Case: LMJ INTERNATIONAL LTD Vs. SLEEPWELL INDUSTRIES CO. LTD

If we disregard the alterations envisaged by the Amendment to the Contract dated 7 th 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 on receipt 01 the shipping documents’, inter alia the above Pre-Shipment Certificates as issued by ISC and provided by Sellers, Sellers were duty entitled to trigger payment under the Contract.6.14 WE THEREFORE FIND THAT Sellers’ claim for payment of IJSD 440.00 per metric ton all three partial shipments succeeds.6.15 In reference with the balance of USD 10.00 per metric ton for each partial shipment, as agreed under the Amendment dated 7 th December 2010, the Amendment Provided that the “Balance amount@ US$10.00 per MT will be payable after receipt of quality inspection report of destination port”.6.16 This indeed establishes an alteration to the original provision of the Contract that the quality would be final at the port of loading, at least as far as the balance of USD 10.00 per metric ton is concerned. On interpretation and construction of the Contract itself and its Amendment dated 7 th December 2010, the Tribunal notes that the Amendment itself defines in“1. Quantity” that the weight in accordance with the Contract would be still “final at loading” while the amended payment term now states that a balance amount of US$ 10.00 per MT would only“be payable after receipt of a quality inspection report of destination port.”6.17 WE THEREFORE FIND THAT the Contract had been validly altered to the provision that Sellers could only have triggered payment of the balance of USD 10.00 per metric ton after presentation of a quality inspection report from the port of destination, i.e. Bangladesh.6.18 As no such quality Inspection had been presented by Buyers, despite various reminders from Sellers, until the present day, the GAFTA Sampling Rules No.124, cl. 6:1 provide that a certificate of analysis should be sent to the other party “within 14 consecutive days” after dispatch of the samples to the analyst.6.19 Buyers in their message of 5 th February 2011 firstly explained that the quality of the cargo on the last vessel i.e. MV Tu man Gang, was inferior.6.20 The Tribunal Therefore finds that buyers, with respect Tribunal THEREFORE FINDS THAT with respect to cl. 6:1 of the GAFTA Sampling Rules No.124 were obliged to provide a certificate of analysis Latter that message dated 5 th February 201 1 therefore latest 20 th February 2011.6.21. The date of default shall therefore be one day later, the 21 st 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 5 th 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 for sums and interest due should be based on a quantity of 13,729.55 metric tons.6.28 WE FIND AND DECLARE THAT:1) Sellers’ claim for payment of balance of USD 10.00 per metric ton for each of the three shipments amounting to USD 137,148.20 succeeds. Interest to run from 29 th June 2011. The date of Buyers’ email stating that they would not be “obliged and/or liable to pay any sum” to Sellers.2) Sellers’ claim for the balance of as deducted from the invoice in reference to the shipment on board of MV Tuman Gang amounting to USD 382,348.90 succeeds. Interest to run from 20 th February 2011, the date by which Buyers should have provided a ‘quality inspection report at destination port’.Buyers shall pay compound interest on the above sum of USD 137,148.20 at the rate of 4% (four per cent) per annum calculated at quarterly rests, from 29 th June 2011 to the date of payment.7.2 Buyers shall forthwith pay to Sellers USD 382,348.90 (three hundred & eighty¬two thousand, three hundred and forty eight United States dollars and ninety cents). Buyers, shall forthwith pay to sellers USD 332,348.90 at the rate of 4% (four percent) per annum calculated at quarterly rests, from 20 th February 2011 to the date of payment.7.3 WE THEREFORE AWARD THAT Buyers shall pay the fees, costs and expenses of this arbitration as per the attached schedule.”17. Suffice it to observe that the Arbitral Tribunal has considered all aspects of the matter and even if it has committed any error, the same could, at best, be a matter for correction by way of appeal to be resorted to on grounds as may be permissible under the English Law, by which the subject arbitration proceedings are governed. We may not be understood to have expressed any opinion on the correctness of those issues.18.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]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 the notice of the Arbitral Tribunal by the respondent – award holder, is baseless and only a subterfuge for protracting the recovery of dues. In that, the respondent had produced a swift message dated 3 rd June, 2011 sent from the respondent bank to the petitioner bank and the subsequent correspondence between the parties to which reference has been made by the Arbitral Tribunal while deciding the matter. There is no allegation that the respondent concealed the stated correspondence between the parties with a view to obtain an arbitral award through fraud. The specific ground taken by the petitioner was that the award holder, with intent to deceive, perpetuated fraud on the petitioner. That is not enough to hold that the subject foreign awards were unenforceable within the meaning of Section 48 of the Act. The petitioner had sufficient notice of the arbitration proceedings but it chose not to participate in the said proceeding for reasons best known to it. Therefore, now it cannot turn around and make a grievance about non¬ consideration of any document. More so, the grievance is in the nature of inviting the Executing Court to have a second look at the award which is not the scope of Section 48 of the Act. The respondent has also refuted the ground urged on behalf of the petitioner regarding awarding of compound interest at the rate of 4% per annum calculated at quarterly rests, being in conformity with the governing laws. The respondent has also relied on the dictum in Shri Lal Mahal Ltd., (2014) 2 SCC 433 (supra) and Renusagar Power Company Ltd.,1994 Supp. (1) SCC 644 (supra). The respondent has also distinguished