AI Drafter 
TaxTMI 
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2017 (8) TMI 1498
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....he expression "maintainability" and "enforceability" used in the order dated 4th December, 2014. The award-holder has filed an application for enforcement of a foreign award in November 13, 2013. Initially, the execution application was not accompanied by the original award and a certified copy of the agreement for which a leave was given to the decree-holder to produce the said documents, pursuant thereto on 16th January, 2014, the original award and a certified copy of the agreement were produced in Court. Justice I.P. Mukerji by an order dated 16th January, 2014 recorded the production of the said two documents and photocopies of the said documents were taken on record without prejudice to the rights and contentions to the judgment-debtor. The said order was passed in presence of the judgment-debtor. The question of maintainability of the application was kept open. On 18th September, 2014, the judgment-debtor was directed to file an affidavit disclosing the particulars of the bank accounts and the amounts lying on to the credit of judgment-debtor in each of such bank accounts with supporting documents mentioned in Paragraph 26 of the Affidavit in support of the tabular ....
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....rnational Asia Pvt. Ltd. Vs. Thapar Ispat Ltd., reported in 2000 (1) Arb. LR 230(Bombay) Paragraph 19. The second objection is that a civil suit is pending between the parties in which there is a categorical observation both by the learned Single Judge as well as the Division Bench that any action taken by the parties to the suit during the pendency of the suit shall subject to and abide by the result of the suit. It is submitted that a cross appeal was preferred by the decree-holder and this observation of the learned Single Judge was not interfered with and accordingly the execution application is premature and unless the suit is decided, the award does not attain its finality. The third objection is that the arbitration clause has not been properly invoked. It is submitted that arbitration clause is a two-tier clause. Before the arbitration clause could be invoked, the parties are required to first make an attempt to amicably settle their disputes and only upon failure, the parties could refer their disputes to the arbitration as per GAFTA clause for rice and arbitration rules 125. It is submitted that there is no averment in the petition that before invoking t....
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....to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or (d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or (e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. (2) Enforcement of an arbitral award may also be refused if the Court finds that - (a) the subject matter of the difference is not capable of settlement by arbitration under the law of India; or (b) the enforcement of the award would be contrary to the public policy of India. Explanation. - Without prejudice to the generality of clause (b) of this section, it is hereby declared, for the avoidance ....
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....ing the arbitration was issued there was no reply to the said notice. Mr. Mitra submits that the disputes shall be required to be submitted to GAFTA, London for arbitration and the decree-holder would not be entitled to invoke the clause unilaterally for appointment of an arbitrator. In my opinion, this submission cannot be accepted. It is an institutionalized arbitration, the rules provide the manner in which the parties are to act in matters relating to arbitration. Elaborate procedures and mechanisms are provided in the Act for conduct of the arbitration. Rule 3 of GAFTA Rules deals with appointment of the Tribunal. It clearly shows that the disputes shall be heard and determined by a Tribunal or three Arbitrators (appointed in accordance with Rule 3.2) or, if both parties agree by a single Arbitrator (appointment in accordance with Clause 3.1). Once the petitioner has named an arbitrator and sent the notice to the opposite party it was open to the opposite party either to accept the said name or to disagree with the same, not later than 9th subsequent day after serving of the said notice, failing which the consequences mentioned in the other rules shall follow. On the ....
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.... notwithstanding any application being filed by the judgment-debtor to question the enforcement of the foreign award, the said applicant was permitted to take all possible defences available to the applicant and it was only on consideration of such objections, the order dated 4th December, 2014 was passed. A review application filed was also dismissed. In view of the aforesaid, the objection raised with regard to the composition of the Arbitral Tribunal and that the procedure for appointment of Mr. R. Eikel as second Arbitrator on behalf of the petitioner by GAFTA was not in accordance with the agreement of the parties (GAFTA Rules) and the petitioner was not given proper notice of appointment of Eikel as the Arbitrator on their behalf is final and cannot be reopened. In fact, this argument runs counter to the pleadings made in the plaint. The petitioner cannot be allowed to re-agitate the said point, on which the objection was already considered in the order dated 4th December, 2014. In the Special Leave Petition, same point was urged. The Hon'ble Supreme Court did not interfere with the order dated 4th December, 2014. Mr. Anindya Kr. Mitra, the learned senior Counsel app....
