Delhi High Court
International Air Transport … vs Spring Travels Pvt Ltd Through Its … on 29 October, 2024
Author: Jasmeet Singh
Bench: Jasmeet Singh
$~5
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 03.07.2024
Judgment pronounced on: 29.10.2024
+ O.M.P.(EFA)(COMM.) 1/2023 & EX.APPL.(OS) 537/2023
INTERNATIONAL AIR TRANSPORT ASSOCIATION
THROUGH ITS HEAD IATA INDIA BRANCH
MR RODNEY AUGUSTINE D CRUZ ..... Decree Holder
Through: Mr Vijay Chawla, Mr Prashant Mehta,
Mr Dhruv Chawla, Mr Vipul Saini and
Ms Yuganshi Singh, Advs.
versus
SPRING TRAVELS PVT LTD THROUGH ITS
MANAGING DIRECTOR MR MANDEEP SINGH ANAND
..... Respondent
Through: Mr Anand Mishra, Mr C P Tomar and
Mr ShammuBaghel, Advs.
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
JUDGMENT
: JASMEET SINGH, (J)
1. This is a petition seeking enforcement and execution of a foreign award
dated 21.04.2022 passed by the learned Sole Arbitrator in the arbitration
between International Air Transport Association (“IATA”) and Spring
Travels Pvt. Ltd. (“STPL”). The arbitration was held under the aegis of
ICC International Court of Arbitration and the seat of arbitration was in
Singapore.
Factual Matrix
Brief Background
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 1 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
2. The petitioner-IATA is a trade association for member airlines
worldwide, comprising approximately 280 airlines, which represent 83%
of total air traffic. IATA, inter alia, promotes safe and reliable air travel
and manages the billing and settlement system for its member airlines (or
“Carriers”) and accredited travel agents.
3. STPL was appointed as an accredited travel agent by IATA under a
Passenger Sales Agency Agreement (“PSA Agreement”) dated
18.01.2005 entered between STPL and IATA members represented by
IATA acting for and on behalf of its members. The PSA Agreement was
signed by the Director General of IATA, acting as an agent for the
Carriers mentioned in the preamble of the PSA Agreement, and by Mr.
Mandeep Singh, Managing Director of STPL, for STPL.
4. Pursuant to the PSA Agreement, STPL was allowed to participate in
IATA’s passenger agency program. This program facilitated the
accredited travel agent to sell air passenger transportation services of the
member airlines.
5. The relationship between IATA and STPL is governed by: a) terms of the
PSA Agreement; and b) pursuant to Clause 2 of the PSA Agreement, the
terms and conditions set forth in the Resolutions (and other provisions
derived therefrom) contained in the Travel Agent’s Handbook
(“Handbook”) attached to the PSA Agreement. The Handbook
incorporates, inter alia, the Sales Agency Rules (also referred to as the
Passenger Sales Agency Rules).
6. Transactions between the member airlines and the accredited travel
agents (such as STPL herein, also referred as “Agent” in the PSA
Agreement) are carried out through the Billing & Settlement Plan
(“BSP”) in accordance with Resolution 850 of the Handbook.
7. Accredited travel agents are granted a short credit period during which
they are permitted to hold the payments collected on behalf of the
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 2 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
member airlines in trust. The remittance frequencyfor the payments from
tickets sold was as follows:
a. For domestic tickets sold from the 1st to the 15th of the month
(“Reporting Period”), payment was due by the 25th of the same
month.
b. For international tickets sold from the 1st to the 15th, payment was
due by the 30th of the same month.
c. For domestic tickets sold from the 16th to the end of the month,
payment was due by the 10th of the following month.
d. For international tickets sold from the 16th to the end of the month,
payment was due by the 15th of the following month.
8. Since STPL breached the PSA Agreement by failing to remit the monies
in terms of the remittance schedule, IATA claimed a sum of Rs.
1,24,31,69,623 (equivalent to USD 19,125,686 calculated at 1 USD =
INR 65) received by STPLfrom the sale of ticketsplus interest. The
claims were for unpaid dues in respect of bookings done in the period of
01.03.2013 to 15.03.2013 and 16.03.2013 to 31.03.2013.
Proceedings before Delhi High Court
9. IATA instituted a suit for recovery before this Court being CS(COMM)
119/2016, wherein STPL filed an interim application under Order VII
Rule 11 CPC read with Section 8 of the Arbitration and Conciliation Act,
1996 (“1996 Act”), which was allowed vide order dated 05.02.2018 and
the dispute was referred to arbitration.
10. On 04.05.2018, IATA filed a petition under Section 9 of the 1996 Act
bearing O.M.P.(I)(COMM.) 209/2018 before this Court, which was
disposed of on 15.03.2023 directing interim orders passed in the petition
to continue till 04.05.2023 and thereafter be subject to
O.M.P.(EFA)(COMM.) 1/2023.
Arbitral Proceedings
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 3 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
11. IATA submitted a request for arbitration dated 29.03.2018 to the
Secretariat of the ICC International Court of Arbitration. STPL submitted
an answer to the request for arbitration dated 05.06.2018, inter alia,
challenging the jurisdiction of the Arbitral Tribunal (“AT”) to hear the
claims in the arbitration. On 29.06.2018, the AT was constituted.
12. On 16.05.2019, the learned AT passed the partial award, wherein the
objections raised by STPL with respect to the jurisdiction and
maintainability of the arbitration proceedings were rejected. The partial
award ruled as follows:
“Upon considering the arguments and submissions of the Parties, the
Tribunal FINDS, AWARDS, ORDERS AND DECLARES that:
(1) The Tribunal has jurisdiction to hear the claims of IATA in
these proceedings.
(2) The Tribunal retains jurisdiction to hear the claims on the
merits and to fix and allocate the costs of the issue of jurisdiction as
well as any further costs of the arbitration, and all issues not dealt
with in this Partial Award are reserved for determination to one or
more future awards.”
13. STPL challenged the partial award before the Singapore International
Commercial Court (“SICC”) in appeal, which was dismissed vide
judgment dated 25.03.2020.
14. Subsequent to the passing of the judgment dated 25.03.2020, the arbitral
proceedings were resumed, and the learned AT passed the final award
dated 21.04.2022, which ruled as follows:
“Upon considering the arguments and submissions of the Parties, the
Tribunal FINDS, AWARDS, ORDERS AND DECLARES that:
(1) Spring Travels Pvt. Limited shall pay the International Air
Transport Association the sum of INR 124,31,67,193.
(2) Spring Travels Pvt. Limited shall pay the International Air
Transport Association simple interest at the rate of 14% per annum
on the amount of INR 124,31,67,193 (i.e. INR 4,76,831.25 per day)
from 1 May 2013 till the date of full payment.
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 4 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
(3) Spring Travels Pvt. Limited shall pay the International Air
Transport Association the fees and expenses of the arbitrator and the
ICC administrative expenses in the sum of USD 200,000.
(4) Spring Travels Pvt. Limited shall pay the International Air
Transport Association its legal and other costs in the sum of USD
87,353.00.
(5) Save as aforesaid, all other claims of the parties are
dismissed.”
