TaxTMI 
TaxTMI 
2020 (12) TMI 1372
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....eement dated 07.03.2007 ["LTA"], between the Appellant and MMTC Ltd. ["Respondent"], the Appellant, referred to as the "seller" in the LTA, agreed to supply certain quantities of freshly mined and washed "German Creek", "Isaac" (Blend of 65% Moranbah North and 35% German Creek coking coals) and "Moranbah North" coking coal to the Respondent. Clause 1 of this LTA is material and states as follows: CLAUSE 1: MATERIAL, QUANTITY, QUALITY AND DELIVERY PERIOD: The SELLER shall sell and the PURCHASER shall buy, a) The base quantity during the currency of the contract shall be 466,000 (Four hundred Sixty Six thousand) metric tons (of one thousand kilograms each) firm. b) During the First Delivery Period (1st July, 2004 to 30th June, 2005), a quantity of 464,374 (Four Hundred Sixty Four Thousand, Three Hundred and Seventy Four) metric tons (of one thousand Kilograms each) firm quantity of freshly mined and washed "Isaac", "Moranbah North" and "German Creek" coking coals. c) During the Second Delivery Period (1st July, 2005 to 30 June, 2006) a quantity of 382,769 (Three Hundred Eighty Two Thousand, Seven Hundred and Sixty Nine) metric tons (of one....
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....ect to availability with the SELLER. The Purchaser reserved the right to postpone the deliveries to be effected under each Delivery Period by upto 3 months i.e. the month of September following each Delivery Period, without any additional financial liability to the PURCHASER. 1.3 The PURCHASER had the option to extend the duration of the Agreement by two more years, at its sole discretion and the Purchaser to exercise its option for extending the Agreement by two more years or otherwise by 31st January, 2007. In case the PURCHASER decides to exercise such option, at its sole discretion, the Agreement shall have two more Delivery Periods as follows: Fourth Delivery Period: 1st July 2007 to 30th June 2008 Fifth Delivery Period: 1st July 2008 to 30th June 2009 3. Under Clause 2 of the LTA, which refers to "Price", for subsequent Delivery Periods, including the "Fifth Delivery Period", with which we are directly concerned, it is undisputed that when read with Annexure I of the LTA and a letter dated 14.08.2008, setting out the terms of the Fifth Delivery Period, the price was fixed at $300 per metric tonne. Clause 2.2 is important and states as fo....
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....s, as follows: I. Common Ground and Issues in Dispute 34. Before setting out the List of Issues to be decided by the Tribunal, some of the undisputed facts are summarised by way of background. These matters, of what the Tribunal understands to be common ground, are summarised also in the Claimant's Opening Submission dated 16th September 2013. 35. By a Long Term Agreement dated 7th March 2007 under which the Respondent contracted to purchase freshly mined and washed coking coal from the Claimant on FOB (trimmed) basis from DBCT Gladstone in Australia. The Long Term Agreement they signed was extended by agreement and is to be read along with Addendum No. 2 dated 20th November 2008. As referred to at paragraph 5 above, the Long Term Agreement as extended by Addendum No. 2 is referred to herein as "the Agreement". 36. Prior to Addendum No. 2, the Agreement encompassed three Delivery Periods of one year each commencing on 1st July 2004 and concluding on 30th June 2007. The Long Term Agreement included a provision (at Clause 1.3) that gave the Respondent an option to extend the Long Term Agreement for two more Delivery Periods, and this option was....
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....,600MT) as compared to the contracted quantity of 466,000MT. Accordingly, the quantity not lifted by MMTC amounts to 454,034 MT. 44. This quantity not lifted underpins the Claimant's claim, which is for damages arising out of an alleged breach on the part of the Respondent in not lifting the contracted quantity. The loss claimed by the Claimant is the difference between what is said to have been the market price, and the contract price. 45. For its part the Respondent denies any breach on its part in not having lifted the contracted quantity. This is because, according to the Respondent, the Claimant did not in fact have the goods available for delivery to the Respondent. The Respondent's contention is that the Claimant's marketing manager expressed an inability to supply cargo under the Fifth Delivery Period, and the Respondent says that this was a simple refusal to perform the obligation to supply coal under the Agreement. Correspondingly, the Respondent contends that it was the Claimant which was in breach of the Agreement. 46. The detailed issues which arise, as defined in the Terms of Reference and, as these were supplemented, are as foll....
