Case Note & Summary
The judgment, delivered by the Bombay High Court's Commercial Division on July 4, 2025, arose from a Commercial Arbitration Petition filed by Ningbo Aux Imp and Exp Co Ltd seeking enforcement of a foreign arbitral award under Part II of the Arbitration and Conciliation Act, 1996 against Amstrad Consumer India Pvt Ltd and another respondent. In the petition, the petitioner obtained an ex parte order on March 12, 2025, directing disclosure of assets by both respondents under prayer clauses (b) and (c). The order expressly granted the respondents liberty to seek variation, modification, or vacation. On April 3, 2025, counsel for both respondents appeared and sought liberty to take out appropriate proceedings to oppose enforcement; the court recorded that statement but directed that an affidavit of disclosure be filed before the next date. Two interim applications, IA Nos.2099 and 2097 of 2025, were then filed seeking deletion of Respondent No.2 from the array of parties and vacation of the March 12, 2025 disclosure order. The ground was that Respondent No.2 was never a party to the arbitration agreement dated October 23, 2020, or to the arbitral proceedings, and therefore the foreign award could not be enforced against it. The petitioner opposed the applications on maintainability, arguing that since the respondents' counsel appeared on April 3, 2025, and did not raise this ground, they had waived the objection and were estopped; reliance was placed on Sri Budhia Swain And Ors v. Gopinath Deb And Ors, May 7, 1999, submitting that a judgment cannot be opened or vacated on a ground which could have been pleaded in the original action, and the proper remedy is by appeal. The court examined Section 46 of the Arbitration and Conciliation Act, 1996, which provides that a foreign award is binding only on the persons between whom it was made, and Section 48(1)(b), which permits refusal of enforcement if 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. The court noted that Respondent No.2 was not even a party to the arbitral proceedings, much less a party who was entitled to notice or unable to present its case. The petitioner's own affidavit revealed that its attempt to make Respondent No.2 a party to the arbitral proceedings had been rejected by the case manager of the arbitral tribunal. Although the petitioner argued that Respondent No.2 was a guarantor under a guarantee certificate, the court observed that the certificate contained no arbitration clause and did not incorporate the arbitration agreement from the underlying contract by reference. The court's analysis indicated that the interim disclosure order against Respondent No.2 was made in ignorance of the fact that it was not a party to the arbitration and therefore could not be sustained, as the foreign award could not bind Respondent No.2. The provided judgment text ends before the final operative order.
Headnote
A) Arbitration - Enforcement of Foreign Award - Binding Effect - Arbitration and Conciliation Act, 1996, Section 46 - Foreign award treated as binding only on persons between whom it was made; a non-party to arbitration proceedings cannot be bound by the award; interim orders directing disclosure against non-party are unsustainable (Paras 5-6, 8). B) Arbitration - Enforcement of Foreign Award - Grounds for Refusal - Arbitration and Conciliation Act, 1996, Section 48(1)(b) - Enforcement can be refused if party against whom award invoked was not given notice or unable to present case; where respondent not party, refusal warranted; guarantee certificate without arbitration clause cannot incorporate arbitration agreement by reference (Paras 7-9). C) Civil Procedure - Interim Orders - Variation and Waiver - Code of Civil Procedure, 1908, Section 151 - Order March 12, 2025 ex parte and without knowledge that Respondent No.2 not party; liberty to seek variation granted; failure to raise issue on next date not waiver because fundamental lack of party status not pleaded (Paras 4, 8-9).
Issue of Consideration
Whether a foreign arbitral award can be enforced against a person who was not a party to the arbitration agreement or arbitral proceedings; whether the ex parte order dated March 12, 2025 directing disclosure of assets is liable to be vacated in respect of Respondent No.2.
Law Points
- Foreign award binding only on persons between whom made under Section 46
- enforcement may be refused under Section 48(1)(b) if party not given notice or unable to present case
- guarantee certificate without arbitration clause cannot incorporate arbitration agreement
- ex parte interim order can be varied if made in ignorance of material fact
- waiver and estoppel do not apply if ground not pleaded in original action.
