AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 1288
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....pecified in the contracts. The contract contained a stipulation that the quantity would be final at the Port of loading as per the official weight certificate issued by SGS at the cost of the seller, meaning thereby the respondent. The consignments were shipped by the seller as per the said contract. The contract was an FOB contract and the goods were meant for the Government of People's Republic of Bangladesh. The contract in "other terms" envisage that on terms and conditions not in contradiction with the stipulated terms of contract shall be governed by GAFTA 48 and disputes to be resolved by Arbitration 125 as per GAFTA 125 in London. The buyer had opened letters of credit on different dates and the consignments were shipped by the seller. For each single shipment, invoices had been issued by the seller in accordance with the addendum to the contract. Shorn of unnecessary details, be it noted that some dispute arose regarding the inferior quality of rice and nonrelease of the payment towards the invoices raised by the seller in respect of certain shipment, which eventually became the subject matter of arbitration proceedings. The respondent, on 28th July, 2011, invoked the arbi....
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....counsel, which read thus: "The first objection raised is that no prayer for declaration has been made in the application that the foreign award is enforceable. It is submitted that unless prayer is made seeking a declaration as to the enforcement of the award, the Court cannot assume jurisdiction. In this regard the learned Senior Counsel has referred to a Single Bench decision of the Bombay High Court in the case of Toepfer International Asia Pvt. Ltd. versus 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 be subject to and abide by the result of the suit. It is submitted that a cross appeal was preferred by the decreeholder 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 c....
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....y the petitioner regarding the subject foreign awards being enforceable or otherwise. To wit, the questions of law and grounds urged in Special Leave Petition (Civil) No.5612 of 2015 (pertaining to contract-I) read thus: "QUESTIONS OF LAW : That the following questions of law of general and public importance arise for consideration of his Hon'ble Court :i) Whether any order in an execution proceeding can be passed before the Court is called upon to decide and declare that the award is enforceable? ii) Whether any declaration as to the enforceability of a foreign award is to be sought by the award holder before seeking to enforce the foreign award? iii) Whether a foreign award which arises out of an arbitration agreement which is under challenge in a properly instituted civil suit, can be put to execution before the suit is heard and disposed of? iv) Whether valid and proper invocation of the arbitration clause is a prerequisite before seeking to enforce the foreign award arising out of the arbitration agreement between the parties? v) Whether in a twotier arbitration mechanism, it is necessary to exhaust the firsttier (....
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....assed without giving any opportunity to the petitioner to file its affidavit or put its objection in writing to the executability of the foreign award. c) For that the impugned order has been passed by a Single Judge of the Calcutta High Court totally ignoring the effect of the observation and finding of an order passed by another Single Judge of the Hon'ble High Court duly affirmed by the Division Bench arise out of a previously instituted civil suit. d) For that there was no prima facie case in favour of the respondent and no interim order could have been granted to the respondent. e) For that the High Court erred in failing to call upon the petitioner to file its affidavit on merits and to raise its objection in writing to the executability of the foreign award? f) For that the High Court erred in holding that the affidavit disclosing the Bank Accounts filed by the petitioner in terms of the order dated 18.09.2014 gave a very bleak picture about the financial condition of the petitioner. g) For that the High Court failed to appreciate that the decree holder/ respondent had not met or satisfied the test laid down in Sections 47 and 48 ....
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.... award dated April 10, 2013 is not enforceable, interalia, being vitiated by fraud and/or corruption as morefully stated above. The particulars of fraud and corruption are, without prejudice to the order challenges to enforceability of the purported award, summarized hereinbelow: (a) The award holder with intent to deceive and/or to perpetrate fraud on the petitioner actively concealed the factum of filing the suit being C.S.No.196 of 2011 (Sleepwell Industries Ltd. Vs. Bank of Baroda) for US$ 382,348.90 before the Arbitral Tribunal and procured the purported Award including the said sum for, Arbitral Tribunal. (b) The award holder with an intent to deceive the petitioner, made a promise without any intention of performing it. (c) By its letter and mail both dated February 14, 2011 the award holder accepted that it has sent inferior quality of rice and promised that it will send its inspectors to Bangladesh for joint inspection of the inferior quality of rice sent by it and forwarded the passports of its inspectors for obtaining VISA and agreed that it will accept 90% payment provisionally against their export bill of exchange and that balance 10% will be....