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....nt wrote to the Claimant, requesting, the Respondent submits, the Claimant to indicate stem availability for two deliveries, one each in August and September 2009. The Respondent said: Transchart has already entered the market on behalf of MMTC for the vessel against July 09 stem. Keeping the huge backlogs in mind we would like to avail two stems in August 09 and one in September 09. Please confirm availability and convey the laycans. 58. On 3rd July 2009 the Claimant wrote to Mr. Babu of the Respondent seeking time to respond to the request. However there was no follow up from the Claimant. On 21st July 2009 the Respondent again requested confirmation of stem availability: We are awaiting stem confirmation from Anglo for August 2009. Please note we have given our Indent well in advance. The flexibility of laycan vested with you completely. We look forward to hear from you... 59. On 22nd July 2009 the Claimant responded, stating: Unfortunately, at this stage we are unable to confirm a stem in Aug/Sep for MMTC due to cargo availability. We are continuing to review our position and will advise our preferred Schedule for O....
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....espondent lifting a very substantial quantity of the carryover quantity by end March 2010. The letter then stated: In this connection, It may please be appreciated that RINL is basically a producer of LAM coke and pig Iron where the value addition is negligible or negative sometimes. The industry is yet to come out of the shock of recession. Lifting even 18.7% carry over tonnage implies a loss of USD 25/1 coke produced. Keeping these Issues in mind, we had approached Anglo Coal for a reduction in price via our letter dated 20.11.2008. Lifting another 38% implies a further increase in loss by another USD 80/1. For the sake of negotiation, we hope you will not ignore the economic realities completely, Steel Melting Shop of NNL is under implementation and the commissioning is expected sometime in end 2010. Economy will also come out of recession gradually. In short we are not denying our obligation. The request is only for staggering the time frame for lifting as explained in para. 1 & 2 above. Please review and reconsider our request for allotting at least one shipment of 50,000MT each from October 09 onwards instead of zero stem till end of 2009. 5c. After....
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....s were made. His affidavit indicated such sales amounted to approximately 712,000 MT, and that these sales were made at between US$83 and US$113 per MT, far below the price agreed with the Respondent. 122. The Tribunal accepts Mr. Wilcox's evidence. It is entirely consistent with the Respondent's own letter dated 20th November 2008 which reads: As you are aware, due to worldwide crisis in financial markets, there has been unprecedented fall in prices of major commodities including steel... The prices of iron and steel products in the international market has nosedived in the month of September and October 2008 and pig iron,... is not getting customer on date even at US$300 FOB. Same is the situation in the domestic market and we are not able to sell our product. Under the circumstances, you will appreciate it has become absolutely unreliable to produce and sell pig iron based on the imported coking coal having prices US$300 per tonne FOB for hard coking coal... The substantial depreciation of Indian rupees to the US dollars is further added to our woes.... In view of unprecedented recessionary trends in the economy and consequent abnormal low real....
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.... the Respondent propose a Delivery Schedule for the coal in question. The Respondent denied the receipt of this letter. However, the Majority Award found as follows: Offer of Supply xxx xxx xxx 139. Mr. Babu does not rebut the existence of the meeting in April. Nor does he deny having received the 2nd e-mail transmission on 12th March. He merely said in his evidence that there was no need for him to be concerned with the attachments to that e-mail. That does not amount to evidence that the letter was not received. 140. Moreover, the Claimant referred to its letter of 11th March in a letter sent on 21st September 2009 (Vol. 2, page 21) which opened with the sentence "We refer to our letter of 11th March 2009 to which we have not yet received a response.". The Claimant did receive a response to the letter of 21st September (Vol. 2, page 23) sent on behalf of Mr. Babu, but that response expressed no surprise regarding the reference to a letter of 11th March 2009, nor did it state that no such letter had been received. 141. In summary therefore there is much in the contemporaneous correspondence to support the Claimant's assertion that t....
