TaxTMI 
TaxTMI 
2010 (1) TMI 1306
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....ocure mineral Ores from the suppliers, negotiate and finalize shipments with the ship owners and arrange for the shipment of Minerals across the world. The Respondent is a Company registered in India using Aluminium Ore as one of the major inputs for their operations. 3. On 15.10.2007, the petitioner submitted a commercial offer through e-mail for the supply of Bauxite to the respondent. After several exchanges of e-mails and after agreeing on the material terms of the contract, the respondent conveyed their acceptance of the offer through e-mail on 16.10.2007 confirming the supply of 5 shipments of Bauxite to be supplied from Australia to Vizag/Kakinada. On the basis of the acceptance by the respondent, the petitioner concluded the deal with the Bauxite supplier in Australia on the same day and entered into a binding Charter Party Agreement with the ship owner in Oslo on 17.10.2007. A meeting was held between the representatives of the respondent and the petitioner at Lanjigarh, Orissa on 26.10.2007 and the minutes of this meeting were signed by them. The acceptance of the offer is acknowledged by the respondent in these minutes. A formal contract containing a detailed arbitrat....
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....act between the parties and the parties are still not ad idem in respect of various essential features of the transaction. Further the draft contract received from the petitioner was yet to be accepted/confirmed by the respondent. The commercial offer provided two options of shipment lot, namely, 2 shipments and 5 shipments. The only understanding that had been arrived at between the parties as a result of the correspondence subsequent to the receipt of the commercial offer from the petitioner was that the transaction would be in respect of 5 shipments. All other terms and conditions pivotal and essential to the transaction were under negotiation as is evident from the correspondence between the parties. The product specifications, price, inclusions in the contract price, delivery point, insurance, commencement and conclusion dates of the contract, transfer of title, quality check and demurrage are all factors that are at large and remain undecided. In such a scenario, where the parties were not in one mind with respect to any aspect of the transaction, the contention of the petitioner that there existed a binding contract between the parties as also a binding arbitration agreement....
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....ng me through various e-mails exchanged between the parties, he contended that the charter was entered into a contract by the parties on 17.10.2007 i.e. the next day. He finally submitted that from the materials it was established beyond doubt that the intention of parties in case of any dispute between them arising out of the contract which was concluded on 16.10.2007 at 3.06 p.m. shall be settled through arbitration. On the other hand, Mr. C.A. Sundaram, learned senior counsel for the respondent contended that there was no concluded contract between the parties and that the agreement between the petitioner and the respondent was only in respect of the number of shipments (two or five) and nothing more. According to him, there is no arbitration agreement and that Clause 6 is vague and ambiguous. He further contended that even in the legal notice dated 01.09.2008 issued by the petitioner's counsel, there is no specific reference to Clause 6 of the commercial offer but mentioned only Clause 29 of the purchase order exchanged between the parties on 08.11.2007 but the present petition before this Court mentions both of them. He also pointed out that the Charter Party Agreement (CP....
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....cs for the fresh cargoes. After discussions with RTA their comments are reproduced. "Quote" We maintain our position that we are not able to accurately measure reactive silica at our Weipa lab for us to place a bonus/penalty on and that any rejection criteria on silica is unreasonable. It is for this reason that we are only prepared to revise our offer on total silica with a Base Grade of 4.5%. We are prepared to increase this bonus/penalty to US$1.50 per % total silica either side the Base Grade. This we believe is a fair compensation to Vedanta and is our final offer. Unfortunately we cannot make this an open ended offer as we need to fill our shipping slots set aside for these cargoes in November and December. We have already lost the October opportunity. Freight and spot prices for bauxite have all moved up since we started this negotiation and we are making offers for 2008 cargoes at $4 higher than your offer. Therefore, we have to put a validity on this until close of business Friday, 12 October after which this offer will be subject to re-confirmation. "Unquote" We have prepared a revised schedule of specs which is attached. This ....
