NATIONAL AGRICULTURAL COOPERATIVE MARKETING FEDERATION OF INDIA v. ALIMENTA S.A.

65Copy pinpoint65. In Shri Lal Mahal Limited v. Progetto Grano Spa, (2014) 2 SCC 433, the ratio of Renusagar (supra) was applied, and it was held that expression and concept of public policy of India are in its application is narrower in the enforcement of foreign award than in respect of the enforcement of domestic arbitral awards. Something more than contravention of the law is required for refusal of enforcement of a B foreign award on the ground that it is contrary to the public policy of India.This court further opined that the expression “public policy of India” in section 48(2)(b) has the same import as that of expression “public policy” in section 7(1)(b)(ii) of the ForeignAwards Act. It further opined that errors of fact by Board of Appeal obtained by the appellant,relying C on the report which was inconsistent with the terms of the contract would not bar enforceability of a foreign award on the ground of being contrary to the public policy of India andthe court cannot look into the merits of the award at the stage of enforcement of the foreign awards, and observed: D “27. In our view, what has been stated by this Court in Renusagar, 1994 Supp (1) SCC 644, with reference to Section 7(1)(b)(ii) of the Foreign Awards Act must apply equally to the ambit and scope of Section 48(2)(b) of the 1996 Act. In Renusagar,it has been expressly exposited that the expression “public policy” in Section 7(1)(b)(ii) of the Foreign Awards Act E refers to the public policy of India. The expression “public policy” used in Section 7(1)(b)(ii) was held to mean “public policy of India.” A distinction in the rule of public policy between a matter governed by the domestic law and a case involving conflict of laws has been noticed in Renusagar. For all this, there is no reason why Renusagar should not apply as regards the scope of inquiry under Section 48(2)(b). Following Renusagar, we think that for the purposes of Section 48(2)(b), the expression “public policy of India” must be given a narrow meaning and the enforcement of foreign award would be refused on the ground that it is contrary to the public policy of India if it is covered by one of the three categories enumerated in Renusagar. Although the same expression “public policy of India” is used both in Section 34(2)(b)(ii) and Section 48(2)(b) and the concept of “public policy in India” is same in nature in both the sections but, in our view, its application differs in degree insofar as these two sections are concerned. The application of the “public policy of India” doctrine

for the purposes of Section 48(2)(b) is more limited than the application of the same expression in respect of the domestic arbitral award.

29. We accordingly hold that enforcement of foreign award would be refused under Section 48(2)(b) only if such enforcement would be contrary to (1) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality. The wider meaning given to the expression “public policy of India” occurring in Section 34(2)(b)(ii) in Saw Pipes is not applicable where objection is raised to the enforcement of the foreign award under Section 48(2)(b).

47. While considering the enforceability of foreign awards, the court does not exercise appellate jurisdiction over the foreign award nor does it enquire as to whether, while rendering foreign award, some error has been committed. Under Section 48(2)(b) the enforcement of a foreign award can be refused only if such enforcement is found to be contrary to: (1) fundamental policy of Indian law; or (2) the interests of India; or (3) justice or morality. D The objections raised by the appellant do not fall in any of these categories and, therefore, the foreign awards cannot be held to be contrary to public policy of India as contemplated under Section 48(2)(b).”

66Copy pinpoint66. In Associate Builders v. Delhi Development Authority,(2015) E 3 SCC 49, the Court relied on the decision in Renusagar (supra) for interpreting the expression “public policy.” The court held that the concept of the fundamental policy of Indian Law to mean (1) compliance of thestatutes and judicial precedence, (2) need for judicial approach, (3) natural justice compliance, and (4) standards of reasonableness. The F concept of justice and morality beside that of patent illegality on consideration of the various decisions, the court observed: “18. In Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644, the Supreme Court construed Section 7(1)(b)(ii) of the Foreign Awards (Recognition and Enforcement) G Act, 1961: “7. Conditions for enforcement of foreign awards.—(1) A foreign award may not be enforced under this Act— * * * H

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A (b) if the Court dealing with the case is satisfied that— * * * (ii) the enforcement of the award will be contrary to the public policy.” B In construing the expression “public policy” in the context of a foreign award, the Court held that an award contrary to (i) The fundamental policy of Indian law, (ii) The interest of India, (iii) Justice or morality, would be set aside on the ground that it would be contrary to the public policy of India. It went on further to hold that a contravention of the provisions of the Foreign Exchange Regulation Act would be contrary to the public policy of India in that the statute is enacted for the national economic interest to ensure that the nation does not lose foreign exchange which is essential for the economic survival of the nation (see SCC p. 685, para 75). Equally, disregarding orders passed by the superior courts in India could also be a contravention of the fundamental policy of Indian law, but the recovery of compound interest on interest, being contrary to statute only, would not contravene any fundamental policy of Indian law (see SCC pp. 689 & 693, paras 85 & 95).

