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PETITIONER: KOCH NAVIGATION INC.

       Vs.

RESPONDENT: HINDUSTAN PETROLEUM CORPN. LTD.

DATE OF JUDGMENT07/09/1989

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RAY, B.C. (J)

CITATION:  1989 AIR 2198            1989 SCR  Supl. (1)  70  1989 SCC  (4) 259        JT 1989 (3)   631  1989 SCALE  (2)588

ACT:     Foreign Awards (Recognition and Enforcement) Act,  1961: Enforcement  of foreign award--Costs of  reference--Entitle- ment to--Whether permissible.

HEADNOTE:     The appellant company had chartered their vessel to  the respondent for carrying oil from Arabian Gulf to India under a charter party. Disputes and differences arose between  the parties  and the matter was referred to a single  arbitrator in London, as stipulated in the charter party. The  arbitra- tor  awarded a certain sum to be paid by the  respondent  to the appellant, with interest. The arbitrator further awarded to  the appellant the costs of the reference, which were  to be  taxed in the event of disagreement. The respondent  paid only  the  principal  sum and failed and  neglected  to  pay interest, the appellant’s cost of reference to  arbitration, and  the cost of the award. The appellant filed an  applica- tion  under the Foreign Awards (Recognition  &  Enforcement) Act,  1961 in the High Court of Bombay. The  learned  Single Judge  of  the  High Court directed the  respondent  to  pay interest and costs of the award so awarded by the arbitrator and  also  cost of the petition. The learned  Judge  however rejected  the appellant’s  prayer for the cost of  reference to  arbitration,  and also rejected the  applicant’s  prayer that  in the alternative liberty should be reserved  in  re- spect of the said prayer. The appellant preferred an  appeal before  the  Division  Bench. During the  pendency  of  this appeal the appellant’s costs of reference to arbitration  as awarded by the arbitrator were taxed and a taxation certifi- cate was produced at the time of hearing of the appeal.  The Division  Bench held that at the time when the petition  was filed,  there  had been no agreement upon or  reference  for taxing.  of such costs, it appeared that the application  to have  the  costs taxed was made only after  the  appeal  was filed;  and  as such no order could be  made  directing  the respondent to make payment to the appellant of the costs  so taxed.     Before this Court it was urged on behalf of the respond- ent  that there was no scope for addition to the award,  and the  award  had to be executed as it was, and the  costs  of

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reference had not been awarded. 71 Allowing the appeal, this Court,     HELD: (1) Foreign awards, as it manifests, are  executa- ble  in  this country under the provisions  of  the  Foreign Awards  (Recognition & Enforcement) Act, 1961. The  Act  was passed  to give effect to the convention on the  recognition and enforcement of foreign arbitrator’s award. [74F]     (2) It is obvious that since the Act was calculated  and designed to subserve the cause of facilitating international trade and promotion thereof by providing for speedy  settle- ment of disputes arising in such trade through  arbitration, any  expression or phrase occurring therein should  receive, consistent with its literal and grammatical sense, a liberal construction. [75B]     Renusagar Power Co. Ltd. v. General Electric Co. & Anr., [1985] 1 SCR 432, referred to.     (3) The Court agrees that the award must be executed  as it  is and there is no scope for any addition to any  award. But the award to be executed must be properly construed  and given  effect to. If the award is ambiguous, the  court  has jurisdiction to determine what it means. [75C]     (4) In the instant case, the award is not ambiguous. The award,  read properly, means, so far as costs of the  refer- ence are concerned, that it was an award upon certain condi- tions, i.e. the award stipulated that the costs of reference will  be  paid. The costs of such reference  were,  however, directed  to be determined either by agreement  between  the parties and in case there was no agreement or  disagreement, to be taxed. [75E]     (5) Law, justice and equity in the facts and the circum- stances of this case, enjoin that the appellant should  have such costs. The appellant has taken all possible steps  that could  be taken in the situation contemplated by the  award. The  appellant has written for agreement about the costs  of reference. The respondent did not agree. The appellant  took steps to have the costs taxed in London, and the costs  have been taxed. [75H; 76A]     (6)  There is no evidence of the delay or laches on  the part  of the appellant, as such, which would disentitle  the appellant to such costs. [75F] 72     (7) Under the Act, if an application is filed for decree in  terms  of the award. the court in  upholding  the  award ought  to grant a decree in terms of the award and not  sub- stract  any portion thereof. Since the award directed  costs of  appellant’s reference to be paid as is  mutually  agreed upon or as taxed, the Division Bench ought to have passed an order for costs as taxed. [76H; 77A]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 3838  of 1989.     From  the  Judgment and Order dated 12.10. 1987  of  the Bombay High Court in Appeal No. 244 of 1983.     C.S.  Vaidyanathan,  S.R. Bhat and K.V.  Mohan  for  the Appellant. M.S. Ganesh for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. Special leave granted.     This  is  an appeal from the judgment  and  order  dated October 12, 1987 of the Division Bench of the High Court  of Bombay.  The appellant had chartered their vessel  ’KRISTEL’

