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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL  APPELLATE JURISDICTION  

SPECIAL LEAVE PETITION (CIVIL) NO. 35092 OF 2012

  ESCORTS LTD.                                  Petitioner(s)

                  VERSUS

  UNIVERSAL TRACTOR HOLDING LLC                 Respondent(s)

O R D E R

This  special  leave  petition  seeks  to  

challenge  the  judgment  and  order  dated  13th July,  

2012 passed by the learned Single Judge of the Delhi  

High Court in Execution Petition No.372 of 2010.   

2. The  short  facts  leading  to  this   petition  

are this wise:  The respondent herein and Escorts  

Agri  Machinery  Inc.,  (“Escorts  AMI”)  which  was  a  

subsidiary of the petitioner, were holding following  

percentage of shares in another company, by name,  

Beever Creek Holdings (“BCH”). The respondent held  

49% of shares and Escorts AMI held 51%. There was an  

agreement  between  the  two  parties  whereby  the  

respondent sold its shareholding in BCH for a price

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of Rs.1.2 Million Dollars which was to be paid in  

four installments. The Escorts AMI paid the first  

two installments but defaulted in the payment of the  

other two. This led to a suit being filed by the  

respondent in the Wake Country Superior Court in the  

State of North Carolina, USA. A consent order was  

passed therein on 19th June, 2009, wherein both the  

parties agreed to refer the matter to arbitration.  

The arbitration was followed by an award in favour  

of the respondent herein.  The respondent sought the  

execution  of  that  award  by  filing  the  aforesaid  

execution petition in India, since the Escorts AMI  

has subsequently merged with the petitioner herein.  

The execution was objected to by the petitioner, and  

those objections have been rejected by the impugned  

order. Therefore,  this special  leave petition  has  

been preferred by Escorts Limited.  

3. The main submission of Mr. Parag Tripathi,  

learned senior counsel appearing for the petitioner  

is  that  under  the  terms  of  agreement,  it  was  

necessary for the respondent to go for confirmation  

of  the  award  in  the  concerned  Court  in  United  

States. He relied upon paragraphs 2 and 8 of the

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consent  order  dated  19th June,  2009.   These  two  

paragraphs read as under:

“2. The case will be stayed from the date and  

time of entry of this Order until completion of  

arbitration between plaintiff and EAMI.  Upon  

the issuance of a decision by the arbitrators,  

this Court may confirm and enter judgement upon  

such  decision  in  accordance  with  the  Federal  

Arbitration  Act  and  may  conduct  such  further  

proceedings   as  are  necessary  to  resolve  

plaintiff's claims against Escorts Limited.”  

“8. The plaintiff agree that entry of this order  

resolves defendants motion to dismiss. The Court  

shall retain jurisdiction for the purposes of  

entering  an  order  confirming  the  arbitration  

decision  pursuant  to  the  Federal  Arbitration  

Act.”

4. The submission of Mr. Tripathi is that unless  

a confirmation of the award by the foreign Court was  

obtained, the award could not be executed in India.  

He relied upon Section 9 of the Federal Arbitration  

Act of U.S. which reads as follows:  

“  &  9.  Award  of  arbitrators;  confirmation;    

jurisdiction; procedure

If the parties in their agreement have agreed that a  

judgment  of  the  court  shall  be  entered  upon  the  

award made pursuant to the arbitration, and shall

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specify the court, then at any time within one year  

after the award is made any party to the arbitration  

may apply to the court so specified for an order  

confirming the award, and thereupon the court must  

grant such an order unless the award is vacated,  

modified, or corrected as prescribed in sections 10  

and 11 of this title.  If no court is specified in  

the agreement of the parties, then such application  

maybe made to the United States court in and for the  

district within which such award was made. Notice of  

the application shall be served upon the adverse  

party,  and  thereupon  the  court  shall  have  

jurisdiction of such party as though he had appeared  

generally in the proceeding. If the adverse party is  

a resident of the district within which the award  

was  made,  such  service  shall  be  made  upon  the  

adverse party or his attorney as prescribed by law  

for service of notice of motion in an action in the  

same  court.  If  the  adverse  party  shall  be  a  

nonresident,  then  the  notice  of  the  application  

shall  be  served  by  the  marshal  of  any  district  

within which the adverse party may be found in like  

manner as other process of the court.”  