27. Coming to each of the heads contained in Saw Pipes[(2003) 5 SCC 705] judgment, ,we will first deal with the head “fundamental policy of Indian law.” It has already been seen from Renusagar F [1994 Supp (1) SCC 644] judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. To this, it could be added that the binding effect of the judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law. G

36. The third ground of public policy is, if an award is against justice or morality. These are two different concepts in law. An award can be said to be against justice only when it shocks the conscience of the court. An illustration of this can be given. A claimant is content with restricting his claim, let us say to Rs 30 H

lakhs in a statement of claim before the arbitrator and at no point A does he seek to claim anything more. The arbitral award ultimately awards him Rs 45 lakhs without any acceptable reason or justification. Obviously, this would shock the conscience of the court and the arbitral award would be liable to be set aside on the ground that it is contrary to “justice.” B

40. We now come to the fourth head of public policy, namely, patent illegality. It must be remembered that under the Explanation to Section 34(2)(b), an award is said to be in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption. This ground is perhaps the earliest ground on which courts in England set aside awards under English C law. Added to this ground (in 1802) is the ground that an arbitral award would be set aside if there were an error of law by the arbitrator. This is explained by Denning, L.J. in R. v. Northumberland Compensation Appeal Tribunal, ex p Shaw, (1952) 1 All ER 122: (All ER p. 130 D-E: KB p. 351) D “Leaving now the statutory tribunals, I turn to the awards of the arbitrators. The Court of King’s Bench never interfered by certiorari with the award of an arbitrator, because it was a private tribunal and not subject to the prerogative writs. If the award was not made a rule of court, the only course available to an aggrieved party was to resist an action on the award or to file a bill in equity. If the award was made a rule of court, a motion could be made to the court to set it aside for misconduct of the arbitrator on the ground that it was procured by corruption or other undue means (see Statutes 9 and 10 Will. III, C. 15). At one time an award could not be upset on the ground of error of law by the arbitrator because that could not be said to be misconduct or undue means, but ultimately it was held in Kent v. Elstob,(1802) 3 East 18, that an award could be set aside for error of law on the face of it. This was regretted by Williams, J., in Hodgkinson v. Fernie, (1857) 3 CB (NS) 189, G but is now well established.”

67Copy pinpoint67. In Ssanyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India (NHAI), (2019) 8 SCALE 41, the Court concerning the public policy held: H

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A “23. What is clear, therefore, is that the expression “public policy of India,” whether contained in Section 34 or in Section 48, would now mean the “fundamental policy of Indian law” as explained in paragraphs 18 and 27 of Associate Builders (supra), i.e., the fundamental policy of Indian law would be relegated to the “Renusagar” understanding of this expression. This would necessarily mean that the Western Geco (supra) expansion has been done away with. In short, Western Geco (supra), as explained in paragraphs 28 and 29 of Associate Builders (supra), would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court’s intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in paragraph 30 of Associate Builders (supra). D

26. Insofar as domestic awards made in India are concerned, an additional ground is now available Under Sub-section (2A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within “the fundamental policy of Indian law,” namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.

30. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate Builders (supra), while no longer being a ground for challenge under “public policy of India,” would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch H

as such decision is not based on evidence led by the parties, and A therefore, would also have to be characterised as perverse.

31. Given the fact that the amended Act will now apply, and that the “patent illegality” ground for setting aside arbitral awards in international commercial arbitrations will not apply, it is necessary to advert to the grounds contained in Section 34(2)(a)(iii) and (iv) B as applicable to the facts of the present case.

