TaxTMI 
TaxTMI 
2024 (4) TMI 1007
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.... Total legal costs and disbursements c USD 60,000 MATRIX LABS to bear the total Costs of the Arbitration of USD 60,000 by way of reimbursement to AARK PHARMACEUTICALS of the sum of USD 60,000 d MATRIX LABS and RARE METABOLICS LIFE SCINENCES PVT LTD are to bear their own costs and disbursements; and All other requests and claims are rejected. 2. Relevant Portion of the Arbitral Award reads as under:- "183. Having carefully considered all the evidence and submissions placed before it and for the reasons set out above, the Tribunal hereby Determines and Orders that: a) MATRIX LABS to make payment of INR 6,29,46,000 (Rupees Sixty-Two Million Four Hundred and Ninety Six Thousand Only) to AARK PHARMACEUTICALS toward repayment of the advance paid by AARK PHARMACEUTICALS for the Rejected Test Kits (that is 148,800 test kits) along with compound interest at the rate of 16% per annum for the period from 29 June 2020 until repayment in full; b) MATRIX LABS to pay AARK PHARMACEUTICALS compound interest at the rate of 16% per annum on the sum of INR 95,80,000 FOR THE PERIOD FROM 3 April 2020 to 3 February 2021; c) MATRIX LABS pay AARK PHA....
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....ted was stated to be engaged in the business of promoting and marketing of a wide range of Diagnostic tests that required specialized handling, and was desirous of appointing a "Distributor" for distribution of Specified Products on an exclusive basis. 7. Ex.C2 Tripartite Agreement dated 23.03.2020 further records that the respondent herein had the requisite infrastructure, expertise and experience to organize the movement of the Specified Products and had obtained all the necessary approvals, licenses and clearances from the relevant authorities under the Applicable Laws including the Drugs and Cosmetics Act, 1940 and the rules made thereunder. 8. The respondent had thus expressed its desire to be appointed as the "Distributor" of the said M/s.Rare Metabolics Life Sciences Private Limited for the Specified Products, and the said M/s.Rare Metabolics Life Sciences Private Limited as the Promoter consented to appoint the respondent as the Distributor upon the terms and conditions in the Tripartite Agreement dated 23.03.2020. 9. The said M/s.Rare Metabolics Life Sciences Private Limited thus acted as the "Promoter" under the Ex.C2 Tripartite Agreement dated 23.03.2020. The re....
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....d price of each testing kits between the respondent (Claimant-Distributor) and ICMR was Rs. 600 + 23.2% towards GST and import duty. Thus, the effective price of the supplies by the respondent (Claimant-Distributor) to the Director General of Medical Research was Rs. 739.20 per testing kit. 17. Out of 3,00,000 testing kits imported earlier by the petitioner on 16.04.2020 after the outbreak of Covid 19 pandemic, the petitioner appears to have supplied 2,76,000 testing kits to ICMR through the respondent herein. Balance 24,000 testing kits are stated to have been supplied to the Government of Tamil Nadu. 18. A dispute is said to have in arise between the petitioner and the respondent and the promoter namely M/s.Rare Metabolics Life Scienes Private Limited. Under these circumstances, the promoter namely M/s.Rare Metabolics Life Sciences Private Limited along with the respondent, AARK Pharmaceuticals had filed O.M.P.(I)(COMM) 93 of 2020 against the petitioner/(importer) before the Delhi High Court for a direction for release of 7.24 Lakhs Covid 19 Rapid Test Kit and other Covid-19 related materials which were imported and/or are being imported from the People's Republic of Ch....
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....e gain. The lis between the parties should give way to the larger public good. In view of the above, the kits/test should be sold at a price not beyond Rs. 400/- per kit/test inclusive of GST. 10. Mr. Jayant Mehta, the learned counsel for the petitioners, states upon instructions, that in the interest of the country he would not pursue the matter any further and would give up all further claims, in the case if the importer undertakes to sell the product at not more than Rs. 400/- each, inclusive of GST. Indeed, both parties agree to the principle public interest should be paramount and the tests should be made available to the general public at the lowest cost possible Mr Nagrath, the learned counsel for the respondent submits, that the respondent is ready to and undertakes to supply the kits/tests at Rs. 400/- each, plus GST i.e. at 40% lesser than the ICMR approved rate, directly to any Government or its agency or private entity duly approved to carry out these tests. 11. So, from the other 5 lakhs kits/tests, 50,000 shall be excluded for the State of Tamil Nadu and the remaining 450,000 would be available to the respondent to be disposed-off in terms of the above, direc....