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....e nature of objections are stated below. The award-holder entered into a contract dated 25th October, 2010 for sale of 15000 metric tons +/- 5% at Buyer's option, Non Basmati Parboiled Rice 15% (Maximum) broken, 2009-10 or latest crop, Thailand origin at the rate of USD 450 per metric ton. The contract contains stipulation that the quantity would be final at the Port of loading as per official weight certificate issued by SGS at the seller's cost meaning thereby the award-holder. The award-debtor under the contract was required to open an irrevocable, confirmed, unrestricted letter of credit in US Dollar in favour of the awarddebtor within 5 working days from the date of signing of contract through Standard Chartered Bank (India) for the value of the goods to be shipped under the contract. The contract is a FOB contract. The contract stipulates that 100% value of the contracted cargo shall be payable on receipt of the shipping documents by the L/C negotiating bank at 30 days sight. The contract mentions about 16 shipping documents to be submitted for receiving payment under the L/C. The contract in "Other Terms" provided that all other terms and conditions not in contradictio....
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....January, 2011 and the latest date of shipment was mentioned as 31st December, 2010. Within the validity period of the Letter of Credit the buyer could manage to arrange for only two vessels. The first two shipments of small quantity of goods were made on 27th December, 2010 and 31st December, 2010. Since the third consignment could not be shipped, a further amendment to the Letter of Credit was made on 31st December, 2010 by which the latest date of shipment was extended until to 15th January, 2011 with new date of expiry of L/C on 30th January, 2011. The validity of the Letter of Credit thereafter was not extended neither the latest date of shipment beyond the aforesaid dates. Seller shipped the consignment as follows: 1. 1,610.00 mt on board of MV Study Falcon on 27 December, 2010 2. 3,430.00 mt on board of MV Genius Mariner on 31 December, 2010 3. 8,689.55 mt on board of MV Tuman Gang [sic] on 17th January 2011 For each single shipment invoices had been issued by Sellers in accordance with the addendum to the Contract displaying the first instalments at each USD 440.00 per metric ton, totalling at USD 6,041,139.30, as follows: 1. Invoice....
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.... in INR on maturity date, i.e. on 16/02/2011 under advice to us. Please release the original shipping documents at the earliest." The sellers received the message from the Bank of Baroda, Kolkata on 3rd February, 2011 stating that the collection bill of the seller for USD 3,823,488.90 has been accepted by the buyers. The buyers, however, did not accept the sellers' offer to take delivery of the remaining quantity of about 2000 MT. The sellers, accordingly, informed the buyers on 4th February, 2011 that the contract for the remaining quantities is foreclosed and the contract should be treated as completed. The buyers, however, by its e-mail dated 5th February, 2011 did not accept the decision of cancellation of balance quantity and had agreed to establish fresh L/C for the balance quantity of about 2000 MT. The buyer alleged that the cargo as loaded on the vessel was of inferior quality for which their ultimate buyer was not accepting the cargo. The buyers asked the sellers to depute their representative to Mongla, Bangladesh to check the quality. The buyers by their e-mail dated 8th February, 2011 asked for details of the person visiting Mongla to check the quality. ....
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....uested the buyer to pay the balance of 10% to which the buyers replied the next date advising sellers, inter alia, that also with the first two partial shipments, quality problems did indeed arise. Nevertheless and so did buyer's advice, a final settlement would only be done upon finalization of the quality in Bangladesh. Within the same message, the buyers informed the sellers that the balance payment for MV Tu Man Gang would be effected as soon as the final accounts of the Bangladesh would be received. On 31st May, 2011, Buyers through their bank, the Bank of Baroda, informed Sellers that the balance of 10% of the invoice in reference with the shipment on board of MV Tu Man Gang will only be effected after completion of a joint inspection of the landed cargo at the port of discharge. On 3rd June 2011, Sellers through their bank, the Bangkok Bank, replied that the weight and the quality were final at loading port Bangkok as per certificate issued by the surveyor ISC nominated by Buyers themselves. Subsequently, Sellers rejected a joint inspection in the country of destination, i.e. Bangladesh. Sellers on 10th June 2011 sent to Buyers a further reminder for payment of the ....