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....ive for the Respondent to continue to purchase from the Claimant at the agreed rates. 146. The Tribunal's view of the correspondence is that the Respondent saw matters similarly, and was seeking to purchase further quantities of coal at the lower rate obtained in the Sea Venus agreement. In the e-mail of 2nd July 2009 Mr. Babu referred to the Respondent having progressed the chartering of a vessel for the Sea Venus agreement, and asked, without apparent distinction about the availability of 2 further stems for August and September. Receiving no substantive response to the enquiry regarding such further stems Mr. Babu followed up by e-mail on 21st July 2009. He did not, as might have been expected if this was part of the usual contractual arrangements point out that the Claimant was obliged to fulfil this order, nor did he make any complaint that the Claimant had failed to comply with the "prerequisite" of indicating stem availability before the Respondent was required to act. 147. It was in this context that Claimant wrote on 22nd July 2009 referring to an inability to confirm stem in August/September due to cargo availability. Seen in the context of the excha....
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....accept only at a price reduced from the contractual rate (Respondent's letter of 27th November 200[9]). The Respondent's arguments now are predicated on there having been a temporary change of stance during the course of the year such that, in June and July 2009 it was seeking no more than to avail itself of supplies of coal at the contract rate. Seen in context, the correspondence relied on does not begin to support that contention, and the Tribunal rejects it. The Respondent was seeking coal at below the contract rate and the Claimant was refusing to supply on those terms. The Respondent failed to fulfil its contractual obligation to lift the contracted quantities of coal at the contract rate. 5g. Under the sub-heading, "Limitation", the Majority Award held: 155. It follows that the Claimant's notice of arbitration, which was issued on 24th September 2012 and received by the Secretariat on the same day was issued and the arbitration commenced within the three-year limitation period. 5h. Under the sub-heading, "Proof of Damage?", the Majority Award found: Proof of Damage? 156. It appears to the Tribunal, with respect to the ....
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....this Award, and at a rate of 15% p.a. on the principal sum from the date of this Award until payment. (3) The Claimant is entitled to its costs of the arbitration which, by a majority we assess in the amount of US$977,395.00. (4) The sums set out above as being due to the Claimant are due as at the date of this Award and are to be paid by the Respondent. (5) This Award is final as to the matters in dispute between the parties and referred to arbitration before us. All other requests and claims by the parties are dismissed. 7. Justice V.K. Gupta (Retd.), in his Dissenting Award found as follows: 4. Analysis xxx xxx xxx (k) In the totality of circumstances and after appreciating the contractual provisions and the conduct and evidence led by the Claimant I find apart from one request for the delivery Schedule from the Respondent vide letter dated 11th March 2009 there is no evidence on record to show that the claimant had the contracted material ready to supply. Even the chart showing supplies to the third parties filed by the Claimant along with the additional evidence of Mr. John Wilcox indicates that the supplies of the entir....
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....it was not the case of MMTC earlier that the letter dated 21st September, 2009 constituted repudiation by Anglo of the contract. In its reply dated 25th September, 2009, MMTC did not suggest that Anglo had repudiated the contract. It viewed the said letter dated 21st September, 2009 as a request from Anglo to start lifting the contractual quantities. This explains why MMTC in the said reply expressed inability to lift 2,25,174 MT by 31st March, 2010 since it seemed "near to impossible as it worked out to 56.7% of the carryover tonnage." It sought a reduction in prices hoping that Anglo would "not ignore the economic realities completely". MMTC stated that "In short, we are not denying our obligation. The request is only for staggering the time frame for lifting..." In its letter dated 3rd December, 2009 MMTC sought Anglo's help in the matter "so that somehow we are able to run the plant by having a mixture of costly coal which we are committed to lift vis-à-vis the coal at new contract prices." The letter dated 21st September, 2009 when read as a whole and in the context of the above correspondence reflects what the majority Award has rightly understood, viz., that Anglo....
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.... Judge Under Section 34 have agreed with a certain view on the facts of the case. However, it is also the law that where a factual inference is based on no evidence, the court may interfere with such inference even Under Section 37. In our reading of the legal position, a factual inference that is based on what is not stated in a document or what may be called 'imaginary evidence', is the same as an inference based on 'no evidence'; or an inference derived ignoring vital evidence. A decision based on such inference would necessarily be perverse. If the majority of the Arbitral Tribunal ignores what is plainly stated in commercial correspondence and reads into emails words that do not exist, or ignores words that are contained in e-mails, this can only pave the way for complete injustice. It is not the purport of any of the precedents that inferences drawn from thin air would become sustainable, hiding behind the shield of an arbitral award. As we see it, this is exactly the position in the present case. There is no evidence to support the conclusion that the Appellant was demanding consignment of coal at any reduced rate vis-à-vis the contractually agreed pri....
