Bombay High Court Dismisses Appeal Against Striking Off Defence in Foreign Award Enforcement. Non-compliance with interim orders under Section 9 of Arbitration and Conciliation Act, 1996 leads to striking off defence under Order 39 Rule 11 CPC.

Appeal against order striking off defence in proceedings for enforcement of a foreign award under Section 47 of the Arbitration and Conciliation Act, 1996.

The appellant sought to set aside the order of the learned Single Judge striking off its defence under Order 39 Rule 11 CPC.

The appellant failed to comply with interim orders passed under Section 9 of the Arbitration and Conciliation Act, 1996 requiring deposit of security or furnishing of bank guarantee, leading to the striking off of its defence.

The learned Single Judge on 20 December 2010 adjourned the enforcement petition pending disposal of the Section 34 challenge but imposed conditions including deposit of US$ 5 million or furnishing of bank guarantee. The appellant did not comply. On 4 October 2012, the learned Single Judge allowed the motion under Order 39 Rule 11 CPC striking off the appellant's defence.

Whether the learned Single Judge was justified in striking off the defence of the appellant under Order 39 Rule 11 CPC for non-compliance with interim orders. Whether the pendency of a Section 34 petition before the District Court at Jamkhambhalia precludes the High Court from enforcing the foreign award or imposing conditions.

The appellant argued that the learned Single Judge erred in striking off its defence as the power under Order 39 Rule 11 CPC is drastic and should not be exercised lightly, and that the appellant had a bona fide challenge to the award pending before the District Court. The respondent argued that the appellant had willfully failed to comply with the interim orders and that the striking off of defence was justified to ensure compliance and prevent abuse of process.

The power under Order 39 Rule 11 CPC to strike off defence for non-compliance with interim orders is discretionary and can be exercised when a party willfully fails to comply with court orders. In proceedings for enforcement of a foreign award under Section 47 of the Arbitration and Conciliation Act, 1996, the court has jurisdiction to pass interim orders under Section 9, and non-compliance with such orders can result in striking off the defence. The pendency of a Section 34 petition does not automatically stay enforcement proceedings, and the court can impose conditions.

This Appeal arises from a judgment of a learned Single Judge dated 4 October 2012 by which a motion seeking a direction under Order 39 Rule 11 of the Code of Civil Procedure, 1908 striking off the defence of the Appellant to a Petition for enforcing a foreign award was allowed. The learned Single Judge has directed that the defence filed by the Appellant to the Petition instituted by the Respondent under Section 47 of the Arbitration and Conciliation Act, 1996 be struck off.

On 25 October 2007, a contract of affreightment was entered between appellant and respondent. Disputes arose, and arbitration in London resulted in an award on 8 July 2009 in favour of respondent. Appellant filed Section 34 petition before District Court at Jamkhambhalia in 2009. Respondent filed Section 47 and Section 9 petitions before Bombay High Court in November 2009. On 20 December 2010, learned Single Judge adjourned enforcement petition pending Section 34 challenge but imposed conditions. Appellant failed to comply. Respondent filed notice of motion under Order 39 Rule 11 CPC to strike off defence. On 4 October 2012, learned Single Judge allowed motion. Appellant appealed on 24 January 2013, and Division Bench dismissed appeal.

• Code of Civil Procedure, 1908 (CPC): Order 39 Rule 11
• Arbitration and Conciliation Act, 1996: Section 47, Section 9, Section 34