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....1. The learned Senior Counsel has referred to the Explanation to Section 48(2) of the Arbitration and Conciliation Act, 1996 and submits that in view of the suppression of two communications of the claimant both dated 14th February, 2011, the said award is required to be declared null and void. It is submitted that the two communications, one is by way of a letter dated 14th February, 2011 and e-mail of the same date, the claimant accepted that they had sent inferior quality of rice and had promised that they would send the representatives to destination Port in Bangladesh for joint inspection of the consignment of rice. The existence of the said two documents although is not in disputes by suppressing the said letter and the e-mail, the claimant was emboldened to make false statement in Paragraph 19 of the claim submission that states: "The sellers were under tremendous pressure as the payment of the invoice was not being released by the buyers despite the fact that they had received the cargo. The seller, therefore, under pressure agreed for release of 90% payment of the invoice of USD 3,823,488.90 which was received by them on 21st February, 2011." The above state....
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.... for the balance 2.22% of the sale price payable under the L/C and balance 10% receivable under the Bill of Exchange and hence no dispute could have arisen regarding balance 2.22% of the sale price of fictitious invoices and 10% of the 3rd invoice but still obtained the ex parte award by suppression that there was no preexisting dispute regarding the same. For the same amount a claim of 10% of the balance price of 3rd shipment was made before the Arbitral Tribunal a suit has been filed being Suit No.196 of 2011 against Bank of Baroda only and no leave has been obtained to file a claim for the same amount from the Tribunal. The petitioner has deliberately suppressed on the Tribunal that parallel proceedings are initiated for realization of the said amount in respect of an alleged cause of action against the petitioner. The petitioner was also not made a party in the said suit. The award has been obtained by the claimant by suppression of breach of the agreement as recorded in the letter of 14th February, 2011 of the claimant that the balance 10% to be settled after inspection and finalization by practicing fraud upon the Tribunal. The second objection is that the Tribunal h....
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....lled for reliance on GAFTA Sampling Rules 124 clause 6.1 is wholly perverse. The contract as amended and recorded in the award in Paragraphs 6, 15, 6.16 and 6.17 does not provide that the buyer was to obtain quality inspection report of the destination port and to hand over the same to the seller nor does the amendment provide that if the quality inspection report of the destination port is not provided by the buyer, the seller will be entitled to balance amount of price. GAFTA Sampling Rules 124 Clause 6.1 is not applicable in this case. GAFTA Sampling Rules 124 does not provide that the buyer is to acquire the quality inspection report. It was not even the case of the claimant that said GAFTA Sampling Rules provide that a quality inspection report was to be provided by the buyer. It is submitted that in paragraph 6.18 the Tribunal has quoted GAFTA Sampling Rules 124, without holding that the said clause 6.1 provided that the certificate of analysis was to be sent to the seller by the buyer. The finding in paragraph 6.20 that "with respect to clause 6.1 of the GAFTA Sampling Rules 124 buyer was obliged to provide certificate of analysis" is without any reasons and is not suppor....