33. In Renusagar (supra), this Court dealt with a challenge to a foreign award Under Section 7 of the Foreign Awards (Recognition and Enforcement) Act, 1961 [“Foreign Awards Act”]. The Foreign Awards Act has since been repealed by the 1996 Act. However, C considering that Section 7 of the Foreign Awards Act contained grounds which were borrowed from Article V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 [“New York Convention”], which is almost in the same terms as Sections 34 and 48 of the 1996 Act, the said judgment is of great importance in understanding the parameters of judicial review D when it comes to either foreign awards or international commercial arbitrations being held in India, the grounds for challenge/refusal of enforcement Under Sections 34 and 48, respectively, being the same. After referring to the New York Convention, this Court delineated the scope of enquiry of grounds Under Sections 34/48 E (equivalent to the grounds Under Section 7 of the Foreign Awards Act, which was considered by the Court), and held:

34. Under the Geneva Convention of 1927, in order to obtain recognition or enforcement of a foreign arbitral award, the requirements of Clauses (a) to (e) of Article I had to be fulfilled and in Article II, it was prescribed that even if the conditions laid down in Article I were fulfilled recognition, and enforcement of the award would be refused if the Court was satisfied in respect of matters mentioned in Clauses (a), (b) and (c). The principles which apply to recognition and enforcement of foreign awards are in substance, similar to those adopted by the English courts at common law. (See Dicey & Morris, The Conflict of Laws, 11th Edn., Vol. I, p. 578). It was, however, felt that the Geneva Convention suffered from certain defects which hampered the speedy settlement of disputes through arbitration. The New York Convention seeks H

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A to remedy the said defects by providing for a much more simple and effective method of obtaining recognition and enforcement of foreign awards. Under the New York Convention the party against whom the award is sought to be enforced can object to recognition and enforcement of the foreign award on grounds set out in Sub-clauses (a) to (e) of Clause (1) of Article V and B the court can, on its own motion, refuse recognition and enforcement of a foreign award for two additional reasons set out in Sub-clauses (a) and (b) of Clause (2) of Article V None of the grounds set out in Sub-clauses (a) to (e) of Clause (1) and Sub-clauses (a) and (b) of Clause (2) of Article V postulates C a challenge to the award on merits.

35. Albert Jan van den Berg in his treatise The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation, has expressed the view: It is a generally accepted interpretation of the Convention D that the court before which the enforcement of the foreign award is sought may not review the merits of the award. The main reason is that the exhaustive list of grounds for refusal of enforcement enumerated in Article V does not include a mistake in fact or law by the arbitrator. E Furthermore, under the Convention, the task of the enforcement judge is a limited one. The control exercised by him is limited to verifying whether an objection of a Respondent on the basis of the grounds for refusal of Article V(1) is justified and whether the enforcement of the award would violate the public policy of the law of his country. F This limitation must be seen in the light of the principle of international commercial arbitration that a national court should not interfere with the substance of the arbitration.” (p. 269)

36. Similarly Alan Redfern and Martin Hunter have said: G The New York Convention does not permit any review on the merits of an award to which the Convention applies and, in this respect, therefore, differs from the provisions of some systems of national law governing the challenge of an award, where an appeal to the courts on points of law may be permitted.” H

(Redfern & Hunter, Law and Practice of International A Commercial Arbitration, 2nd Edn., p. 461.)

37. In our opinion, therefore, in proceedings for enforcement of a foreign award under the Foreign Awards Act, 1961, the scope of enquiry before the court in which award is sought to be enforced is limited to grounds mentioned in Section 7 of the Act and does not enable a party to the said proceedings to impeach the award on merits. xxx xxx xxx

65. This would imply that the defence of public policy which is permissible Under Section 7(1)(b)(ii) should be construed narrowly. In this context, it would also be of relevance to mention that Under Article I(e) of the Geneva Convention Act of 1927, it is permissible to raise objection to the enforcement of arbitral award on the ground that the recognition or enforcement of the award is contrary to the public policy or to the principles of the law of the country in which it is sought to be relied upon. To the same effect is the provision in Section 7(1) of the Protocol & Convention Act of 1837(sic 1937) which requires that the enforcement of the foreign award must not be contrary to the public policy or the law of India. Since the expression “public policy” covers the field not covered by the words “and the law of E India” which follow the said expression, contravention of law alone will not attract the bar of public policy and something more than contravention of law is required.

