LMJ INTERNATIONAL LTD. versus SLEEPWELL INDUSTRIES CO. LTD. on 20 February 2019

[2019] 4 S.C.R. 617

LMJ INTERNATIONAL LTD.

v.

SLEEPWELL INDUSTRIES CO. LTD.

(Special Leave Petition (Civil) No. 540 of 2018)

FEBRUARY 20, 2019

[A. M. KHANWILKAR AND AJAY RASTOGI, JJ.]

Arbitration and Conciliation Act, 1996 – s. 48 – Parties enteredinto separate contracts for sale of Non-Basmati Parboiled Rice,Thailand origin– Contract governed by GAFTA 48 and disputeswere to be resolved by Arbitration 125 as per GAFTA 125 in London– Dispute arose – Arbitral Tribunal passed two separate awards –Respondent filed two execution cases (pertaining to contract-I andcontract-II) u/Part-II of the 1996 Act before the High Court forenforcement of the foreign arbitral award – Petitioner’s objectionregarding the maintainability of the subject foreign awards rejected– Special Leave Petitions (pertaining to contract-I & II) filed by thepetitioner– Dismissed– Single Judge in the execution petition heldthat the subject foreign awards were deemed to be decrees and henceenforceable –Order upheld by the Division Bench – Petitioner thenfiled review application in the execution case – Dismissed –Petitioner filed G.As. in the respective execution cases, objectingthe enforceability of the foreign awards – Rejected – On appeal,held: Grounds urged by the petitioner in the earlier round regardingthe maintainability of the execution case could not have beenconsidered in isolation and de hors the issue of enforceability of thesubject foreign awards – Scheme of s.48 does not envisagepiecemeal consideration of the issue of maintainability of theexecution case concerning the foreign awards, in the first place;and then the issue of enforceability thereof – Subject applicationfiled by the petitioner deserves to be rejected, being barred byconstructive res judicata – After an interim order was passed in favourof the respondent permitting withdrawal of part of the amountdeposited in the High Court in relation to the execution of the subjectforeign awards, the petitioner lost no time in changing the name ofthe company within three days thereafter–Petitioner also changedits registered office address and had no compunction in moving the

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ANCLT, Kolkata to prevent the respondent from enjoying the fruitsof the subject awards, and saying so brazenly in the petition filedby it u/s.10 of the I & B Code – Conduct of the petitioner is indicativeof an attempt to overreach this Court – High Court considered everyaspect of the grounds urged by the petitioner and the view soexpressed is a possible view – Exemplary costs, quantified atBRs.20,00,000/- be paid to the respondent – Registrar (OS), CalcuttaHigh Court to encash the FDs lying deposited in the credit of theconcerned stated execution case and, after obtaining the RBI’spermission forthwith, remit the entire amount, including the interestaccrued in US Dollars, to the respondent – Principles of res judicataC– Insolvency & Bankruptcy Code, 2016 – s.10.

Dismissing the Special Leave Petitions, the Court

Conclusion

Dismissing the Special Leave Petitions, the Court HELD: 1.1 The petitioner contends that on the earlieroccasion, the objections were limited to the questions ofmaintainability of the execution case on grounds as were urgedDat the relevant time and not in reference to the enforceability ofthe subject foreign awards as such. This argument, to say theleast, is an attempt to indulge in hair-splitting and nothing more.It is an argument in desperation only to protract the execution ofthe foreign award on untenable grounds. Indeed, the petitionerEhad not filed any formal application to raise the issue ofmaintainability of the execution case but the Court had permittedthe petitioner to orally urge “all available grounds”. The Judgehad then reproduced the five points, which alone were orally urgedon behalf of the petitioner through its counsel. The High Courtexamined the said grounds which, obviously, were transcendingFin the realm of enforceability of the subject foreign awards. Inthe special leave petitions filed before this Court, the petitionerhad articulated questions of law and the grounds also in referenceto the scope of Section 48 of the Arbitration and Conciliation Act,1996, which included the enforceability of the subject foreignGawards. Additionally, the Single Judge of the High Court videorder date 17[th] March, 2015 had made it amply clear that thesubject foreign awards were deemed to be decrees, whichpresupposes that the same were enforceable. That order cameto be upheld by the Division Bench whilst disposing of the appealspreferred by the petitioner. These orders have become final andH

have not been challenged by the petitioner. The petitionerthereafter unsuccessfully resorted to the remedy of review beforethe High Court. Even the order passed in review petition hasbecome final. [Para 13] [638-D-H; 639-A]

1.2 The grounds urged by the petitioner in the earlier roundregarding the maintainability of the execution case could not havebeen considered in isolation and de hors the issue of enforceabilityof the subject foreign awards. For, the same was intrinsicallylinked to the question of enforceability of the subject foreignawards. In any case, all contentions available to the petitioner inthat regard could and ought to have been raised specifically and,if raised, could have been examined by the Court at that stageitself. The scheme of Section 48 of the Act, does not envisagepiecemeal consideration of the issue of maintainability of theexecution case concerning the foreign awards, in the first place;and then the issue of enforceability thereof. Whereas, keeping inmind the legislative intent of speedy disposal of arbitrationproceedings and limited interference by the courts, the Court isexpected to consider both these aspects simultaneously at thethreshold. Taking any other view would result in encouragingsuccessive and multiple round of proceedings for the executionof foreign awards. Such a situation cannot be countenancedkeeping in mind the avowed object of the Arbitration andConciliation Act, 1996, in particular, while dealing with theenforcement of foreign awards. For, the scope of interferencehas been consciously constricted by the legislature in relation tothe execution of foreign awards. Therefore, the subjectapplication filed by the petitioner deserves to be rejected, beingbarred by constructive res judicata, as has been justly observedby the High Court in the impugned judgment. [Para 14][639-B-F]

1.3 The conduct of the petitioner is indicative of an attemptto overreach this Court. For, after an interim order was passedin favour of the respondent, permitting withdrawal of part of thedeposited amount, the petitioner lost no time in changing thename of the company within three days thereafter on 23[rd] April,2018. The petitioner also changed its registered office addresson 26[th] April, 2018 and had no compunction in moving the NCLT,Kolkata on 27[th] April, 2018 to prevent the respondent from A

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Aenjoying the fruits of the subject awards, and saying so brazenlyin the petition filed by it under Section 10 of the I & B Code.Strikingly, attention of this Court was invited to these facts bythe respondent by moving a formal application. The petitionerhas not offered any explanation, much less a plausible one. Onthis count also, the special leave petitions deserve to be rejected.B[Para 15] [639-G-H; 640-A-B]