15. Pursuant to this, the present petition for enforcement has been filed.
Respondent’s Objections
16. The respondent-STPL has filed reply-cum-objections to the petition:
17. The primary objection raised by STPL is in terms of Section 48(1)(c) read
with Section 48(2) of the 1996 Act. It is stated that there was no arbitral
dispute in the absence of review by Travel Agency Commissioner
(“TAC”). For this, reliance is placed upon, inter alia, Sections 12.1.1,
12.2.1 and 12.3.1 of the Handbook, which imply that review by TAC was
a mandatory pre-requisite for invoking arbitration. It is stated that the
learned AT travelled beyond the terms of the contract in holding that
IATA was not obligated to seek review from TAC, which is in
contravention to Rule 1.3 of Resolution 820e of the Handbook. Reliance
is placed upon Indian Oil Corpn. Ltd. v. Shree Ganesh Petroleum1and
SAIL v. J.C. Budharaja, Govt. and Mining Contractor2 to state that the
arbitrator, being a creature of the agreement, must operate within the four
corners of the agreement.
18. As regards AT’s finding that STPL had waived off this pre-condition, it is
stated that the same is in contravention of Section 4 of the 1996 Act since
STPL raised this objection at the threshold (as seen in the Terms of
Reference). It is argued that in terms of principles of kompetenz-
kompetenz, the AT was empowered to give a ruling on the objections with
1
(2022) 4 SCC 463
2
(1999) 8 SCC 122
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 5 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
respect to all aspects of non-arbitrability. Reliance is placed upon Sanjiv
Prakash v. Seema Kukreja3. Further, it is stated that seeking reference
under Section 8 of the 1996 Act by STPL did not amount to STPL
waiving off the objection towards the pre-condition, in the absence of
anything to the contrary being recorded in the order. Although the parties
were referred to arbitration, it did not amount to appointment of an
arbitral tribunal (as under Section 11 of the 1996 Act) and
commencement of arbitration in a manner contrary to the arbitration
agreement between the parties. Reliance is placed upon Delhi Express
Travels Pvt. Ltd. v. International Air Transport Association &Ors.4.
19. The second main contention raised by STPL is that the cost of arbitration
was extremely high, which prevented STPL from effectively participating
in the proceedings and denied it fair opportunity of being heard. It is
stated that initial cost of approximately Rs. 1 Cr was charged.
Additionally, the cost for arranging a virtual setup for five days for cross-
examination was SGD 36,754 to be paid to a third party. When STPL was
unable to cover these costs, it was denied the right of cross-examination,
leading to its evidence being disregarded.
20. STPL has also raised certain other contentions in its reply. It is stated that
the AT’s finding that compliance of Section 65B of Indian Evidence Act,
1872 was not required, since STPL had seen all the hardcopies of
evidence provided in Compact Disc was against the laws of India, making
the award unenforceable.
21. It is argued that the foreign award is unenforceable because, under the
PSA Agreement and the Handbook, the Carriers whose monies were
involved were necessary parties to the proceedings, and IATA’s claim
could not be maintained in a representative capacity. For this, reliance is
3
(2021) 9 SCC 732
4
2009 (3) Arb LR 303 (Delhi)
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 6 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
placed upon Clauses 7 and 1 of the PSA Agreement. Furthermore, it is
asserted that according to the Sales Agency Rules in the Handbook,
IATA served only as a billing platform and rule-making body for its
accredited agents and Carriers. It is also submitted that the AT’s finding
that IATA’s member airlines had authorized IATA to take legal action on
their behalf was unsupported by any evidence.
22. Another objection raised is that under Section 47(1)(b) of the 1996 Act,
IATA did not file the complete arbitration agreement with the petition
and only provided the PSA Agreement as Document-2. It is stated that
STPL filed the complete Handbook as Document R/2.
23. STPL submits that AT’s finding regarding limitation was perverse as
there was no specific finding as to whether Indian limitation law would
be applicable or that of Singapore. It is argued that Section 14 of The
Limitation Act, 1963 was invoked without meeting its essential
requirements. It is stated that in the present case, the termination notice
was issued by IATA on 01.05.2013 and the arbitration request was
submitted by IATA on 29.03.2018, which was barred by limitation.
Petitioner’s Submissions
24. It is submitted that the objections of STPL are not within the purview of
Section 48 of the Act.
25. It is argued that the aspect of TAC review, being a pre-condition for
institution of arbitral proceedings, has been considered and deliberated by
the AT at great length. It is asserted that the AT had the requisite
jurisdiction, which was not ousted by IATA’s failure to seek TAC’s
review before initiating arbitration. Additionally, it is argued that STPL
cannot challenge the jurisdiction at this stage as this Court in enforcement
proceedings does not act as an appellate court.
25.1 STPL agreed that the dispute between the parties should be
referred to arbitration, which was duly noted in the consent order
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 7 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
dated 05.02.2018 passed in CS (COMM) 119/2016. This consent
order was not challenged by any of the parties in any forum.
25.2 STPL belatedly contacted the TAC via email on 23.05.2014, but
the TAC rejected the request on 26.05.2014, citing it as time-
barred.
25.3 The partial award dated 16.05.2019 addressed the TAC issue,
concluding that IATA was under no obligation to seek a review
by TAC regarding the outstanding fees. It further determined that
STPL had waived the pre-arbitration requirement by failing to
approach the TAC for review within the specified time limit of 30
days.
25.4 STPL appealed to the SICC to have the partial award set aside. In
its judgment dated 25.03.2020, SICC upheld the AT’s
jurisdiction, stating that STPL had acknowledged that only it
could initiate a review by TAC, which it failed to do.
Additionally, SICC noted that when a creditor demands payment,
it is up to the debtor to raise an objection, and IATA was not
obligated to seek a third-party review of its payment demands
from agents.
25.5 STPL filed I.A. No. 15689/2021 in the disposed of suit being
CS(COMM) 119/2016, re-agitating the same arguments.
However, after extensive arguments, STPL withdrew the
application as per the order dated 30.11.2021.
25.6 Against the final award dated 21.04.2022, STPL filed objections
under Section 34 of the 1996 Act, however, they were withdrawn
by STPL as recorded in the order dated 15.03.2023.
Consequently, the foreign award dated 21.04.2022 has attained
finality.
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 8 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
26. As regards the issue of alleged financial hardship of STPL and violation
of principles of natural justice, the same is denied and it is stated that
STPL willfully absented itself from the proceedings and is now
attempting to benefit from its own wrong. It is asserted that the statements
of STPL are not valid for the following reasons:
26.1 STPL contends that the expenses associated with virtual
proceedings in Singapore were excessive. However, on
16.07.2021, STPL emailed the AT requesting in-person hearings
in Singapore, which would result in even greater procedural costs.
26.2 Vide email dated 14.09.2021 sent to the AT, the advocates
representing STPL in the arbitral proceedings withdrew their
representation. However, those same advocates appeared on
behalf of STPL in CS(COMM) 119/2016, as is evident from the
order dated 30.11.2021. Hence, STPL’s argument that it could not
engage counsel for the arbitration proceedings, despite having the
funds to retain the same counsel for applications before the Court,
was a mere delaying tactic.
26.3 Although STPL was not willing to bear any of the expenses
associated with the arbitral proceedings, it was still granted access
to the virtual proceedings.
27. As regards the alleged non-compliance of Section 65B of the Indian
Evidence Act, 1872, it is submitted that IATA filed certification in
compliance with Section 65B along with its Statement of Claim.
Additionally, hard copies of emails sent after STPL’s counsel requested
discharge were also provided to STPL. It is also submitted that the Terms
of Reference to the arbitration itself specified that communications sent
via email will be valid.
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 9 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
Discussion and Findings
28. I have heard learned counsels for the parties and perused the documents
on record.
29. At this stage, it is relevant to map out in brief the relevant statutory
provisions as well as case laws regarding enforcement of foreign awards.