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to  the  respondent for carrying oil from  Arabian  Gulf  to India  under  a charter party, dated  30th  November,  1979. Clause 40(a) of the charter party provided that the  charter shall  be  construed and the relations between  the  parties shall  be  determined in accordance with  the  English  Law. Clause 40(b) of the charter party provided that any  dispute arising  under  the charter party shall be  decided  by  the English Courts but that either party may elect, in  writing, to have the dispute referred to the arbitration of a  single arbitrator in London in accordance with the (English)  Arbi- tration Act, 1950.                             ,     Disputes and differences arose between the parties,  and they  appointed  one Mr. Robert William Reed of  the  Baltic Exchange  and of 28, Reddons Road, Beckenham, Kent BR 3  ILZ to  be the sole arbitrator. The parties appeared before  the arbitrator  represented by their respective  Solicitors  and counsel.  The arbitrator made his award on 28th  July,  1982 which contained, inter alia, as follows:               "I AWARD AND ADJUDGE that the Charterers do               73               forthwith  pay  the Owners the sum of  U.S.  $               291,822.00 (United  States Dollars two hundred               and  ninetyone  thousand  eight  hundred   and               twenty-two only) together with interest at the               rate  of  15 per cent per annum as  from  20th               June, 1980, to the date of this my Final Award               in full and final settlement of the matters at               issue in the Reference.               I FURTHER AWARD AND ADJUDGE that the  Charter-               ers do bear and pay their own and the  Owners’               costs of the Reference (the latter to be taxed               in  the  event of disagreement) and  that  the               Charterers do bear and pay the cost of this               my  Final Award which I hereby tax and  settle               at E4,684 including my disbursements. Provided               always  that  if  in the  first  instance  the               Owners  shall have paid the said cost of  this               my  Award, then they shall be entitled  to  an               immediate  refund from the Charterers  of  the               sum so paid."     As  mentioned hereinbefore, the arbitrator  awarded  the cost of reference to be taxed in the event of  disagreement. The  respondent paid only the principal sum and  failed  and neglected to pay any interest on it and the appellant’s cost of  reference  to  arbitration and the cost  of  the  award. Pursuant to section 20 of the English Arbitration Act,  1950 a sum directed to be paid by the award shall carry  interest as from the date of the award at the same rate as the  judg- ment date. It appears that from 8th June, 1982 the  interest rate on judgment debt in England was 14% per annum.     The  award  is  enforceable  under  the  Foreign  Awards (Recognition  & Enforcement) Act, 1961  (hereinafter  called ’the Act’). The appellant filed an application under the Act in the High Court of Bombay, inter alia, contending for  the judgment  be pronounced and a decree to be passed  according to the award in favour of the appellant. The learned  Single Judge of the High Court by his judgment and order dated 21st February,  1983 decreed in favour of the appellant  and  di- rected the respondent to pay interest and costs of the award so awarded by the arbitrator and also cost of the  petition. The learned Judge, however, rejected the appellant’s  prayer for the cost of reference to arbitration, and also  rejected the  applicant’s  prayer  that in  the  alternative  liberty should  be reserved in respect of the said prayer. The  said prayer was made orally but was refused by the learned Single