1.4 Any other argument of the petitioner not examined,including on merits of the enforceability of the subject foreignawards. Even if it were to be done so, we would have agreed withthe High Court that the grounds urged by the petitioner toCquestion the enforceability of the subject foreign awards areuntenable, not being within the purview of Section 48 of the Act.The High Court has considered every aspect of the grounds urgedby the petitioner; and the view so expressed by the High Courtin reference to each of the points considered by it is a possible Dview. The High Court has correctly noted the limited scope forinterference in the matter of foreign awards under Section 48 ofthe Act, keeping in view the principles enunciated by this Court.The High Court has justly noted that the attempt of thepetitioner was to call upon the executing court to have a re-look at the award. That cannot be countenanced. All the relevantEdocuments submitted to buttress the claim of the respondentbefore the Arbitral Tribunal, have been adverted to in the awardand the findings reached in the award are based on theinterpretation and meaning given to the said documents. Thatcan be discerned from the discussion and findings recorded byFthe Arbitral Tribunal in the award under consideration.[Para 16] [640-B-F]

1.5 The Arbitral Tribunal has considered all aspects of thematter and even if it has committed any error, the same could, atbest, be a matter for correction by way of appeal to be resortedGto on grounds as may be permissible under the English Law, bywhich the subject arbitration proceedings are governed. Courtmay not be understood to have expressed any opinion on thecorrectness of those issues. In view of the above, the amounttowards the exemplary costs, quantified at an aggregate amount H

of Rs.20,00,000/- (Rupees Twenty Lakh only) be paid to therespondent within six weeks from today. The Registrar (OS),Calcutta High Court is directed to forthwith encash the FDslying deposited in the credit of the concerned stated executioncase and, after obtaining the Reserve Bank of India’spermission forthwith, remit the entire amount, including theinterest accrued in US Dollars, to the respondent. That shall bedone within eight weeks from today and compliance report besubmitted in the Registry of this Court within two weeksthereafter. The above directions shall be complied with by theRegistrar (OS), Calcutta High Court, irrespective of any orderpassed by any other Court/Tribunal in India. [Paras 17-19][646-D-H; 647-A]

Shri Lal Mahal Ltd. v. Progetto Grano SPA (2014) 2SCC 433 :Renusagar Power Company Ltd. v. General Electric Co.(1994) 1 Suppl. SCC 644 : [1993] 3 Suppl.

SCR 22;Oil & Natural Gas Corporation Ltd. v. SawPipes Ltd. (2003) 5 SCC 705 : [2003] 3 SCR 691 –referred to.

Case Law Reference

(2014) 2 SCC 433 referred to Para 8

[1993] 3 Suppl. SCR 22 referred to Para 8

[2003] 3 SCR 691 referred to Para 8

CIVIL APPELLATE JURISDICTION : Special Leave Petition(Civil) No. 540 of 2018.

From the Judgment and Order dated 22.08.2017 of the HighCourt at Calcutta in G.A. No. 3306 of 2016

WITH

Special Leave Petition (Civil) No. 5493 of 2019.

A.K. Sinha, Sr. Adv., Vikas Sethi, Sanandha Mukherjee, DeepakGoel, Advs. for the Petitioner.

Shyam Divan, Sr. Adv., Rakesh Sinha, Pinaki Addy, ShailendraJain, Chira Ranjan Addy, Advs. for the Respondent.

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[2019] 4 S.C.R.

AThe Judgment of the Court was delivered by

A.M. KHANWILKAR, J. 1.These special leave petitionsemanate from the judgment and orders dated 22[nd] August, 2017 passedby the High Court at Calcutta in G.A. No.3306/2016 in E.C. No.487/2013and dated 9[th] July, 2018 in G.A. No.3307/2016 in E.C. No.488/2013,Brespectively. The special leave petitions pertain to two execution petitionsfiled by the respondent – award holder concerning two separate foreignawards. Since the questions raised in both these petitions are overlapping,the same are being answered together.

2. The parties had entered into separate contracts for sale of NonCBasmati Parboiled Rice, Thailand origin, on the terms and conditionsspecified in the contracts. The contract contained a stipulation that thequantity would be final at the Port of loading as per the official weightcertificate issued by SGS at the cost of the seller, meaning thereby therespondent. The consignments were shipped by the seller as per thesaid contract. The contract was an FOB contract and the goods wereDmeant for the Government of People’s Republic of Bangladesh. Thecontract in “other terms” envisage that on terms and conditions not incontradiction with the stipulated terms of contract shall be governed byGAFTA 48 and disputes to be resolved by Arbitration 125 as per GAFTA125 in London. The buyer had opened letters of credit on differentEdates and the consignments were shipped by the seller. For each singleshipment, invoices had been issued by the seller in accordance with theaddendum to the contract. Shorn of unnecessary details, be it noted thatsome dispute arose regarding the inferior quality of rice and non-releaseof the payment towards the invoices raised by the seller in respect ofcertain shipment, which eventually became the subject matter ofFarbitration proceedings. The respondent, on 28[th] July, 2011, invoked thearbitration clause and eventually appointed Mr. R. Barber as itsArbitrator. As the petitioner failed to respond, the respondent requestedGAFTA to appoint an arbitrator on their behalf in accordance with GAFTAArbitration Rules 125. GAFTA duly appointed Mr. R. Eikel as theGsecond Arbitrator on 22[nd] September, 2011. On 25[th] June, 2012 GAFTAappointed Mr. C. Debattista as the third Arbitrator and Chairman of theTribunal.

3. The respondent filed its claim submissions dated 11[th] May, 2012in the two independent arbitration proceedings, concerning contract-I

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and contract-II, respectively. These claim submissions came to be filedafter giving various opportunities to the petitioner. Resultantly, theArbitral Tribunal passed two separate awards in relation to theconcerned contracts, being Arbitration Case No.14/456 (pertaining tocontract-I) and Arbitration Case No.14/457 (pertaining to contract-II).Be it noted that the Arbitral Tribunal proceeded ex-parte against thepetitioner as, despite notice, the petitioner refused to participate in thearbitration proceedings. Neither did it file any statement of defence orcounterclaim nor did it adduce any evidence.

4. On 19[th] November, 2013, the respondent filed two executioncases, being Execution Case No.487/2013 (pertaining to contract-I) andExecution Case No.488/2013 (pertaining to contract-II), under Part-IIof the Arbitration and Conciliation Act, 1996 (for short “the Act”),before the High Court at Calcutta for enforcement of the foreignarbitral awards. The learned Single Judge of the High Court passed acommon order in the said execution cases rejecting the objectionpurportedly regarding the maintainability of the subject foreign awardsvide judgment and order dated 4[th] December, 2014. The learned SingleJudge noted that the petitioner did not file any affidavit or formalapplication to oppose the execution case, but chose to raise objectionsorally, only through his counsel, before the Court. The Single Judge notedthe objections of the petitioner. The Court also noted that the Courtought to be satisfied that the foreign award was enforceable and mustrecord its satisfaction in that regard, consequent to which, in view ofSection 48 of the Act, the award shall be deemed to be a decree of theCourt. The learned Single Judge then went on to record the fiveobjections taken on behalf of the petitioner through its counsel, whichread thus:

“The first objection raised is that no prayer for declaration hasbeen made in the application that the foreign award is enforceable.It is submitted that unless prayer is made seeking a declaration asto the enforcement of the award, the Court cannot assumejurisdiction. In this regard the learned Senior Counsel has referredto a Single Bench decision of the Bombay High Court in the caseof Toepfer International Asia Pvt. Ltd. versus Thapar Ispat Ltd.,reported in 2000 (1) Arb. LR 230 (Bombay) paragraph 19.

