2023 (11) TMI 1040 - HC - Customs

Container Freight Station bound by arbitration clause in e-bidding process for unclaimed imported consignments under Section 48

Suresh Kumar Prop. Shekhar Industries Versus Sattva Hi Tech and Conware Private Limited, MSTC Limited

Suresh Kumar Prop. Shekhar Industries Versus Sattva Hi Tech and Conware Private Limited, MSTC Limited - TMI Issues involved:The case involves the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, to resolve a dispute arising from an auction of imported goods conducted by the Customs Department.Details of the Judgment:Issue 1: Dispute Resolution through ArbitrationThe petitioner purchased imported goods in an auction but later found discrepancies in the quality of the goods. The auction terms provided for dispute resolution through arbitration. The petitioner issued notices to the respondents, who responded stating they were not bound by the arbitration clause as they were not direct parties to the agreement. The Court considered the arguments and appointed an arbitrator to resolve the dispute.Issue 2: Role of First RespondentThe first respondent, a custodian appointed under the Customs Act, claimed it was not the actual seller but merely a custodian of the goods. They argued that as the auction was conducted by the Customs Department, any dispute should be resolved with them. The Court analyzed the Customs Act provisions and regulations governing the handling and disposal of unclaimed goods by the first respondent.Issue 3: Validity of Arbitration ClauseThe first respondent contended that there was no valid arbitration clause binding them to arbitration for the dispute. They argued that there was no consensus ad idem and no contract between the petitioner and the first respondent regarding the auction. The Court examined the regulations governing the first respondent's actions and clarified the procedure for disposal of unclaimed goods under the Customs Act.Separate Judgment:The Court appointed Mrs. Elizabeth Seshadri as the arbitrator to adjudicate the dispute between the parties. The arbitrator was tasked with resolving the inter se dispute and passing an award in accordance with the Arbitration and Conciliation Act, 1996. The fees and charges of the arbitrator were to be borne by the parties equally, with provisions for recovery in case of one party being ex parte. The judgment allowed parties to seek further reliefs under Section 17 of the Act before the arbitrator, while preserving the respondents' rights to raise objections under Section 16.