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.... the award holder procured a purported award for the amount US$ 137,148.20. (i) The award holder with an intent to perpetrate fraud on the petitioner actively concealed from the arbitral tribunal that in respect of the third consignment being the consignment sent through the vessel MV Tu Man Gang, the balance 10% of their invoice amounting to US$ 382,348.90 was to be settled after inspection and finalization and by doing so, the award holder procured a purported award for the sum of US$ 382,348.90. (j) The award holder with an intend to deceive the petitioner and to perpetrate fraud on the petitioner deliberately suppressed from the purported Arbitral tribunal that the award holder in its letters dated June 10, 2011 and July 11, 2011 had admitted its liability and agreed to pay demurrage charges on vessel Tu Man Gang to the extent of US$ 20,921,88. The petitioner is unable to disclose other particulars of fraud till disclosure of fuller and better particulars by the award holder. The petitioner craves leave to file a supplementary affidavit upon such disclosure of fuller and better particulars by the award holder. 75. In the premises, the purported award ....
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..... C1. By a mail dated September 19, 2011, the Award holder informed the petitioner to appoint its arbitrator within three days therefrom and informed that on failing to do so, they will request GAFTA to appoint an Arbitrator on behalf of the petitioner. However, by a communication dated February 29, 2012 Mr. Bardia on behalf of the award holder informed GAFTA that he has received a purported letter dated September 22, 2011 from GAFTA appointing one Mr. R. Eikel as arbitrator on behalf of the petitioner in case No.14456 and requested to appoint Arbitrator in Case No.14457. C2. The time to appoint arbitrator by the petitioner was to expire on September 22, 2011. Only after that, the award holder was entitled to make an application to GAFTA to appoint an Arbitrator. Appointment of Mr. R. Eikel by GAFTA on September 22, 2011 without any application by the award holder was irregular and not binding on the petitioner. In any event and as the award holder by its letter dated September 19, 2011 wanted the petitioner to appoint its Arbitrator within 3 days therefrom and as in computing the 3 days period the date of issuance being September 19, 2011 was to be excluded, no a....
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....older as to whether address of the petitioner submitted by the award holder was correct. By a mail dated December 17, 2012, the Tribunal closed arbitration proceedings. By mails dated January 11, 2013 and February 12, 2013 the award holder submitted the correct email address of the petitioner to GAFTA, i.e. after close of arbitration proceedings. E2. Therefore, the petitioner herein was not given proper notice of the appointment of the arbitrator. The petitioner was not given proper notice of the arbitral proceedings. The petitioner was unable to present its case. In the premises, the purported award is not enforceable. F1. From the mail of GAFTA dated September 26, 2012, it is clear that GAFTA can only accept hardcopies towards pleadings. From the mail dated September 25, 2012 of GAFTA, it appears that hardcopy of the claim submission was filed by the award holder on September 24, 2012, though the time limit was September 19, 2012. F2. In the premises, the arbitral procedure was not in accordance with the law applicable and enforcement of the purported award should be refused. G1. A Civil suit being C.S. No.185 of 2011 filed by the petitioner ag....
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....ation Ltd. Vs. Saw Pipes Ltd. (2003) 5 SCC 705. In addition, the High Court went on to observe that the petitioner, having failed to participate in the arbitration proceedings despite the opportunity given to it and having notice of such proceedings, could not be heard to make a grievance that the respondent award holder did not produce the relevant documents before the Arbitral Tribunal. On the other hand, the Court held that the respondent award holder had placed all the relevant documents/materials before the Arbitral Tribunal and more particularly, because the subsequent correspondence between the parties disclosed very clearly that the respondent had categorically denied its obligation to produce any quality inspection report at the Port of destination. It also noted that the Arbitral Tribunal had jurisdiction to decide the issue one way or the other and in the present case, it had so decided. The High Court also noted that the petitioner had not alleged any fraud or bias against the Arbitral Tribunal as such. From the grievance of the petitioner, even if taken at its face value, it did not warrant interference under Section 48 of the Act. In substance, the learned Single Judg....
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....espondent succeeded in the present petitions. The purpose for which the petitioner invoked NCLT proceedings is, in fact, manifest from the averments in the petition filed by the petitioner before the NCLT itself, claiming that the objective of initiating the corporate insolvency process was to prevent the respondents from receiving the proceeds. All these developments have been brought on record by the respondent. The same were not disclosed by the petitioner on its own, which it was obliged to do in law. For this reason alone, contends the respondent, no indulgence should be shown to the petitioner. 11. On merits, it is submitted that the grounds urged by the petitioner would not come within the purview of Section 48 of the Act, which is very narrow and does not require the Court to have a second look at foreign awards. The grounds, at best, could be urged by the petitioner in the appeal to be filed against the foreign award governed by English Laws (UK Arbitration Act, 1996). The petitioner has allowed the said awards to attain finality having failed to file such appeal. Even the argument of fraud on the basis of the allegation that the relevant documents were not brought to t....