The second objection is that a civil suit is pending between theparties in which there is a categorical observation both by the AB

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learned Single Judge as well as the Division Bench that any actiontaken by the parties to the suit during the pendency of the suitshall be subject to and abide by the result of the suit. It is submittedthat a cross appeal was preferred by the decree-holder and thisobservation of the learned Single Judge was not interfered withand accordingly the execution application is premature and unlessthe suit is decided, the award does not attain its finality.

The third objection is that the arbitration clause has not beenproperly invoked. It is submitted that arbitration clause is atwo-tier clause. Before the arbitration clause could be invoked,the parties are required to first make an attempt to amicably settletheir disputes and only upon failure, the parties could refer theirdisputes to the arbitration as per GAFTA clause for rice andarbitration rules 125. It is submitted that there is no averment inthe petition that before invoking the arbitration clause there wasany attempt to settle the disputes amicably. Since this stage hasnot been reached, the invocation of Arbitration Clause is void abinitio. In this regard, the learned Senior Counsel has referred toan unreported decision of a single Bench of this Court in AP 112of 2008 [Waidhan Engineering & Industries Private Limited vs.The Board Of Trustees For The Port Of Kolkata] decided on 5thMay 2010.

The fourth objection is that even if it is assumed for the sake ofargument that this amicable settlement was not followed, eventhen Rule 3.1 was not followed with regard to the appointment ofthe sole Arbitrator. It is submitted that it was incumbent upon thedecree-holder to inform the respondent about the appointment ofa sole arbitrator and it was only on refusal to accede to suchrequest that other procedures prescribed under the rules shallfollow.

The fifth and the last objection appears to be that the nomineearbitrator of the respondent was appointed de hors the provisionsof GAFTA Rules and accordingly the procedure adopted isirregular from the very beginning and the award is not enforceable.”

5. After considering the rival submissions, the Court rejected theaforementioned objections on the finding that the legislative intent underlying the Act was to circumscribe the supervisory role of the Courtin arbitral proceedings and that it predicated limited interference.Further, it went on to observe that the objections raised by the petitionerwere in a quagmire of despondency and a desperate attempt to resistthe enforceability of an enforceable award rather than being any realchallenge thrown towards the maintainability of the said petition. Theseobservations would assume relevance because in the special leavepetitions filed against the said common judgment dated 4[th] December,2014, the questions of law and grounds articulated resonate with theobjections taken by the petitioner regarding the subject foreign awardsbeing enforceable or otherwise. To wit, the questions of law and groundsurged in Special Leave Petition (Civil) No.5612 of 2015 (pertaining tocontract-I) read thus:

“QUESTIONS OF LAW :

That the following questions of law of general and publicimportance arise for consideration of his Hon’ble Court :-

i) Whether any order in an execution proceeding can be passedbefore the Court is called upon to decide and declare that theaward is enforceable?

ii) Whether any declaration as to the enforceability of a foreignaward is to be sought by the award holder before seeking toenforce the foreign award?

iii) Whether a foreign award which arises out of an arbitrationagreement which is under challenge in a properly instituted civilsuit, can be put to execution before the suit is heard and disposedof?

iv) Whether valid and proper invocation of the arbitration clauseis a pre-requisite before seeking to enforce the foreign awardarising out of the arbitration agreement between the parties?

v) Whether in a two-tier arbitration mechanism, it is necessary toexhaust the first-tier (i.e. negotiation) before proceeding to for-mally commence the reference?

vi) Whether the executing Court can assume jurisdiction withoutthere being a declaration as to the enforcement of the foreignaward?

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vii) Whether the execution of the foreign award was prematurebefore the outcome of the civil suit filed by the appellant?

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viii) Whether the invocation of the arbitration clause was properlydone by the award-holder?

ix) Whether the Arbitral Tribunal rightly applied the rules,principles and practice of GAFTA Arbitration Rules whiledelivering the foreign award?

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x) Whether an award-holder can seek to apply for execution of aforeign award without first complying with the conditions laiddown in Section 48 of the 1996 Act?

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xi) Whether a foreign award can be said to be enforceable merelyupon production of original award and a duly certified copy of thearbitration agreement?

xii) Whether it is necessary to file a formal application underSection 48 of the 1996 Act to resist the foreign award orobjections as to the enforceability of a foreign award can be madeeven otherwise?

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xiii) Whether recourse to Section 49 of the Arbitration &Conciliation Act, 1996 can be taken without satisfying the test laiddown in Section 48 of the 1996 Act?

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xiv) Whether the executing court can pass any order in aid ofexecution despite the pendency of a properly instituted civil suitwhich challenges the very basis of a purported foreign award?

xv) Whether the executing court an substantive pass orders inthe execution ignoring the pendency of the civil suit and theobservation of the Division Bench of the Calcutta High Court tothe effect that “any action taken by the parties to the suit duringits pendency shall be subject to and abide by the result of the suit?

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xvi) Whether the executability of the foreign award can beGdecided without allowing the award debtor to file its affidavit orits objection in writing to defend a purported foreign award?

xvii) Whether any interim order can be passed in favour of aparty relying upon a purported foreign award without going into atall the objections raised by the petitioner?

GROUNDS

a) For that the impugned order is untenable in law and facts of thepresent case.

b) For that the impugned order has been passed without givingany opportunity to the petitioner to file its affidavit or put itsobjection in writing to the executability of the foreign award.

c) For that the impugned order has been passed by a Single Judgeof the Calcutta High Court totally ignoring the effect of theobservation and finding of an order passed by another Single Judgeof the Hon’ble High Court duly affirmed by the Division Bencharise out of a previously instituted civil suit.

d) For that there was no prima facie case in favour of therespondent and no interim order could have been granted to therespondent.

e) For that the High Court erred in failing to call upon thepetitioner to file its affidavit on merits and to raise its objection inwriting to the executability of the foreign award?

f) For that the High Court erred in holding that the affidavitdisclosing the Bank Accounts filed by the petitioner in terms ofthe order dated 18.09.2014 gave a very bleak picture about thefinancial condition of the petitioner.

g) For that the High Court failed to appreciate that thedecree-holder/respondent had not met or satisfied the test laiddown in Sections 47 and 48 of the Arbitration & Conciliation Act,1996.

h) For that the High Court failed to appreciate the purport andthe scope of the Arbitration & Conciliation Act, 1996 and misdi-rected itself in law and in fact.

i) For that the High Court failed to appreciate that the impugnedorder will cause create hardship and inconvenience and wouldaffect the day-to-day business of the petitioner.

j) For that the High Court erred in holding that sufficientopportunity was given to the petitioner to deal with themaintainability of the execution proceeding.”