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Judge  because as he observed that he saw no reason  to  re- serve  such  liberty,  as the appellant had  not  taken  any steps. 74     Aggrieved  by  the said judgment and  order  dated  21st February, 1983 the appellant preferred an appeal before  the Division Bench of the High Court. During the pendency of the said  appeal  in  the High Court the  appellant’s  costs  of reference  to arbitration as awarded by the arbitrator  were taxed because of the failure of the parties to agree and the taxed amount was Pound 10,901.45 by the Taxing Master of the Supreme Court of Judicature, England. A taxation certificate dated  19th December, 1984 was issued and the same was  pro- duced at the time of hearing of the appeal before the  Divi- sion Bench. Before the Division Bench, cross-objections  had been  filed on behalf of the respondent. By  judgment  dated 12th  October,  1987, the Division Bench of the  High  Court dismissed  the respondent’s cross-objections, and held  that the only point related to the refusal of the learned  Single Judge  to grant liberty to the appellant to file a  separate petition  upon  the costs of the  reference  to  arbitration being  quantified. The Division Bench held that at the  time when  the  petition was filed, there had been  no  agreement upon  or reference for taxing of such costs, and as such  it appears  that  the application to have the costs  taxed  was made only after the appeal was filed. No order could be made directing the respondent to make payment to the appellant of the  costs  so taxed. The Division Bench held  that  if  the appellant  was  entitled to file a fresh petition  for  such costs, it might adopt such proceedings.     Aggrieved thereby, the appellant has come up before this Court.  We  are unable to uphold the views of  the  Division Bench of the Bombay High Court that no order could have been made by the Division Bench directing the respondent to  make payment  to the appellant’s costs so taxed. Foreign  awards, as  it manifests, are executable in this country  under  the provisions  of  the Act. The Act in question was  passed  to give  effect  to the convention on the recognition  and  en- forcement  of foreign arbitrator’s award. Section 6  of  the Act is as follows:               "Enforcement  of Foreign Award: (1) Where  the               Court  is satisfied that the Foreign award  is               enforceable  under this Act, the  court  shall               order the award to be filed and shall  proceed               to pronounce judgment according to the award.               (2) Upon the judgment so pronounced, a  decree               shall follow and no appeal shall lie from such               decree  except in so far as the decree  is  in               excess  of  or  not  in  accordance  with  the               award." Thus  foreign award is enforceable in India. In such a  case the 75 Court  is  obliged  to direct that the award  be  filed  and proceed  to pronounce judgment according to the  award.  And upon the judgment so pronounced a decree shall follow.  This Court  had occasion to examine the purpose and terms of  the Act  in Renusagar Power Co. Ltd. v. General Electric  Co.  & Anr.,  [1985]  1 SCR 432. This Court held referring  to  the objects  that the Act seeks to achieve speedy settlement  of disputes  arising from international trade through  arbitra- tion.  The  Act was enacted to give effect  to  the  Newyork International Convention on the Recognition and  Enforcement of  Foreign  Awards to which India was a party.  This  Court noted  that it is obvious that since the Act was  calculated