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....e non-judicial approach. The findings of the Arbitral Tribunal in paragraphs 6.18, 6.20 and 6.22 is contradictory to its own finding given in paragraphs 6.15, 6.16 and 6.17 of the award which would demonstrate that the Tribunal lacked judicial approach in the matter. The Arbitral Tribunal has failed to apply its mind and has not at all considered that since GAFTA Contract No.48 is in contradiction with the amended contract and the letter of credit, GAFTA Contract No.48 would not be applicable in the instant case. Consequently, GAFTA Sampling Rules No.124 would also be in applicable. Therefore, the inference drawn by the Arbitral Tribunal in paragraphs 6.18, 6.20 and 6.22 of the award is on the fact of its untenable as it is against the specific contract terms. Furthermore the Arbitral Tribunal has omitted to consider that GAFTA Sampling Rules if in contradiction with the terms of the contract would not be applicable. The terms of the contract read with letter of credit clearly mean that certificate of quality inspection report of the destination port was to be acquired by the seller. Accordingly, reliance on the GAFTA Sampling Rules is perverse, contrary to the terms of the c....
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.... of the contention that the objection with regard to the enforceability of the award on the ground of public policy can be raised even without any pleading. Although in the instant case, it is admitted that the grounds of challenge on public policy may not have been properly pleaded and not exactly in the manner in which the matter has been argued. Per contra, Mr. Tilak Kumar Bose, the learned Senior Counsel representing the decree-holder submits that the instant application is not maintainable on the ground of res judicata estoppel, cause of action estoppel and/or principles analogous thereto. It is submitted that the public challenge to the enforceability of the foreign award as opposed to public policy is not as wide as Section 34 of the Arbitration and Conciliation Act, 1996 as held in Shrilal Mahal Ltd. Vs. Progetto Grano SPA reported at (2014) 2 SCC 433. It is submitted that in Shrilal Mahal (supra) it has been categorically held that the public policy grounds available for setting aside of the domestic award under Section 34 are not the same "public policy grounds" mentioned under Section 48 of the Arbitration and Conciliation Act, 1996. Mr. Bose has requested this Cou....
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....no new L/C was established after the latest date of shipment under the amended L/C expired on 15th January, 2011 and the shipment was done on 17th January, 2011. In responding a submission made on behalf of the applicant regarding non-receipt of invoices it is submitted that the said issue is wholly irrelevant inasmuch as LMJ has not filed any defence to the claim submission nor did LMJ participate in the arbitration proceeding. If such a challenge had been thrown by LMJ in arbitration certainly the claimant would have been called upon to answer such issues before the Arbitral Tribunal. The existence or non-existence of the invoices was never an issue before the Arbitral Tribunal. The claimant has in its possession an email message dated 25th February, 2011 by which various invoices were again submitted by the claimant. However, this being not an issue arising out of the award and beyond the scope of the application under Section 48 of the Arbitration and Conciliation Act, 1996, such documents has not been disclosed. If called upon, the claimant is willing to disclose such documents. The arbitral tribunal, however, has not relied upon the invoices at all. Instead, the arbitral t....
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....ods could not be negotiated under the Letter of Credit, but for the balance 2.22% of goods under the same shipment documents can be validly negotiated under the same Letter of Credit. Similarly, by the time the second instalment i.e. 2.22% of the value of goods for the first two shipments could be realized under the Letter of Credit, dispute with regard to the Letter of Credit had already arisen. Even the validity period of Letter of Credit expired on 30th January, 2011. The arbitral tribunal has correctly, therefore, not referred to the terms of the Letter of Credit. The arbitral tribunal was aware of the fact that the shipment period was till 15th January, 2011 and that shipment on MV Tu Man Gang was done after last date of shipment. The discussions and findings of the arbitral tribunal, therefore, are correctly based on construction of the contract. It is submitted that it is the buyer's obligation to furnish quality inspection report at the destination port. The construction of the contract will show that a FOB seller never has any obligation at a destination port. It is pertinent to mention that from the contract itself, it would appear that the documents which were to b....