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A6. The aforementioned special leave petition came to be dismissedon 27[th] February, 2015. Similarly, the special leave petition filed by thepetitioner, being SLP(C) No.6682 of 2015 (pertaining to contract-IIinvolving similar questions and grounds), was dismissed on 17[th] August,2015.B7.Later on, when the matter proceeded before the Single Judge

B7.Later on, when the matter proceeded before the Single Judgeof the High Court in the execution petition, the Court noted that it hadalready held in its earlier order dated 4[th] December, 2014, that thesubject foreign awards were deemed to be decrees and henceenforceable, whilst rejecting the objections of the petitioner in both thecases with regard to the maintainability of the execution petition. TheClearned Single Judge directed the petitioner to examine its PrincipalOfficer. The petitioner preferred an appeal against the said decisiondated 17[th] March, 2015 which came to be disposed of by the DivisionBench vide common order dated 1[st] December, 2015. These orders havebeen allowed to attain finality. The petitioner then filed a reviewDapplication in the execution case. The same was dismissed by the learnedSingle Judge of the High Court on 8[th] June, 2015, holding that the reviewapplication was a ploy to reopen the matter which had attained finalityafter the rejection of the special leave petitions. After the rejection ofthe review application, the petitioner was advised to file G.A.Nos.3306/2016 and 3307/2017 in the respective execution cases,Epurporting to raise objections regarding the enforceability of the foreignawards in terms of Section 48 of the Act. We may refer to theapplication filed in G.A. No.3306/2016 as to the grounds on which theobjection regarding enforceability of the foreign awards came to beresurrected. The relevant extract thereof reads thus:F

“74. The said purported award dated April 10, 2013 is notenforceable, interalia, being vitiated by fraud and/or corruption asmorefully stated above. The particulars of fraud and corruptionare, without prejudice to the order challenges to enforceability ofthe purported award, summarized hereinbelow:- G

(a) The award holder with intent to deceive and/or to perpetratefraud on the petitioner actively concealed the factum of filing thesuit being C.S.No.196 of 2011 (Sleepwell Industries Ltd. Vs. Bankof Baroda) for US$ 382,348.90 before the Arbitral Tribunal andprocured the purported Award including the said sum for, ArbitralTribunal.H

(b) The award holder with an intent to deceive the petitioner, madea promise without any intention of performing it.

(c) By its letter and mail both dated February 14, 2011 the awardholder accepted that it has sent inferior quality of rice and promisedthat it will send its inspectors to Bangladesh for joint inspection ofthe inferior quality of rice sent by it and forwarded the passportsof its inspectors for obtaining VISA and agreed that it will accept90% payment provisionally against their export bill of exchangeand that balance 10% will be paid after joint inspection andsettlement of claim towards the inferior goods supplied by theaward holder.

(d) However, as soon as the 90% payment was released by thepetitioner, as agreed between the parties, the award holder refusedto send its representative for joint inspection and finalization ofthe claim and allegedly claimed that the inspection held at loadingport was final and with an intent to deceive and/or to perpetratefraud on the petitioner demanded the balance 10% amount of thebill of exchange.

(e) The award holder made a suggestion as to a fact that if thepetitioner accept the Bill of Exchange for the inferior quality ofgoods and pays 90% of the bill amount, it will depute itsrepresentatives for joint inspection and the balance 10% will besettled after such joint inspection and finalization of the claim,which was not true and which the award holder did not believe itto be true.

(f) The award holder with an intent to deceive the petitionerprocured the purported award in respect of 2.22% of the totalamount due under the three consignments actively concealing thatit has neither raised any invoice on the petitioner for all the threeconsignments nor did it make any claim under the subsisting Lettersof Credit through which the entire payments were made in respectof the first two consignments and further that it has not raised anyBill of Exchange for the balance 2.22% in respect of the thirdconsignment sent through vessel M.V. Tu Man Gang.

(g) The award holder with an intent to perpetrate fraud on thepetitioner gave a wrong email address to GAFTA and correctemail address was given by its mail dated January 11, 2013 and AB

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February 12, 2013 after close of arbitration proceedings by thearbitral tribunal by its mail dated December 17, 2012.

(h) The award holder with an intent to perpetrate fraud on thepetitioner suggested as a fact, which was not true and which theaward holder did not believe to be true that the balance 2.22% orUS$ 10/- per MT shall be payable on the basis that “certificate ofinspection at the time of loading shall be final as to quality” bysuppressing the addendum to the contract dated December 7,2010, which provided that “the balance amount at the rate of US$10/- per MT will be payable after receipt of quality inspectionreport at destination port and in the process, the award holderprocured a purported award for the amount US$ 137,148.20.

(i) The award holder with an intent to perpetrate fraud on thepetitioner actively concealed from the arbitral tribunal that inrespect of the third consignment being the consignment sentthrough the vessel MV Tu Man Gang, the balance 10% of theirinvoice amounting to US$ 382,348.90 was to be settled afterinspection and finalization and by doing so, the award holderprocured a purported award for the sum of US$ 382,348.90.

(j) The award holder with an intend to deceive the petitioner andto perpetrate fraud on the petitioner deliberately suppressed fromthe purported Arbitral tribunal that the award holder in its lettersdated June 10, 2011 and July 11, 2011 had admitted its liability andagreed to pay demurrage charges on vessel Tu Man Gang to theextent of US$ 20,921,88. The petitioner is unable to disclose otherparticulars of fraud till disclosure of fuller and better particularsby the award holder. The petitioner craves leave to file asupplementary affidavit upon such disclosure of fuller and betterparticulars by the award holder.

75. In the premises, the purported award holder was in conflictwith the Public Policy of India as the same was induced or affectedby fraud and hence enforcement of the purported award holderbe refused and/or the same should be held as unenforceable.

76. Without prejudice to the aforesaid and/or in addition thereto,the purported award is not enforceable, interalia, on the followinggrounds:- A-1 The contract between the parties dated 25[th] October 2010provides as follows:

“All other terms and conditions not in contradiction with the aboveas per GAFTA 48 Arbitration as per GAFTA 12 in London.

ARBITRATION

All disputes in connection with this contract or the executionthereof shall be settled amicably by friendly negotiations betweenthe two parties. If no settlement can be reached, the case in disputeshall then be submitted GAFTA, LONDON for arbitration as perGAFTA clause for rice and amendment if any and ArbitrationRule 125".

A copy of the GAFTA 125 is annexed hereto and marked “OO”.

A copy of the GAFTA No.48 is annexed hereto and marked “PP”.

A-2. On a perusal GAFTA No.48, it is apparent that it is a standardform of contract to be filled up in detail and is to be signed by theparties. In the instant case, the petitioner did not sign any contractwith the award holder in GAFTA No.48. In view of the above,there was no contract between the parties herein in terms of and/or on the basis of GAFTA Form No.48.

A-3 However, the purported award was passed on the basis ofGAFTA No.48. Therefore, the arbitral procedure was not inaccordance with the agreement of the parties and the award isnot enforceable under Section 48 (1)(d) of the said Act.

