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The Supreme Court observed two major issues in the LMJ International Ltd. vs. Sleepwell Industries Co. Ltd. First that the piecemeal consideration of issue of maintainability of the execution case concerning the foreign awards. Second, about the issue of enforceability is not foreseeable under the Section 48 of the Arbitration & Conciliation ACT, 1996. The bench comprising of Justice AM Khanwilkar & Justice Ajay Rastogi observed that it is necessary to consider both the aspects of maintainability and enforceability.
The court in the matter dealt with the argument that, during the time of earlier proceedings, the objections were limited to the questions of maintainability and not in reference to enforceability of the subject foreign awards. The High Court had held that the application of questions pertaining to the enforceability of the foreign award ought to be rejected, being barred by constructive res judicator.
The Court observes that the questions regarding maintainability of the execution case cannot be heard in isolation and has to be observed with the issue of enforceability of the foreign awards. The court observed that subject of maintainability and enforceability are liked and thus cannot be heard in isolation. The court stated, “In any case, all contentions available to the petitioner in that regard could and ought to have been raised specifically and, if raised, could have been examined by the Court at that stage itself."
The bench observed, "Taking any other view would result in encouraging successive and multiple rounds of proceedings for the execution of foreign awards. We cannot countenance such a situation keeping in mind the avowed object of the Arbitration and Conciliation Act, 1996, in particular, while dealing with the enforcement of foreign awards. For, the scope of interference has been consciously constricted by the legislature in relation to the execution of foreign awards. Therefore, the subject application filed by the petitioner deserves to be rejected, being barred by constructive res judicata, as has been justly observed by the High Court in the impugned judgment."The High Courts decision was upheld and the bench held as aforesaid.
The SLPs were dismissed with exemplary costs of Rs. 20,00,000.
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