66. Article V(2)(b) of the New York Convention of 1958 and Section 7(1)(b)(ii) of the Foreign Awards Act do not postulate refusal of recognition and enforcement of a foreign award on the ground that it is contrary to the law of the country of enforcement and the ground of challenge is confined to the recognition and enforcement being contrary to the public policy of the country in which the award is set to be enforced. There is nothing to indicate that the expression “public policy” in Article V(2) (b) of the New York Convention and Section 7(1)(b)(ii) of the Foreign Awards Act is not used in the same sense in which it was used in Article I(c) of the Geneva Convention of 1927 and Section 7(1) of the Protocol and Convention Act of 1937. This would mean that “public policy” in Section 7(1)(b)(ii) has been used in a narrower sense H

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A and in order to attract the bar of public policy the enforcement of the award must invoke something more than the violation of the law of India. Since the Foreign Awards Act is concerned with recognition and enforcement of foreign awards which are governed by the principles of private international law, the expression “public policy” in Section 7(1)(b)(ii) of the Foreign Awards Act must necessarily be construed in the sense the doctrine of public policy is applied in the field of private international law. Applying the said criteria, it must be held that the enforcement of a foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality. This judgment was cited with approval in Redfern and Hunter on International Arbitration by Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter (Oxford University Press, Fifth D Ed., 2009) [“Redfern and Hunter”] as follows: 11.56. First, the New York Convention does not permit any review on the merits of an award to which the Convention applies. [This statement, which was made in an earlier edition of this book, has since been cited with approval by the Supreme Court of India in E Renusagar Power Co. Ltd. v. General Electric Co. The court added that in its opinion ‘the scope of enquiry before the court in which the award is sought to be enforced is limited [to the grounds mentioned in the Act] and does not enable a party to the said proceedings to impeach the Award on merits’]. Nor does the Model Law. F The same theme is echoed in standard textbooks on international arbitration. Thus, in International Commercial Arbitration by Gary B. Born (Wolters Kluwer, Second Ed., 2014) [“Gary Born”], the learned author deals with this aspect of the matter as follows:

G [12] No Judicial Review of Merits of Foreign or Non-Domestic Awards in Recognition Actions It is an almost sacrosanct principle of international arbitration that courts will not review the substance of arbitrators’ decisions contained in foreign or non-domestic arbitral awards in recognition proceedings. Virtually every authority acknowledges this Rule and H

virtually nobody suggests that this principle should be abandoned. A When national courts do review the merits of awards, they labour to categorize their action as an application of public policy, excess of authority, or some other Article V exception, rather than purporting to justify a review of the merits. [a] No Judicial Review of Awards Under New York and Inter- B American Conventions Neither the New York Convention nor the Inter-American Convention contains any exception permitting non-enforcement of an award simply because the arbitrators got their decision on the substance of the parties’ dispute wrong, or even badly wrong. C This is reasonably clear from the language of the Convention, which makes no reference to the possibility of a review of the merits in Article V’s exhaustive list of the exclusive grounds for denying recognition of foreign and non-domestic awards. There is also no hint in the New York Convention’s drafting history of any authority to reconsider the merits of an arbitral award in recognition proceedings. Likewise, the prohibition against review of the merits of the arbitrator’s decision is one of the most fundamental pillars of national court authority interpreting the Convention. This prohibition has repeatedly and uniformly been affirmed by national courts, in both common law and civil law jurisdictions. Simply put: “the court may not refuse to enforce an arbitral award solely on the ground that the arbitrator may have made a mistake of law or fact” [KarahaBodas Co. LLC v. Perusahaan PertambanganMinyak Dan Gas Bumi Negara, 364 F.3d 274, 287-88 (5th Cir. 2004)]. Thus, in the words of the Luxembourg Supreme Court [Judgment of 24 November 1993, XXI Y.B. Comm. Arb. 617, 623 (Luxembourg CourSuperieure de Justice) (1996)]: The New York Convention does not provide for any control on the manner in which the arbitrators decide on the merits, with as the only reservation, the respect of international public policy. Even if blatant, a mistake of fact or law, if made by the arbitral tribunal, is not a ground for refusal of enforcement of the tribunal’s award. Or, as a Brazilian recognition decision under the Convention held [Judgment of 19 August 2009, Atecs Mannesmann GmbH v. H