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....mitted that paragraph 22 of the counter filed by the petitioner before the Arbitral Tribunal was mis-interpreted by the Arbitral Tribunal as a result of which, a patent illegality has been committed by the Arbitral Tribunal while passing the Impugned Award in favour of the respondent/ (the claimant). 28. It is further submitted that in Paragraph 22 of the counter, the petitioner has only mentioned about the re-export of 2,24,000 testing kits out of 7,00,000 testing kits imported later on 23.04.2020. 29. It is further case of the petitioner that the petitioner had returned a sum of Rs. 1,15,80,000/- to the respondent and to the promoter namely M/s.Rare Metabolics Life Sciences Private Limited. Despite the same, the Tribunal has awarded the amount claimed by the respondent. 30. It is further submitted that there was no scope for confusing the re-exports made during the month of May of all 7,00,000 [4,76,000+ 2,24,000] testing kits imported by the petitioner after the Delhi High Court order. 31. That apart, the timeline between the import of the consignments covering 2,76,000 testing kits supplied to ICMR and eventual return on 29.06.2020 made it impossible for the petitio....
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....in receipt of advance 1,03,00,000 Interest @ 18% Sub-total 2,87,00,000 The cost of 148800 kits, returned by Claimant and received by R1* 6,24,00,000 The Cost recovered by the R1* on disposal - Scrapped Profit/(loss) 6,24,00,000 The cost of 224000 kits, returned by Claimant and received by R1* 9,40,00,000 The cost recoverable by the R1* on disposal by exporting to HK 9,40,00,000 The cost of freight incurred for inward of 0.5 Million kits and return of 0.224 million kits 75,00,000 Supporting Documents as evidence enclosed Net FOREX Loss - the Forex loss incurred in the transaction of 0.5 Million Kits 75,00,000 Supporting Documents as evidence enclosed Profit/(loss) -1,50,00,000 SUMMARY Relating to 127200 2,87,00,000 Relating to 148800 -6,24,00,000 Relating to 224000 -1,50,00,000 Total -4,87,00,000 (*the petitioner herein) 37. In support of its plea, the petitioner has filed a written submission on the grounds of challenge to the arbitral award as follows:- ....
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....he covenants of the agreement which was breached or failed to comply nor with regard to any complaints by the customer. 38. It is submitted that none of the alternate submissions of the petitioner were also considered by the Arbitral Tribunal. 39. It is submitted that not only the Arbitral Tribunal Impugned Award has arrived improbable conclusion in the Impugned Award based on the available facts but has also ignored the fundamental law. 40. The learned Senior Counsel for the petitioner has placed reliance on the following case laws:- i. Aircon Beibars FZE vs. Heligo Charters Private Limited, MANU/MH/0495/2022; ii. Associate Builders vs. Delhi Development Authority, MANU/SC/1076/2014; iii. Eastern Mining Contractors (Private) Limited vs. The Premier Automobiles Limited, MANU/MH/0205/1962; iv. Mideast Pipeline Products vs. Fernas Construction Co.Ltd, MANU/DE/1352/2018; v. MMTC Ltd vs. Vedanta Limited, MANU/SC/0221/2019; vi. Ssangyong Engineering & Construction Co. Ltd vs. National Highways Authority of India (NHAI), MANU/SC/0705/2019 41. Mr.N.L.Rajah, the learned Senior Counsel for the petitioner has also placed relia....
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....ty before he issued the order of dismissal. Even if he had prepared the order of dismissal, he could have considered the show-cause as he did not leave his office by then. The expression "communication" in respect of an order of dismissal or removal from service would mean that the same is served upon the delinquent officer. (See State of Punjab vs. Amar Singh Harika) 23. Even otherwise also the jurisdiction of a disciplinary authority to consider the matter would remain with it till it goes out of its hands which would mean that the order is dispatched, as in the case of the order of suspension. (See Sultan Sadik v. Sanjay Raj Subba). 25. A learned Single Judge of this Court (Justice BALASUBRAMANIAN) in the discussion Manohara Chetty and Others vs. Coomaraswamy Naidu and Sons (supra) has held as under in Paragraph 10: "10. The law by no means regards admission as conclusive proof of the matters admitted. This is because to a Court of law admissions are but statements which do not more then suggest an inference as to some facts or facts in issue. (See Sections 31 and 17 of the Indian Evidence Act, 1872). It is therefore, important that the Court should ex....
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....n 30.07.2020 and a further sum of Rs. 95,80,000/- to the respondent/distributor on 03.02.2021 being the excess amounts paid against supply of 2,76,000 /- kits. It is therefore submitted that the petitioner was required to refund the amount paid in advance for 1,48,800 testing kits that were returned on 29.06.2020. 48. It is submitted that to realize its payment, the respondent initiated the arbitration proceedings which was presided by the Sole Arbitrator and based on the pleadings filed by the parties the Sole Arbitrator framed issues and based on the submissions of the both the parties, facts on record and applicable law, the Sole Arbitrator passed a reasoned award upon full consideration of facts, evidences presented by the parties, and has allowed the Respondent's claim. 49. The learned counsel for the respondents submitted that the petitioner failed to satisfy any of the grounds for setting aside an award under Section 34 of the Arbitration and Conciliation Act, 1996. It is further submitted that the Petitioner also urges re-appreciation of evidence and merits that were already considered in the arbitration proceeding by the Arbitral Tribunal and by doing so the Peti....