B-1. Assuming but not admitting that GAFTA No.48 wasapplicable, the same could not be applied if in contradiction withthe agreement dated October 25, 2010. The agreement asamended by the Addendum dated December 7, 2-010 providedthat “….. balance amount of US$10 Per Mt will be payable afterreceipt of quality inspection report of destination port.”

B-2. However, the purported award was passed on the basis ofclause 5 of GAFTA No.48 providing “Certificate of Inspection attime of loading shall be final as to quality”.

B-3. Therefore, the arbitral procedure was not in accordance withthe agreement of the parties and hence, the said purported awardis not enforceable.

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C-1. By a mail dated September 19, 2011, the Award holderinformed the petitioner to appoint its arbitrator within three daystherefrom and informed that on failing to do so, they will requestGAFTA to appoint an Arbitrator on behalf of the petitioner.However, by a communication dated February 29, 2012 Mr. Bardiaon behalf of the award holder informed GAFTA that he hasreceived a purported letter dated September 22, 2011 from GAFTAappointing one Mr. R. Eikel as arbitrator on behalf of the petitionerin case No.14-456 and requested to appoint Arbitrator in CaseNo.14-457.

C-2. The time to appoint arbitrator by the petitioner was to expireon September 22, 2011. Only after that, the award holder wasentitled to make an application to GAFTA to appoint an Arbitrator.Appointment of Mr. R. Eikel by GAFTA on September 22, 2011without any application by the award holder was irregular and notbinding on the petitioner. In any event and as the award holder byits letter dated September 19, 2011 wanted the petitioner to appointits Arbitrator within 3 days therefrom and as in computing the 3days period the date of issuance being September 19, 2011 was tobe excluded, no appointment of any Arbitrator, either of Mr. R.Eikel or otherwise, could not be made by GAFTA on September22, 2011 and such alleged appointment is bad being contrary tothe agreement between the parties and is not and cannot be bindingon the petitioner.

C-3. Since the Arbitrator on behalf of the petitioner was notappointed in accordance with the procedure agreed, thecomposition of the arbitral tribunal was not in accordance withthe agreement of the parties and the purported award cannot beenforced and its enforcement should be refused.

D-1. The purported award provides that –

“6.20 : The Tribunal THEREFORE FINDS THAT Buyers, withrespect to Cl.6.1 of the GAFTA Sampling Rules No.124 wereobliged to provide a certificate of analysis latest 14 days after thatmessage dated 5 February 2011, therefore, latest 20 February2011.

6.21: The date of default shall therefore, be one day later, the 21February, 2011 and SO WE DO FIND”.

D-2. The GAFTA Arbitration Rules provide that a claimant cangive a notice of his intention to refer a dispute to arbitration withinthe time limits prescribed therein. In the case of non-payment ofamount, a Notice of Reference cannot be issued beyond 60 daysfrom the date the dispute has arisen. A claimant can initiatearbitration proceeding or appoint an Arbitrator before expiry ofthe time limit.

D-3. The Notice of Arbitration was given and Arbitrator on itsbehalf was appointed by the award holder by two letters bothdated July 28, 2011. Therefore, the Notice of Arbitration andappointment of Arbitrator was ex facie time barred under theArbitration Rules of GAFTA and/or Agreement between theparties.

D-4. Further, GAFTA 124 does not find any place in the agreementbetween the parties and is wholly inapplicable in the instant case.

D-5. Therefore, the arbitral procedure and also appointment ofarbitrators was not in accordance with the agreement of the partiesand also not in accordance with law applicable, and hence, thesaid purported Award was not enforceable.

E-1 By a mail dated September 19, 2012, the arbitral tribunal allowedthe award holder to file its further claim submissions till close ofbusiness of that date. No opportunity was given to the petitionerto file its defence submission. By a mail dated November 23,2012 GAFTA requested the award holder as to whether addressof the petitioner submitted by the award holder was correct. By amail dated December 17, 2012, the Tribunal closed arbitrationproceedings. By mails dated January 11, 2013 and February 12,2013 the award holder submitted the correct email address of thepetitioner to GAFTA, i.e. after close of arbitration proceedings.

E-2. Therefore, the petitioner herein was not given proper noticeof the appointment of the arbitrator. The petitioner was not givenproper notice of the arbitral proceedings. The petitioner was unableto present its case. In the premises, the purported award is notenforceable.

F-1. From the mail of GAFTA dated September 26, 2012, it isclear that GAFTA can only accept hardcopies towards pleadings.

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From the mail dated September 25, 2012 of GAFTA, it appearsthat hardcopy of the claim submission was filed by the awardholder on September 24, 2012, though the time limit was September19, 2012.

F-2. In the premises, the arbitral procedure was not in accordancewith the law applicable and enforcement of the purported awardshould be refused.

G-1. A Civil suit being C.S. No.185 of 2011 filed by the petitioneragainst the award holder challenging the purported notices bothdated July 28, 2011 referring the alleged disputes to Arbitrationand appointment of Arbitrator is pending disposal. In the said suitan order dated September 9, 2011 was passed by an Hon’bleSingle Judge directing that any action taken by the parties to thesuit shall be subject to and abide by the result of the suit. The saidorder was upheld by the Hon’ble Division Bench dismissing theCross-Objection by the Award holder. The suit is still pending.The award holder did not challenge the order dated September28, 2012 passed by a Division Bench of this Hon’ble Courtdismissing both the appeals and the two cross objections. Havingnot done so, the award holder accepted that the observations madeby the learned Single Judge to the effect that “any action taken bythe parties to the suit shall be subjected to and abide by the resultsof the suit” would affect the enforcement of any award, whichwould be passed by the Arbitral Tribunal.

G-2. In the premises, the purported award did no and could notattain finality and hence not yet enforceable.”

8. The learned Single Judge of the High Court (Executing Court)was once again called upon to consider the objections regardingenforceability of the subject foreign awards. At the outset, it has notedthat such a challenge was not maintainable after the rejection of theobjections in the first round had attained finality with the dismissal of thespecial leave petitions by this Court. It held that the objections now takenwould be hit by the principles of res judicata. Despite that, the Courtproceeded to examine the objections on merit and opined that the samewere not falling within the purview of conflict with the public policy ofIndia as such. On the other hand, it was an attempt to invite the Court tohave a second look at the foreign awards. That could not be countenanced in view of the limited jurisdiction under Section 48 of theAct, considering the decisions cited at the Bar by both sides highlightingthe distinction between the approach to be adopted while examining thequestion of enforceability of the foreign award and the domestic award,as delineated by this Court in Shri Lal Mahal Ltd. Vs. Progetto GranoSPA[1], Renusagar Power Company Ltd. Vs. General Electric Co.[2],and Oil & Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd.[3]. Inaddition, the High Court went on to observe that the petitioner, havingfailed to participate in the arbitration proceedings despite the opportunitygiven to it and having notice of such proceedings, could not be heard tomake a grievance that the respondent - award holder did not producethe relevant documents before the Arbitral Tribunal. On the other hand,the Court held that the respondent - award holder had placed all therelevant documents/materials before the Arbitral Tribunal and moreparticularly, because the subsequent correspondence between theparties disclosed very clearly that the respondent had categoricallydenied its obligation to produce any quality inspection report at the Portof destination. It also noted that the Arbitral Tribunal had jurisdiction todecide the issue one way or the other and in the present case, it had sodecided. The High Court also noted that the petitioner had not allegedany fraud or bias against the Arbitral Tribunal as such. From thegrievance of the petitioner, even if taken at its face value, it did notwarrant interference under Section 48 of the Act. In substance, thelearned Single Judge after adverting to the settled legal position and thefactual matrix of the case on hand, concluded that the objections of thepetitioner, regarding enforceability of the subject foreign award, weredevoid of merit and thus rejected the same.