30. The enforcement of certain foreign arbitral awards is dealt with in Part II
of the 1996 Act, wherein Chapter I deals with awards under the New
York Convention. Section 46 states that a foreign award enforceable
under this Chapter is binding for all purposes on the parties between
whom it is made. Section 47 outlines the evidentiary requirements for
enforcing a foreign award. Section 48 lists the grounds upon which a
court may refuse to enforce a foreign award. Section 49 provides that
once a court is satisfied with the enforceability of a foreign award under
this Chapter, the award shall be deemed to be a decree of Court.
31. Relevant portion of Section 48 of the 1996 Act reads as under:
“48. Conditions for enforcement of foreign awards.–(1) Enforcement
of a foreign award may be refused, at the request of the party against
whom it is invoked, only if that party furnishes to the court proof
that–
(a) …..
(b) 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; or
(c) the award deals with a difference not contemplated by or not
falling within the terms of the submission to arbitration, or it contains
decisions on matters beyond the scope of the submission to
arbitration: Provided that, if the decisions on matters submitted to
arbitration can be separated from those not so submitted, that part of
the award which contains decisions on matters submitted to
arbitration may be enforced; or
(d) …..
(e) …..
(2) Enforcement of an arbitral award may also be refused if the Court
finds that–
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 10 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
(a) the subject-matter of the difference is not capable of
settlement by arbitration under the law of India; or
(b) the enforcement of the award would be contrary to the
public policy of India.
[Explanation 1.–For the avoidance of any doubt, it is clarified that
an award is in conflict with the public policy of India, only if,–
(i) the making of the award was induced or affected by fraud or
corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian
law; or
(iii) it is in conflict with the most basic notions of morality or
justice.
Explanation 2.–For the avoidance of doubt, the test as to whether
there is a contravention with the fundamental policy of Indian law
shall not entail a review on the merits of the dispute.]
(3) ……”
32. Powers of an enforcement court under Section 48 of the 1996 Act
(relevant to the issues raised in this petition) have been interpreted as
follows:
32.1 The power to set aside a foreign award lies only with the courts at
the seat of the arbitration, which exercise primary/supervisory
jurisdiction over the matter.5 Even if grounds under Section 48 of
the 1996 Act can be made out, this Court being the enforcement
court and having only secondary jurisdiction over the foreign
award cannot set aside the award but may only “refuse” its
enforcement.6 The enforcement court in its assessment under
Section 48 is not bound by the findings of the seat court rejecting
a challenge to the award, however, it also does not have the power
to review the correctness of the seat court’s judgment.7 Though
principles of res judicata do not strictly apply in proceedings
before an enforcement court, enforcement courts generally do not
allow re-litigation of issues which have been decided by courts5
Union of India v. Vedanta Ltd., (2020) 10 SCC 1, paragraph 83.11
6
Id at paragraphs 83.11 and 91
7
Id at paragraph 94
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 11 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
having competent jurisdiction on merits or where the parties had
the opportunity to raise the issues but did not do so.8
32.2 The grounds under Section 48(1)(a) to (e) are to be narrowly
construed, and grounds under Sections 48(1) and (2) must be
clearly made out by the objecting party.9 The expression “proof”
in Section 48 only means “established on the basis of the record
of the arbitral tribunal” and “such other matters as are relevant
to the grounds contained in Section 48.”10 “Perversity of an
award” under the head of public policy and “patent illegality on
the face of the award” as an independent ground are not valid
grounds under Section 48 and cannot be invoked against
international commercial arbitrations.11
32.3 Grounds urged under Section 48 objecting to enforcement can be
categorized in three groups: (a) grounds affecting the jurisdiction
of the arbitration proceedings; (b) grounds affecting party interest
alone; (c) grounds affecting the public policy of India. There is no
scope for discretion for grounds made under groups (a) and (c)
and the enforcement would have to be rejected if such grounds are
made out. However, if grounds under group (b) are made out, for
instance, if a party was unable to present its case before the
arbitrator, or if a ground is capable of waiver, the Court may still
enforce the award, despite such grounds, depending on the facts
and circumstances of the case.12
32.4 In the assessment under Section 48(1)(b), it is to be seen whether
factors beyond the party’s control have denied it a fair hearing. If
a party had no opportunity to address key arguments or respond to
8
Cruz City 1 Mauritius Holdings v. Unitech Limited, 2017 SCC OnLine Del 7810, paragraph 50
9
Gemini Bay Transcription (P) Ltd. v. Integrated Sales Service Ltd., (2022) 1 SCC 753, paragraph 41
10
Id at paragraph 40
11
Id at paragraph 60, referring to Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131
12
Vijay Karia v. Prysmian Cavi E Sistemi SRL, (2020) 11 SCC 1, paragraphs 58-59
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 12 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
evidence which forms basis of the award, it could render a foreign
award unenforceable. However, such breaches must be clearly
proven.13 To assess if the foreign award violates the most basic
notion of justice under Section 48(2)(b), it is to be seen whether
the award “fails to determine a material issue which goes to the
root of the matter or fails to decide a claim/counter claim in its
entirety”. Poor reasoning adopted by the arbitral tribunal to reject
a material claim is not a ground to refuse its enforcement.14
33. With this background, I will deal with the objections raised by the
judgment-debtor.
Regarding Review by TAC
34. The primary ground urged by STPL is that in the absence of TAC review
(which could have been sought by either of the parties), arbitration could
not have been invoked. IATA in response stated that this argument was
rejected by the AT in the partial award (also upheld by SICC) as STPL
had waived off this requirement by not approaching the TAC within the
time limit of 30 days. It contended that in light of the withdrawal of the
Section 34 petition filed by STPL, withdrawal of the application bearing
I.A. No. 15689/2021 filed by STPL in the disposed of suit, as well as lack
of any challenge to the consent order vide which the parties were referred
to arbitration, the issue has attained finality and cannot be challenged at
this stage.
35. At the outset, it is relevant to address IATA’s argument on the issue
attaining finality and the bar to its challenge at this stage. The issue was
discussed in the partial award dated 16.05.2019 and findings of the AT
were upheld by the SICC. Thereafter, a Section 34 petition was filed by
STPL before this Court, however, the same was withdrawn for lack of
13
Id at paragraph 81
14
Id at paragraph 83
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By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
jurisdiction. STPL also filed I.A. No. 15689/2021 in CS(COMM)
119/2016 seeking clarification of the order dated 05.02.2018 vide which
the suit was disposed of (referring the parties to arbitration). Clarification
was sought on whether the order suggested that the parties have waived
off the required pre-condition of a TAC review, however, the application
was not pressed and accordingly dismissed on 30.11.2021. The foreign
award has also not been challenged in the seat court.
36. As per the judgment of the Hon’ble Supreme Court in Union of India v.
Vedanta Ltd.15, the enquiry by the enforcement court under Section 48 of
the 1996 Act is not to be constrained by findings of the seat court:
“94. The enforcement court would, however, examine the challenge to
the award in accordance with the grounds available under Section 48
of the Act, without being constrained by the findings of the Malaysian
courts. Merely because the Malaysian courts have upheld the award,
it would not be an impediment for the Indian courts to examine
whether the award was opposed to the public policy of India under
Section 48 of the Indian Arbitration Act, 1996. If the award is found
to be violative of the public policy of India, it would not be enforced
by the Indian courts. The enforcement court would however not
second-guess or review the correctness of the judgment of the seat
courts, while deciding the challenge to the award.”
37. Hence, although there is no dispute that the foreign award has attained
finality, this Court has the power to assess and refuse enforcement as long
as the same falls within the parameters of Section 48 of the 1996 Act.