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....interpret a document, it looks at its language. If the language is clear and unambiguous and applies accurately to existing facts, it shall accept the ordinary meaning, for the duty of the Court is not to delve deep into the intricacies of the human mind to a certain one's undisclosed intention, but only to take the meaning of the words used by him, that is to say his expressed intentions. Sometimes when it is said that a Court should look into all the circumstances to find an author's intention, it is only for the purpose of finding out whether the words apply, accurately to existing facts. But if the words are clear in the context of the surrounding circumstances, the Court cannot rely on them to attribute to the author an intention contrary to the plain meaning of the words used in the document. The other Sections in the said group of Sections deal with ambiguities, peculiarities in expression and the inconsistencies between the written words and the existing facts. In the instant case, no such ambiguity or inconsistency exists as we shall demonstrate presently. The Privy Council's case was one of ambiguity and the surrounding circumstances gave the clue to find out ....
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...., i.e., at the rate of $300 per metric tonne; and no dispute as to the quantity of coal that remained unlifted, i.e., 454,034 metric tonnes. The only issue before the Arbitral Tribunal was whether the Appellant was unable to supply the contracted quantity of coal at the contractual price, or whether the Respondent was unwilling to lift the quantity of coal at the contractual price, both being purely questions of fact as to the performance of contractual obligations stemming from the LTA. 11. Shri Sibal then argued that a crucial letter dated 11.03.2009, by which the Appellant requested the Respondent to propose a Delivery Schedule under the LTA, remained unanswered, the Majority Award having found as a matter of fact that the said letter was received by the Respondent. In any event, he argued that the Appellant's letter dated 21.09.2009, which referred to the letter dated 11.03.2009, would clinch the case in the Appellant's favour, as this letter clearly referred to the delivery of the balance quantity of coal, giving a without prejudice offer, open and capable of acceptance until 30.09.2009. The Respondent's only response to this was by a letter dated 25.09.2009, in....
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.... $300 per metric tonne and at a rate much lower than that. He also referred to Mr. Wilcox's testimony to argue that the Appellant was a major producer of coal and huge quantities of coal were produced at the time of the Fifth Delivery Period, in July 2009, which could have easily been supplied, had the Respondent demanded the balance unlifted quantity of 454,034 metric tonnes at the price of $300 per metric tonne. 14. Shri Mukul Rohatgi, learned Senior Advocate appearing on behalf of the Respondent, supported the impugned judgment of the Division Bench and took us through the correspondence between the parties, the Majority Award, the Dissenting Award, and the judgments of the learned Single Judge and the Division Bench. According to him, this Court ought not to interfere Under Article 136 of the Constitution of India, given the fact that the Division Bench had not acted as a court of appeal, but had specifically followed the judgment in Associate Builders (supra), in that, it found the present case to be a case in which "no evidence" was led on the crucial issues of breach, as well as quantum of damages. According to him, the three crucial emails that were relied upon by th....
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.... the Fifth Delivery Period, at the contractual price, and that it was the Respondent who was unwilling to lift the coal, owing to a slump in the market, the Respondent being conscious of the fact that mere commercial difficulty in performing a contract would not amount to frustration of the contract. It was for this reason that the Respondent decided, as an afterthought, in reply to the Appellant's legal notice dated 04.03.2010, to attack the Appellant on the ground that it was the Appellant that was unable to supply the contracted quantity in the Fifth Delivery Period. Once this becomes clear, it is obvious that the Majority Award, after reading the entire correspondence between the parties and examining the oral evidence, has come to a possible view, both on the Respondent being in breach, and on the quantum of damages. 18. We may hasten to add that the entire approach of the Division Bench is flawed. First and foremost, to cherry-pick three emails out of the entire correspondence and to rest a judgment on those three emails alone, without having regard to the context of the LTA and the correspondence, both before and after those three emails, would render the judgment of ....