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A Rodrimar S/A Transportes Equipamentos Industriais e Armazes Gerais, XXXV Y.B. Comm. Arb. 330, 331 (Brazilian Tribunal de Justica) (2010)]: These questions pertain to the merits of the arbitral award that, according to precedents from the Federal Supreme Court and of B this Superior Court of Justice, cannot be reviewed by this Court since recognition and enforcement of a foreign award is limited to an analysis of the formal requirements of the award. Commentators have uniformly adopted the same view of the Convention [See, for e.g., K.-H. Bockstiegel, S. Kroll & P. C Nacimiento, Arbitration in Germany 452 (2007)].(at pp. 3707-3710) Likewise, the UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (2016 Ed.) [“UNCITRAL Guide on the New York Convention”] also states:

D 9. The grounds for refusal Under Article V do not include an erroneous decision in law or in fact by the arbitral tribunal. A court seized with an application for recognition and enforcement under the Convention may not review the merits of the arbitral tribunal’s decision. This principle is unanimously confirmed in the case law and commentary on the New York Convention.” (emphasis supplied)

68Copy pinpoint68. It is apparent from above-mentioned decisions as to enforceability of foreign awards, Clause 14 of FOSFA Agreement and as per the law applicable in India, no export could have taken place without the permission of the Government, and the NAFED was unable to supply, as it did not have any permission in the season 1980-81 to effect the supply,it required the permission of the Government. The matter is such which pertains to the fundamental policy of India and parties were aware of it, and contracted that in such an exigency as provided in clause 14, the Agreement shall be cancelled for the supply which could not be made. It became void under section 32 of the Contract Act on happening of contingency. Thus, it was not open because of the clear terms of the Arbitration Agreement to saddle the liability upon the NAFED to pay damages as the contract became void. There was no permission to export commodity of the previous year in the next season, and then the Government declined permission to NAFED to supply. Thus, it would

be against the fundamental public policy of India to enforce such an award, any supply made then would contravene the public policy of India relating to export for which permission of the Government of India was necessary.

69Copy pinpoint69. In our considered opinion, the award could not be said to be enforceable, given the provisions contained in Section 7(1)(b)(ii) of the B Foreign Awards Act. As per the test laid down in Renusagar (supra), its enforcement would be against the fundamental policy of Indian Law and the basic concept of justice. Thus, we hold that award is unenforceable, and the High Court erred in law in holding otherwise in a perfunctory manner. C

70Copy pinpoint70. Though in view of the finding above, it is not necessary to go into other questions. It was argued that the Arbitrator was appointed in violation of the order passed by the High Court. The High Court on 20.3.1981 granted interim stay till 22.4.1981. A telex dated 20.3.1981 was sent informing that the High Court granted an interim stay. The FOSFA vide letter dated 6.4.1981 asked the NAFED to appoint its arbitrator by 20.4.1981. On 9.4.1981, NAFED informed FOSFA about the stay of the arbitration proceedings granted by the High Court. The interim order was extended on 22.4.1981 till further orders. On 23.4.1981, Mr. F.A.D. Ralfe, a nominee of the NAFED, was appointed as Arbitrator by FOSFA in the Arbitration Tribunal in violation of the order passed by the High Court.

71Copy pinpoint71. It was also urged that after that, this Court stayed proceedings on 30.4.1982, it was responded by Alimenta S.A. on 4.5.1982 to NAFED that this Court did not have authority to stay the arbitration proceedings. It was also argued that on 1.5.1981, NAFED objected to the appointment of Mr. F.A.D.Ralphe for their representation in the arbitration. On 30.10.1981, NAFED filed a writ petition against the Alimenta S.A. and Arbitrator to prevent the arbitration proceedings. It was further argued that the appellant was deprived of appointing arbitrators; the same was against the public policy. As per Rule 1(a) of FOSFA Rules, each party had the right to nominate its Arbitrators. As per Rule 1(d), the party claiming arbitration can only apply to FOSFA for the appointment of an arbitrator on behalf of the other party. As there was restraint order, the appointment of Arbitrator by FOSFA under Rule 1(d)of the Rules was illegal. A party claiming arbitration could only apply for the appointment of Arbitrator on behalf of another party. Learned senior counsel further H

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A urged that the action taken was in contravention of natural justice and is a nullity violating the interim order of the court as opined in Manohar Lal (Dead) by Lrs. v. Ugrasen (Dead) by Lrs. &Ors., (2010) 11 SCC

557. In Manohar Lal(supra), the court held thus: “24. In Mulraj v. Murti Raghunathji Maharaj,AIR 1967 SC B 1386, this Court considered the effect of action taken subsequent to passing of an interim order in its disobedience and held that any action taken in disobedience of the order passed by the Court would be illegal. Subsequent action would be a nullity.