38. In the partial award, which is entirely dedicated to the issue of AT’s
jurisdiction and has merged with the final award, the AT gave its detailed
findings on the following sub-issues, inter alia: (1) whether TAC’s
decision was a mandatory pre-condition to arbitration, and hence required
to be complied with (discussed in paragraphs 110-186 of the partial
award); (2) whether IATA could and should have sought TAC’s review
(discussed in paragraphs 187-204); and (3) whether STPL’s
15
(2020) 10 SCC 1
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 14 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
actions/conduct constituted a waiver/estoppel (discussed in paragraphs
205-234).
39. The AT held that although TAC review was indeed a mandatory pre-
condition, there was no sufficiently clear procedure in place obligating
IATA to initiate a review by TAC of its claim for outstanding fees. It
further held that: a) STPL waived off this pre-condition by not
approaching the TAC within the prescribed time; and b) STPL is
estopped from raising this objection in view of its Section 8 application in
CS(COMM) 119/2016 whereby STPL prayed for IATA to bring its claim
to arbitration.
40. As regards the objection that the AT has gone beyond the terms of the
contract in holding that IATA was not obliged to initiate a review by
TAC in this case, I find no merit in the same.
41. STPL has placed reliance upon certain clauses of the PSA Agreement and
the Handbook to state that the AT has exceeded its jurisdiction and dealt
with issues which were beyond the scope of arbitration, since the
mandatory prerequisite of a TAC review was not fulfilled. For the sake of
brevity, only operative portions of the relevant clauses are reproduced
hereinbelow:
41.1 Clause 2 of the PSA Agreement:
“Rules, Resolutions and Provisions Incorporated in Agreement
2.1(a) the terms and conditions governing the relationship between
the Carrier and the Agent are set forth in the Resolutions (and
other provisions derived therefrom) contained in the Travel
Agent’s handbook (“the Handbook”) as published from time to
time under the authority of the Agency Administrator and attached
to this Agreement. The Handbook incorporates:
…..”
41.2 Clause 14 of the PSA Agreement:
“If any matter is reviewed by arbitration pursuant to the Sales
Agency Rules, the Agent hereby submits to arbitration in
accordance with such Rules and agrees to observe the proceduresDigitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 15 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
therein provided and to abide by any arbitration award made
thereunder.”
41.3 Section 12 of the Handbook:
“12.1.1 Any party to a dispute settled in accordance with
Resolution 820e shall have the right to submit the Travel Agency
Commissioner’s decision to de novo review by arbitration in
accordance with this Section.
…..
12.2.1 All disputes arising out of or in connection with a decision
rendered by a Travel Agency Commissioner (a “Decision”) shall
be finally settled under the Rules of Arbitration of the International
Chamber of Commerce by one or more arbitrators appointed in
accordance with said Rules and judgment upon the award may be
entered in any Court having jurisdiction thereof.
……
12.3.1 Arbitration proceedings pursuant to this Section 12 shall be
commenced no later than thirty (30) calendar days from the date of
the Travel Agency Commissioner’s award.”
41.4 Section 1 of Resolution 820e in the Handbook:
“All disputes arising out of or in connection with matters
enumerated in the present Section shall be finally settled, subject to
review by arbitration pursuant to Section 4 herein, by the
Commissioner, in accordance with this Resolution.”
41.5 Section 1.1 of Resolution 820e in the Handbook is regarding
review to be initiated by agent or applicant and Section 1.3 is
regarding review to be initiated by agency administrator.
42. The learned AT has discussed this issue in paragraphs 187-204 of the
partial award. I am of the view that the AT has given due consideration to
the arguments put forth by both parties, the evidence on record, and dealt
with the relevant clauses of the agreement to arrive at its findings.
Relevant extract from the discussion by the AT in the partial award is
reproduced hereinunder:
“201. The Tribunal finds that STPL has not established that IATA
could have requested areview from the TAC in relation to a claim
for outstanding dues under Section 1.8 or its subsections or had the
obligation to do so. The onus was on STPL to establish itsDigitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 16 of 35
By:DEEPANSHU MALASI
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14:50:15
assertions. The reference to Section 1.8 appeared to have been an
afterthought.
202. Further, the kinds of decisions which the TAC may decide to
take under Section 3.3 of Resolution 820e upon a review initiated
by the Agency Administrator do not appear to involve, as IATA
submitted, a review as to whether a mere payment of money was
claimed for outstanding dues. The decisions required to be taken
by the TAC appear to be decisions involving some form of positive
actions to be taken against an Agent, such as removal or
suspension (Section 3.3.1), requiring the Agent to meet certain
specified requirements as a condition for retention on the Agency
list (Section 3.3.2), ordering that traffic documents be removed
from the Agent (Section 3.3.3), the Agent being reprimanded
(Section 3.3.4), the Agent’s access to reduced fares being
suspended for a specific period (Section 3.3.5), the Agent being
required to undergo at its own expense an audit by an independent
certified public accountant (Section 3.3.6) and where it is found
that the Agent has been improperly withholding money from a
Member, suspension of the Agent until all outstanding monies have
been paid (Section 3.3.7). It would be expected that if such careful
thought had been given to the matters for which the TAC was
empowered to make decisions, as evidenced by the list of matters in
Section 3.3, and the intention was that a review request was
required to be made by the Agency Administrator to the TAC to
review an outstanding debt to establish whether the debt was due
or not, Section 3.3 might have included a specific provision for
such decisions to be taken or for specific orders for reliefs to be
granted.”
43. For reference, Section 3.3 of the Handbook reads as under:
“3.3 DECISIONS ON REVIEWS INITIATED BY THE AGENCY
ADMINISTRATOR
Consequent on a review initiated by the Agency Administrator, the
Commissioner may decide that one or more of the following actions
be taken:
3.3.1 the Agent or Approved Location be removed or suspended for
a stated period of time from the Agency List;
3.3.2 an Agent or Approved Location be required to meet specified
requirements as a condition for retention on the Agency List;
3.3.3 order that Standard Traffic Documents, and ticketing
authorities be removed from the Agent:
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3.3.4 the Agent be reprimanded;
3.3.5 the Agents access to reduced fare air passenger
transportation be suspended for a specified period;
3.3.6 the Agent, at its own expense, be required to undergo an audit
by an independent certified public accountant;
3.3.7 where it is found that at the time of the hearing, the Agent is
improperly withholding money from a Member, the Commissioner
shall suspend the Agent until all outstanding amounts have been
paid to the Member(s) concerned.”
44. The challenge to above observations in the partial award has also failed
before the SICC vide order dated 25.03.2020 and the partial award has
attained finality. To my mind, the view taken by the AT that a) none of
the provisions of the PSA Agreement or the Handbook stated that IATA
is to approach the TAC for claiming unpaid dues; and b) STPL had
waived off its objection by conduct (discussed in detail later) to arrive at
the finding that it has the requisite jurisdiction is the correct view, and in
the worst-case scenario, a plausible view. The AT has not travelled
beyond the terms of the contract and has interpreted the terms of the
contract in a reasonable way. The claim of IATA was based on unpaid
dues for the tickets sold by STPL. Hence, no ground under Section 48 can
be made out to refuse enforcement of the award.