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....ual price. The Majority Award found, relying upon Mr. Wilcox's evidence, that the supplies that were sought to be made in August and September, 2009 were therefore, also in the nature of "mixed" supplies, i.e., coal at the contractual price, as well as coal at a much lower price. This is a finding of fact that cannot be characterised as perverse, as it is clear from the evidence led, the factual matrix of the setting of there being a slump in the market, in which the performance of the contract took place, as well as the ambiguity as to whether the correspondence referred to contractual price or "mixed" price, and thus, is a possible view to take. 22. The Division Bench also relied upon Smt. Kamala Devi v. Takhatmal and Anr., (1964) 2 SCR 152, ["Smt. Kamala Devi"] which in turn, relied upon Section 94 of the Indian Evidence Act, 1872 ["Evidence Act"], by which the Division Bench concluded that it found no reason to look for the undisclosed intention of the parties, since the clear and express words contained in the three "crucial" emails were perfectly in accord with and applied squarely to the existing facts. Therefore, the ordinary meaning of what was stated in those email....
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....rate presently. The Privy Council's case was one of ambiguity and the surrounding circumstances gave the clue to find out the real intention of the parties as expressed by them. (page 162) Having so held, the Court then found that the surety bond did not need to be qualified by adding words to it when the words used in the bond were otherwise clear. Importantly, the words "in default of his doing so" were held by the Court to make it absolutely clear that the surety comes into effect only if the judgment debtor makes a default when required to produce the document. Adding that the surety bond has to be strictly construed, the Court held that a demand of the Court on the judgment debtor, and default made by him in so doing, were necessary pre-conditions for the enforcement of the bond against the Appellant. 24. Section 1 of the Evidence Act states as follows: 1. Short title. -- This Act may be called the Indian Evidence Act, 1872. Extent. -- It extends to the whole of India except the State of Jammu and Kashmir and applies to all judicial proceedings in or before any Court, including Courts-martial, other than Courts-martial convened under the Ar....
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....t it was used in a peculiar sense. 27. Importantly, Section 92 of the Evidence Act refers to the terms of a "contract, grant or other disposition of property or any matter required by law to be reduced to the form of a document". In all these cases, under proviso (6) read with illustration (f), any fact may be proven which shows in what manner the language of a document is related to existing facts. Illustration (f) of Section 92 of the Evidence Act indicates that facts, which may on the face of it, be ambiguous and vague, can be made certain in the contextual setting of the contract, grant or other disposition of property. Section 94 of the Evidence Act, then speaks of language being used in a document being "plain in itself". It is only when such document "applies accurately to existing facts", that evidence may not be given to show that it was not meant to apply to such facts. Likewise, the obverse situation is contained in Section 95 of the Evidence Act, which then states that when the language used in a document is plain in itself, but is "unmeaning in reference to existing facts", only then may evidence be given to show that it was used in a peculiar sense. 28. When Sec....
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....loose conjecture as to the intent and meaning of the party, but to the expressed meaning and that, on the other hand, where either the terms used are incapable of any certain and definite meaning, or, being in themselves intelligible, exhibit plain and obvious uncertainty, and are equally capable of different applications, to give an effect to them by extrinsic evidence as to the intention of the party would be to make the supposed intention operate independently of any definite expression of such intention. By patent ambiguity, therefore, must be understood an inherent ambiguity, which cannot be removed, either by the ordinary Rules of legal construction or by the application of extrinsic and explanatory evidence, showing that expressions, prima facie, unintelligible, are yet capable of conveying a certain and definite meaning. (page 653) On the other hand, a "latent ambiguity" is described in Woodroffe and Ali's Law of Evidence, as follows: Latent ambiguity, in the more ordinary application, arises from the existence of facts external to the instrument, and the creation by these facts of a question not solved by the document itself. A latent ambiguity arises when the....