9. Aggrieved, the petitioner has once again approached this Courtby way of the instant special leave petitions, broadly reiterating theobjections taken before the High Court. In that, the subject foreign awardsare vitiated by fraud; the awards are contrary to the terms of thecontract and thus violative of Section 28(3) of the Act; the ArbitralTribunal has considered an issue in respect of which there is nopre-existing dispute; the Arbitral Tribunal has made out a new case whichwas not even made out by the claimant in the statement of claim; thesubject foreign awards are not supported by reason and are in violation 1(2014) 2 SCC 433

21994 Supp. (1) SCC 644

3(2003) 5 SCC 705

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Aof natural justice and in contravention of the fundamental policy ofIndian law; and the Executing Court considering the application underSection 48 of the Act has acted as a First Court of appeal and assumedpowers under Order 41 Rule 33 of CPC and sustained the arbitral awardby supplying new reasons and facts, which is not the basis on which theimpugned awards have been passed.

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10. The respondent, on the other hand, has urged that theapplication filed by the petitioner was not maintainable as it was hit bythe principles of res judicata, issue estoppel and cause of actionestoppel and principles analogous thereto. The respondent has alsoinvited our attention to the conduct of the petitioner which wasCindicative of an attempt to overreach the Court. In that, after the interimorder was passed by the Court on 20[th] October, 2018, permitting therespondent to withdraw part of the amount deposited in the High Courtin relation to the execution of the subject foreign awards, the petitionerchanged its name on 23[rd] April, 2018 from LMJ International Ltd. to SriDMunisuvrata Agri International Limited. It then changed its registeredoffice from Hemanta Basu Sarani to British India Street on or about26[th] April, 2018. The petitioner then, without any compunction, proceededto file a petition under Section 10 of the Insolvency and BankruptcyCode, 2016 before NCLT, Kolkata on 27[th] April, 2018 so as to invoke a moratorium against the release of any further amount to the respondent,Ein the event the respondent succeeded in the present petitions. Thepurpose for which the petitioner invoked NCLT proceedings is, in fact,manifest from the averments in the petition filed by the petitioner beforethe NCLT itself, claiming that the objective of initiating the corporateinsolvency process was to prevent the respondents from receiving theFproceeds. All these developments have been brought on record by therespondent. The same were not disclosed by the petitioner on its own,which it was obliged to do in law. For this reason alone, contends therespondent, no indulgence should be shown to the petitioner.

11. On merits, it is submitted that the grounds urged by theGpetitioner would not come within the purview of Section 48 of the Act,which is very narrow and does not require the Court to have a secondlook at foreign awards. The grounds, at best, could be urged by thepetitioner in the appeal to be filed against the foreign award governed byEnglish Laws (UK Arbitration Act, 1996). The petitioner has allowed H

the said awards to attain finality having failed to file such appeal. Eventhe argument of fraud on the basis of the allegation that the relevantdocuments were not brought to the notice of the Arbitral Tribunal by therespondent – award holder, is baseless and only a subterfuge forprotracting the recovery of dues. In that, the respondent had produced aswift message dated 3[rd] June, 2011 sent from the respondent bank to thepetitioner bank and the subsequent correspondence between the partiesto which reference has been made by the Arbitral Tribunal whiledeciding the matter. There is no allegation that the respondent concealedthe stated correspondence between the parties with a view to obtain anarbitral award through fraud. The specific ground taken by thepetitioner was that the award holder, with intent to deceive, perpetuatedfraud on the petitioner. That is not enough to hold that the subject foreignawards were unenforceable within the meaning of Section 48 of theAct. The petitioner had sufficient notice of the arbitration proceedingsbut it chose not to participate in the said proceeding for reasons bestknown to it. Therefore, now it cannot turn around and make a grievanceabout non-consideration of any document. More so, the grievance is inthe nature of inviting the Executing Court to have a second look at theaward which is not the scope of Section 48 of the Act. The respondenthas also refuted the ground urged on behalf of the petitioner regardingawarding of compound interest at the rate of 4% per annum calculatedat quarterly rests, being in conformity with the governing laws. Therespondent has also relied on the dictum in Shri Lal Mahal Ltd. (supra)and Renusagar Power Company Ltd., (supra). The respondent hasalso distinguished the judgments cited by the petitioner on the scope ofinterference in domestic awards on the ground of its enforceability asopposed to the foreign awards in the present cases. The respondentsubmits that these petitions be dismissed with exemplary costs and whiledoing so, appropriate directions be issued to the Registrar (OS), HighCourt at Calcutta to forthwith encash the FDs of approximately Rs.2crores, in the credit of both the execution cases and forthwith remit theentire receipts, including the accrued interest in US Dollars, to therespondent, as was ordered earlier vide orders dated 5[th] January, 2018,5[th ]March, 2018 and 20[th] April, 2018, respectively, after obtaining priorpermission of the Reserve Bank of India in that regard. The respondentalso seeks direction against the petitioner for securing the deficit amount,which would remain after appropriation of the amount under the FDs, AB

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Alying with the Registrar (OS), Calcutta High Court. The respondent wouldcontend that such direction is necessary in the peculiar facts of thepresent case and to obviate any complication due to moratorium, as thepetitioner has invoked proceedings under the Insolvency and BankruptcyCode.

B12.We have heard Mr. A.K. Sinha, learned senior counselappearing for the petitioner and Mr. Shyam Divan, learned seniorcounsel appearing for the respondents.