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....rtance: High Dear Swayam, We reviewed the reply below and this not acceptable to RTA or by ourselves. We are unable to improve on the proposal given from our side which itself needs to be ratified by RTA. Please also keep in mind the time limit and we need to have time for obtaining freights which is the most difficult aspect in the present market. Your final reply may be given to us before close of office hours today. Regards Swami D) Shanika From: Swayam Mishra [[email protected]] Sent: Wednesday, October 10, 2007 7:17 PM To: Swaminathan G Cc: Chinmayee Panda; Hukum Chand Dahiya N. Chellappa; Rajesh Mohata; Shanika; SR Subramanyam; Subject: Re: LM Grade Bauxite specs Rs. 1 (2). Doc Dear Mr. Swaminathan, Please send your rates at your proposed quality parameters on FOB basis and on CIF basis, separately. We would also be interested to have separate rates for 2 shipments and for the complete offer of 2 Lac MT. Thanks Swayam Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh ....
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....rantee draft of 12 mtrs, at discharge port Quantity: Draft survey at discharge port by mutually agree independent surveyor will be final. _____________________________________________________________________________________ Quality: Invoice for initial payment as per Producer's Quality Certificate Balance 7.5% payment will be based on analysis done by Independent surveyor Bonus/Penalty: As per Annexure I ------------------------------------------------------------------------------------------------- Wherever applicable any charges payable at discharge port (custom duty, taxes etc.) other than our stated sales conditions will be to buyers account. Conditions of sale-all sales are concluded on the following terms, unless varied by written agreements between us. Neither our agents nor our associated companies are authorized to vary these terms. 1. We shall not be liable by reason of any defect (including non- conformity with specification or sample) unless we receive written notice of the defect within 15 days of delivery. Our liability in that event will be limited to product related compensation after discussions an....
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....jigarh Distt: Kalahandi Pin: 766 027 Orissa Shanika G) From: Swaminathan G [[email protected]] Sent: Monday, October 15, 2007 6:04 PM To: [email protected] Cc: [email protected]; Shanika; SR Subramanyam; Chinmayee [email protected] Subject: Re: Offer for imported bauxite Dear Swayam, THA penalty rate is as agreed/ratified by RTA. Silica rejection cls not agreed by RTA. Given at our risk but we cannot make it coincide with maximum of range as it is too risky for us. In fact, we also refused rejn cls but Mr. SRS argued on this and persuaded us to put it in for your comfort. We only sell C N F basis. Freight rates presently are even more firm than next year. But overall we have this package from ship owners. Trust this clarifies. Best regards Swami H) From: Swayam Mishra [[email protected]] Sent: Tuesday, October 16, 2007 11:28 AM To: Swaminathan G Cc: [email protected]; [email protected]; Shanika; SR Subramanyam ....
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....ssel Owners. Either reduce the freight rate or the demurrage rate. Kindly confirm at the earliest. Swayam Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt: Kalahandi Pin: 766 027 Orissa L) Shanika From: Shanika[[email protected]] Sent: Tuesday, October 16, 2007 2:01 PM To: `Swayam Mishra' Swaminathan G' Cc: [email protected]; [email protected]; SR Subramanyam; Sarika Singh Subject: RE: Offer for imported Bauxite Dear Mr. Swayam, As confirmed by Mr. Swaminathan the Demurrage rate is US$ 69,000 per day. This is the offer given by owners and cannot be reduced any further. Regards Shanika Peiris Assistant Manager-Commercial TRIMEX INTERNATIONAL FZE P.O. BOX 17056, Dubai, UAI Tel:971-4-8835544, Ext. 208 Fax:-971-4-8836410 971-6522083 M) Shanika From: Swayam Mishra [[email protected]] Sent: Tuesday, October 16, 2007 2:41 PM To: [email protected] ....
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....rom: Swaminathan G [[email protected]] Sent: Wednesday, October 17, 2007 11:12 AM To: [email protected] Cc: [email protected] [email protected]; Shanika; SR Subramanyam; [email protected] Subject: Re: Inactive Role of Agent. Dear Swayam Small check n revert and advise them suitably. Meantime please send draft agreement. Regards Swami --------Original Message------- From: Swayam [email protected] To: Swaminathan G Cc: [email protected]; [email protected] [email protected]; [email protected]; Shanika; SR Subramanyam; Suvendu.Sekhar Sahoo [email protected] Sent: Wed Oct 17 10:56:43 2007 Subject: Inactive role of Agent Dear Mr. Swaminathan, On one hand where we are going to do 5 future shipments of imported bauxite, it is sad to notice that your agent at Vizag port is not taking enough initiative to handle the first shipment even!!! While our stevedores and representative....