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.... Rules, 125 and appointment of Mr. R.A. Barber as Arbitrator on behalf of the claimant. This letter is also not disputed by LMJ. In fact, Paragraph 31 and 32 of the application reads as follows: "31. By a cryptic letter dated 28th July, 2011, the award holder informed the petitioner..... 32. By a letter also dated 28th July, 2011, the award holder purported to appoint one R.A. Barber...." It is submitted that the allegation of LMJ that the letter dated 23rd August, 2011, was not received is without any basis and no credible evidence is forthcoming. By the letter dated 23rd August, 2011, GAFTA Tribunal was reminded that the requisite nine day period mentioned in Rule 3.2(b) of the GAFTA Rules had expired and that the arbitrator on behalf of LMJ had to be appointed. A copy of the said letter was also sent to LMJ at the same email address. Rule 20(3) of GAFTA Rules states that for the purpose of the GAFTA Rules, the date when the 'nine consecutive days' should start will not be taken into account. Thus, even after 28th July, 2011, the nine consecutive days thereafter expired on 6th August, 2011. After 6th August, 2011 the claimant became entitled to request GAF....
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....ity was not considered on 4th December, 2014. In distinguishing the decisions relied upon by the applicant on the question of res judicata it is submitted that it is preposterous to argue that a matter regarding enforceability which has been decided by a learned Single Judge against which Special Leave Petition and review have been dismissed will not attain finality. Regarding whether principles of res judicata apply, it is submitted that even from the guidelines of res judicata outlined in Syed Mohd. Salie Labbai & Ors. Vs. Mohd. Hanifa & Ors. reported at (1976) 4 SCC 780 and the four guidelines mentioned therein, the present application is barred under the principles of res judicata. The two cases, namely, Kanshi Ram Vs. Bansi Lal reported at AIR 1977 HP 61 (Paragraphs 6 and 7) and Sm. Muktakesi Dawn & Ors. Vs. Haripada Mazumdar & Anr. reported at AIR 1988 Cal 25 (Paragraph 6) were all cases involving orders of injunction for which principles of res judicata usually do not apply. Apart from the question of res judicata, the application is also barred under the principles of estoppel. Principles of estoppel may be similar to that of res judicata, although the strict requi....
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....t look for payment other than under the Letter of Credit are academic. Firstly, there was no valid Letter of Credit inasmuch as the valid date of the Letter of Credit and the last date of shipment was 15th January, 2011 whereas the bulk shipment of over 8000 MT was done on MV Tu Man Gang only on 17th January, 2011 after the expiry of the last date of shipment. By the time the goods were discharged and Quality Inspection Report at the discharge port could have been made available by the buyer, the validity of the Letter of Credit expired. In fact, it was the buyer's obligation to open the Letter of Credit. The buyer knew that documents could not be negotiated under the Letter of Credit. Presentation of documents under the Letter of Credit, therefore, was not even a possibility. In Shamsher Jute Mills Ltd. (supra) and Ficom S.A. (supra) can both be distinguished by one sentence, viz. "the buyer had not taken delivery of the goods" in such cases. A buyer who takes delivery of goods is obliged to pay for the value of the goods. Mr. Bose has referred to two standard and celebrated Books on Letter of Credit, namely:- (a) Jack on Documentary Credits where specifically mentioned t....
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....ame to the Arbitral Tribunal. Mr. Bose submits that LMJ not having contested the Arbitration proceeding and filed the written statement is estopped from contending that documents have been suppressed and such suppression amounts to fraud. In any event, there has been no suppression. The letter dated 14th February, 2011 clearly states that Sleepwell was accepting 90% of the Bill of Exchange amount provisionally and the same was also conveyed to its bankers who was initially insisting on 100% payment. It is only when Sleepwell requested his banker 90% of the Bill of Exchange provisionally from the bank of Baroda, that bank of Baroda released 90% of the Bill of Exchange amount. The relevant documents have been disclosed in the statement of claim. I have considered the rival contentions. Section 48 of the 1996 Act materially corresponds to Section 7 of the Foreign Awards (Recognition and Enforcement) Act, 1961. Section 48(1)(a)(b)(c)(d) and (e) of the Act corresponds to provisions of Section 103(2)(a)(b)(c)(d)(e) and (f) respectively of the English Arbitration Act, 1996. Sub-sections 48(2) and 48(3) of the Act correspond to sub-sections 103(2) and 103(5) respectively of the En....
