,
      attention of this Court was invited to these facts by the respondent by
      moving a formal application. The petitioner has not offered any
      explanation, much less a plausible one. On this count also, the special
      leave petitions deserve to be rejected.
B
             16. Having said this, we do not wish to examine any other
      argument of the petitioner, including on merits of the enforceability of
      the subject foreign awards. Even if we were to do so, we would have
      agreed with the High Court that the grounds urged by the petitioner to
      question the enforceability of the subject foreign awards are untenable,
C     not being within the purview of Section 48 of the Act. Be that as it may,
      we find that the High Court has considered every aspect of the grounds
      urged by the petitioner; and the view so expressed by the High Court in
      reference to each of the points considered by it is a possible view. The
      High Court has correctly noted the limited scope for interference in the
D     matter of foreign awards under Section 48 of the Act, keeping in view
      the principles enunciated by this Court. The High Court has justly noted
      that the attempt of the petitioner was to call upon the executing court to
      have a re-look at the award. That cannot be countenanced. We would
      also agree with the High Court that all the relevant documents submitted
      to buttress the claim of the respondent before the Arbitral Tribunal, have
E     been adverted to in the award and the findings reached in the award are
      based on the interpretation and meaning given to the said documents.
      That can be discerned from the discussion and findings recorded by the
      Arbitral Tribunal in the award under consideration. The relevant extract
      thereof reads thus:
F           “6. DISCUSSION AND FINDINGS
            6.1 The disputed issues submitted for our determination concern
               three different aspects first of all, the question whether the
               contractual quality had been delivered by sellers and received
               by Buyers. Secondly, the matter of the balance to the full
G              contractual quantity and thirdly, and subsequently to the first
               two issues, the payment of the invoices.
            6.2 As respondents elected not to participate in the round of
               submissions the Tribunal is bound to base its discussion and
               subsequently its findings on the submission and evidence filed
H              by claimants only.
LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                          641
         CO. LTD. [A. M. KHANWILKAR, J.]

  6.3 As a starting point on the first issue, whether the contractual   A
     quality had been delivered by sellers and received by buyers,
     the tribunal focuses on the provisions of the governing contract
     and, as far as relevant, to its amendments.
  6.4 The contract agreed between the parties was for the sale and
     purchase of 15000 metric tons of Thai Non-basmati Parboiled        B
     Rice on FOB Bangkok terms.
  6.5. The contract provided in his context under the quality clause
     that:-
  “Rice to be supplied ‘Rice to be supplied shall be 15000MT (5
  percent more or less) of Non-basmati Parboiled rice 15 percent        C
  (Maximum) Broken. Latest Clop of 2009-2010 Thailand origin In
  good condition, ‘fit for human consumption without any unpleasant
  odour, free from any sign or mould, fermentation or deterioration
  and free from obnoxious and deleterious matters and poisonous
  weed seeds. Rice must be free from insect infestation and shall       D
  have the following specification”.
      i) Moisture (Maximum): 13 PCT
 ii) Broken Grains (Maximum): 15 PCT (Rice size of 3/4th and
     below will be considered as broken and less than 1/4th Broken
     should not be more than 2 percent                                  E
     iii) Foreign Mater (Maximum) :       0.3 Percent
     iv) Dead, Damaged and Discoloured Grains
      (Maximum):                         3 Percent in Total
  iv) Radio Activity (Maximum) : 50 DO/KG 01 737 SC/134 CS              F
  (Relaxable for the Crop of SAARC and South-East Asian Country)
 6.6 In relevance to this dispute and under consideration of the
    Quality Clause of the Contract, same was amended on 7th
    December 2010 and altered:
                                                                        G
 “2. Specifications: Clause II – to be amended to 17 Pct Max I/0 15
     Pct. Clause IV – to be amended to 6 Pct. Max I/0 3 Pct in
     Total.
    All other specifications will be remain unchanged.”
                                                                        H
642      SUPREME COURT REPORTS                          [2019] 4 S.C.R.


A     6.7 Three partial shipment had been performed by claimants as
         follows:-
      1. 1,610.00 mt on board of MV Sturdy Falcon on 27th December
          2010
      2. 3,430.00 mt on board of MV Genius Mariner on 31st December
B         2010
      3. 8,689.55 mt on board of MV Tuman Gang (sic) on 17th January
          2011
      6.8 Subsequently, 133,729.55 metric tons had been delivered by
C         Sellers to Buyers and Sellers provided for each shipment
          various documents under the Contract, including so-called “pre-
          shipment Inspection Certificates issued by SGS” as under the
          Payment Clause, yet altered by Amendment to the Contract
          dated 7 December 2010 to same issued now by “ISC”.