45. It is also pertinent to understand the scope of Section 48(1)(c) in respect
of this objection. The Hon’ble Supreme Court in Ssangyong Engg. &
Construction Co. Ltd. v. NHAI16 has restricted the scope of challenge as
contained in Section 34(2)(a)(iv), which is in pari material with Section
48(1)(c)17. Paragraph 69 of Ssangyong18 reads as under:
“69. We therefore hold, following the aforesaid authorities, that in
the guise of misinterpretation of the contract, and consequent
“errors of jurisdiction”, it is not possible to state that the arbitral
award would be beyond the scope of submission to arbitration if
16
(2019) 15 SCC 131
17
Supra note 9 at paragraph 62
18
Supra note 16 at paragraph 69
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otherwise the aforesaid misinterpretation (which would include
going beyond the terms of the contract), could be said to have been
fairly comprehended as “disputes” within the arbitration
agreement, or which were referred to the decision of the
arbitrators as understood by the authorities above. If an arbitrator
is alleged to have wandered outside the contract and dealt with
matters not allotted to him, this would be a jurisdictional error
which could be corrected on the ground of “patent illegality”,
which, as we have seen, would not apply to international
commercial arbitrations that are decided under Part II of the 1996
Act. To bring in by the backdoor grounds relatable to Section 28(3)
of the 1996 Act to be matters beyond the scope of submission to
arbitration under Section 34(2)(a)(iv) would not be permissible as
this ground must be construed narrowly and so construed, must
refer only to matters which are beyond the arbitration agreement
or beyond the reference to the Arbitral Tribunal.”
46. To my mind, the issue of whether TAC review was mandatory, of
whether IATA could have/should have approached the TAC on its own
accord, of whether STPL has waived off the objection – are all issues
which can be comprehended as “disputes” within the arbitration
agreement. It cannot be said that the issues raised were beyond the
arbitration agreement or beyond the reference to the AT. STPL’s
arguments before this Court are in the nature of review of the merits of
the case, which is impermissible at this stage.
47. As regards the objection that the enforcement needs to be rejected since
the AT’s finding on waiver is in contravention of Section 4 of the 1996
Act and against the principles of kompetenz-kompetenz, I am inclined to
reject the same.
48. AT’s findings on this issue are contained in paragraphs 205-234 of the
partial award. Certain relevant portions are quoted hereinbelow:
“211. ….Accordingly, STPL could have, as a matter of contract,
initiated a review by the TAC for a decision in respect of IATA’s
claim for outstanding dues or monies. It should also have done so
in time, that is, within the 30-day period allowed by the contract,
and if it did not do so, it would have only itself to blame if a TACDigitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 19 of 35
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decision was not given, as the court in the Delhi case, rightly
observed, and the ultimate step of arbitration to resolve disputes
involving claims such as for dues against STPL could not be
achieved by reason thereof.
212. …. In these circumstances, the absence of a TAC decision was
the result of STPL’s own wrongdoing and the general principle that
a party should not be permitted to benefit from or take advantage
of its own wrong, as a principle of Indian law (and as the
substantive law governing the contract) as held in the Delhi case,
should apply.
…..
219. Accordingly, for the above reasons, the Tribunal finds that
STPL by its conduct or actions waived the pre-condition to
arbitration and/or should be estopped from objecting to IATA
proceeding with the arbitration on its present claims.
…..
226. The Tribunal does not consider that the court order has any
finality in relation to the Tribunal’s jurisdiction to rule on its own
jurisdiction, at any rate, under the laws of theseat of the
arbitration, or in any way “denudes” the Tribunal from possessing
orexercising such jurisdiction…..
227. Although the Tribunal does not need to make a definitive
finding on whether the orderwas a consent order (and does not do
so), it appears that there was some element ofconsent involved in
the making of the Court order as STPL (the applicant seeking
toinvoke Order VII Rule 11 which is, in essence, an application to
strike out the claim) “agreed” as recorded by the Court order, that
the application under Order VII Rule 11was “misconceived”, and
IATA also “agreed” as recorded by the Court order that theaction
before the Court was “the subject matter of (the) arbitration
agreement” and further, that on the basis of the matters recorded
in the Court order, the application was allowed and disposed of
without a full hearing on the merits.
…..
231. So far as STPL is concerned, the Tribunal has already found
that STPL could have sought a review and decision by the TAC and
by not seeking a review within the prescribed time, effectively
prevented the TAC decision (which was a condition precedent to
arbitration as found by the Tribunal and itself the position that
STPLtook in this arbitration) from being issued, and waived the
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 20 of 35
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condition precedent orshould be estopped from relying on its non-
fulfilment. STPL then had the right todefend the action brought by
IATA against it in the court. STPL had that “right” solong as IATA
did not proceed with arbitration itself. STPL had, however, by not
seeking a review by the TAC within the time prescribed, lost the
right and opportunity to obtain a decision from the TAC, and if it
was unhappy with the decision, the right to commence arbitration
itself (if only to seek negative declarations of liability). STPL’s only
remedy in these circumstances was to defend the claim in court
when IATA commenced the suit against it. Defending the claim in
court would also be consistent with its arguments that as there was
no TAC decision, there would be nothing to arbitrate.
232. Instead of defending the claim in court however, STPL elected
to require IATA to bring its claim to arbitration, by its application
to the court to refer the Parties toarbitration. In the Tribunal’s
view, this would amount to an estoppel by conduct. The Tribunal
finds that STPL should be estopped from objecting to IATA
bringing its claims in this arbitration.”
49. Hence, STPL’s argument that the award violated principles of kompetenz-
kompetenz is misconceived as paragraph 226 of the partial award shows
that the AT has adhered to the same. In this regard, the reliance placed by
STPL upon Sanjiv Prakash19 becomes irrelevant.
50. As regards the alleged misapplication/misinterpretation/ignorance of
contours of Section 4, Section 16(2) or Section 8 of the 1996 Act is
concerned, I am of the view that the same does not warrant refusal of
enforcement. Pursuant to Vijay Karia v. Prysmian Cavi E Sistemi SRL20,
this Court can exercise its discretion under Section 48:
“59. On the other hand, where the grounds taken to resist
enforcement can be said to be linked to party interest alone, for
example, that a party has been unable to present its case before the
arbitrator, and which ground is capable of waiver or
abandonment, or, the ground being made out, no prejudice has
been caused to the party on such ground being made out, a court
may well enforce a foreign award, even if such ground is made out.
When it comes to the “public policy of India” ground, again, there19
Supra note 3
20
(2020) 11 SCC 1
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would be no discretion in enforcing an award which is induced by
fraud or corruption, or which violates the fundamental policy of
Indian law, or is in conflict with the most basic notions of morality
or justice. It can thus be seen that the expression “may” in Section
48 can, depending upon the context, mean “shall” or as connoting
that a residual discretion remains in the court to enforce a foreign
award, despite grounds for its resistance having been made out.
What is clear is that the width of this discretion is limited to the
circumstances pointed out hereinabove, in which case a balancing
act may be performed by the court enforcing a foreign award.”
51. AT has considered that STPL belatedly approached the TAC and hence
was barred from seeking a review. Thereafter, IATA approached the
court to realise its claims against STPL. STPL, instead of defending the
claims in court, filed an application under Order VII Rule 11 CPC read
with Section 8 of the 1996 Act in that suit, seeking reference of the
disputes to arbitration and obtained a favorable order. IATA did not
object to this and invoked arbitration. This conduct of STPL, the AT held,
amounted to estoppel. To my mind, the view taken by the AT is the
correct view, and in the worst-case scenario, a plausible view. STPL
cannot approbate and reprobate as per its convenience. If STPL’s
objection was to be accepted, IATA would be left remediless. The
conduct of STPL suggests that it is trying to defeat the arbitral process.
Hence, this objection cannot be sustained under Section 48.