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and designed to subserve the cause of facilitating  interna- tional  trade and promotion thereof by providing for  speedy settlement  of disputes arising in such trade through  arbi- tration,  any expression or phrase occurring therein  should receive, consistent with its literal and grammatical  sense, a liberal construction.     The judgment has been pronounced in terms of the  afore- said  and  a decree has followed. The award  enjoins,  inter alia,  "that the Chatterers do pay and bear their own  costs and  the owner’s costs of reference (the latter to be  taxed in the event of disagreement). The judgment and decree which was pronounced in terms of the award did not direct any cost taxed  or quantified of the reference to be paid.  Indubita- bly,  the costs of reference have been awarded.  The  award, read  properly, means, so far as costs of the reference  are concerned,  that  it was an award upon  certain  conditions, i.e., the award stipulated that the costs of reference  will be paid. The costs of such reference were, however, directed to be determined either by agreement between the parties and in case there was no agreement or disagreement, to be taxed. The parties have not been able to agree. It appears from the averments made in the pleadings before the High Court, there was  no agreement as to the costs, and the steps were  taken after the appeal was filed before the Division Bench to have the  costs taxed. But there is no evidence of any  delay  or laches  on the part of the appellant, as such,  which  would disentitle the appellant to such costs. In that view of  the matter this award can legitimately be considered as an award directing  payment  of costs upon the condition  that  these will  be taxed on the failure of agreement  or  disagreement between  the parties. The parties have failed to agree.  The costs have been taxed and certified. There is no dispute  as to the costs taxed or certified.     We  are of the opinion that law, justice and  equity  in the  facts and the circumstances of this case,  enjoin  that the  appellant  should have such costs.  The  appellant  has taken all possible steps that could be 76 taken in the situation contemplated by the award. The appel- lant has written for agreement about the costs of reference. The  respondent did not agree. The appellant took  steps  to have  the  costs taxed in London, and the  costs  have  been taxed.     On  behalf of the respondent, several  contentions  were urged mainly on the ground that there is no scope for  addi- tion to the award and the award had to be executed as it was and  the costs of reference had not been awarded. We are  in agreement with Mr. Ganesh that the award must be executed as it is and there is no scope for any addition to any award in executing a foreign award but the award to be executed  must be  properly construed and given effect to. If the award  is ambiguous,  the court has jurisdiction to determine what  it means. In this case, the award is not ambiguous. It is clear that  the costs of reference should be paid by the  respond- ent, and that such costs should be paid as are determined by agreement between the parties and in case of failure of  the agreement  by the taxation, such costs have been  taxed  and were  placed before the Division Bench before it  pronounced its judgment. Our attention was drawn to the decision in  Re Becker  Shillan & Co. and Barry Bros., [1920] All E.R.  644, where  it was held that where an umpire in making his  award dealt with the costs of the award including the expenses  of the  hire  of  the room for the  arbitration  and  shorthand notes,  but  made no order as to the general  costs  of  the parties  to the reference, the court would not presume  that

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he has exercised his discretion to make no order as to costs or  that  he has left them to be borne by  the  parties  who incurred them, but will conclude that the question of  costs has not been dealt with at all and, therefore, should  remit the award to him for reconsideration.     In our opinion, the said decision has no application  to the facts of this case. The instant appeal before us is  not a  case  where  the award has not dealt with  the  costs  of reference,  rather it has specifically dealt with the  same. It  has categorically provided that cost of reference is  to be  paid by the respondent. The award has stated  that  such cost should be agreed between the parties and in case  there was  no agreement, cost should be taxed. The award is  clear and unambiguous and does not leave this question  undecided. In the circumstances, there is no scope of remission of this award  or  not enforcing what the  arbitrator  has  awarded. Under  the  Act, if an application is filed  for  decree  in terms  of the award, the court in upholding the award  ought to  grant a decree in terms of the award and  not  substract any  portion  thereof.  Since the award  directed  costs  of appellant’s reference to be paid as is mutually agreed  upon or as taxed, the Division Bench ought to have 77 passed an order for costs as taxed.     We, therefore, direct that the award to be enforced  and the  costs as mentioned hereinbefore should also be  payable by the respondent. The judgment and order of the High  Court are  modified to that extent. In the facts and  the  circum- stances of the case, we do not make any order as to costs of this appeal. R.S.S.                                                Appeal allowed. 78