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....from Australia 1. For the shipments under the proposed new contract of 2 Lacs MT. Trimex requested to clearly mention the following clauses: i) As per Trimex offer No. TID/F/223/2007 dated 15th October 2007 and accepted by VAL, the price is on CIF-FO basis. As per Trimex under such a situation the berthing responsibility should be with VAL. ii) A copy of base Charter Party Agreement and fixture terms shall be provided by Trimex, which should be deemed incorporated in the Purchase agreement. iii) The Discharge rate agreed should be clearly mentioned in the Purchase agreement. 2. VAL will confirm on the feasibility of discharging the cargo at Kakinada port and accordingly TRIMEX will discuss with the Vessel Owners. 3. For the demurrage incurred in the shipment of MV Nena C vide Order No. VAL/OPRN/526 dated 10.09.07, Trimex claims that the same is on VAL's account as the agreement was on CIF- Visakhapatnam basis. VAL will give its opinion on the same. 4. Trimex has asked to finalise on the new contract and the demurrage by end of office hours on 30.10.2007. S) Annexure P-5 Swaminathan G ....
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....um time before Owner will nominate a vessel for the first laycan starting 15-30 Nov anytime from tomorrow. We have to establish our L/c on RTA and this is already overdue. We should have too much pressure at last minute and could result in demurrage at load port as holidays are on from tomorrow in Middle East and India. Please rush the agreement for signature. Best Regards Swami V) Shanika From: Shanika [[email protected]] Sent: Wednesday, November 07, 2007, 11:20 AM To: Swayam Mishra Cc: [email protected] [email protected]; S R Subramanyam; `Swaminathan G' Subject: Agreement for 5 x 45, 000 mt LM Bauxite Importance: High Urgent Attn: Mr. Swayam Mishra We have just received feed back from Owners. On 11.5 meters Draft they have indicated an increase of US$3.5 pmt which will make the price US$97.00 pmt CIF Free Out kakinada if you were to have an option additionally for Kakinada. The following terms would be applicable: - Discharge port to be declared before vessels arrival at load port. - Discha....
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....icably the same shall be referred to Arbitration in accordance with the Arbitration and Conciliation Act 1996, as is prevalent in India. Each Party shall be entitled to nominate an Arbitrator and the two Arbitrators so nominated shall jointly nominate a third presiding Arbitrator. The Arbitrators shall give a reasoned award. The place of arbitration shall be Mumbai, Maharashtra in accordance with Indian Law and the language of the arbitration shall be English. The Parties further agree that any arbitration award shall be final and binding upon both the Parties. The Parties hereto agree that the Seller shall be obliged to carry out its obligations under the Contract even in the event a dispute is referred to Arbitration. 30. Governing Law This Contract shall be construed in accordance with and governed by the laws of Indian and in the event of any litigation the Courts in Mumbai shall have exclusive jurisdiction. This order is being issued in duplicate. You are requested to send the duplicate copy duly signed as a token of acceptance of the terms and conditions. Thanking you Yours faithfully For Vedanta....
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....mportance : High Dear Mr. Rajesh, This is a bit shocking at this juncture as vessel nomination is due from the Owners any time now against the COA. First, we have to go them urgently and ask them to defer the first vessel by 15 days until 1st December as proposed by you on phone. In that case there will be two vessels in December subject to RTA agreement. There might be claims from them. But before we talk to them we need VAL's confirmation that any claims from Owners for the delay or cancellation of any or all shipment(s) under this contract will be fully guaranteed to us and that VAL will pay the amount without demur. Matter urgent as we have to act fast before Owners nominate any vessel. As far as RTA is concerned we shall take-up and hope they will agree to a revised schedule as they are fully booked for December and thereafter this will have also to be agreed with Owners. Please respond by return mail for us to talk to RTA/Owners. We shall try and do our best but before that we need VAL's clear confirmation on above. Regards Swami From the materials placed, it has to be ascertained whet....
