Delhi High Court
Interore Fertichem Resources Sa vs Mmtc Of India Limited on 10 October, 2007
Equivalent citations: 2007(4)ARBLR242(DELHI), 146(2008)DLT61
Author: Sanjay Kishan Kaul
Bench: Sanjay Kishan Kaul
JUDGMENT Sanjay Kishan Kaul, J.
1. The petitioner and the respondent entered into a contract dated 25-05-1999 under Contract No. MMTC/1999-2000/FZ(V)/1. Disputes having arisen under the said contract, the petitioner invoked the Arbitration Clause XX of the contract and referred the matter to an Arbitral Tribunal comprising of Captain S.M. Berry nominated by the petitioner, Shri R.S. Saran nominated by the respondents and Rear Admiral (Dr.) O.P. Sharma as the third and presiding arbitrator. The tribunal passed an award dated 23-06-2005 rejecting the claim of the petitioner, leaving the parties to bear their own costs. It is this award which is sought to be challenged by the petitioner under Section 34(2) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the said Act).
2. In order to appreciate the scope of the challenge, certain facts need to be set out. The documents placed on record show that the petitioner and the respondent entered into a contract dated 25-05-1999 wherein the petitioner agreed to supply to the respondent 25,000 MTs of bulk Urea plus minus 10% bulk urea at buyers option at the rate of US $ 87.45 PMT. It is stated that as per Annexure III (A), clause 1 of the said contract, the petitioner was required to charter a vessel for shipment of the requisite quantity of urea and the buyers/respondent or its nominees was responsible for fulfilllment of the conditions of the Charter Party at the discharging port. The said contract inter alia provided for wharfage and demurrage, shipment terms, settlement of dispatch and demurrage, force majeure, arbitration clause etc. Consequently, on 28-06-1999, the petitioner entered into a Charter Party with M/s Camlica Denizcilik Ve Tic A.S. Istanbul, Turkey, owners of Turkish flag Vessel "MV Sadan Kaptanoglu" which was agreed to by the respondent on 29-06-1999. Under clause 2 of the Charter Party, the Master or owners of the Vessel was required to give notices of arrival to the Charterer and Charterer's agent at each discharging port and under clause 4 of the Charter Party, the provisions in relation to lay time and its exceptions were set out.
3. It is stated that by a Nomination message dated 12-07-1999 addressed to Collector of customs, Chennai, Traffic Manager, Chennai, Transchart, New Delhi, IPL and the respondent, the Assistant Director (Shipping), Department of fertilizers, Government of India, New Delhi nominated Chennai as the Discharge port for full discharge, informed the expected time of arrival (ETA) as 26-07-1999, reserved their right to nominate a second port of discharge and nominated one Indian Potash Limited (IPL) as receivers. Through this message, it was also informed that Stevedores would be appointed by the Receivers and the respondent was asked to advise the Master of Vessel to proceed to Chennai port immediately and fixed the discharge rate post berthing at 1750 MTs per day for IPL.
4. Further, a letter of authority was issued by MMTC authorizing IPL "sign Bill of Entry in respect of vessel Sadan Katanoglu (23703.210)" and "to handle/take delivery of Urea Cargo from the Vessel arriving at Chennai Port around 26-07-1999" and the same was informed to the petitioner.
5. Accordingly, IPL (the receivers) appointed M/s. Sea Shore Logistics as their Stevedoring-cum C & F agents for the said vessel on 26-07-1999 and requested them to complete the customs and port formalities before the arrival of the vessel with an expected discharge rate of 2000 mts per day as per the Charter party.
6. The vessel arrived at Chennai port on 27-07-1999. The Master gave Notice of Readiness (NOR) at 1520 hours which was accepted by the Stevedores M/s. Sea Shore Logistics on behalf of the receivers. No objections were raised by IPL as to the non-receipt of Expected Time of Arrival (ETA) and the NOR was accepted subject to the terms and conditions of the Charter Party.
7. The petitioner states that when the vessel arrived at Chennai port without giving any notice of ETA, then instead of declining the NOR, the receivers accepted the same.
8. As per clause 14 of the Charter party and para 9 of Annexure-II (A) of the Contract, the lay time was to begin from 24 running hours after the vessel's arrival and the NOR, to discharge the cargo being tendered and accepted. The lay time commenced on 28-07-1999.
