TaxTMI 
TaxTMI 
2014 (10) TMI 983
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....heme; b) Buyers' Credit Scheme; and c) Usance Letter of Credit and Stand By Letter of Credit Scheme. 3.Learned Senior Counsel for the appellant submits that the transactions in question are solely under the Buyers' Credit Scheme, though the learned senior counsel for the respondents seeks to state that they also include Outright Purchase Scheme. 4.A perusal of the plaint shows that in para 8, there is a categorical averment that a request was made by the first respondent/ first defendant for commencement of purchase of Bullion under Buyers' Credit Scheme and on that basis, goods were sold on the understanding that all expenses and losses in respect of transactions will be on the account of the first respondent. These transactions took place from the period 01.04.2007 to 31.12.2012. The plaint also alleges that the third defendant (not a party in this appeal), an employee of the appellant, was looking after the books of accounts during the period 01.04.2007 to 30.11.2010. 5.The appellant further alleges that the first respondent, on 18.06.2008, accepted that there was an increase in their liability towards payment for the bullions purchased and gave an undertaking to ....
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....pondent by the fraudulent certificate obtained from the Union Bank of India. 10.The aforesaid transactions have given rise to investigations by the C.B.I. and learned Senior Counsel for the appellant, on instructions, states that even charge sheet has now been filed, post completion of investigation. 11.In the suit proceedings, the third defendant sought to bring his written statement on record albeit belatedly and suffice to note his defence in substance, whereby it was alleged that the transaction was not and could not have been handled solely by the third defendant. The relevant portion of the application seeking condonation of delay in filing the written statement is extracted as under: " I further submit that the plaintiff MMTC is one of the nominated agents for importion bullion and supply to registered customers on demand by addressing a letter to G.M. (Marketing Division) for supply of certain quantity of bullion and there after MMTC will direct the customer to pay the value of Bullion based on notional exchange rate along with commission of MMTC. The customer will transfer 110% of the value and handed over the cheque to General Manager (Commodity) in turn will hand ove....
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....) the third defendant becomes necessary to the proceedings, who is not a party to the arbitration clause and the allegations of fraud are not only against the third defendant, but also against the first two defendants / respondents. 17.In order to appreciate the aforesaid pleas, we also consider it appropriate to refer to some of the inter se correspondence exchanged between the counsels for the appellant on one hand and the first two defendants / respondents on the other hand. The first communication dated 17.01.2013 is by the Advocates for the appellant proposing an adhoc arbitration before a Single Arbitrator not being acceptable to them as proposed by the first two respondents and stating that the Memorandum of Understanding dated 02.04.2008 would govern the same and thus, the matter be referred to arbitration under ICA Rules with three Arbitrators with the seat of arbitration being at Chennai. This proposal was, in fact, accepted by the Advocates for the first two defendants / respondents vide their communications dated 29.01.2013 and 31.01.2013, subject to certain clarifications. Thereafter, on 04.02.2013, the Advocates for the appellant sought certain clarifications and con....
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....t of allegation of fraud and the criminal case being filed is concerned, learned Senior Counsel for the appellant fairly states that there is a subsequent development in the hiatus period between the judgment being reserved and it being pronounced - the judgment of the learned Single Judge of the Hon'ble Supreme Court in Swiss Timing Ltd. vs. Commonwealth Games 2010 Organising Committee, (2014) 6 SCC 677. It has been held that it is mandatory for the Courts to refer disputes to arbitration if the agreement between the parties provides for a reference to arbitration, and the registering of a criminal case in relation to agreement concerned on grounds of fraud, corruption and collusion against certain members of both parties is not an absolute bar to refer disputes to arbitration. It goes on to state that even stalling of arbitration proceedings till the disposal of criminal proceedings was not warranted and further more, the Arbitrator can decide the allegations of fraud in obtaining of the contract. 23.The plea of the learned Senior Counsel for the appellant is that while taking note of its earlier judgment in N.Radhakrishnan vs. Maestro Engineers and Ors., (2010) 1 SCC 72, th....