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....s been made to a competent authority referred to in clause (e) of subsection (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security." The grounds of challenge enumerated in the aforesaid section are meant to be construed narrowly and do not permit review of the foreign award on merits. The Courts are not expected in proceedings to re-apprise and re-appreciate the evidence. In Shrilal Mahal Ltd. (supra) in paragraph 45 of the report, the Hon'ble Supreme Court has specifically held that Section 48 of the 1996 Act does not give an opportunity to have a "second look" at the foreign award in the award enforcement stage. The scope of inquiry under Section 48 does not permit review of the foreign award on merits. Procedural defects (like taking into consideration inadmissible evidence or ignoring/rejecting the evidence which may be of binding nature) in the course of foreign arbitration do not lead necessarily to excuse an award from enforcement on the ground of public policy. The scope of "Public Policy" in rela....
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.... of public policy is not only now quite distinct from that of the policy of law but has in fact always been so except in some exceptional instances of confusion which have had no substantial effect on the general course of authority. X X X X X 'public policy' has been defined by Winfield as a principle of judicial legislation or interpretation founded on the current needs of the community." 82. In the case of (Gherulal Parakh v. Mahadeodas Mairye), reported in A.I.R. 1959 S.C. 781 the Supreme Court considered whether a wagering contract is contrary to public policy. It held that "the common law of England and that of India have never struck down contracts of wager on the ground of public policy; indeed they have always been held to be not illegal notwithstanding the fact that the statute declared them void" It said that there is no definite head or principle of public policy evolved by Courts or laid down by precedents which would directly apply to wagering contracts. Even if it is permissible for Courts to evolve a new head of public policy under extraordinary circumstances giving rise to incontestable harm to the society, wager is not one of such instances of....
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....g charging of compound interest, the parties could not have, by an agreement between them, opted out of a matter, of public policy." In an appeal from the said judgment by Renusagar, the Hon'ble Supreme Court upheld the judgment of the Division Bench. The decision is reported at AIR 1994 SC 860 (Renusagar Power Co. Ltd. Vs. General Electric Co.). It was held that the defence of public policy should be construed narrowly. It could be seen from the judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. In this context reference may be made to Paragraphs 50, 51, and 63 to 66 of the said report. The said paragraphs read:- "50. In the field of private international law, courts refuse to apply a rule of foreign law or recognise a foreign judgment or a foreign arbitral award if it is found that the same is contrary to the public policy of the country in which it is sought to be invoked or enforced. The English courts follow the following principles: "Exceptionally, the English court will not enforce or recognise a right conferred or a duty impo....
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....e in the field of municipal law. 64. Keeping in view the object underlying the enactment of the Foreign Awards Act, this Court has also favoured a liberal construction of the provisions of the said Act. In Renusagar case I it has been observed: (SCC p. 723, para 50) "It is obvious that since the Act is calculated and designed to subserve the cause of facilitating international trade and promotion thereof by providing for speedy settlement of disputes arising in such trade through arbitration, any expression or phrase occurring therein should receive, consisting with its literal and grammatical sense, a liberal construction." (p. 492) 65. This would imply that the defence of public policy which is permissible under Section 7(1)(b)(ii) should be construed narrowly. In this context, it would also be of relevance to mention that under Article I(e) of the Geneva Convention Act of 1927, it is permissible to raise objection to the enforcement of arbitral award on the ground that the recognition or enforcement of the award is contrary to the public policy or to the principles of the law of the country in which it is sought to be relied upon. To the same effect is....