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....s/Penalty Rates & 17) Applicable Laws (Indian Law) and Arbitration. The minute to minute correspondence exchanged between the parties, all the conditions prescribed which had been laid down, awareness of urgency of accepting the offer without any further delay to avoid variation in the freight or other factors, coupled with the e-mail sent on 16.10.2007 at 3.06 p.m. under the subject "re: offer for imported bauxite" stated in unequivocal terms, i.e. "we confirm the deal for five shipments", would clearly go to show that after understanding all the details and the confirmation by the respondent, the petitioner sent a reply stating that "thanks for the confirmation, just in time to go to the ship owners". All the above details clearly establish that both the parties were aware of various conditions and understood the terms and finally the charter was entered into a contract by the parties on 17.10.2007. 8. Mr. C.A. Sundaram, learned senior counsel for the respondent taking me through the same emails/correspondence submitted that such clauses being unclear and ambiguous, cannot be permitted to stand on its own footing so as to deprive the respondent of its valid defence. He also....
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....ner. In other words, once the offer of the petitioner was accepted following a very strict time schedule, the respondent could not escape from the obligations that flowed from such an action. 11. The Court of Appeal in the case of Pagnan SPA v. Feed Products Ltd., [1987] 2 LLR 619 observed as follows: It is sometimes said that the parties must agree on the essential terms and that it is only matters of detail which can be left over. This may be misleading, since the word `essential' in that context is ambiguous. If by `essential' one means a term without which the contract cannot be enforced then the statement is true: the law cannot enforce an incomplete contract. If by `essential' one means a term which the parties have agreed to be essential for the formation of a binding contract, then the statement is tautologous. If by `essential' one means only a term which the Court regards as important as opposed to a term which the Court regards as less important or a matter of detail, the statement is untrue. It is for the parties to decide whether they wish to be bound and, if so, by what terms, whether important or unimportant. It is the parties who are, in ....
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...., is not the same as entering into the contract itself" whereas in the case on hand, the moment the commercial offer was accepted by the respondent, the contract came into existence. Though in para 44 of the Dresser Rand S.A (supra), it is recorded that neither the Letter of Intent nor the General Conditions contained any arbitration agreement, in the case on hand, the arbitration agreement is found in Clause 6 of the Commercial Offer. In view of the same, reliance placed by the respondent on Dresser Rand S.A (supra) is wholly misplaced and cannot be applied to the case on hand where the parties have arrived at a concluded contract. 13. Mr. Venugopal pointed out that the Charter Party Agreements are governed as per international shipping practices. The normal procedure is that the brokers from both sides first agree on the vital terms over phone/telex (these terms relate to Freight, Type of Ship, Lay Can (Period of shipping), Demurrage Rate, Cranes, etc.) At this stage, no agreement is formally signed but the terms are binding on both the parties, as per the Contract of Affreightment (CoA), which in the present case was entered into on the next day, i.e. 17.10.2007. Certain mino....
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....absence of signed agreement between the parties, it would be possible to infer from various documents duly approved and signed by the parties in the form of exchange of e-mails, letter, telex, telegrams and other means of tele-communication. 18. Though, Mr. C.A. Sundaram, relied on several decisions, in view of clear materials in the form of emails/correspondence between the parties, those decisions are not germane to the issue on hand. 19. Before winding up, it is useful to refer the latest decision of this Court about the object of Arbitration and Conciliation Act, 1996. In Great Offshore Ltd. v. Iranian Offshore Engg. & Construction Co. MANU/SC/7970/2008 : (2008) 14 SCC 240, this Court while considering the objects and provisions of the Arbitration and Conciliation Act, 1996, held: 59 The court has to translate the legislative intention especially when viewed in light of one of the Act's "main objectives": "to minimize the supervisory role of courts in the arbitral process." [See Statements of Objects and Reasons of Section 4(v) of the Act.] If this Court adds a number of extra requirements such as stamps, seals and originals, we would be enhancing our role, n....