52. STPL has placed reliance upon Delhi Express Travels21 to state that an
application by a party under Section 8 of the 1996 Act does not equate to
its readiness and willingness to proceed with arbitration. It is stated that in
the order dated 05.02.2018 in CS(COMM) 119/2016 vide which the
matter was referred to arbitration, both parties had agreed to the
application of Delhi Express Travels22. Order dated 05.02.2018 in
CS(COMM) 119/2016 reads as under:
21
Supra note 4
22
Ibid
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 22 of 35
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“IA No. 9449/2016 (of defendants u/O VII R-11 r/w S-8 of
Arbitration & Conciliation Act, 1996)
1. The senior counsel for the defendants/applicants agreed that
the invocation of Order VII Rule 11 of the Code of Civil
Procedure, 1908 is misconceived.
2. The counsel for the plaintiff has fairy stated that the matter is
covered by Delhi Express Travels Pvt. Ltd. Vs. International
Air Transport Association MANU/DE/0739/2009 and against
which, both counsels agree, no appeal was preferred and
there is no contrary view.
3. The counsel for the plaintiff on further query agrees that the
action brought before this Court by way of this suit is subject
matter of arbitration agreement.
4. In this view of the matter, the application is allowed and
disposed of.
CS(COMM) 119/2016
5. The parties are referred to arbitration under Section 8 of the
Arbitration and Conciliation Act, 1996.
6. The suit is disposed of.
7. On request of the counsel for the plaintiff, a certification
entitling the plaintiff to refund of court fees paid on the plaint,
less Rs. 20,000/- be issued and handed over to the counsel for
the plaintiff.”
53. I am of the view that the argument put forth by STPL placing reliance
upon Delhi Express Travels23 is misconstrued. In that case, the Agent had
filed the suit and IATA had filed a Section 8 application stating that the
dispute was subject matter of arbitration. In the present case, AT has
already given a finding that IATA was not obligated to seek a review
from TAC, and the same has been upheld by SICC. It was STPL who was
obligated to approach the TAC, however, it did not do so within the
stipulated time. Hence, STPL cannot be permitted to take advantage of its
own wrongs. This has also been observed by the AT in the partial award:
23
Ibid
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“208. The principle that a party should not be allowed to benefit
from its own wrong was stated and recognized as applicable in the
Delhi case discussed above where a party, the agent in that case,
argued that disputes involving a claim for outstanding dues should
not be allowed to go to arbitration as no decision of the TAC had
been obtained. The court there held that the contention that the
disputes were not the subject matter of the arbitration agreement in
question (which was worded in similar terms as the contract in this
case) was “misconceived” and that “merely because the agreement
between the parties provides for a precursor to the arbitration,
arbitration cannot be avoided on the ground of the pre requisite
step having not been taken.” The court further held that “it was
open to the plaintiff [i.e. the Agent] to have applied to the Travel
Agent Commissioner for review of the decision of the Agency
Administrator with which the [Agent] was aggrieved. The [Agent]
having not done has itself to blame for not adopting the course
leading to arbitration.” The court then referred the parties to
arbitration.
…..
211. ….Accordingly, STPL could have, as a matter of contract,
initiated a review by the TAC for a decision in respect of IATA’s
claim for outstanding dues or monies. It should also have done so
in time, that is, within the 30-day period allowed by the contract,
and if it did not do so, it would have only itself to blame if a TAC
decision was not given, as the court in the Delhi case, rightly
observed, and the ultimate step of arbitration to resolve disputes
involving claims such as for dues against STPL could not be
achieved by reason thereof.
212. The Tribunal has already found that IATA was not obligated
to seek a review by the TAC of its claim for outstanding dues. In
these circumstances, the absence of a TAC decision was the result
of STPL’s own wrongdoing and the general principle that a party
should not be permitted to benefit from or take advantage of its
own wrong, as a principle of Indian law (and as the substantive
law governing the contract) as held in the Delhi case, should
apply.”
54. Further, STPL had filed an application seeking clarification of the order
dated 05.02.2018 in CS(COMM) 119/2016 as regards whether the filing
of the application bearing I.A. No. 9449/2016 (under Order VII Rule 11
CPC read with Section 8 of the 1996 Act) would be treated as a legal
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 24 of 35
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estoppel for it to raise the plea of jurisdiction before the AT. The same
was dismissed as not pressed vide order dated 30.11.2021:
“I.A. No. 15689/2021 (for clarification in the Order dated 05th
February, 2018 passed in I.A. No. 9449/2016)
1. After some arguments, Mr. Sanjay Rathi, counsel for the
Applicants/Defendants, states that he does not wish to press the
present application.
2. Accordingly, the application is dismissed, as not pressed.”
Regarding Violation of PNJ
55. STPL has contended that pursuant to the exorbitant costs associated with
the proceedings, it could not effectively participate and hence it was
denied fair hearing and the right to cross-examination, and its evidence
was disregarded. In response, IATA has rebutted this position by
questioning STPL’s claims of financial hardship, stating that STPL was
using mere delaying tactics and willingly absented itself from the
proceedings. IATA stated that regardless of STPL’s unwillingness to bear
the costs of the proceedings, STPL was granted access to the virtual
proceedings.
56. STPL has urged this ground under Section 48(2)(b) read with Explanation
1(iii) of the 1996 Act, stating that the award is in violation of most basic
notions of justice. At this stage, it is also relevant to discuss Section
48(1)(b) of the 1996 Act. The Hon’ble Supreme Court in Vijay Karia24
has interpreted the scope of these provisions.
57. Section 48(1)(b) provides grounds for rejection of enforcement if the
party was “otherwise unable to present its case”. In interpreting this
provision, this Court has to see whether factors beyond the control of
STPL denied it a fair opportunity of being heard, and to address key
arguments/evidence which forms the basis of the award. It is pertinent to
24
Supra note 20
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note that this provision concerns breaches at the hearing stage, and not
after the award has been delivered. Operative portion of Vijay Karia25
reads as under:
“81. Given the fact that the object of Section 48 is to enforce foreign
awards subject to certain well-defined narrow exceptions, the
expression “was otherwise unable to present his case” occurring in
Section 48(1)(b) cannot be given an expansive meaning and would
have to be read in the context and colour of the words preceding the
said phrase. In short, this expression would be a facet of natural
justice, which would be breached only if a fair hearing was not given
by the arbitrator to the parties. Read along with the first part of
Section 48(1)(b), it is clear that this expression would apply at the
hearing stage and not after the award has been delivered, as has been
held in Ssangyong. A good working test for determining whether a
party has been unable to present his case is to see whether factors
outside the party’s control have combined to deny the party a fair
hearing. Thus, where no opportunity was given to deal with an
argument which goes to the root of the case or findings based on
evidence which go behind the back of the party and which results in a
denial of justice to the prejudice of the party; or additional or new
evidence is taken which forms the basis of the award on which a party
has been given no opportunity of rebuttal, would, on the facts of a
given case, render a foreign award unenforceable on the ground that
a party has been unable to present his case. This must, of course, be
with the caveat that such breach be clearly made out on the facts of a
given case, and that awards must always be read supportively with an
inclination to uphold rather than destroy, given the minimal
interference possible with foreign awards under Section 48.”