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....b)(ii) of Foreign Awards (Recognition and Enforcement) Act, 1961. The Hon'ble Supreme Court held that contravention of law alone would not attract bar of public policy and something more than contravention of law is required to be established to resist enforcement of a foreign award as contrary to public policy of India. After considering the decisions in Renusagar (supra) and ONGC Ltd. Vs. Saw Pipes Ltd. reported at (2003) 5 SCC 705, it is stated:- "26. From the discussion made by this Court in Saw Pipes in paragraph 18, paragraph 22 and paragraph 31 of the Report, it can be safely observed that while accepting the narrow meaning given to the expression "public policy" in Renusagar in the matters of enforcement of foreign award, there was departure from the said meaning for the purposes of the jurisdiction of the Court in setting aside the award under Section 34. 27. In our view, what has been stated by this Court in Renusagar with reference to Section 7(1)(b)(ii) of the Foreign Awards Act must equally apply to the ambit and scope of Section 48(2)(b) of the 1996 Act. In Renusagar it has been expressly exposited that the expression "public policy" in Section 7(1)(....
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....a, J.) accepted the submission made on behalf of the appellant therein that the meaning given to the expression "public policy of India" in Section 34 in Saw Pipes1 must be applied to the same expression occurring in Section 48(2)(b) of the 1996 Act. However, in what we have discussed above it must be held that the statement in paragraph 16 of the Report that the expression "public policy of India used in Section 48(2)(b) has to be given a wider meaning and the award could be set aside, if it is patently illegal" does not lay down correct law and is overruled." It is pertinent to note that the agreement which contains arbitration clause is not in dispute. It is also undisputed that the buyers have accepted the goods. The buyer in spite of notice of the arbitration has failed to participate. The attempt by the buyer to resist commencement of the arbitration proceeding has also failed. The buyers now want to contend that the award is vitiated by reason of non-disclosure of the letter dated 14th February, 2011. The applicant was aware that while vacating the interim order on 9th September, 2011, Justice Dipankar Datta observed that "this Court is also in agreement with Mr. Mooke....
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....e port of destination and dealt with the issue and arrived at a finding that the seller is not responsible. The Tribunal has the jurisdiction to decide the issue and has decided the issue in one way or the other. Interpretation of a contract is a matter for the arbitrator to determine, even if it gives rise to determination of a question of law. Arbitration is consensual and some amount of laxity should be given while scrutinizing an award. A sense of informality is attached to such proceeding. It cannot be scrutinized with an Eagle's eye or as an appellate authority. The objection to enforcement of a foreign award is extremely limited. Moreover, in view of the order passed by the Division Bench in refusing to pass any order of injunction restraining commencement and/or continuation of the arbitration proceedings it cannot be said that the award was passed in violation of any order passed by a superior Court. The relevant observations of the Division Bench in this regard are:- "The intention of the parties to have their disputes resolved by arbitration cannot be doubted. The parties have entered into such contract with their eyes wide open. They have decided that all dispu....
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....proceeding knowing fully well that the result of the proceeding may be adverse to its interest cannot complain of violation of natural justice. The petitioner was under no disability and nothing has prevented the petitioner to file its statement of defence along with documents. The petitioner is in effect seeking a review of the foreign award on merit which is not permitted in this proceeding. Lord Mansfiled in Holman v. Johnson stated that the principle of public policy is ex dolo malo non oritur action. No Court of law will lend its aid to a man who founds his cause of action upon an immoral or illegal act. The rule has been further illustrated by Russel by stating that grounds of public policy on which an award may be set aside include: (1) that its effect is to enforce an illegal contract; (2) that the arbitrator, for instance manifested obvious bias too late for an application for his removal to be effective before he made his award. None of the above conditions apply in the instant case. The petitioner is not alleging fraud or bias by the arbitrator. Even under the domestic award, a possible view by the arbitrator on facts has necessarily to pass muster as the arbitrato....
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....ments", inter alia the above Pre-Shipment Certificates as issued by ISC and provided by Sellers, Sellers were duly entitled to trigger payment under the Contract. 6.14. We therefore find that Sellers' claim for payment of USD 440.00 per metric ton for all three partial shipments succeeds. 6.15. In reference with the balance of USD 10.00 per metric ton for each partial shipment, as agreed under the Amendment dated 7th December, 2010, the Amendment provided that the "Balance amount @ US$ 10.00 per MT will be payable after receipt of quality inspection report of destination port". 6.16. This indeed establishes an alteration to the original provision of the Contract that the quality would be final at the port of loading, at least as far as the balance of USD 10.00 per metric ton is concerned. On interpretation and construction of the Contract itself and its Amendment dated 7th December, 2010, the Tribunal notes that the Amendment itself defines in "1. Quantity" that the weight in accordance with the Contract would be still "final at loading" while the amended Payment Term now states that "a balance amount of US$ 10.00 per MT" would only "be payable after rece....