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....lied warranty and therefore has no bearing on the matter at hand. 55. It is submitted that the Petitioner has thus far not paid any of the sums due to the Respondent under the impugned Award dated 31.10.2022 and submitted that the present Petition is an attempt to delay payment and to obstruct enforcement of the Award and hence submitted that the present Petition is devoid of merits and deserves to be dismissed. 56. The learned counsel for the respondent submitted that the scope of challenge under Section 34 of the Act is very narrow. It is submitted that the Petitioner herein has not discharged the burden to show how they fall within the limited bracket for setting aside an arbitral award as per the amended Section 34 of the Act and has placed reliance on the following decisions:- i. MMTC LId v. Vedanta Ltd., (2019) 4 SCC 163; ii. Ssangyong Engineering & Construction Co. Ltd vs. National Highways Authority of India (NHAI), (2019) 15 SCC 131 iii. PatelEngineering Ltd. v. NEEPCO, (2020) 7 SCC 167; iv. The Project Director. NHAI V. M Hakim (2021) 9 SCC 1 57. The learned counsel for the respondent has also placed reliance on the following d....
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....unal is based on no evidence or ignoring vital evidence or is based on documents taken as evidence without notice to the parties. 63. The Honourable Supreme Court in Patel Engineering Ltd V. NEEPCO, (2020) 7 SCC 167 held that patent illegality as a ground for setting aside an award is available only if the decision of the arbitrator is found to be perverse or so irrational that no reasonable person would have arrived at the same or the construction of the contract is such that no fair or reasonable person would take or that the view of the arbitrator is not even a possible view. 64. The Honourable Supreme Court in McDermott International Inc. v. Burn Standard Co. Ltd, (2006) 11 SCC 181 held that while interpreting the terms of a contract, the conduct of parties and correspondences exchanged would also be relevant factors and it is well within the arbitrator's jurisdiction to consider the same. 65. The Honourable Supreme Court in Sutlej Construction Ltd. v. UT of Chandigarh (2018) 1 SCC 718, held that when the award is a reasoned one and the view taken is plausible, re-appreciation of evidence is not allowed while dealing with the challenge to an award under Section 34 ....
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....tabolics Life Sciences Private Limited, along with the respondent AARK Pharmaceuticals - (the claimant) filed in O.M.P.(I)(COMM) 93 of 2020 before the Delhi High Court and secured an order dated 24.04.2020, Content of which has been extracted above. 72. As a result of order dated 24.04.2020 of the Delhi High Court, there was a downward revision in the price agreed between the parties under the Tripartite Master Distribution Agreement dated 23.3.2020. Both the petitioner and the respondents are also not in dispute on this issue. Thus, the contract for Rs. 30,00,00,000/- was reduced to Rs. 21,00,00,000/-. 73. Pursuant to the order dated 24.04.2020 of the Delhi High Court in O.M.P.(I)(COMM) 93 of 2020, petitioner also supplied 2,24,000 test kits to ICMR. However, the entire consignment of 2,24,000 test kit was returned immediately by ICMR. According to the petitioner, in view of the return of 2,24,000 test kits by ICMR, the balance 4,76,000 (7,00,000-2,24,000) test kits were also later exported to a buyer from Hong Kong. 74. Later, ICMR, returned 1,48,000 test kits to the respondent which were in turn were returned to the petitioner on 4.7.2020. According to the petitioner, t....
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....which culminated in order dated 27.01.2021 of the Principal Commissioner of Customs ACC (Imports). The said order indicates that the petitioner had imported 15,0000 Nos. of Covid-19 Test Kits vide Bill of Entry and that out of 15,000 Nos. of Covid-19 Test Kits imported vide aforesaid Bill of Entry No.7460225 dated 16.04.2020, the petitioner has exported 8098 kits vide Shipping Bill No.5380454. 79. In the said proceeding, it was also the stand of the petitioner that 6360 Nos.of Kits were sold to ICMR through the promoters which was exempted for payment of duty @ 5% in terms of Notification No.45/2017 (CGST) dated 14.11.2017 and that 525 Kits were sold to a Chennai Company (Clinical Automation) and that only a small quantity of 17 Nos of test kits were held in their stock and thus differential duty payable by the petitioner was only on the balance 542 Nos of Test Kits . Para 21 of Ex.R.1 to Ex.R8 of the Principal Commissioner of Customs ACC(Imports) of order reads as under:- 21. The importer. on the other hand, has contended that they have imported 15,000 Nos of COVID.19 Kit vide Bill of Entry no. 7460225, dated 16.04.2020, out of which 8098 kits were exported vide Shippi....