9. As per para 1 of Annexure-III A of the contract, the buyers or its nominees were responsible for fulfillling the conditions of the Charter party at the discharging port.
10. On 28-07-1999, the prior entry (Import General Manifest) in respect of the cargo of the vessel was filed by the owner's agent where as it had to be filed at least 8 days prior to the arrival of the vessel to enable the traffic authorities of the port to schedule the proper berthing, and to allocate proper priority to the vessel as per the regulations of the Chennai port. At all Indian ports including Chennai, it was the responsibility of the owner's agent to obtain proper berthing schedule.
11. The vessel, however, berthed only on 31-07-1999 and commenced discharge. On 12-08-1999, the vessel was pulled out as the Stevedores appointed by IPL were unable to maintain the discharge rate set by the port authorities as their minimum norm. The vessel could however gain berth due to the intervention of the Government authorities on 17-08-1999.
12. Since the stevedores did not improve the discharge rate, despite several reminders and written warning, IPL terminated the said contract and appointed M/s. Express Clearance Agency in their place to discharge the balance cargo.
13. This prompted M/s. Sea Shore Logistics to file a suit and an injunction application on 23-08-1999 challenging the termination of their agency, contenting inter alia that the termination was done suddenly and unilaterally without determining the cargo discharged by them and without settling their accounts. An ex-parte interim injunction was passed restraining the receivers from further discharge of the cargo.
14. The respondent receivers filed an application for vacation of the interim injunction on 28-08-1999 and such injunction was vacated by an order dated 03-09-1999. In such application for vacation of the injunction, the IPL stated that it incurred a demurrage of US$ 6000 per day from 20-08-1999.
15. The vessel was re-berthed on 07-09-1999 and commenced discharge. However, M/s. Sea Shore Logistics filed an appeal and managed to get an order restraining the vessel from discharging the cargo. On 21-09-1999, the appellate Court heard the appeal, vacated the said order and dismissed the appeal so filed.
16. Thereafter on 24-09-1999, a revision was filed and an interim order was passed granting injunction. On 28-09-1999, after hearing both the parties, the court directed inter alia the vessel be brought to berth immediately and ordered the remaining cargo lying on board to be removed in the presence of both the parties and ordered the commissioners to measure the quantity of the cargo removed by the plaintiff. Pursuant to such directions, the vessel completed discharge on 06-10-1999.
17. Subsequently, the petitioners made a claim for demurrage as per their lay time calculations vide their Demurrage Invoice dated 09-11-1999 for US $ 6000 as per day demurrage. There were various reminders sent to respondents but to no avail, therefore on 25-09-2001, the petitioner sent a legal notice calling upon the respondents to settle the said claim along with interest to be computed from 09-12-1999. But the petitioners got no response still and invoked arbitration in terms of clause XX of the contract.
18. In the meantime, an Interim Final Arbitration Award was passed in London (herein after referred to as the London Award) on 15-05-2000 in favor of the owners of the vessel directing the petitioners to pay demurrage in the amount of USD 216,531.92 along with interest at the rate of 7.5% per annum compounded at three monthly rests calculated from the date of publication of the said award until payment along with costs in the sum of 9850 pounds along with interest thereon at the rate of 7% per annum compounded at three monthly rests calculated from the date of publication of the said award until payment.
19. On 08-03-2002, the parties were asked to file their claim, reply, counter claim within the time specified. Accordingly, on 30-09-2002, the respondents filed their reply and stated that the claim of US $ 6000 made by the petitioner was incorrect and should have been US $ 5500 per day and that the petitioner had not shown that it had incurred any liability towards demurrage to the vessel owners or had actually paid such amount. Further, it also stated that it shall be liable to be compensated by demurrage only if it had actually incurred any such liability as it was not the owner of the ship.
20. In its rejoinder filed, the petitioner accordingly annexed the London Award and revised the claim to US $ 5500 per day as per the rate of demurrage.
21. After hearing both the parties, the Arbitral Tribunal ordered the parties to furnish certain information as to the amount claimed by the petitioner, rate of discharge achieved till 12-08-1999, proof of payment under the London Award, time schedule laid down under Article xviii of the contract, etc.
