AI Drafter 
TaxTMI 
TaxTMI 
2011 (9) TMI 1082
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....to purchase Calibrated Lumpy Ore Fines of the approximate quantity of 40,000/- Wet Metric Tones (hereinafter called as `WMT') (10% more or less at buyers' option) at the price and on the terms and conditions stipulated in the said agreement. The agreement provided for the chemical specification/composition of the Ore and for guaranteed level of Fe i.e. iron content in the contracted goods which could not be less than 63%. In case the iron content was less than 63%, the buyer would have a right to reject the cargo. 4. A large quantity of Ore had been supplied to the respondents which had been accepted and payments had been made. Pursuant to the purchase contract, the applicants on 6.8.2008 shipped a total consignment of 24,500 Dry MT of Calibrated Lumpy Ore from New Mangalore Port, India to the port of discharge viz. Rizhao Port, China by vessel named "MV. FUJIN". The applicants raised a provisional invoice for a sum of US$ 32,13,529.11 and sent a Certificate of Origin and the Bill of Lading dated 6.8.2008 as issued by the carriers in respect of the carriage of the goods from Mangalore Port, India to Rizhao Port, China. The material so supplied had been sent after proper ....
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....an be held only in a third country. The applicants suggested to have the arbitration proceedings either in Singapore or in Australia. In spite of receiving the said notice, neither the payment of the balance amount was made, nor the respondents came forward for friendly negotiations. Therefore, a further reminder was sent by the applicants to the respondents calling upon them to indicate the place of arbitration. As neither the payment had been made, nor the respondents have agreed for arbitration proceedings, they have approached this Court by filing these applications. 6. Shri V.A. Mohta, learned senior counsel appearing for the applicants, has submitted that in spite of the fact that the supply of iron ore has been made strictly in terms of the purchase contract and the outstanding payments have not been made even after several reminders, the applicants served a notice on the respondents for appointment of Arbitrator in the third country in terms of Clause 18 of the Purchase Agreement but the respondents did not make any effort either to come for friendly negotiations or to refer the matter for arbitration, therefore, this Court must refer the matter to the Arbitrator in a....
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....of provision of Part-I cannot be inferred and therefore the principles regarding the arbitral reference laid down in Bhatia International (supra) are applicable. 11. Hon'ble Mr. R.C. Lahoti, J. (as His Lordship then was) however, has taken a contrary view as in Shreejee Traco (I) Pvt. Ltd. v. Paperline International Inc., (2003) 9 SCC 79; it was held: "8. So far as the language employed by Parliament in drafting sub-section (2) of Section 2 of the Act is concerned, suffice it to say that the language is clear and unambiguous. Saying that this Part would apply where the place of arbitration is in India tantamounts to saying that it will not apply where the place of arbitration is not in India." However, considering the fact that Bhatia International (supra) is a three-Judge Bench judgment and has consistently been followed, the judgment of the learned Single Judge in Shreejee Traco (I) Pvt. Ltd. (supra) does not have binding effect. As a consequence, the application is held to be maintainable. 12. The Relevant part of the Purchase Agreement dated 28.6.2008 reads as under: "Clause 5: Price Adjustment For Fe content: In respect of iron ore which does not meet the....
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....arket is still on the down trend. However in consideration of the long term good cooperation between the two companies, we are offering to bear at least a $10-20 loss on our side and with the huge risks of further slide of market, which actually is foreseeable. ......Our above offer is valid till this Friday (26th September, 2008) only..." 14. The email dated 7.10.2008 sent by the applicants to the respondents reads as under: "Further to telecom just now, pls note as per latest mutual agreement between seller and buyer, the said USD1.50 million shall be final settlement for subj.shipment, so please request your bank to revise the swift msg as follows: "beneficiary agrees to receive USD1,500,000.00 for full and final payment for this set of documents and under this letter of credit, after release of this amount, the letter of credit shall be considered expired and cancelled." (Emphasis added) 15. Subsequently, the applicants sent an email to the respondents dated 14.11.2008 which provided inter-alia, as under: "Clause 8 of the Purchase Contract provided for the remedies available in the event of there being a difference in percentage of the Fe content as compared t....
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.... fact that the Applicants had specifically informed their Bankers that an amount of US$ 1.5 million was to be received in lieu of provisional payment, an erroneous message was forwarded by the Applicants' Bankers to the Respondents that the beneficiary being the Applicants herein had agreed to receive an amount of US$ 1.5 million towards full and final payment and that the Letters of Credit would be considered expired and cancelled on receipt of the said payment." (Emphasis added) 18. Error means - a mistake in judgment/assessment in a process or proceedings; some wrong decision taken inadvertently; unintentional mistakes; something incorrectly done through ignorance or inadvertence; mistake occurred from an accidental slip; deviation from standard or course of right or accuracy - unintentionally; to be wrong about; to think or understand wrongly; an omission made not by design, but by mischance. 19. In Nathani Steels Ltd. v. Associated Constructions, 1995 Supp (3) SCC 324, while dealing with a similar issue, this Court held: "......once the parties have arrived at a settlement in respect of any dispute or difference arising under a contract and that dispute or the dif....
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....he execution of such discharge agreement or voucher was on account of fraud/coercion/undue influence practised by the other party and is able to establish the same, then obviously the discharge of the contract by such agreement/voucher is rendered void and cannot be acted upon. Consequently, any dispute raised by such party would be arbitrable." (Emphasis added). xx xx xx 29. It is thus clear that the arbitration agreement contained in a contract cannot be invoked to seek reference of any dispute to arbitration, in the following circumstances, when the contract is discharged on account of performance, or accord and satisfaction, or mutual agreement, and the same is reduced to writing (and signed by both the parties or by the party seeking arbitration): (a) where the obligations under a contract are fully performed and discharge of the contract by performance is acknowledged by a full and final discharge voucher/receipt, nothing survives in regard to such discharged contract; (b) where the parties to the contract, by mutual agreement, accept performance of altered, modified and substituted obligations and confirm in writing the discharge of contract by performance of the....
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....p;of three months after acceptance of the money under the full and final settlement, applicants did not raise any dispute in respect of the agreement of price adjustment. In such a fact-situation, the plea that instructions were given by the applicants to the banker erroneously, being, afterthought is not worth acceptance. The transaction stood concluded between the parties, not on account of any unintentional error, but after extensive and exhaustive bilateral deliberations with a clear intention to bring about a quietus to the dispute. These negotiations, therefore, are self-explanatory steps of the intent and conduct of the parties to end the dispute and not to carry it further. 25. In R.N. Gosain v. Yashpal Dhir, AIR 1993 SC 352, this Court has observed as under:- "Law does not permit a person to both approbate and reprobate. This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that "a person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purp....