Government of India Vs. Vedanta Ltd. (Formerly Cairn India Ltd.)
Case Number: Civil appeal No. 3185 of 2020 arising out of S.L.P. (Civil) No. 7172 of 2020
Judges Name: Hon’ble Judges S ABDUL NAZEER J, INDU MALHOTRA J and ANIRUDDHA BOSE J.
Order dated: 16.09.2020
Facts of the Case:
- The present Civil Appeal has been filed by the Government of India to challenge the Judgment and Order dated 19 February 2020 passed by the Delhi High Court, wherein the application under Section 48 of the Arbitration and Conciliation Act, 1996 being I.A. No. 3558 of 2015 filed by the Government of India has been dismissed; the Application filed under Section 47 read with 49 being O.M.P. (EFA) (Comm) 15 of 2016 for the enforcement of the foreign award by the Respondents, and the I.A. No. 20149 of 2014 for condonation of delay in filing the execution petition by the Respondents were allowed.
- In 1993, the Government of India was desirous of exploring and developing the petroleum resources in the Ravva Gas and Oil Fields (lying 10 to 15 kms offshore in the Bay of Bengal), for which a global competitive tender was floated to invite bids. Pursuant thereto, Videocon International Ltd. and Command Petroleum Holdings NV, the predecessors of the Respondents submitted their bid to develop the Ravva Field along with other bidders.
- The contract for this petroleum development was to be given on a production sharing basis through a Production Sharing Contract. On 28.10.1994, the Production Sharing Contract (the “PSC”) was executed between the Government of India and the following parties to commercially explore and develop the Ravva Oil and Gas Field:
(a) Command Petroleum (India) Pvt. Ltd, an Australian Company established under the laws of the State of New South Wales, which has since been renamed as Cairn Energy India Pty. Ltd;
(b) Ravva Oil (Singapore) Pty. Ltd, a company established under the laws of Singapore;
(c) Videocon Industries Limited, a company established under the laws of India; and
(d) Oil and Natural Gas Corporation Ltd (ONGC). The PSC was for a period of 25 years, and the development and exploration of the Ravva Field was to be conducted in terms of the ‘Ravva Development Plan’.
- As per Articles 11.1 and 11.2 of the PSC, Addendums 1 and 2 to the Rvva Development Plan were annexed to the PSC as Appendix F. The Respondents were required to carry out Petroleum Operations in the Ravva Field as per the said Plan. The Ravva Development Plan inter alia contemplated the drilling of 19 oil and 2 gas wells in the Ravva Field.
- The Malaysian High court vide order dated 30.08.2012 rejected the challenge to the Award holding that the requirements of Sections 37(1)(a)(iv) and (v) and Section 37(1)(b)(ii) of the Malaysian Act have not been met, to sustain the challenge to the award. The Award did not involve any ‘new difference”, which would have been relevant for determination by the arbitral tribunal. The High court found no reason which would merit intervention with the Award.
- Aggrieved by the Order dated 30.08.2012 the Government to the Respondents-Claimants, raising a demand of US $77 million towards the Government’s Share of Profit Petroleum under the PSC. The Respondents were directed to show cause as to why the said amount ought not to be directly to show cause as to why the said amount ought not to be directly recovered from the amounts payable by the Oil Marketing Companies.
- On 21.07.2014, the Government filed an application for leave to Appeal before the Malaysian Federal Court, which was rejected vide Order dated 17.05.2016.
- During the pendency of the Application for leave to Appeal before the Malaysian Federal Court, on 14.01.2014, the respondents filed a petition for enforcement under sections 47 read with 49 of the 1996 Act before the Delhi High Court, along with an application for condonation of delay.
- The Government filed an application under section 48 resisting the enforcement of the Award before the Delhi High Court inter alia on the ground that the enforcement petition was filed beyond the period of limitation. The enforcement of the Award was contrary to the public policy of India and contained decisions on matters beyond the scope of the submission to arbitration.
- The Delhi High Court rejected the Petition under Section 48 vide the impugned judgment dated 19.09.2020, allowed the application for condonation of delay filed by the Respondents, and directed the enforcement of the Award.
- Aggrieved by the judgment of the High Court, the Government has filed the present civil Appeal before this Court. This Court issued notice vide Order dated 17.06.2020, and directed the parties to maintain status quo till further orders.
Whether the petition is maintainable inspite of the fact that the petition for enforcement /execution of the foreign award under Section 47 was barred by the limitation and whether the said foreign award is in conflict with the Public Policy of India.
Supreme Court held:
- The court held that the petition for enforcement of the foreign award was filed within the period of limitation prescribed by Article 137 of the Limitation Act, 1962 because the cause of action for filing the enforcement petition under sections 47nand 49 arose on 10.07.2014. The enforcement petition was filed on 14.10.2014 i.e. within 3 months from the date when the right to apply accrued.
- The issue of limitation for enforcement of foreign award being procedural in nature, is subject to the lex fori i.e. the law of the forum (state) where the foreign award is subject to be enforced. The limitation period for filing the enforcement/execution petition for enforcement of a foreign award in India, would be governed by Indian law. The Indian Arbitration Act, 1996 does not specify any period of limitation for filing an application for enforcement / execution of a foreign award. Section 43 however provides that the Limitation Act, 1963 does not contain any specific provision for enforcement of a foreign award. Articles 136 and 137 fall in the Third Division of the Schedule to the limitation act. Article 136 provides that the period of limitation for the execution of any decree or order becomes enforceable. Article 137 is the residuary provision in the Limitation Act which provides that the period of limitation is provided in the Act, would be three years form “when the right to apply accrues”.
- Section 36 of the Arbitration Act, 1996 creates a statutory fiction for the limited purpose of enforcement of a ‘domestic award’ as a decree of the court, even though it is otherwise an award in an arbitral proceeding. By this deeming fiction, a domestic award is deemed to be decree of the court, even though it is as such not a decree passed by a civil court. The arbitral tribunal cannot be considered to be a ‘court’, and the arbitral proceedings are not civil proceedings. The deeming fiction is restricted to treat the award as a decree of the court for the purpose of execution, even though it is, as a matter of fact, only an award in an arbitral proceeding.
- Foreign award are not decrees of an Indian Court. By a legal fiction, Section 49 provides that a foreign award, after it is granted recognition and enforcement under section 48, would be deemed to be a decree of “that court” for the limitation purpose of enforcement. The phrase “that Court” refers to the court which has adjudicated upon the petition filed under Section 47 and 49 for enforcement of the foreign award. In our view, Article 136 of the Limitation Act would not be applicable for the enforcement /execution of a foreign award, since it is not a decree of a civil court in India. The enforcement of a foreign award as a deemed decree of the concerned High Court [as per the amended Explanation to Section 47 by Act 3 of 2016 confers exclusive jurisdiction on the High Court for execution of foreign awards] would be covered by the residuary provisions i.e. Article 137 of Limitation Act.
- The court held that the enforcement of the foreign award does not contravene the public policy of India, or that it is contrary to the basic notions of justice.