TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 210
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.... 2,28,91,856.20/- and for a further direction against the 1st and 2nd respondents to jointly and severally pay to the petitioner a further sum of Rs. 67,66,770.10/- and for a further direction against the 1st and 2nd respondents to jointly and severally pay to the petitioner a further sum of Rs. 32,91,147.96/- and for a further direction against the 1st and 2nd respondents to pay the costs of the petition. 4.By order dated 16.10.2023, a learned Single Judge of this Court had partly allowed the petition by granting a decree in terms of the foreign arbitral award dated 26.03.2021 and the corrective award dated 17.05.2021 against the 1st respondent alone, in accordance with Section 49 of the Arbitration and Conciliation Act, 1996. The petition was dismissed as against the 2nd respondent. Costs were also not granted. Liberty was granted to the petitioner to execute the foreign arbitral award and the corrective award against the 1st respondent by filing an execution petition seeking appropriate reliefs. 5.Aggrieved by the dismissal of the petition, as against the 2nd respondent, the petitioner had filed the present Appeal. 6.It is the contention of the appellant that by a voyag....
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....5.05.2019, 15.06.2019, 15.07.2019 and 15.09.2019 drawn in favour of the agents of the appellant M/s.Taurus Shipping Pvt. Ltd., and drawn on Union Bank of India, Washermanpet Branch, Chennai - 600 021. It was also agreed between the parties that if the payment on any one of the months was not honoured, M/s.Taurus Shipping Pvt. Ltd., was entitled to encash the other post dated cheques to cover the amount outstanding and payable by the 1st respondent to the appellant. 11.Thereafter, on request of the 1st respondent, the first Deferment Agreement was amended by a second Deferment Agreement dated 12.04.2019. By this agreement, the 1st respondent agreed to make payment towards the load port demurrage of USD 226.005.86 and the undisputed discharge port demurrage of a sum of USD 83,617.27 in three instalments to be paid on 15.04.2019 - USD 100,000 and on 25.04.2019 - USD 100,000 and on 05.05.2019 - USD 109,623.13. 12.Again the 1st respondent had provided as security an undated cheque drawn on Union Bank of India, Washermanpet Branch, Chennai, for a sum of Rs. 2,06,78,000/- to be handed over to the agent of the appellant, M/s.Taurus Shipping Pvt. Ltd. On the basis of the aforementione....
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....so be dishonoured. 16.In view of that particular fact, the appellant filed A.No.4708 of 2019 under Section 9 of the Arbitration and Conciliation Act, 1996 seeking protection of the security given by the 1st respondent. In the proceedings, the 1st respondent replaced the undated cheque with another undated cheque for Rs. 2,06,78,000/- drawn on Union Bank of India, Washermanpet Branch, Chennai in favour of M/s.Taurus Shipping Pvt. Ltd., with a covering letter of the 2nd respondent issued in terms of clause 7 of the second Deferment Agreement dated 12.04.2019. In the letter, the 2nd respondent stated that the said cheque was issued in accordance with clause 7 of the agreement dated 12.04.2019. 17.It was contended that the 2nd respondent was a group company of the 1st respondent. This was recorded in the order dated 17.09.2019 in A.No.4708 of 2019. The appellant then sent a letter dated 31.07.2019 to the 1st respondent that an agreement can be reached whereby the cargo which was under the lien could be monetized. Since there was no response, the appellant filed A.No.6092 of 2019 for sale of the 2500 MTs of cargo under lien and appointment of an Advocate Commission (A.No.231 of 20....
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....d the corrected award was issued on 07.05.2021. The appellant then issued demand notices dated 05.07.2021, 26.07.2021 and 05.10.2021 to the 1st respondent calling upon them to pay the sums awarded under the award dated 26.03.2021 and the corrective award dated 17.05.2021. 22.Though notices were delivered to the 1st respondent, they failed to honour their commitment. Thereafter, the appellant filed petition for enforcement of the award under Sections 47 and 49 of the Arbitration and Conciliation Act, 1996 as against the 1st and 2nd respondents jointly and severally. 23.The 2nd respondent was not a party to the arbitration proceedings. But however, the appellant sought to enforce the award also against the 2nd respondent claiming them to be a group company of the 1st respondent and that they had issued a cheque in accordance with clause 7 of the Arbitration Agreement dated 12.04.2019 for a sum of Rs. 2,06,78,000/-. It was contended that the 1st and 2nd respondents should be considered as one single economic entity having common directors and having common key personnel in management and also operating from the same premises. It was contended that the businesses were interlinked....