13. We first proceed to examine the preliminary issue as to whetherit was open to the petitioner to raise grounds regarding enforceability ofCthe foreign awards despite the judgment of the High Court dated 4[th]December, 2014, rejecting the objections in the context ofmaintainability of the execution petition and which decision had attainedfinality consequent to rejection of the special leave petitions by this Courtand including the review petition by the High Court. The petitionercontends that on the earlier occasion, the objections were limited to theDquestions of maintainability of the execution case on grounds as wereurged at the relevant time and not in reference to the enforceability ofthe subject foreign awards as such. This argument, to say the least, is anattempt to indulge in hair-splitting and nothing more. It is an argument indesperation only to protract the execution of the foreign award onEuntenable grounds. Indeed, the petitioner had not filed any formalapplication to raise the issue of maintainability of the execution case butthe Court had permitted the petitioner to orally urge “all available grounds”.The learned Judge had then reproduced the five points, which alonewere orally urged on behalf of the petitioner through its counsel, asextracted in paragraph 4 above. The High Court examined the saidFgrounds which, obviously, were transcending in the realm ofenforceability of the subject foreign awards. In the special leavepetitions filed before this Court, the petitioner had articulated questionsof law and the grounds also in reference to the scope of Section 48 ofthe Act which included the enforceability of the subject foreign awards.GThat can be discerned from the close reading of Questions and Groundsin the previous SLPs, reproduced in paragraph 5 above. Additionally, thelearned Single Judge of the High Court vide order date 17[th] March, 2015had made it amply clear that the subject foreign awards were deemed tobe decrees, which presupposes that the same were enforceable. Thatorder came to be upheld by the Division Bench whilst disposing of theH

appeals preferred by the petitioner. These orders have become final andhave not been challenged by the petitioner. The petitioner thereafterunsuccessfully 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 theearlier round regarding the maintainability of the execution case couldnot have been considered in isolation and de hors the issue ofenforceability of the subject foreign awards. For, the same wasintrinsically linked to the question of enforceability of the subject foreignawards. In any case, all contentions available to the petitioner in thatregard could and ought to have been raised specifically and, if raised,could have been examined by the Court at that stage itself. We are ofthe considered opinion that the scheme of Section 48 of the Act does notenvisage piecemeal consideration of the issue of maintainability of theexecution case concerning the foreign awards, in the first place; andthen the issue of enforceability thereof. Whereas, keeping in mind thelegislative intent of speedy disposal of arbitration proceedings andlimited interference by the courts, the Court is expected to consider boththese aspects simultaneously at the threshold. Taking any other viewwould result in encouraging successive and multiple round ofproceedings for the execution of foreign awards. We cannotcountenance such a situation keeping in mind the avowed object of theArbitration and Conciliation Act, 1996, in particular, while dealing withthe enforcement of foreign awards. For, the scope of interference hasbeen consciously constricted by the legislature in relation to theexecution of foreign awards. Therefore, the subject application filed bythe petitioner deserves to be rejected, being barred by constructive resjudicata, as has been justly observed by the High Court in the impugnedjudgment.

15. There is an additional reason which dissuades us to show anyindulgence to the petitioner. We find force in the grievance made by therespondent that the conduct of the petitioner is indicative of an attemptto overreach this Court. For, after an interim order was passed in favourof the respondent, permitting withdrawal of part of the deposited amount,the petitioner lost no time in changing the name of the company withinthree days thereafter on 23[rd] April, 2018. The petitioner also changed itsregistered office address on 26[th] April, 2018 and had no compunction inmoving the NCLT, Kolkata on 27[th] April, 2018 to prevent the respondent A

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Afrom enjoying the fruits of the subject awards, and saying so brazenly inthe 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 bymoving a formal application. The petitioner has not offered anyexplanation, much less a plausible one. On this count also, the specialleave petitions deserve to be rejected.B

16. Having said this, we do not wish to examine any otherargument of the petitioner, including on merits of the enforceability ofthe subject foreign awards. Even if we were to do so, we would haveagreed with the High Court that the grounds urged by the petitioner toquestion the enforceability of the subject foreign awards are untenable,Cnot 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 groundsurged by the petitioner; and the view so expressed by the High Court inreference to each of the points considered by it is a possible view. TheHigh Court has correctly noted the limited scope for interference in theDmatter of foreign awards under Section 48 of the Act, keeping in viewthe principles enunciated by this Court. The High Court has justly notedthat the attempt of the petitioner was to call upon the executing court tohave a re-look at the award. That cannot be countenanced. We wouldalso agree with the High Court that all the relevant documents submittedto buttress the claim of the respondent before the Arbitral Tribunal, haveEbeen adverted to in the award and the findings reached in the award arebased on the interpretation and meaning given to the said documents.That can be discerned from the discussion and findings recorded by theArbitral Tribunal in the award under consideration. The relevant extractthereof reads thus:F“6. DISCUSSION AND FINDINGS

6.1 The disputed issues submitted for our determination concernthree different aspects first of all, the question whether thecontractual quality had been delivered by sellers and receivedby Buyers. Secondly, the matter of the balance to the fullGcontractual quantity and thirdly, and subsequently to the firsttwo issues, the payment of the invoices.

6.2 As respondents elected not to participate in the round ofsubmissions the Tribunal is bound to base its discussion andsubsequently its findings on the submission and evidence filedHby claimants only.

CO. LTD. [A. M. KHANWILKAR, J.]

6.3 As a starting point on the first issue, whether the contractualquality had been delivered by sellers and received by buyers,the tribunal focuses on the provisions of the governing contractand, as far as relevant, to its amendments.

6.4 The contract agreed between the parties was for the sale andpurchase of 15000 metric tons of Thai Non-basmati ParboiledRice on FOB Bangkok terms.

6.5. The contract provided in his context under the quality clausethat:- “Rice to be supplied ‘Rice to be supplied shall be 15000MT (5percent more or less) of Non-basmati Parboiled rice 15 percent(Maximum) Broken. Latest Clop of 2009-2010 Thailand origin Ingood condition, ‘fit for human consumption without any unpleasantodour, free from any sign or mould, fermentation or deteriorationand free from obnoxious and deleterious matters and poisonousweed seeds. Rice must be free from insect infestation and shallhave the following specification”.

i) Moisture (Maximum): 13 PCT

ii) Broken Grains (Maximum): 15 PCT (Rice size of 3/4[th] andbelow will be considered as broken and less than 1/4[th] Brokenshould not be more than 2 percent

iii) Foreign Mater (Maximum) : 0.3 Percent

iv) Dead, Damaged and Discoloured Grains (Maximum): 3 Percent in Total

iv) Radio Activity (Maximum) : 50 DO/KG 01 737 SC/134 CS(Relaxable for the Crop of SAARC and South-East Asian Country)

6.6 In relevance to this dispute and under consideration of theQuality Clause of the Contract, same was amended on 7[th]December 2010 and altered:

“2. Specifications: Clause II – to be amended to 17 Pct Max I/0 15Pct. Clause IV – to be amended to 6 Pct. Max I/0 3 Pct inTotal.

All other specifications will be remain unchanged.”

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A6.7 Three partial shipment had been performed by claimants asfollows:-

1. 1,610.00 mt on board of MV Sturdy Falcon on 27[th] December2010

2. 3,430.00 mt on board of MV Genius Mariner on 31[st] DecemberB2010

3. 8,689.55 mt on board of MV Tuman Gang (sic) on 17[th] January2011

6.8 Subsequently, 133,729.55 metric tons had been delivered byCSellers to Buyers and Sellers provided for each shipmentvarious documents under the Contract, including so-called “pre-shipment Inspection Certificates issued by SGS” as under thePayment Clause, yet altered by Amendment to the Contractdated 7December 2010 to same issued now by “ISC”.

