Shri Lal Mahal Ltd. v. Progetto Grano Spa

Facts

Progetto Grano sought enforcement in India of foreign GAFTA awards arising from wheat supply contracts. Shri Lal Mahal resisted enforcement under S. 48 on the ground that the awards were contrary to the public policy of India, invoking the broad Saw Pipes standard that an earlier decision (Phulchand Exports) had extended to foreign awards.

Issues

• Whether 'public policy of India' in S. 48(2)(b) bears the same wide meaning given to that phrase under S. 34 in Saw Pipes?
• Whether enforcement of a foreign award may be refused on the ground of patent illegality or by taking a 'second look' at its merits?

Arguments

Shri Lal Mahal argued, following Phulchand Exports, that the broad Saw Pipes meaning applied to S. 48 so the awards could be refused enforcement for illegality/error. Progetto Grano argued S. 48 permits only the narrow Renusagar review with no merits scrutiny.

Held

Overruling Phulchand Exports on this point, the Court held that 'public policy of India' under S. 48(2)(b) must be given the narrower Renusagar meaning and does not extend to the patent-illegality ground introduced by Saw Pipes for domestic awards. Section 48 does not permit a 'second look' at a foreign award as if in appeal, and an error in the award does not amount to a violation of public policy. It thus restored the dichotomy between the standard for domestic awards (Part I) and enforcement of foreign awards (Part II).

Ratio decidendi

For enforcement of foreign awards under S. 48, public policy is confined to the narrow Renusagar heads; patent illegality and merits review are excluded, preserving a distinction from the wider S. 34 domestic-award review then prevailing.

Significance

A key act of judicial self-correction that re-narrowed the public policy exception for foreign awards and clarified that the expansive S. 34 jurisprudence did not infect S. 48. It informed the 2015 Amendment's design of separate standards and is foundational to understanding the meaning of 'public policy of India' shared textually by S. 34 and S. 48.

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