Madras High Court Upholds Enforcement of Foreign Arbitral Award, Says Deliberate Non-Participation in Proceedings No Ground to Evade Liability
Isabella Mariam
The High Court of Judicature at Madras, Single Bench of Justice N. Anand Venkatesh held that a party which deliberately fails to avail an opportunity duly accorded by an Arbitral Tribunal to present its case cannot later rely on its own default to resist enforcement of the resulting award. Allowing a petition under Sections 47 to 49 of the Arbitration and Conciliation Act, 1996, the Court declared a foreign arbitral award passed by the International Cotton Association, Liverpool, in a cotton supply dispute to be enforceable as a decree of the Court. It directed the respondent textile company to pay the awarded amount with interest and costs of ₹2.5 lakh
The petitioner, M/s Viterra B.V., entered into a contract on May 29, 2019, with M/s S.K.T. Textile Mills for the sale of 200 metric tons of raw cotton. The contract, governed by English law, provided for arbitration under the English Arbitration Act, 1996, before the International Cotton Association Ltd., Liverpool. The petitioner alleged that the respondent failed to fulfil contractual obligations by not opening a workable letter of credit, resulting in losses due to trans-shipment and demurrage costs. After repeated communications, the petitioner issued a notice of arbitration in November 2019.
The respondent contended that no binding contract existed as it had not signed the agreement, arguing that the communications were with one Mr. Santhosh, who was not an authorized agent. It was further asserted that the respondent had no privity of contract with the petitioner and was not bound by the arbitral award. The petitioner, however, submitted that the respondent’s conduct, including the issuance of a No Objection Certificate (NOC) dated August 31, 2019, confirmed the existence of a contractual relationship. The NOC explicitly referenced the contract number and permitted Glencore (Viterra) to amend the Bill of Lading, thereby demonstrating acknowledgment of the underlying agreement.
The ICA Arbitral Tribunal in England rendered its award in favor of the petitioner, directing M/s S.K.T. Textile Mills to pay the sums awarded along with interest and costs. The respondent did not challenge the award in England, leading to the enforcement petition under Sections 47 to 49 of the Arbitration and Conciliation Act, 1996, before the Madras High Court.
Justice N. Anand Venkatesh observed that the respondent’s contention regarding the absence of a written and signed contract was a “hyper-technical plea.” The Court recorded that “if the respondent was not a party to the contract and if the parties had not reached any agreement, there was no requirement for the respondent to issue the NOC in favour of the petitioner.” The NOC, referring directly to the contract, was considered decisive evidence of a subsisting contractual relationship.
Citing the Supreme Court’s decisions in Trimex International FZE Ltd. Dubai v. Vedanta Aluminium Ltd. and Cox & Kings Ltd. v. SAP India (P) Ltd., the Court stated that an arbitration agreement may be inferred from email exchanges, correspondence, or conduct, even without a formal signature. Justice Venkatesh noted, “A non-signatory can be bound by an arbitration agreement through its conduct.” The Court also referred to Smita Conductors Ltd. v. Euro Alloys Ltd., where the enforcement of a foreign award was upheld despite the absence of a signed contract, as the parties had acted upon it.
Addressing the respondent’s argument of denial of opportunity, the Court relied on the Supreme Court’s decision in Vijay Karia v. Prysmian Cavi E Sistemi SRL and Centrotrade Minerals & Metals Inc. v. Hindustan Copper Ltd., stating that a deliberate decision not to participate in proceedings cannot later be invoked as denial of natural justice. The Court quoted: “A party which fails to take advantage of an opportunity duly accorded cannot invoke the ground of being unable to present its case.” Justice Venkatesh found that the respondent’s non-participation was conscious and deliberate and thus could not serve as a valid ground for resisting enforcement.
Rejecting the respondent’s objections, the Court recorded that “the deliberate non-participation of the respondent in the arbitration proceedings must be construed as a forfeiture of their own right to object.” It added that the burden of proving denial of opportunity under Section 48(1)(b) of the Act lies on the resisting party, which must demonstrate that circumstances beyond its control prevented participation. “Such a circumstance cannot be presumed by merely showing that the award was passed ex parte.”
The Court Observed: “The Hon’ble Apex Court, in the decision in PEC Ltd., held that this requirement is only directory in nature and that the non compliance will not entail in the dismissal of the application. In any case, the learned counsel for the respondent did not urge this point seriously at the time of final arguments.”
“In the light of the above discussions, the above original petition is allowed by holding that the final award dated 30.4.2020 is enforceable as a decree of this Court and that the respondent shall pay the amount due under the award together with accrued interest to the respondent. There shall be a further direction to the respondent to pay costs of Rs.2,50,000/- (Rupees two lakhs and fifty thousand only) to the petitioner.”
Advocates Representing the Parties
For the Petitioner: Mr. Rahul Balaji
For the Respondent: Mr. C. Manishankar, Senior Counsel, for Mr. B.A. Sujay Prasanna
Case Title: M/s Viterra B.V. v. M/s S.K.T. Textile Mills
Neutral Citation: 2025: MHC:2401
Case Number: Arb.O.P.(Com.Div) No.423 of 2023
Bench: Justice N. Anand Venkatesh