25. In Surjit Singh v. Harbans Singh, (1995) 6 SCC 50, this C Court while dealing with the similar issue held as under: (SCC p. 52, para 4) “4. … In defiance of the restraint order, the alienation/ assignment was made. If we were to let it go as such, it would defeat the ends of justice and the prevalent public policy. When D the court intends a particular state of affairs to exist while it is in seisin of a lis, that state of affairs is not only required to be maintained, but it is presumed to exist till the court orders otherwise. The court, in these circumstances has the duty, as also the right, to treat the alienation/assignment as having not taken place at all for its purposes.” E

26. In All Bengal Excise Licensees’ Assn. v. Raghabendra Singh, (2007) 11 SCC 374, this Court held as under: (SCC p. 387, para 28) “28. … a party to the litigation cannot be allowed to take an unfair advantage by committing breach of an interim order and escape the consequences thereof. … the wrong perpetrated by the respondent contemnors in utter disregard of the order of the High Court should not be permitted to hold good.”

27. In DDA v. Skipper Construction Co. (P) Ltd.,(1996) 4 SCC 622, this Court after making reference to many of the earlier judgments held: (SCC p. 636, para 18) “18. … ‘… on principle that those who defy a prohibition ought not to be able to claim that the fruits of their defiance are good, and not tainted by the illegality that produced them.’*” H

28. In Gurunath Manohar Pavaskar v. Nagesh Siddappa A Navalgund, (2007) 13 SCC 565, this Court while dealing with the similar issues held that even a court in exercise of its inherent jurisdiction under Section 151 of the Code of Civil Procedure, 1908, in the event of coming to the conclusion that a breach of an order of restraint had taken place, may bring back the parties to the same position as if the order of injunction has not been violated.

29. In view of the above, it is evident that any order passed by any authority in spite of the knowledge of the interim order of the court is of no consequence as it remains a nullity.” Thus, it was argued that the appointment of the arbitrator to constitute the Arbitral Tribunal violated the order of the Indian Court and it was against the public policy. Consequently, the respondent, Alimenta S.A., could not approach the Indian Court to enforce such an award passed by the Arbitral Tribunal.

72Copy pinpoint72. Though this Court passed an interim order, ultimately, it dismissed the petition filed on behalf of the NAFED, and it was open to the appellant to raise the question at the relevant time when this court decided the matter in the year 1987. This court permitted the arbitration proceedings to continue.As such, we are of the opinion that though it would have been proper for the FOSFA to comply with the interim orders passed by this Court, the proceedings in which the temporary orders were given were dismissed way back in the year 1987. At that time, the question was required to be agitated. This Court permitted to continue proceedings in 1987. The said questions ought to have been raised at that stage; we cannot permit the appellant to raise them now. Hence,at this stage, we are not inclined to entertain and examine merits of the argument mentioned above.

73Copy pinpoint73. Learned senior counsel appearing on behalf of the appellant also argued that NAFED was not allowed to have any legal representation before the arbitral tribunal or in the Board of Appeal. Rule 3 of the FOSFA Rules bars the parties from having legal representation before the Arbitral Tribunal. However, Rule 6 empowers the Board of Appeal to allow legal representation to the partiesin case of particular circumstances. The NAFED through its solicitor M/s. Clyde and Company submitted letters on 16.1.1990 and 13.5.1990 to permit legal representation. However, the same was denied by the Board of Appeals. As such learned counsel argued that due opportunity of defending to H

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A NAFED was not afforded. For this purpose, reliance was placed on C.L. Subramaniam v. Collector of Customs, Cochin (1972) 3 SCC 542 wherein the court observed: “6. Removal from service is a major penalty. Procedure for imposing major penalties is prescribed in Rule 15 of the Central B Civil Services (Classification, Control and Appeal) Rules, 1957, a rule framed under Article 309 of the Constitution. Sub-rule (5) of that rule provides: “The Disciplinary Authority may nominate any person to present the case in support of the charges before the authority C inquiring into the charges (hereinafter referred to as the Inquiring Authority. The government servant may present his case with the assistance of any government servant approved by the Disciplinary Authority, but may not engage a legal practitioner for the purpose unless the person nominated by the Disciplinary Authority as aforesaid is a legal practitioner or unless the D Disciplinary Authority, having regard to the circumstances of the case, so permits.”