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....ree "crucial" emails, these emails must be read as part of the entirety of the correspondence between the parties, which would then make the so-called "admissions" in the aforementioned emails apply to existing facts. Once this is done, it is clear that there is no scope for the further application of the "patent ambiguity" principle contained in Section 94 of the Evidence Act, to the facts of the present case. 32. However, Section 95 of the Evidence Act, dealing with latent ambiguity, when read with proviso (6) and illustration (f) to Section 92 of the Evidence Act, could apply to the facts of the present case, as when the plain language of a document is otherwise unmeaning in reference to how particular words are used in a particular sense, given the entirety of the correspondence, evidence may be led to show the peculiar sense of such language. Thus, if this provision is applied, the Majority Award cannot be faulted as it has accepted the evidence given by Mr. Wilcox, wherein he explained that the three emails would only be meaningful if they were taken to refer to "mixed" supplies of coal, and not supplies of coal at the contractual price. 33. A judgment of the Court of A....
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....ore, the parol evidence Rule (as statutorily embedded in Section 94 of the Evidence Act) still operates as a restriction on the use of extrinsic material to affect a contract. However, extrinsic material is admissible for the purpose of interpreting the language of the contract. In this respect, Sandar Aung acknowledges that extrinsic material is admissible even if no ambiguity is present in the plain language of the contract. However, ambiguity still plays an important role, in that the court can only place on the relevant contractual word, phrase or term an interpretation which is different from that to be ascribed by its plain language if a consideration of the context of the contract leads to the conclusion that the word, phrase or term in question may take on two or more possible meanings, i.e., if there is latent ambiguity. In Sandar Aung, after the Estimate was taken into account, the phrase "all charges, expenses and liabilities incurred by and on behalf of the Patient" could plausibly be taken to mean all charges, expenses and liabilities incurred by and on behalf of the Patient in respect of the envisaged angioplasty. Thus, the court had a legitimate basis to place a narr....
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.... Court of Appeal held: 132 To summarise, the approach adopted in Singapore to the admissibility of extrinsic evidence to affect written contracts is a pragmatic and principled one. The main features of this approach are as follows: (a) A court should take into account the essence and attributes of the document being examined. The court's treatment of extrinsic evidence at various stages of the analytical process may differ depending on the nature of the document. In general, the court ought to be more reluctant to allow extrinsic evidence to affect standard form contracts and commercial documents. (b) If the court is satisfied that the parties intended to embody their entire agreement in a written contract, no extrinsic evidence is admissible to contradict, vary, add to, or subtract from its terms (see Sections 93-94 of the Evidence Act). In determining whether the parties so intended, our courts may look at extrinsic evidence and apply the normal objective test, subject to a rebuttable presumption that a contract which is complete on its face was intended to contain all the terms of the parties' agreement. In other words, where a contract is comp....
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....re that extrinsic evidence is used to explain and illuminate the written words, and not to contradict or vary them. Where the court concludes that the parties have used the wrong words, rectification may be a more appropriate remedy. (emphasis supplied) 34. The approach of the Singapore Court of Appeal has our broad approval, being in line with the modern contextual approach to the interpretation of contracts. When proviso (6) and illustration (f) to Section 92, Section 94 and Section 95 of the Evidence Act are read together, the picture that emerges is that when there are a number of documents exchanged between the parties in the performance of a contract, all of them must be read as a connected whole, relating each particular document to "existing facts", which include how particular words are used in a particular sense, given the entirety of correspondence between the parties. Thus, after the application of proviso (6) to Section 92 of the Evidence Act, the adjudicating authority must be very careful when it applies provisions dealing with patent ambiguity, as it must first ascertain whether the plain language of a particular document applies accurately to existing facts. ....
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....nding circumstances of the entirety of the LTA and the correspondence which ensued between the parties. Once that exercise is undertaken, as was undertaken by the Majority Award, it is impossible to hold that the Majority Award is not a possible view on the facts of this case. The reliance of the Majority Award upon the correspondence between the parties pre-July and in September to December 2009, buttressed by Mr. Wilcox's evidence, cannot therefore be said to be flawed. 38. Shri Rohatgi's argument in support of the impugned judgment of the Division Bench that there is no evidence to demonstrate proof of damage suffered as on the date of breach, is also factually incorrect. It is well established that the arbitral tribunal is the final judge of the quality, as well as the quantity of evidence before it (see Sudarsan Trading Co. v. Govt. of Kerala, (1989) 2 SCC 38 at page 53). As was correctly pointed out by Shri Sibal, the Majority Award has taken into account Mr. Wilcox's Affidavit dated 10.07.2013 and Additional Affidavit dated 03.09.2013 detailing the prices at which sales of coal were made to Chinese purchasers during the Fifth Delivery Period, which ended on 30....
