P.E.C. LIMITED versus AUSTBULK SHIPPING SDN BHD

Citation: [2018] 13 S.C.R. 830 · Decided: 14-11-2018 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2018] 13  S.C.R.
P.E.C. LIMITED
v.
AUSTBULK SHIPPING SDN BHD
(Civil Appeal No. 4834 of 2007)
NOVEMBER 14, 2018
[A. M. KHANWILKAR AND L. NAGESWARA RAO, JJ.]
Arbitration and Conciliation Act, 1996:
ss.44, 46, 47 and 48 – Foreign award – Enforcement and
execution of – Charter Party between appellant and respondent –
Dispute as regards payment of freight by appellant to respondent –
Respondent appointed its nominated Arbitrator – Appellant failed
to appoint its Arbitrator within stipulated time – The sole Arbitrator
awarded the freight as demanded by the respondent with interest @
8% P.A. – Petition for enforcement of the Award filed before High
Court in India – Objection by the appellant as to maintainability of
the petition on the ground that authenticated copy of the original
agreement was not filed at the time of presentation of the application;
that there was no arbitration agreement as the Charter Party was
not signed by the appellant; and that award was not a valid foreign
award – High Court rejecting the objections, directed enforcement
and execution of the award – On appeal, Held: Production of the
arbitration agreement at the time of filing the application is not
mandatory – Article 35(2) of UNCITRAL Model Law on International
Commercial Arbitration (on the basis of which the Act is made) does
not provide for presentation of the copy of the arbitration agreement
– The object of New York convention is smooth and swift enforcement
of foreign awards – Keeping in view the object and purpose of New
York Convention, the word ‘shall’ in s. 47 of the Act has to be read
as ‘may’ – Therefore, signing of Charter Party is not necessary to
make it binding as the English Law (by which the contract is
governed) there is no such requirement – United Nations Commission
International Trade Law (UNCITRAL) – UNICITRAL Model Law
on International Commercial Arbitration – Article 35(2) –
Convention on the Recognition and Enforcement of Foreign
Arbitration Awards, 1958 (New York Convention).
[2018] 13  S.C.R. 830
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Arbitration:
Arbitral clause – Incorporation of – Held: Arbitral clause
need not be found in a contract or an arbitral agreement – It can
be included in the correspondence between the parties.
Interpretation of Statutes:
Provisions of statute – Whether directory or mandatory/
imperative – Determination of – Held: The scope and object of a
statute are the only guides in determining whether its provisions are
directory of imperative – It is duty of the court to get the real intention
of the legislature – The word “shall” though prima facie gives an
impression of being of mandatory character, is required to be
considered in the light of the intention of the legislature by carefully
attending to the scope of the statute, its nature and design and
consequences that would flow from the construction thereof –
Legislative Intent.
Words and Phrases:
‘Foreign award’ – Meaning of, in the context of Arbitration
and Conciliation Act, 1996.
‘Arbitration agreement’ – Meaning of.
‘Shall’ – Interpretation of.
Dismissing the appeal, the Court
HELD: 1.1 Part II of the Arbitration and Conciliation Act,
1996 deals with enforcement of foreign awards.  An arbitral award
made in pursuance of an agreement in writing for arbitration, to
which the Convention on the Recognition & Enforcement of
Foreign Arbitration Awards, 1958 (“New York Convention”) set
forth in the First Schedule of the Act applies, is defined to be a
“Foreign Award”.  [Para 10][840-A-B]
1.2 Section 47 of the 1996 Act postulates that the party
applying for the enforcement of a foreign award, “shall” produce
before the Court at the time of application the following: (a) The
original award or a copy thereof, duly authenticated in the manner
required by the law of the country in which it was made; (b) The
original agreement for arbitration or a duly certified copy thereof,
P.E.C. LIMITED v. AUSTBULK SHIPPING SDN BHD
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SUPREME COURT REPORTS
[2018] 13  S.C.R.
and (c) Such evidence as may be necessary to prove that the
award is a foreign award.” [Para 10][840-C-D]
1.3 Admittedly, an authenticated copy of the arbitration
agreement was not placed on record by the Respondent at the
time of filing of the application for enforcement.  It is clear from
the record that the appellant placed the arbitration agreement
along with its reply and thereafter the Respondent also filed the
original arbitration agreement in 

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