58. Section 48(2)(b) read with Explanation 1(iii) of the 1996 Act has a wider
ambit than that envisaged under Section 48(1)(b)26. The Court has to see
that the arbitral tribunal has failed to determine a material issue or
claim/counter-claim which goes to the root of the matter. Operative
portion of Vijay Karia27 reads as under:
“83. Having said this, however, if a foreign award fails to determine
a material issue which goes to the root of the matter or fails to decide25
Id at paragraph 81
26
Id at paragraph 77
27
Id at paragraph 83
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a claim or counterclaim in its entirety, the award may shock the
conscience of the Court and may not be enforced, as was done by the
Delhi High Court in Campos. It must always be remembered that
poor reasoning, by which a material issue or claim is rejected, can
never fall in this class of cases. Also, issues that the Tribunal
considered essential and has addressed must be given their due
weight — it often happens that the Tribunal considers a particular
issue as essential and answers it, which by implication would mean
that the other issue or issues raised have been implicitly rejected. For
example, two parties may both allege that the other is in breach. A
finding that one party is in breach, without expressly stating that the
other party is not in breach, would amount to a decision on both a
claim and a counterclaim, as to which party is in breach. Similarly,
after hearing the parties, a certain sum may be awarded as damages
and an issue as to interest may not be answered at all. This again
may, on the facts of a given case, amount to an implied rejection of
the claim for interest. The important point to be considered is that the
foreign award must be read as a whole, fairly, and without nit-
picking. If read as a whole, the said award has addressed the basic
issues raised by the parties and has, in substance, decided the claims
and counterclaims of the parties, enforcement must follow.”
59. Although STPL has stated that it has urged this ground under Section
48(2)(b), I am of the view that the arguments put forth by STPL are
pertaining to the pre-award stage and hence the parameters under Section
48(1)(b) are the relevant parameters.
60. The learned AT has addressed the issue of STPL’s non-participation in
paragraphs 155-157 of the final award, which read as under:
“155. Before discussing the issues on the merits, it is necessary to
consider the effect of STPL’s non-participation and attendance at the
virtual hearing held over 3 days in October 2021 to hear oral
evidence and arguments. STPL participated in the arbitration
proceedings from the commencement thereof throughout as would be
evident from the procedural history set out above. Even after its
counsel withdrew from representing it in September 2021, it was
represented by its Managing Director, Mr Mandeep Singh, to whom
all correspondence was sent. It however chose not to participate in or
attend the oral hearing to have its witness, Mr Mandeep Singh, give
evidence or to be made available for cross-examination or to
challenge the evidence of STPL’s witnesses, or to make submissions toDigitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 27 of 35
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refute or rebut those of STPL on the law and the facts. The Tribunal is
satisfied that STPL had full notice of the hearing and/or the hearing
dates and had reasonable, and indeed full, opportunity to present its
case and call witnesses in accordance with the Tribunal’s directions
but chose not to avail itself of that opportunity without valid
justification.
Effect of the failure of STPL and its witnesses to appear at the
hearing
156. At the commencement of the hearing when it became apparent
that STPL was not going to appear and participate in the hearing, the
Tribunal asked counsel for IATA for its submissions on the effect of
STPL’s non-appearance at the hearing and how the evidence of its
witness, Mr Mandeep Singh, who had filed witness statements should
be treated. Counsel for IATA submitted, inter alia, that Mr Mandeep
Singh’s evidence should be disregarded as he had not submitted
himself for cross-examination.
157. Having heard the submissions, the Tribunal considers that
notwithstanding the non-appearance or participation of STPL at the
hearing, the hearing should continue. While the Tribunal should
satisfy itself that IATA’s claims were well-founded, it should not
however substitute itself for the defaulting party and attempt to argue
that party’s case for that party or attempt to improve upon it. As
regards the evidence in witness statements by a witness who did not
appear at the hearing to affirm the same and to allow his evidence to
be tested and challenged by cross-examination, the Tribunal retains
“…the power to determine the admissibility, relevance, materiality
and weight of any evidence” in accordance with the Singapore
International Arbitration Act and First Schedule the UNCITRAL
Model Law, Article 19(2), which applies as the applicable law at the
seat or place of arbitration, which is Singapore. While it will not
reject outright the witness statements, it will give such weight to the
evidence therein as it considers appropriate, drawing, if necessary,
such inferences as it deems appropriate.”
61. Further, a perusal of paragraphs 60-83 of the final award (pertaining to
procedural history) shows that multiple extensions were granted to STPL
for lack of finances. On 06.09.2021, STPL agreed to share the costs of
virtual proceedings and sought yet another extension. Despite the same,
STPL refused to bear the costs and sought a further extension. Owing to
this, IATA made arrangements for virtual hearing at its own expense and
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copied STPL on all correspondences with the service provider.
Arrangements were also made to upload the documents submitted by
STPL during the arbitration proceedings to the document repository
system, despite STPL’s non-cooperation. STPL did not confirm its
presence in the virtual hearings, despite notice having been given.
62. Going further, STPL was provided withthe link for the test call, the log-in
details and other requisite information, and even then, STPL did not join
the test call. STPL was also supplied IATA’s Written Opening Statement,
which was uploaded to the online repository system, however, STPL did
not submit its Written Opening Statement. For the virtual hearing held via
Zoom video conference on 19.10.2021, 20.10.2021 and 22.10.2021,
STPL was provided with the link, log-in details as well as access to the
online repository system (which included IATA’s and STPL’s pleadings,
memorials and written statements) for its participation. However, there
was no representation on behalf of STPL on any of the dates. The AT was
satisfied that due notice and ample opportunity was given to STPL to
attend the hearing and present its defence and evidence. It is also clear
that despite STPL’s non-appearance, and in the absence of its witness
submitting himself to cross-examination, the AT did not outrightly reject
STPL’s witness statements.
63. In the present case, the series of events makes it clear that a) multiple
opportunities were given STPL to comply with its obligations in bearing
the costs of the proceedings; b) in STPL’s failure to do so, the entire cost
for arrangement of virtual proceedings was undertaken by IATA and
regardless of it, STPL was given access to them; c) at every step, STPL
was included in the correspondences, given access to the document
repository system, provided with the links and requisite log-in details to
the proceedings; and d) despite the same, STPL refused to participate in
the proceedings, refused to present its defence, and refused to submit its
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witness to cross-examination.Hence, STPL had full opportunity to submit
its case, but it willfully chose not to.
64. Even before me, STPL has failed to provide any valid justification for
absenting itself from the proceedings which was ignored by the AT or
make a clear case of the proceedings being unfair. It has levied mere bald
allegations that STPL was denied right of cross-examination for not being
able to deposit the costs of the proceedings. Hence, no ground can be
made out under Section 48(1)(b) of the 1996 Act.
65. For the said reasons, I find no substance in the arguments of STPL. STPL
has failed to prove that the enforcement of the foreign award should be
rejected on the ground of its inability/denial of opportunity to present its
case.
Regarding Ancillary Objections
66. As regards the objection on alleged non-adherence of Section 65B of the
Indian Evidence Act, 1872 is concerned, the AT has dealt with this issue
in paragraphs 224-228 of the final award and held that the provision of
documents in electronic form in CD was in consonance with the Terms of
Reference. It also observed that the AT was empowered to adjudicate on
any issues of evidence as per the Singapore International Arbitration Act
(Singapore being the seat/place of arbitration) and the ICC rules (being
the applicable rules). The operative portion of the final award reads as
under:
“225. In short, STPL had asked to be supplied with hard copies of
the contents of a CD containing the BSP documents which showed
and evidenced the transactions on which IATA’s claim was based.
The CD had been provided by IATA at the commencement of the
arbitration to STPL.