D     6.9 Those pre-Shipment inspection Certificates were indeed Issued
          by ISC for all three shipments displaying the following analysis
          results:
      1. Certificate No.11000(2) 22010/4 dated 27th December 2010
         for MV Sturdy Falcon
E        Mositure:                        12.80%
         Total broken Kernels:            15.00%
         Small Broken:                    0.59%
         Dead, damaged and discoloured kernels: 3.00%
F         Foreign Matter.                 0.07%
      2. Certificate No.11038/2010/4 dated 31st December 2010 for
         MV Genius Manner
         Mositure:                        12.80%
G        Total broken Kernels:            12.60%
         Small Broken:                     0.46%
         Dead, damaged and discoloured kernels:       3.00%
          Foreign Matter.                  0.16%
H
LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                           643
         CO. LTD. [A. M. KHANWILKAR, J.]

  3. Certificate No.11039/2010/2 dated 17th January 2011 for MV          A
     Tu Man Gang
      Mositure:                       12.80%
     Total broken Kernels:            14.79%
     Small Broken:                    0.23%                              B
     Dead, damaged and discoloured kernels: 3.00%
      Foreign Matter.                 0.29%
  6.10 If we disregard the alterations envisaged by the Amendment
      to the Contract dated 7th December 2010, granting an even
                                                                         C
      higher level for “Broken Grains” end “Dead, damaged and
      Discoloured Grains”, the results provided by ISC were well
      Within the parameters foreseen for the quality under the
      Contract.
  6.11 The Tribunal therefore FINDS THAT the quality of the cargo
                                                                         D
      shipped on the three vessels was within the amended
      contractual specifications.
  6.12.In addition to the above, the provision DI the Quality Clause
      5 of GAFTA Contract No.48, being Tale Quale contract as
      such, states, Inter alia:
                                                                         E
     “Certificate of Inspection at time o/ loading –shall be final as
      to quality”.
  6.13 Consequently, and under consideration of the Payment Term
      of the- Contract providing for payment
     “on receipt 01 the shipping documents’, inter alia the above        F
      Pre-Shipment Certificates as issued by ISC and provided by
      Sellers, Sellers were duty entitled to trigger payment under the
      Contract.
  6.14 WE THEREFORE FIND THAT Sellers’ claim for payment
      of IJSD 440.00 per metric ton all three partial shipments          G
      succeeds.
  6.15 In reference with the balance of USD 10.00 per metric ton
      for each partial shipment, as agreed under the Amendment
      dated 7th December 2010, the Amendment Provided that the
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644      SUPREME COURT REPORTS                            [2019] 4 S.C.R.


A         “Balance amount@ US$10.00 per MT will be payable after
          receipt of quality inspection report of destination port”.
      6.16 This indeed establishes an alteration to the original provision
          of the Contract that the quality would be final at the port of
          loading, at least as far as the balance of USD 10.00 per metric
B         ton is concerned. On interpretation and construction of the
          Contract itself and its Amendment dated 7th December 2010,
          the Tribunal notes that the Amendment itself defines in
      “1. Quantity” that the weight in accordance with the Contract
          would be still “final at loading” while the amended payment
C         term now states that “a balance amount of US$ 10.00 per MT
          would only “be payable after receipt of a quality inspection
          report of destination port.”
      6.17 WE THEREFORE FIND THAT the Contract had been
         validly altered to the provision that Sellers could only have
D        triggered payment of the balance of USD 10.00 per metric ton
         after presentation of a quality inspection report from the port
         of destination, i.e. Bangladesh.
      6.18 As no such quality Inspection had been presented by Buyers,
          despite various reminders from Sellers, until the present day,
E         the GAFTA Sampling Rules No.124, cl. 6:1 provide that a
          “certificate of analysis should be sent to the other party “within
          14 consecutive days” after dispatch of the samples to the
          analyst.
      6.19 Buyers in their message of 5th February 2011 firstly explained
F         that the quality of the cargo on the last vessel i.e. MV Tu man
          Gang, was inferior.
      6.20 The Tribunal Therefore finds that buyers, with respect Tribunal
          THEREFORE FINDS THAT with respect to cl. 6:1 of the
          GAFTA Sampling Rules No.124 were obliged to provide a
          certificate of analysis Latter that message dated 5th February
G
          201 1 therefore latest 20th February 2011.
      6.21. The date of default shall therefore be one day later, the 21st
          February 2011 and SO WE DO FIND.