D6.9 Those pre-Shipment inspection Certificates were indeed Issuedby ISC for all three shipments displaying the following analysisresults:

1. Certificate No.11000(2) 22010/4 dated 27[th] December 2010for MV Sturdy Falcon E Mositure:12.80% Total broken Kernels:15.00% Small Broken:0.59%

Dead, damaged and discoloured kernels: 3.00%

F Foreign Matter.0.07%

2. Certificate No.11038/2010/4 dated 31[st] December 2010 forMV Genius Manner Mositure:12.80%

Total broken Kernels: 12.60%

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Small Broken: 0.46%

Dead, damaged and discoloured kernels: 3.00%

Foreign Matter. 0.16%

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3. Certificate No.11039/2010/2 dated 17[th] January 2011 for MVTu Man Gang Dead, damaged and discoloured kernels: 3.00%

6.10 If we disregard the alterations envisaged by the Amendmentto the Contract dated 7[th] December 2010, granting an evenhigher level for “Broken Grains” end “Dead, damaged andDiscoloured Grains”, the results provided by ISC were wellWithin the parameters foreseen for the quality under theContract.

6.11 The Tribunal therefore FINDS THAT the quality of the cargoshipped on the three vessels was within the amendedcontractual specifications.

6.12. In addition to the above, the provision DI the Quality Clause5 of GAFTAContract No.48, being Tale Quale contract assuch, states, Inter alia:

“Certificate of Inspection at time o/ loading –shall be final asto quality”.

6.13 Consequently, and under consideration of the Payment Termof the- Contract providing for payment “on receipt 01 the shipping documents’, inter alia the abovePre-Shipment Certificates as issued by ISC and provided bySellers, Sellers were duty entitled to trigger payment under theContract.

6.14 WE THEREFORE FIND THAT Sellers’ claim for paymentof IJSD 440.00 per metric ton all three partial shipmentssucceeds.

6.15 In reference with the balance of USD 10.00 per metric tonfor each partial shipment, as agreed under the Amendmentdated 7[th] December 2010, the Amendment Provided that the A

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A“Balance amount@ US$10.00 per MT will be payable afterreceipt of quality inspection report of destination port”.

6.16 This indeed establishes an alteration to the original provisionof the Contract that the quality would be final at the port ofloading, at least as far as the balance of USD 10.00 per metricBton is concerned. On interpretation and construction of theContract 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 Contractwould be still “final at loading” while the amended paymentCterm now states that “a balance amount of US$ 10.00 per MTwould only “be payable after receipt of a quality inspectionreport of destination port.”

6.17 WE THEREFORE FIND THAT the Contract had beenvalidly altered to the provision that Sellers could only haveDtriggered payment of the balance of USD 10.00 per metric tonafter presentation of a quality inspection report from the portof 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,Ethe GAFTA Sampling Rules No.124, cl. 6:1 provide that a“certificate of analysis should be sent to the other party “within14 consecutive days” after dispatch of the samples to theanalyst.

6.19 Buyers in their message of 5[th] February 2011 firstly explainedFthat the quality of the cargo on the last vessel i.e. MV Tu manGang, was inferior.

6.20 The Tribunal Therefore finds that buyers, with respect TribunalTHEREFORE FINDS THAT with respect to cl. 6:1 of theGAFTA Sampling Rules No.124 were obliged to provide acertificate of analysis Latter that message dated 5[th] FebruaryG201 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.

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6.22 As Buyers failed to forward the certificate within this limit of14 days, any claim for rejection or for an allowance in respectof any matters dealt with under the Contract, and itsAmendments. shall be deemed to be waived and absolutelybarred, AND SO WE DO FIND.

6.23 THE TRIBUNAL THEREFORE FINDS THAT Sellers’claim for payment of balance invoices of USD 10,00 per metricton succeeds.

6.24 There is no apparent disputes as far as the quantity of theshipment under the contract is concerned as the contractprovided for the shipment of 15000 metric tons, +-5% in buyersoption and sellers only shipped 13,729.55 metric tons.

6.25 Buyers nevertheless informed Sellers 5[th] February 2011 thatthe original Letter of Credit as foreseen for payment under theContract not be extended and Buyers therefore planned to“establish Fresh LC for the balance quantity of 2000 ton in theold contract”.

6.26 The Tribunal has not seen any new letter of credit for thispurpose and as Buyers have not filed such, the Contract cameto its end, 6.27 WE THEREFORE FIND THAT Sellers’ calculations forsums and interest due should be based on a quantity of 13,729.55metric tons.

6.28 WE FIND AND DECLARE THAT:

1) Sellers’ claim for payment of balance of USD 10.00 per metricton for each of the three shipments amounting to USD137,148.20 succeeds. Interest to run from 29[th] June 2011. Thedate of Buyers’ email stating that they would not be “obligedand/or liable to pay any sum” to Sellers.

2) Sellers’ claim for the balance of as deducted from the invoicein reference to the shipment on board of MV Tuman Gangamounting to USD 382,348.90 succeeds. Interest to run from20[th] February 2011, the date by which Buyers should haveprovided a ‘quality inspection report at destination port’.

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A Buyers shall pay compound interest on the above sum of USD137,148.20 at the rate of 4% (four per cent) per annumcalculated at quarterly rests, from 29[th] June 2011 to the date ofpayment.

7.2 Buyers shall forthwith pay to Sellers USD 382,348.90 (threeBhundred & eighty-two thousand, three hundred and forty eightUnited States dollars and ninety cents).

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7.3 WE THEREFORE AWARD THAT Buyers shall pay the fees,costs and expenses of this arbitration as per the attachedschedule.”

17. Suffice it to observe that the Arbitral Tribunal has consideredDall aspects of the matter and even if it has committed any error, thesame could, at best, be a matter for correction by way of appeal to beresorted to on grounds as may be permissible under the English Law, bywhich the subject arbitration proceedings are governed. We may not beunderstood to have expressed any opinion on the correctness of thoseEissues.

18. In view of the above, these special leave petitions are dis-missed with exemplary costs, quantified at an aggregate amount ofRs.20,00,000/- (Rupees Twenty Lakh only). The amount towards costsbe paid to the respondent within six weeks from today.

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19. Although we are dismissing the special leave petitions, weaccede to the request of the respondent to pass a specific order to directthe Registrar (OS), Calcutta High Court to forthwith encash the FDslying deposited in the credit of the concerned stated execution case and,after obtaining the Reserve Bank of India’s permission forthwith, remitGthe entire amount, including the interest accrued in US Dollars, to therespondent. That shall be done within eight weeks from today and com-pliance report be submitted in the Registry of this Court within two weeksthereafter. We further clarify that the above directions shall be complied with by the Registrar (OS), Calcutta High Court, irrespective of anyorder passed by any other Court/Tribunal in India. We are required topass such a directions in the peculiar facts of the present case.

Divya Pandey

Petitions dismissed.

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