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.... stated that for each day, the demurrage charge payable was USD 1,00,000. The appellant became liable to pay demurrage charges for the 27 days of delay in removing the cargo by the 1st respondent. The 1st respondent, however, disputed that fact but admitted that there had been a delay of about 8 days. 29.In order to resolve the issues, the appellant and the 1st respondent had entered into a first Deferment Agreement. The 1st respondent had issued five separate cheques towards payment of the undisputed amount. They had also issued yet another cheque as security. The cheques when presented for payment were dishonoured initially on the ground that the account was frozen and later on the ground that the account was declared as Non Performing Asset. The learned counsel pointed out that issuing cheques with the knowledge that the 1st respondent was heading towards liquidation was a clear indication that the 1st respondent had intention to default the appellant. 30.With respect to the disputed amounts, in accordance with the clause to refer matters to arbitration, the appellant had instituted arbitration proceedings at London which was the seat of arbitration. The arbitral tribunal ....
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....epted the cheque issued by the 2nd respondent as security and had raised the lien over the cargo and permitted it to sold by auction. The learned counsel stated that therefore, the appellant should be permitted to enforce the award even against the 2nd respondent, irrespective of the fact whether they were parties to the arbitration proceedings or not. The learned counsel therefore urged that this Court should reverse the judgment of the learned Single Judge and permit enforcement of the award as against the 2nd respondent also. 34.Mr.B.Arvind Srevatsa, learned counsel for the 2nd respondent, however, strongly contested the arguments advanced. The learned counsel pointed out that the 2nd respondent as a Private Limited Company is a separate entity having a separate seal, independent of the 1st respondent. It could be a fact that some of the Directors were common to both companies, but that would not indicate that the 2nd respondent should be made liable for the commitments of the 1st respondent. The learned counsel pointed out that the 2nd respondent was not a party to any of the agreements entered into between the 1st respondent and the appellant herein. Naturally, not being a ....
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....he appropriate Laws of the United Arab Emirates and the 1st respondent / K.I. (INTERNATIONAL) LIMITED, a company incorporated under the Companies Act, 1956 had entered into a voyage Charterparty on 22.11.2018, whereby the appellant as a disponent owner agreed to carry cargo of 1,50,000 MT +/- 10% MOLOO (More or Less Owners Option) of coal on board a vessel which had been chartered, M.V.Citrus from Richards Bay Terminal, South Africa to Krishnapatnam Port, India. 39.The Vessel M.V.Citrus arrived at the port of discharge, Krishnapatnam Port on 30.01.2019 and tendered notice of readiness (NOR) at 0100 hrs and proceeded to berth and after discharging 163,114 MT of coal left Krishnapatnam Port on 05.03.2019. The terms of the Charterparty stipulated that the 1st respondent was to ensure that 25000 MT of cargo was discharged per day after the vessel tendered her NOR at the port of discharge. 40.It was therefore contended by the appellant that the cargo should have been discharged within 6.5246 days failing which demurrage charge would be payable at the rate of USD 14,000 per day, as stipulated in the terms of the Charterparty. It is further contended by the appellant that the 1st re....
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....e disputed sum of USD 295,400/- was still payable towards discharge port demurrage. The appellant invoked the arbitration clause in the Charterparty dated 02.08.2018 and an award was passed on 26.03.2021 and a corrective award was passed on 17.05.2021 against the 1st respondent. 44.The appellant then filed an application in A.No.4708 of 2019 under Section 9 of the Act seeking security for the claim. The 2nd respondent herein came forward to replace the earlier cheque of Rs. 2,06,78,000/- issued by the 1st respondent with another cheque for the same sum, undated, but again drawn on Union Bank of India, Washermanpet, Chennai, in favour of M/s.Taurus Shipping Pvt. Ltd., in accordance with clause 7 of the second deferment agreement dated 12.04.2019. 45.The facts narrated above are not in dispute. 46.The 2nd respondent handed the cheque for consideration to the Court and claimed that it could be held over as security. It was stated before the Court that the 2nd respondent was one of the group companies of the 1st respondent. This statement had been recorded in the order dated 17.07.2019. Paragraph Nos.4, 5, 6 and 7 on the said order in A.No.4708 of 2019 is extracted below: ....