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.... to recover the price directly from the buyer, at any rate once the letter of credit has expired. The buyers appear to have agreed that a letter of credit is a conditional payment only, but contend that it is under the parties' contract the sole method of payment agreed. Justice Bingham on consideration of the materials on record stated that "if the seller fails to obtain payment because he does not and cannot present the documents which the terms of the credit, supplementing the terms of the contract, require, the buyer is discharged: that was the Ficom case. In the ordinary case, therefore, of which the present is an example, the due establishment of the letter of credit fulfils the buyer's payment obligation unless the bank which opens the credit fails for any reason to make payment in accordance with the credit terms against documents duly presented. I know of no case where a seller who has failed to obtain payment under a credit because of failure on his part to comply with its terms has succeeded in recovering against a buyer personally. If this were an available road to recovery, many of the familiar arguments about discrepancies in documents would be unnecessary. Bearing in....
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....sed of the goods for their own account and in the latter the goods appear to have been sold in satisfaction of freight or warehouse costs with neither seller nor buyer deriving any benefit. In both cases it was held that the seller could only obtain the price through the letter of credit. In Shamsher Jute, Bingham J. said: If the seller fails to obtain payment because he does not and cannot present the documents which the terms of the credit, supplementing the terms of the contract, require the buyer is discharged: that was the Ficom case. In the ordinary case, therefore, of which the present is an example, the due establishment of the letter of credit fulfils the buyer's payment obligation unless the bank which opens the credit fails for any reason to make payment in accordance with the credit terms against documents duly presented. I know of no case where a seller who has failed to obtain payment under a credit because of failure on his part to comply with its terms has succeeded in recovering against a buyer personally. 3-30 In the Shamsher Jute, Bingham, J. was dealing with a case where the failure to present documents required by the terms of the credit is th....
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....ance of the goods. 3-43. Where the seller fails to perform an obligation which is a condition precedent to the buyer's obligation to open the credit or fails to present conforming documents to the bank within the time stipulated in the credit, this constitutes a repudiation of the contract of sale and the buyer is entitled to treat the contract as terminated and claim damages for non-delivery of the goods. 3-44. If the seller presents conforming documents to the bank, this will discharge his obligations under the contract in relation to the documents and he will be able to recover the sum due under the letter of credit. This will usually be the whole contractual consideration, but it need not be. If it is not the seller is entitled to recover such further consideration from the buyer as is payable under the contract of sale. If, when the goods are delivered, they do not conform to the contract quality, the buyer may claim damages for breach of warranty, or if the facts justify it may reject the goods and claim damages for non-delivery or return of the price as for a consideration that has wholly failed. 3-45. If it transpires that the documents tendered t....
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....he tort of conversion for the value of the goods. The buyer will have converted the goods by taking them if he had no title to them and no right to possession. This remedy is of particular use where the market has risen so that damages may exceed the contract price. In such a situation if the buyer has himself sold the goods - perhaps for a higher price - the seller may alternatively pursue a restitutionary action to recover the amount received by the buyer as the proceeds of his tort. If the goods have been delivered to the buyer without the buyer having duly presented bills of lading, the seller, if he retains the bills, will have a cause of action against the carrier for misdelivery, in English law for conversion. For an example of such a claim being made against a carrier and admitted by him in exchange for an assignment of the seller's rights under the credit, see Mannesman Handel AG v Kaunlaran Shipping Corpn." The aforesaid decision was cited primarily that when the contract is silent as to who would produce the quality certificate, terms of the letter of credit can be looked into to fill up the gap, if any, in order to ascertain whose obligation it would be to produce su....