23. It is needless to say that Rule 15 is a mandatory rule. That rule regulates the guarantee given to Government servants under Article 311. Government servants, by and large, have no legal training. At any rate, it is nobody’s case that the appellant had legal training. Moreover, when a man is charged with the breach of a rule entailing serious consequences, he is not likely to be in a position to present his case as best as it should be. The accusation against the appellant threatened his very livelihood. Any adverse verdict against him was bound to be disastrous to him, as it has proved to be. In such a situation, he cannot be expected to act calmly and with deliberation. That is why Rule 15(5) has provided for representation of a Government servant charged with dereliction of duty or with contravention of the rule by another Government servant or in appropriate cases by a legal practitioner. G

24. For the reasons mentioned above, we think that there had been a contravention of Rule 15(5). We are also of the opinion that the appellant had not been afforded a reasonable opportunity to defend himself. Hence the impugned order is liable to be struck down, and it is hereby struck down. The facts of this case are not H

such as to justify any fresh enquiry against the appellant. Hence A we direct that no fresh enquiry shall be held against the appellant, and he be restored to the position to which he would have been entitled to but for the impugned order. The appeal is accordingly allowed. The appellant is entitled to his costs from the respondents both in this Court as well as in the High Court.” B The decision of Board of Trustees of the Port of Bombay v. Dilipkumar Raghavendranath Nadkarni and Ors. (1983) 1 SCC 124 has been relied on, wherein it was held: “9. We concern ourselves in this case with a narrow question whether where in such a disciplinary enquiry by a domestic tribunal, the employer appoints Presenting-cum-Prosecuting Officer to represent the employer by persons who are legally trained, the delinquent employee, if he seeks permission to appear and defend himself by a legal practitioner, a denial of such a request would vitiate the enquiry on the ground that the delinquent employee had not been afforded a reasonable opportunity to defend himself, thereby vitiating one of the essential principles of natural justice.” (emphasis supplied)

74Copy pinpoint74. It is not disputed that before the Arbitration Tribunal, the rule debars legal representation; hence the submission as to non-representation before the Tribunal, cannot be accepted.However, in appeal due to refusal to permit representation through a legal firm, the NAFED was not able to point out the prejudice caused to it.In the absence of proof of prejudice caused due to non-representation by a Legal Representative and to show that it was disabled to put forth its views,we cannot set aside the award on the ground that it would have been proper to allow the assistance of F a Legal Representative. Thus,we are not inclined to render the award unenforceable on the aforesaid ground.

75Copy pinpoint75. Learned senior counsel appearing on behalf of NAFED also argued that Mr. A.G Scott, the Arbitrator nominated by the respondent, delivered the award and, after that, appeared as a counsel for Alimenta G S.A. before the Board of Appeal. Thus, his participation in the appeal was bad in law. He could not have defended his award and subvert the basic norms of fairness. The action was against the concept of justice and rules of procedure, as observed in The State of Punjab & Anr. v. Shamlal Murari & Anr., (1976) 1 SCC 719, wherein this Court found H thus:

p. 848 Copy page pinpoint

A “8. It is obvious that even taking a stern view, every minor detail in Rule 3 cannot carry a compulsory or imperative import. After all, what is required for the Judges to dispose of the appeal is the memorandum of appeal plus the judgment and the paper-book. Three copies would certainly be a great advantage, but what is the core of the matter is not the number but the presence, and the overemphasis laid by the court on three copies is, we think, mistaken. Perhaps, the rule requires three copies, and failure to comply therewith may be an irregularity. Had no copy been furnished of any one of the three items, the result might have been different. In the present case, copies of all the three documents prescribed, have been furnished but not three copies of each. This omission or default is only a breach that can be characterised as an irregularity to be corrected by condonation on application by the party fulfilling the condition within a time allowed by the court. We must always remember that processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. It has been wisely observed that procedural prescriptions are the handmaid and not the mistress, a lubricant, not a resistant in the administration of justice. Where the non- compliance, tho’ procedural, will thwart fair hearing or prejudice doing of justice to parties, the rule is mandatory. But, grammar apart, if the breach can be corrected without injury to a just disposal of the case, we should not enthrone a regulatory requirement into a dominant desideratum. After all, courts are to do justice, not to wreck this end product on technicalities. Viewed in this perspective, even what is regarded as mandatory traditionally may, perhaps, have to be moderated into wholesome directions to be complied with in time or in extended time. Be that as it may, and ignoring for a moment the exploration of the true office of procedural conditions, we have no doubt that what is of the essence of Rule 3 is not that three copies should be furnished, but that copies of all the three important documents referred to in that suit shall be produced. We further feel that the court should, if it thinks it necessitous, exercise its discretion and grant further time for formal compliance with the rule if the copies fall short of the requisite number. In this view and to the extent indicated, we overrule the decision in Bikram Dass’s case, AIR 1975 Punj& Har 1 (FB).” H

76Copy pinpoint76. Learned counsel also relied on Kailash v. Nankhu & Ors., A (2005) 4 SCC 480, in which the court observed: “28. All the rules of procedure are the handmaid of justice. The language employed by the draftsman of processual law may be liberal or stringent, but the fact remains that the object of prescribing procedure is to advance the cause of justice. In an B adversarial system, no party should ordinarily be denied the opportunity of participating in the process of justice dispensation. Unless compelled by express and specific language of the statute, the provisions of CPC or any other procedural enactment ought not to be construed in a manner which would leave the court helpless to meet extraordinary situations in the ends of justice. C The observations made by Krishna Iyer, J. in Sushil Kumar Sen v. State of Bihar, (1975) 1 SCC 774 are pertinent: (SCC p. 777, paras 5-6) “The mortality of justice at the hands of law troubles a judge’s conscience and points an angry interrogation at the D law reformer. The processual law so dominates in certain systems as to overpower substantive rights and substantial justice. The humanist rule that procedure should be the handmaid, not the mistress, of legal justice compels consideration of vesting a E residuary power in judges to act ex debito justitiae where the tragic sequel otherwise would be wholly inequitable. … Justice is the goal of jurisprudence — processual, as much as substantive.”

p. 850 Copy page pinpoint

77Copy pinpoint77. On behalf of the respondent, letter dated 17.11.2011 issued by FOSFAwas relied on stating that even though the FOSFA rules are silent on the issue of the first tier Arbitrator acting as a representative of the party in the second tier, i.e., at the appellate stage, the practice prevalent at the relevant time in the UK allowed the same. The FOSFA mentioned in the letter that many parties in cases before FOSFA elected to make such an appointment with the agreement of the individual arbitrator concerned, and this practice was prevalent.

78Copy pinpoint78. The Arbitrator appeared at the appellate stage, though, as per the Indian Law and the ethical standards, the Arbitrator could not have appeared at the second stage to defend arbitration award passed by him, and should have kept aloof. However, no concrete material has been placed on record to substantiate the objection as to prevailing practice and law in U.K. at the relevant time. Hence, we are not inclined to decide the issue in this case. Suffice it to observe that Arbitrator is supposed to followethical standards, and, in our considered view, ought not to have defended arbitrationa ward passed by him in the subsequent judicial proceedings.

79Copy pinpoint79. The question was also raised concerning the Board of Appeal, enhancing the rate of interest from 10.5 % to 11.25 %. We hold that it was not open to the Board of Appeal to increase the interest in the absence of appeal. As we have held award to be unenforceable under section 7 of the Foreign Awards Act, other submission does not survive for decision.

80Copy pinpoint80. Resultantly, the award is ex facie illegal, and in contravention of fundamental law, no export without permission of the Government was permissible and without the consent of the Government quota could not have been forwarded to next season. The export without permission would have violated the law, thus, enforcement of such award would be violative of the public policy of India. On the happening of contingency agreed to by the parties in Clause 14 of the FOSFA Agreement the contract was rendered unenforceable under section 32 of the Contract Act. As such the NAFED could not have been held liable to pay damages under foreign award.

81Copy pinpoint81. The appeal filed by the NAFED is thus allowed, and the impugned judgment and order passed by the High Court is set aside. Award is held to be unenforceable. No costs.

H Devika Gujral Appeal allowed.