226. Although STPL had acknowledged receipt of the CD and
evidently read the CD contents, as it had admitted, it nevertheless
asked to be furnished with hard, printed copies of the pages in the
CD, which amounted to some 17,000 pages of documents. TheDigitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 30 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
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Tribunal after considering STPL’s application and hearing
submissions from the Parties decided not to order IATA to provide
hard copies since STPL had access to them and was able if it
wished, to print the copies itself. In any event, paragraph 8 of the
Terms of Reference signed by the Parties and the Tribunal
provided: “8. All written notifications or communications to or by
the Parties (including pleadings, submissions, witness statements
and exhibits) shall be valid if sent by email to the representatives of
the Parties, the Tribunal and the Secretariat to the ICC
International Court of Arbitration, to the email addresses specified
below (with PDF or Word attachments, unless the attachments are
too big to be attached to the email, in which case they should be
provided on a memory stick or similar device and sent by courier to
the postal addresses of the Parties and the Tribunal), unless
otherwise directed by the Tribunal … ” IATA had complied with the
Terms of Reference by supplying the documents in electronic form
in a CD.
227. STPL’s defence was not one dealing with the merits of the
claim. Any reliance it places on the provisions of the Indian
Evidence Act is misplaced as the question of evidence is to be
determined by the Tribunal in accordance with its powers under
the Singapore International Arbitration Act as the seat or place of
the arbitration and the ICC Rules as the applicable rules of the
arbitration.”
67. Hence, it is clear that STPL was provided the documents in accordance
with the Terms of Reference. Even otherwise, IATA in its rejoinder to the
reply-cum-objections/written submissions hascategorically stated to have
complied with the requirements of Section 65B of the Indian Evidence
Act, 1872 by furnishing the certificate along with its Request for
Arbitration/Statement of Claim. For the above reasons, this objection
cannot be sustained at this stage.
68. As regards STPL’s objection of non-joinder of necessary parties is
concerned, the same does not find merit with this Court. The AT has
already adjudicated on this issue and its findings regarding this is
contained in paragraphs 181-193 of the final award, which is not
reproduced herein for the sake of brevity.
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 31 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
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69. The AT observed that STPL’s stance on IATA having no locus standi
was not clearly made out and it also chose not to participate in the hearing
to explain its position. It further noted that although there was no
evidence of a direct contract between IATA and STPL, the Member
Airlines of IATA must have authorized IATA to commence arbitration
proceedings against STPL to recover the monies that were not paid by
STPL to IATA on behalf of the Member Airlines. It inferred this from the
PSA Agreement which described each IATA member as represented by
the Director General of IATA “acting for and on behalf of such IATA
Member”. It also referred to the Articles of Association of IATA, which
empowered the Corporate Secretary of IATA to grant powers of attorney
for the conduct of the activities of IATA including the collection of
money from agents on behalf of the Member Airlines. It also drew
persuasive value from Delhi Express Travels28 wherein, on similar facts,
the Court found that IATA was bound by the PSA Agreement and had the
locus standi to refer the disputes to arbitration. Hence, in the absence of
any substantive arguments/evidence to the contrary presented by STPL,
the AT held that IATA had the locus standi to commence the arbitration
to recover the monies on behalf of the Member Airlines.
70. The argument of STPL is that the finding is unsupported by evidence and
lacks reasons. STPL has also relied upon certain clauses of the PSA
Agreement in an attempt to argue the case on merits. This Court is
satisfied that this ground cannot be taken under Section 48 of the 1996
Act. STPL had the opportunity to present its arguments before the AT,
and as observed by the AT, it failed to do so by choosing not to
participate in the proceedings. At this stage, this Court cannot go into the
merits of the case and also cannot refuse to enforce the award on the
alleged basis that the AT adopted poor reasoning to adjudicate upon an
28
Supra note 4
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Signing Date:29.10.2024
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issue. Hence, given the limited purview of Section 48, this objection is
rejected.
71. As regards the objection of limitation is concerned, the same also cannot
be taken at this stage. The AT has already adjudicated on this issue and its
findings regarding this is contained in paragraphs 194-213 of the final
award. The AT observed that STPL’s defence on limitation was
convulated and inconsistent, since STPL did not plead material facts
identifying the cause of action from which time would run for limitation,
nor did it provide details of the statute it relied upon and how it was to be
applied. It rejected the argument of a contractual time bar being wholly
without merit. It also rejected the arguments of statutory time bar since
STPL failed to reply upon any provisions of the Singapore or Indian
limitation laws to make its case, failed to adduce any evidence as regards
the material/relevant facts and failed to submit its witnesses to be cross-
examined. The AT was inclined to accept IATA’s arguments on this issue
(which it made pre-emptively) but held that it was not required to make
this determination since no defence was made out by STPL on the issue
of limitation.
72. STPL has made some arguments on merits and also argued that the
finding on limitation was perverse. This is not a court of appeal, or a
court of primary/supervisory jurisdiction over the matter. Further, the
ground of perversity is not envisaged under Section 48. Hence, this
objection is rejected.
73. As regards the objection of non-compliance of Section 47(1)(b) of the
1996 Act is concerned, the same is misconceived. The Hon’ble Supreme
Court in PEC Ltd. v. Austbulk Shipping Sdn. Bhd.29 has held that non-
filing of documents under Section 47 is not a valid ground for rejection of
enforcement under Section 48:
29
(2019) 11 SCC 620
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By:DEEPANSHU MALASI
Signing Date:29.10.2024
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“22. The object of the New York Convention is smooth and swift
enforcement of foreign awards. Keeping in view the Object and
Purpose of the New York Convention, we are of the view that the
word “shall” in Section 47 of the Act has to be read as “may”.
The opposite view that it is obligatory for a party to file the
arbitration agreement or the original award or the evidence to
prove that the award is a foreign award at the time of filing the
application would have the effect of stultifying the enforcement
proceedings. The object of the New York Convention will be
defeated if the filing of the arbitration agreement at the time of
filing the application is made compulsory. At the initial stage of
filing of an application for enforcement, non-compliance of the
production of the documents mentioned in Section 47 should not
entail in dismissal of the application for enforcement of an
award. The party seeking enforcement can be asked to cure the
defect of non-filing of the arbitration agreement. The validity of the
agreement is decided only at a later stage of the enforcement
proceedings.
23. It is relevant to note that there would be no prejudice caused to
the party objecting to the enforcement of the award by the non-
filing of the arbitration agreement at the time of the application for
enforcement. In addition, the requirement of filing a copy of the
arbitration agreement under the Model Law which was categorised
as a formal requirement was dispensed with. Section 48 which
refers to the grounds on which the enforcement of a foreign
award may be refused does not include the non-filing of the
documents mentioned in Section 47. An application for
enforcement of the foreign award can be rejected only on the
grounds specified in Section 48. This would also lend support to
the view that the requirement to produce documents mentioned in
Section 47 at the time of application was not intended to be
mandatory.”
(emphasis supplied)
74. The PSA Agreement has been annexed with the petition by IATA as
Document-2. Relevant extracts of the Handbook have been annexed by
STPL as Document-R/2. The entire arbitration agreement is available on
the court file, and hence the mandate of the 1996 Act has duly been
complied with. This ground does not warrant refusal of enforcement of
the award. Hence, this objection is rejected.
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By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15
Conclusion
75. For the reasons stated above, the objections raised by the respondent-
STPL under Section 48 of the 1996 Act stand rejected. The enforcement
petition is allowed. The judgment-debtor is directed to pay to the decree
holder the entire awarded amount along with awarded interests, costs,
fees and expenses of the arbitrator as well as administrative expenses in
terms of the foreign award dated 21.04.2022 within 4 weeks from today.
76. List for compliance on 10.01.2025 before the Roster Bench.
77. Pending applications, if any, are disposed of.
JASMEET SINGH, J
OCTOBER 29th, 2024
skm
Digitally Signed O.M.P.(EFA)(COMM.) 1/2023 Page 35 of 35
By:DEEPANSHU MALASI
Signing Date:29.10.2024
14:50:15