Si-Al Bioenergie vs Sbec Systems

Citation: AIR 2005 Delhi 95

Facts of the Case

The facts of the case were that the decree holder (Si-Al Bioenergie) sought to enforce an arbitral award under Sections 48 and 34 of the Arbitration & Conciliation Act, 1996. However, the judgment debtor (Sbec Systems) applied to set aside and suspend the award and sought to object to the same and seeks to introduce evidence by way of summoning witnesses of the judgment debtor/applicant and they should also be permitted to be cross-examined.

Issue before the Court

Whether the Arbitration & Conciliation Act, 1996 allows the judgment debtor to lead oral evidence at the stage of objections raised against an arbitral award?

Plea of the Judgment Debtor (Applicant)

According to the Advocate of the Judgment Debtor, summoning witnesses of the judgment debtor/applicant should be allowed and they should also be permitted to be cross-examined. Both the witnesses deposed before the Arbitrator and they have personal knowledge of the entire case and can depose in support of the applicant’s objections in the present Court.

Plea of the Decree Holder (Respondent)

According to the Advocate of the Decree Holder, objections to the enforcement of the award have already been raised by way of affidavit and counter affidavit to the said objections has been filed which constitute sufficient material for disposal of the said objections and there is no need to summon witnesses or lead oral evidence.

Provisions of Law

Section 48 of the Arbitration and Conciliation Act, 1996 reads as follows:-

“48.Conditions for enforcement of foreign awards.- (1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that-

(a) the parties to the agreement referred to in Section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or.

(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or……

(2) Enforcement of an arbitral award may also be refused if the court finds that-

(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or.

(b) the enforcement of the award would be contrary to the public policy of India……

Statement of Objects and Reasons of the 1996 Act are:

“4. The main objectives of the Bill are as under:-

(ii) To make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration………

(v) to minimize the supervisory role of courts in the arbitral process.”

Judgment

The whole purpose of the 1996 Act would be completely defeated by granting permission to the applicant/Judgment Debtor to lead oral evidence at the stage of objections raised against an arbitral award. The 1996 Act requires expeditious disposal of the objections and the minimal interference by the Court.

Important Point

The main reason behind why the Delhi High Court rejected the plea of the applicant was that the Supreme Court in FCI v. Indian Council for Arbitration (2003) 6 SCC 564 had summarized the ethos underlying the Act as follows:

“The legislative intent underlying the 1996 Act is to minimize the supervisory role of the Courts in the arbitral process and nominate/appoint the arbitrator without wasting time leaving all contentious issues to be urged and agitated before the arbitral tribunal itself.”

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