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....ly arose in the usual course of things from such breach" appearing in Section 73. As the Respondent had failed to prove the rate for similar canvas in Kanpur on the date of breach it is not entitled to any damages in the circumstances. (pages 660-661) 39. The Single Judge correctly appreciated this part of the case when he stated as follows: 86. MMTC's submission is belied by what it has itself stated in the correspondence exchanged with Anglo. In its letter dated 25th September, 2009, MMTC describes USD 128 as the '2009' rate. In its letter dated 27th November, 2009 it refers to "the 2009 price level of US$ 128/125 PMT." In its letter dated 3rd December, 2009 MMTC referred to "coal being purchased at current price of US$ 128.25 PMT." Further the re-negotiated contracts with SAIL and RINL acknowledge the slump in coal prices to USD 128 during the period from April, 2009 to March 2010. The date of 30th September, 2009 fell between the said dates and was the date to be reckoned for determining the prevalent market price. 87. The majority Award has based its conclusion as regards the prevalent market price of coal as on 30th September, 2009 on the b....
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....tral Tribunal takes into account something irrelevant to the decision which it arrives at; or (iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse. 32. A good working test of perversity is contained in two judgments. In Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath & Sons [1992 Supp (2) SCC 312], it was held: (SCC p. 317, para 7) 7. ... It is, no doubt, true that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then, the finding is rendered infirm in law. In Kuldeep Singh v. Commr. of Police [(1999) 2 SCC 10], it was held: (SCC p. 14, para 10) 10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on re....
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....ubstituted by the "patent illegality" principle which, in turn, contains three subheads: 42.1. (a) A contravention of the substantive law of India would result in the death knell of an arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. This again is really a contravention of Section 28(1)(a) of the Act, which reads as under: 28. Rules applicable to substance of dispute. --(1) Where the place of arbitration is situated in India-- (a) in an arbitration other than an international commercial arbitration, the Arbitral Tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India; 42.2. (b) A contravention of the Arbitration Act itself would be regarded as a patent illegality -- for example if an arbitrator gives no reasons for an award in contravention of Section 31(3) of the Act, such award will be liable to be set aside. 42.3. (c) Equally, the third subhead of patent illegality is really a contravention of Section 28(3) of the Arbitration Act, which reads as under: 28.....
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....nnot be characterized as being either perverse or being based on no evidence. 45. However, Shri Rohatgi relied upon a number of recent judgments, which according to him, throw further light upon the elucidation of law in Associate Builders (supra). Thus, in MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163, this Court held: 11. As far as Section 34 is concerned, the position is well-settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided Under Section 34(2)(b)(ii) i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury [A....
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....ion 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court Under Section 34 and by the court in an appeal Under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings. 15. Having noted the above grounds for interference with an arbitral award, it must now be noted that the instant question pertains to determining whether the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration. However, this question has been addressed by the courts in terms of the construction of the contract between the parties, and as such it can be safely said that a review of such a construction cannot be made in terms of reassessment of the material on record, but only in terms of the principles governing interference with an award as discussed above. 16. It is equally important to observe at this juncture that while interpreting the terms of a contract, the conduct of parties and correspondences exchanged would also be relevant....
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.... award is implied unless such award portrays perversity unpardonable Under Section 34 of the Arbitration Act. 47. In Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236, after referring to the parameters of review in Associate Builders (supra) and other cases, this Court found that with respect to the first claim, relating to price adjustment/escalation, the arbitrator interpreted the relevant clauses of the contract and came to a certain finding. The High Court, in interfering with that finding, was wrong in doing so merely because some other view could have been taken, as the interpretation made by the arbitrator was a possible one. The High Court's judgment was, therefore, set aside to this extent. However, insofar as the second and third claims were concerned, on the facts of that case, the finding was said to be so perverse or irrational that no reasonable person could have arrived at the same, based on the material/evidence on record, as a result of which, the High Court's judgment was upheld. 48. In South East Asia Marine Engg. & Constructions Ltd. (SEAMEC LTD.) v. Oil India Ltd., (2020) 5 SCC 164, a three Judge Bench of t....