the judgments cited by the petitioner on the scope of interference in domestic awards on the ground of its enforceability as opposed to the foreign awards in the present cases. The respondent submits that these petitions be dismissed with exemplary costs and while doing so, appropriate directions be issued to the Registrar (OS), High Court at Calcutta to forthwith encash the FDs of approximately Rs.2 crores, in the credit of both the execution cases and forthwith remit the entire receipts, including the accrued interest in US Dollars, to the respondent, as was ordered earlier vide orders dated 5 th January, 2018, 5 th March, 2018 and 20 th April, 2018, respectively, after obtaining prior permission of the Reserve Bank of India in that regard. The respondent also seeks direction against the 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 Bankruptcyr contends that on the earlier occasion, the objections were limited to the questions of maintainability of the execution case on grounds as were urged at the relevant time and not in reference to the enforceability of the subject foreign awards as such.This argument, to say the least, is an attempt to indulge in hair-splitting and nothing more. It is an argument in desperation only to protract the execution of the foreign award on untenable grounds. Indeed, the petitioner had not filed any formal application to raise the issue of maintainability of the execution case but the Court had permitted the petitioner to orally urgeThe learned Judge had then reproduced the five points, which alone were orally urged on behalf of the petitioner through its counsel, as extracted in paragraph 4 above. The High Court examined the said grounds which, obviously, were transcending in the realm of enforceability of the subject foreign awards. In the special leave petitions filed before this Court, the petitioner had articulated questions of law and the grounds also in reference to the scope of Section 48 of the Act which included the enforceability of the subject foreign awards. That can be discerned from the close reading of Questions and Grounds in the previous SLPs, reproduced in paragraph 5 above. Additionally, the learned Single Judge of the High Court vide order date 17 th March, 2015 had made it amply clear that the subject foreign awards were deemed to be decrees, which presupposes that the same were enforceable. That order came to be upheld by the Division Bench whilst disposing of the appeals preferred by the petitioner. These orders have become final and have not been challenged by the petitioner. The petitioner thereafter unsuccessfully resorted to the remedy of review before the High Court. Even the order passed in review petition has become final.14. Be that as it may, the grounds urged by the petitioner in the earlier round regarding the maintainability of the execution case could not have been considered in isolation and de hors the issue of enforceability of the subject foreign awards. For, the same was intrinsically linked to the question of enforceability of the subject foreign awards. In any case, all contentions available to the petitioner in that regard could and ought to have been raised specifically and, if raised, could have been examined by the Court at that stage itself. We are of the considered opinion that the scheme of Section 48 of the Act does not envisage 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 respondent that the conduct of the petitioner is indicative of an attempt to overreach this Court. For, after an interim order was passed in favour of the respondent, permitting withdrawal of part of the deposited amount, the petitioner lost no time in changing the name of the company within three days thereafter on 23 rd April, 2018. The petitioner also changed its registered office address on 26 th April, 2018 and had no compunction in moving the NCLT, Kolkata on 27 th April, 2018 to prevent the respondent from enjoying the fruits of the subject awards, and saying so brazenly in the petition filed by it under Section 10 of the I & B Code. Strikingly, attention of this Court was invited to these facts by the respondent by moving a formal application. The petitioner has not offered any explanation, much less a plausible one. On this count also, the special leave petitions deserve to be rejected.16. Having said this, we do not wish to examine any other argument of the petitioner, including on merits of the enforceability of the subject foreign awards. Even if we were to do so, we would have agreed with the High Court that the grounds urged by the petitioner to question the enforceability of the subject foreign awards are untenable, not being within the purview of Section 48 of the Act. Be that as it may, we find that the High Court has considered every aspect of the grounds urged by the petitioner; and the view so expressed by the High Court in reference to each of the points considered by it is a possible view. The High Court has correctly noted the limited scope for interference in the matter of foreign awards under Section 48 of the Act, keeping in view the principles enunciated by this Court. The High Court has justly noted that the attempt of the petitioner was to call upon the executing court to have a re-look at the award. That cannot be countenanced. We would also agree with the High Court that all the relevant documents submitted to buttress the claim of the respondent before the Arbitral Tribunal, have been adverted to in the award and the findings reached in the award are based on the interpretation and meaning given to the said documents. That can be discerned from the discussion and findings recorded by the Arbitral Tribunal in the award under consideration.Suffice it to observe that the Arbitral Tribunal has considered all aspects of the matter and even if it has committed any error, the same could, at best, be a matter for correction by way of appeal to be resorted to on grounds as may be permissible under the English Law, by which the subject arbitration proceedings are governed. We may not be understood to have expressed any opinion on the correctness of those issues.