22. The said information was supplied and the award was passed, dismissing the claim of the petitioner and rejecting the counter claim of the respondent amounting to a 'Nil' award.
23. The Arbitral Tribunal found that the injunction orders passed by the Courts were restraints by the established authorities covered under clause 4, Exception Lay time etc. and therefore the respondents were entitled to the protection under the said clause. Further, that the period during which the Respondent were prevented from discharging by lawful authority of the courts could not be counted for the purpose of lay time as this period would be fall under the 'Force Majeure' clause in the contract since the acts of the Courts would tantamount to or constitute acts of Government. It was held that the respondents cannot be held responsible owing to the fact that they were vigilant enough and vigorous in opposing the various petitions and applications of M/s. Sea Shore Logistics and in getting the injunction orders vacated.
24. The Arbitral Tribunal also found that the London Award was based on higher loading rates and higher rates of demurrage and that the petitioner had not shown any payment being made towards the fulfilllment of claim under the London Award.
25. In the petition under Section 34(2) of the said Act, it is pleaded that the said award is contrary to the terms of the contract, public policy of India and the evidence on record. The award is pleaded to be patently illegal and also opposed to justice, morality and fundamental policy of Indian law.
26. It is pleaded that the Award is contrary to clauses XI, XIX, XXIII and Annexure III A of the contract dated 25-05-1999 as well as clause 4 of the Charter Party. The said clauses have been reproduced below:
Clause XI of the contract reads as under:
if any wharfage or demurrage results at the port of discharge due to the negligence of the sellers or their nominee including negligence of sending correct documents in time connected with the ship of material under this contract and if consequence thereof, clearance of the consignment by the Buyers or delivery of goods to it is delayed resulting in wharfage or demurrage such wharfage or demurrage shall be to the account of the Sellers. Similarly any wharfage or demurrage resulting from the negligence or default on the part of Buyers shall be to the buyers account.
Clause XIX of the contract reads as under:
If at any time during the existence of this contract either party is unable to perform either in whole or in part any obligations under this contract because of war, hostility, civil commotion, sabotage, quarantine restrictions, acts of Gods and acts of Govt. (including but not restricted prohibition of exports or import), floods, explosions, epidemics, then the date of fulfilllment shall be of engagement shall be postponed during the time when such circumstances have operative.
Clause XXIII of the contract reads as under:
It is expressly understood and agreed between the Buyer and the Seller that MMTC is entering into this agreement solely in its own behalf and not on behalf of any other person or entity. In particular it is expressly understood and agreed that the Govt. of India is not a party to this agreement and has no liabilities, obligations or rights hereunder. It is expressly understood and agreed that MMTC is an independent legal entity with power and authority to enter into contract solely on its own behalf under the applicable laws of India and general principles of contract law. The seller expressly agrees, acknowledges and understands that MMTC is not an agent, representative or delegate of the Govt. of India. It is further understood and agreed that the Govt. of India is not and shall not be liable for any acts, omission, commission or breaches of or other wrongs arising out of contracts. Accordingly MMTC expressly waives, releases and forgoes any and all actions or claims including cross-claims, impleader claims or counter claims against the Govt. of India arising out of this contract and covenants not to sue the Govt. of India as to any manners, claims, cause of action or things whatsoever arising out of or under this agreement.
Relevant portion of the Annexure III A of the contract provides as under:
1. The Seller will arrange for chartering suitable vessels of load the agreed quantity in full ship loads and the sellers are responsible for fulfillling the conditions of the Charter Party at the loading port and the buyer or their nominees are responsible for fulfillling the conditions of the Charter Party at the discharging port. Vessel will be chartered on Ferticon Charter Party.
9...Time shall begin to count from 24 running hours after vessels arrival within ports limits and notice of readiness tendered and accepted during official working hours at each discharging port reported in free pratique whether in berth or not but not between the hours of 5 PM and 8 PM on a week day or during any of the periods above exempted even of used unless (at discharging port) the vessel on arrival already on demurrage. Charterers have the right to work during accepted periods such time used not to count as lay time.