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LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                            645
         CO. LTD. [A. M. KHANWILKAR, J.]

  6.22 As Buyers failed to forward the certificate within this limit of   A
      14 days, any claim for rejection or for an allowance in respect
      of any matters dealt with under the Contract, and its
      Amendments. shall be deemed to be waived and absolutely
      barred, AND SO WE DO FIND.
  6.23 THE TRIBUNAL THEREFORE FINDS THAT Sellers’                         B
     claim for payment of balance invoices of USD 10,00 per metric
     ton succeeds.
  6.24 There is no apparent disputes as far as the quantity of the
      shipment under the contract is concerned as the contract
      provided for the shipment of 15000 metric tons, +-5% in buyers      C
      option and sellers only shipped 13,729.55 metric tons.
  6.25 Buyers nevertheless informed Sellers 5th February 2011 that
      the original Letter of Credit as foreseen for payment under the
      Contract not be extended and Buyers therefore planned to
      “establish Fresh LC for the balance quantity of 2000 ton in the     D
      old contract”.
  6.26 The Tribunal has not seen any new letter of credit for this
      purpose and as Buyers have not filed such, the Contract came
      to its end,
  6.27 WE THEREFORE FIND THAT Sellers’ calculations for                   E
      sums and interest due should be based on a quantity of 13,729.55
      metric tons.
  6.28 WE FIND AND DECLARE THAT:
  1) Sellers’ claim for payment of balance of USD 10.00 per metric
                                                                          F
     ton for each of the three shipments amounting to USD
     137,148.20 succeeds. Interest to run from 29th June 2011. The
     date of Buyers’ email stating that they would not be “obliged
     and/or liable to pay any sum” to Sellers.
  2) Sellers’ claim for the balance of as deducted from the invoice
     in reference to the shipment on board of MV Tuman Gang               G
     amounting to USD 382,348.90 succeeds. Interest to run from
     20th February 2011, the date by which Buyers should have
     provided a ‘quality inspection report at destination port’.

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646            SUPREME COURT REPORTS                           [2019] 4 S.C.R.


A              Buyers shall pay compound interest on the above sum of USD
                137,148.20 at the rate of 4% (four per cent) per annum
                calculated at quarterly rests, from 29th June 2011 to the date of
                payment.

            7.2 Buyers shall forthwith pay to Sellers USD 382,348.90 (three
B               hundred & eighty-two thousand, three hundred and forty eight
                United States dollars and ninety cents).

               Buyers, shall forthwith pay to sellers USD 332,348.90 at the
               rate of 4% (four percent) per annum calculated at quarterly
               rests, from 20th February 2011 to the date of payment.
C
            7.3 WE THEREFORE AWARD THAT Buyers shall pay the fees,
                costs and expenses of this arbitration as per the attached
                schedule.”

             17. Suffice it to observe that the Arbitral Tribunal has considered
D
      all aspects of the matter and even if it has committed any error, the
      same could, at best, be a matter for correction by way of appeal to be
      resorted to on grounds as may be permissible under the English Law, by
      which the subject arbitration proceedings are governed. We may not be
      understood to have expressed any opinion on the correctness of those
E     issues.

            18. In view of the above, these special leave petitions are dis-
      missed with exemplary costs, quantified at an aggregate amount of
      Rs.20,00,000/- (Rupees Twenty Lakh only). The amount towards costs
      be paid to the respondent within six weeks from today.
F
             19. Although we are dismissing the special leave petitions, we
      accede to the request of the respondent to pass a specific order to direct
      the Registrar (OS), Calcutta High Court to forthwith encash the FDs
      lying deposited in the credit of the concerned stated execution case and,
      after obtaining the Reserve Bank of India’s permission forthwith, remit
G
      the entire amount, including the interest accrued in US Dollars, to the
      respondent. That shall be done within eight weeks from today and com-
      pliance report be submitted in the Registry of this Court within two weeks
      thereafter. We further clarify that the above directions shall be complied

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   LMJ INTERNATIONAL LTD. v. SLEEPWELL INDUSTRIES                            647
            CO. LTD. [A. M. KHANWILKAR, J.]

with by the Registrar (OS), Calcutta High Court, irrespective of any         A
order passed by any other Court/Tribunal in India. We are required to
pass such a directions in the peculiar facts of the present case.


Divya Pandey                                          Petitions dismissed.
                                                                             B




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