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....nt had become insolvent and therefore, they were forced to handover a fresh cheque from their group company, the 2nd respondent herein. The pleading to that extent in the counter affidavit of the 1st respondent in O.A.No.6092 of 2019 is as follows: "5. The fact that the Respondent under Clasue 7 of Agreement dated 22/11/2018, was forced agree to the Applicant to exercise lien on the balance cargo of 2500 MTs and in addition also agreed to provide an undated cheque for USD 295,4000 (equivalent to Indian Rupees of Rs. 2,06,78,000) as security for the disputed amount of dischage port demurrage itself amount to an act of duress, rendering the contract null and void. Since the cheque issued by Respondent's sister concern on the earlier instance had become insolvent, the Respondent's was once again forced to hand over a fresh undate cheque from the Respondent's group concern Goval Ispat Private Limited, on 16/07/2019 as part of O.A. No 4708 of 2019, before this Hon'ble Court for release of 7,500Mt cargo under the Agreement clearly establishes the intention of the Applicant to merely force the Respondent for out-of-court settlements. The Applicant even verified th....
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....pondent had issued a cheque for a sum of Rs. 2,06,78,000/- in favour of Taurus Shipping Private Limited as undertaken. Since the other cheques issued by the 1st respondent had been dishonoured, on the ground that the account was frozen and subsequently, on the ground that the account was declared as Non Performing Asset, the cheque already issued came to be of no value. The 2nd respondent then stepped in and issued another cheque for an even sum as security for the disputed amount of discharge port demurrage which was the subject matter of arbitration initiated between the parties. 51.Thus, it is seen that the 2nd respondent, who now claims to be a stranger third party to the agreements between the appellant and the 1st respondent was actually aware of the nature of the agreements, was aware that the 1st respondent had undertaken to provide security towards the disputed amount which was the subject matter of arbitration, was aware that the 1st respondent would not be able to honour the security provided and therefore, had, with knowledge issued the cheque for a sum of Rs. 2,06,78,000/- as security for the disputed amount of discharge port demurrage. 52.Thus, the cheque had be....
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.... the dispute voluntarily by providing a cheque for Rs. 2,06,78,000/- as stipulated under the second deferment agreement dated 22.11.2018 as security "for the disputed amount of discharge port demurrage". The arbitral proceedings related to "the disputed amount of discharge port demurrage". The appellant as claimant has claimed a sum of Rs. 2,06,78,000/- in the arbitral proceedings. We therefore hold that the 2nd respondent effectively stood as a guarantor for enforcement of the award, if passed by the arbitral tribunal at London and in evidence thereof and in acceptance of such status thereof had issued the cheque as security for the amount claimed in the arbitral proceedings. 56.The allegation that the 1st and 2nd respondents are group companies are neither denied nor disputed. It is admitted by both sides that they have common directors, that they have a common registered address and that there had been transactions interse between them at various points of time. Though the fortunes of one may not benefit the other directly, the misfortunate of one, in this instance, the 1st respondent which had entered into liquidation would certainly have an effect on the security provided b....
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....he same and they had very specifically issued the cheque, not at the calling of either the appellant or the 1st respondent, but under a specific clause in the second deferment agreement dated 22.11.2018. They had misleded the Court to hold, on the earlier occasion, when orders were passed in A.No.4708 of 2019 and in A.No.6092 of 2019, that the cheque was a valid security and had been issued with intention as security for the disputed amount which was the subject matter of the arbitral proceedings. 61.The learned counsel for the 2nd respondent had argued very forcefully that enforcement could not be initiated against the 2nd respondent. The learned Single Judge had accepted such argument and had held that the 2nd respondent not being a signatory to any of the agreements between the appellant and the 1st respondent and not being a party to the arbitral proceedings cannot now be made a party in the enforcement application. 62.We do not agree with the reasons advanced. We hold that the learned Single Judge had not taken note of one crucial fact namely, that the cheque had actually been issued only as security towards the disputed amount of demurrage charges, which was the subject....