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....petitioner for securing the deficit amount, which would remain after appropriation of the amount under the FDs, lying with the Registrar (OS), Calcutta High Court. The respondent would contend that such direction is necessary in the peculiar facts of the present case and to obviate any complication due to moratorium, as the petitioner has invoked proceedings under the Insolvency and Bankruptcy Code. 12. We have heard Mr. A.K. Sinha, learned senior counsel appearing for the petitioner and Mr. Shyam Divan, learned senior counsel appearing for the respondents. 13. We first proceed to examine the preliminary issue as to whether it was open to the petitioner to raise grounds regarding enforceability of the foreign awards despite the judgment of the High Court dated 4th December, 2014, rejecting the objections in the context of maintainability of the execution petition and which decision had attained finality consequent to rejection of the special leave petitions by this Court and including the review petition by the High Court. The petitioner contends that on the earlier occasion, the objections were limited to the questions of maintainability of the execution case on grounds as w....
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....age piecemeal consideration of the issue of maintainability of the execution case concerning the foreign awards, in the first place; and then the issue of enforceability thereof. Whereas, keeping in mind the legislative intent of speedy disposal of arbitration proceedings and limited interference by the courts, the Court is expected to consider both these aspects simultaneously at the threshold. Taking any other view would result in encouraging successive and multiple round of proceedings for the execution of foreign awards. We cannot countenance such a situation keeping in mind the avowed object of the Arbitration and Conciliation Act, 1996, in particular, while dealing with the enforcement of foreign awards. For, the scope of interference has been consciously constricted by the legislature in relation to the execution of foreign awards. Therefore, the subject application filed by the petitioner deserves to be rejected, being barred by constructive res judicata, as has been justly observed by the High Court in the impugned judgment. 15. There is an additional reason which dissuades us to show any indulgence to the petitioner. We find force in the grievance made by the responden....
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....puted issues submitted for our determination concern three different aspects first of all, the question whether the contractual quality had been delivered by sellers and received by Buyers. Secondly, the matter of the balance to the full contractual quantity and thirdly, and subsequently to the first two issues, the payment of the invoices. 6.2 As respondents elected not to participate in the round of submissions the Tribunal is bound to base its discussion and subsequently its findings on the submission and evidence filed by claimants only. 6.3 As a starting point on the first issue, whether the contractual quality had been delivered by sellers and received by buyers, the tribunal focuses on the provisions of the governing contract and, as far as relevant, to its amendments. 6.4 The contract agreed between the parties was for the sale and purchase of 15000 metric tons of Thai Nonbasmati Parboiled Rice on FOB Bangkok terms. 6.5. The contract provided in his context under the quality clause that: "Rice to be supplied 'Rice to be supplied shall be 15000MT (5 percent more or less) of Non-basmati Parboiled rice 15 percent (Maximum) Broken. L....
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.... Small Broken: 0.46% Dead, damaged and discoloured kernels: 3.00% Foreign Matter. 0.16% 3. Certificate No.11039/2010/2 dated 17th January 2011 for MV Tu Man Gang Mositure: 12.80% Total broken Kernels: 14.79% Small Broken: 0.23% Dead, damaged and discoloured kernels: 3.00% Foreign Matter. 0.29% 6.10 If we disregard the alterations envisaged by the Amendment to the Contract dated 7th December 2010, granting an even higher level for "Broken Grains" end "Dead, damaged and Discoloured Grains", the results provided by ISC were well Within the parameters foreseen for the quality under the Contract. 6.11 The Tribunal therefore FINDS THAT the quality of the cargo shipped on the three vessels was within the amended contractual specifications. 6.12. In addition to the above, the provision DI the Quality Clause 5 of GAFTA Contract No.48, being Tale Quale contract as such, states, Inter alia: "Certificate of Inspection at time o/ loading -shall be final as to quality". 6.13 Consequently, and under consideration of the Payment Term of the Contract providing for payment ....
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.... one day later, the 21st February 2011 and SO WE DO FIND. 6.22 As Buyers failed to forward the certificate within this limit of 14 days, any claim for rejection or for an allowance in respect of any matters dealt with under the Contract, and its Amendments. shall be deemed to be waived and absolutely barred, AND SO WE DO FIND. 6.23 THE TRIBUNAL THEREFORE FINDS THAT Sellers' claim for payment of balance invoices of USD 10,00 per metric ton succeeds. 6.24 There is no apparent disputes as far as the quantity of the shipment under the contract is concerned as the contract provided for the shipment of 15000 metric tons, +5% in buyers option and sellers only shipped 13,729.55 metric tons. 6.25 Buyers nevertheless informed Sellers 5th February 2011 that the original Letter of Credit as foreseen for payment under the Contract not be extended and Buyers therefore planned to "establish Fresh LC for the balance quantity of 2000 ton in the old contract". 6.26 The Tribunal has not seen any new letter of credit for this purpose and as Buyers have not filed such, the Contract came to its end, 6.27 WE THEREFORE FIND THAT Sellers' calculations f....