5. Mr. Tripathi submitted that ultimately what  

one has to see is whether the consent award was a  

binding one as required under Section 48(1)(e) of  

the Arbitration and Conciliation Act, 1996 and that  

unless a confirmation of the award was obtained, the  

award  could  not  be  said  to  be  binding  and,  

therefore,  not  executable  in  India.  Mr.  Tripathi

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referred  to  and  relied  upon  paragraph  15  of  the  

judgment  of  this  Court  in  Oil  and  Natural  Gas  

Commission Vs.  Western  Company  of  North  America,  

(1987)  1  SCC  496,  wherein  this  Court  held  that  

recognition  and  enforcement  of  the  award  will  be  

refused if the award has not become binding on the  

parties.  

6. Mr.  Rautray,  learned  counsel  appearing  for  

the respondent, on the other hand, pointed out that  

the  relevant  Section  of  the  Federal  US  Law  is  

concerning the domestic awards and when it comes to  

foreign awards, there is a separate chapter under  

the US Law and in that behalf he referred to Section  

202 of the said Act which reads as follows:

“202.  Agreement  or  award  falling  under  the  

Convention

An arbitration agreement or arbitral award  

arising  out  of  a  legal  relationship,  whether  

contractual  or  not,  which  is  considered  as  

commercial,  including  a  transaction,  contract,  or  

agreement  described  in  section  2  of  this  title,  

falls under the Convention. An agreement or award  

arising out of such a relationship which is entirely  

between  citizens  of  the  United  States  shall  be  

deemed not to fall under the Convention unless that

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relationship  involves  property  located  abroad,  

envisages performance or enforcement abroad, or has  

some  other  reasonable  relation  with  one  or  more  

foreign states.  For the purpose of this section a  

corporation is a citizen of the United States if it  

is  incorporated  or  has  its  principal  place  of  

business in the United States.”

7. He pointed out that the requirement of this  

double excequatur has been removed in view of the  

provisions of the New York Convention which has been  

now adopted under the Arbitration and Conciliation  

Act,  1996.   He  further  pointed  out  that  even  in  

England, this has been accepted. He referred to and  

relied upon the judgment in the case of Russeel N.V.  

V.  Oriental Commercial & Shipping Co. (U.K.) Ltd.  

and Others, reported in (1991) Vol. 2 Lloyd's Law  

Reports  625.   He  referred  to  and  relied  upon  an  

American judgment in the case of Florasynth, Inc. V.  

Alfred Pickholz, 750 F. 2d 171, to the same effect.  

8. The Oriental Commercial & Shipping Company's  

judgment  (supra)  refers  to  the  commentary  of  Dr.  

Albert Jan van den Berg which noted the features  

emerging out of the New York Convention. It records  

that the burden of proving that the award is not

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enforceable lies on the party which has raised the  

issue.  It  also  points  out  that  if  any  such  

additional  procedure  is  required  to  be  followed,  

this will be a proceeding of no consideration or any  

substance.  It  will  be  a  procedural  addition  

resulting into further delay into getting the fruits  

of the award of the party which has succeeded.   

9. He  also  drew  our  attention  to  certain  

observations  of  this  Court  in  paragraph  33  in  

Harendra H. Mehta an Ors. Vs.  Mukesh H. Mehta and  

Ors., reported in (1995) 5 SCC 108. It was in a  

situation  where  a  judgment  had,  in  fact,  been  

obtained before  going for  execution. However,  the  

Court also observed that it was not material for the  

purpose of enforcement of a foreign award under the  

Foreign Awards Act that the award in any country  

other than India is made enforceable by a judgment.

10. We  have  noted  the  submissions  of  both  the  

counsel  appearing  for  the  parties.  It  is  also  

material to note that even as per the requirement of  

the US Law, a notice of three months is required to  

be given in case a party does not want the award to

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be enforced. In the instant case, paragraph 7 of the  

consent order clearly recorded that the award given  

by the arbitrator shall be final and binding on the  

parties.  If the petitioner wanted to dispute it, it  

was required of them to have issued necessary notice  

which they had not done. The  submission  of  Mr.  

Tripathy,  which  was  emphasised,  was  that  the  

respondent ought to proceed for confirmation of the  

award under the US Law and then come to India for  

execution.  In  our  considered  view,  the  said  

submission is not tenable in view of the changed law  

and doing away of the rule of double excequatur. We,  

therefore, see no error in the order passed by the  

learned Single Judge of the High Court. The special  

leave petition is, therefore, dismissed.   

.........................J (H.L. GOKHALE)

...........................J (DIPAK MISRA)

New Delhi; March 13, 2013.