NEW DELHI: In a important judgment, the Supreme Court on Wednesday ruled that foreign awards against Indian companies could not be enforced if the contract was against the policy decision of the government and quashed a 30-year-old foreign award against National Agricultural Cooperative Marketing Federation ( NAFED ) saving it hundreds of crores of rupees.A bench of Justices Arun Mishra , M R Shah and B R Gavai through this ruling set aside a 1989 award given by Federation of Oil, Seed and Fats Association (FOSFA) Ltd, London in favour of Swiss food firm Alimenta SA asking NAFED to pay $46,81,000 with 10.5% interest from February 13, 1981, the date when the Swiss firm had moved for arbitration after NAFED expressed inability to ship groundnut as contracted by it following government's refusal to grant permission for export.NAFED and Alimenta had entered into a contract by which the former was to ship 5,000 tones of groundnut during 1979-80. NAFED could ship only 1,900 tonnes during the year and when it attempted to export the balance 3,100 tones during 1980-81, it required government permission. The government declined permission to extend its export permission, valid till 1980, to 1980-81.When Alimenta started the arbitration proceedings before FOSFA, NAFED refused to participate saying it would have been illegal for it to export without government permission. FOSFA appointed an arbitrator on behalf of NAFED and proceeded with the arbitration and gave an award in 1989.Allowing NAFED's appeal, the three-judge bench said, "It would have been unlawful for NAFED to effect the supply in view of the Union government's refusal to accord permission to extend the export permission, which was valid from 1970-80, to beyond 1980. If NAFED had made the supplies, it would have been unlawful. Thus, the parties had agreed for cancellation as such an award is against the basic law and public policy as applied to India."Justice Mishra, writing the judgment for the bench, said, "The government had rightly objected to supply being made at the rate of the previous (groundnut) season, particularly when the prices had escalated three... Thus, for such an unfair contract, permission was rightly declined by the government."Allowing NAFED's appeal, the SC said, "the matter is such which pertains to the fundamental policy of India. It would be against fundamental public policy of India to enforce such an award, any supply made then would contravene the public policy of India relating to export for which permission of government of India was necessary."