Clause 4 of the Charter Party insofar is relevant reads as under:
...Any of the following causes are excepted, regardless of where they occur: strikes or lockouts at the Shippers' or Suppliers' mines or factory...restraints of established authorities; any delay caused by the Vessel, Master or crew; and any other causes whatsoever of howsoever arising happening without the fault of the Charterers preventing or delaying the mining or manufacturing, supplying, transporting, loading, discharging or receiving of the cargo charterers shall not be liable for any loss of damage resulting from any such excepted causes and time lost by reason thereof shall not count as used lay time or time on demurrage, unless vessel already on demurrage....
Clause 12 insofar as is relevant reads as under:
...The Charterers, Suppliers or Receivers shall appoint Stevedores for loading and discharging....
Under clause 12 of the Charter party, the Charterers, Suppliers, or Receivers were required to appoint stevedores for loading and discharging.
27. It has been pleaded that the tribunal has overlooked the relevant clause of the contract as an order of restraint, at the instance of a party to a contract, cannot be termed as an act of the Government. Further that such clause does not expressly or impliedly refer to the orders passed by the Courts of Law. It is also submitted that the suit was filed by M/s. Sea Shore Logistics at the instance of the contract being terminated unilaterally without settling the account of the said Stevedore.
28. The petitioner has further submitted that the respondents or their nominees were responsible for fulfillling the conditions of the Charter Party at the discharge port as per the terms of the contract. It was the respondent who had nominated their receiver-IPL to fulfilll its obligations. The receiver in turn admittedly appointed an "inexperienced and inefficient" stevedore to discharge the cargo from the vessel. No objections were raised by IPL/stevedores on the Master as to the non-receipt of Expected Time of Arrival (ETA) and the NOR was accepted subject to the terms and conditions of the Charter Party. The stevedores were unable to maintain the minimum discharge rate which resulted in the removal of the vessel from berth twice and the termination of their contract. It is in consequence to the termination of the contract unilaterally without quantifying the stock unloaded and without settling the accounts, that the said stevedores filed the suit to obtain injunction orders. It has been pleaded that if the respondents had exercised due care in appointing the stevedores, such delays would not have arisen as also the delays caused by the injunction order. Therefore, it is the case of the petitioner that due to the facts stated aforesaid the court injunctions would not fall under the clause of Force Majeure as Acts of the Government. It is submitted that the said clause would apply only where a contract would frustrate due to a supervening impossibility over which neither of the parties could have control.
29. It is pleaded that the respondents would not fall under the protection of exception to lay time, clause 4 inter alia 'the restraints of established authorities' as it would come into operation only when the charterers had no role in the passing of the order of restraint of established authorities. In the present case there was fault on the part of the charterers. It is stated that the Arbitral Tribunal in invoking Clause 4 in favor of the respondent had completely ignored the words "without any fault of the charterers".
30. It is pleaded the London Tribunal Award was based on the Charter Party and the respondent itself had relied on this Charter Party to contend that the respondents were liable to pay demurrage at the rate of US$ 5,500 per day instead of US$ 6000 per day and that in view of Clause 4 of the Charter Party i.e. exception to lay time inter alia 'the restraints of established authorities', the period during which the order of injunction operated should be excluded. Hence, the reasoning of the tribunal that the petitioner could not base its claim on the London Award becomes self contradictory.
31. It is further pleaded that the London ward was based on the terms and conditions of the Charter Party therefore the rejection of the claim based on the London Arbitral award on the ground that it was based on higher loading rates and higher rates of demurrage was unsustainable in law and on facts.
32. It is pleaded that the claim of the petitioner ought not to have been rejected merely on the ground that the petitioner had not satisfied the London Award yet as the fact remains that an award has been passed against the petitioner, the petitioner has incurred liability under the award passed by the London Arbitral Tribunal and has thus suffered a loss.
33. It is pleaded that a mere change or shift in the claim figure cannot and shall not be a reason to disentitle the petitioner to the legal claim or right due to him.
34. It is pleaded that the receivers had failed to make arrangements at the Chennai port for the berthing of the vessel despite having been informed of the same on 12-07-1999 about the ETA of the vessel being 26-07-1999, therefore the period prior to the berthing which was not utilized for discharge should not be on the petitioner's account and demurrage should be calculated for such period.
35. It is pleaded that the lay time calculations were based on the Charter Party i.e. 1500 MT per day which had already formed part of the London Award, therefore the rejection of the claim on the ground that the petitioner had not furnished the information sought for vide order dated 27-02-2004 was incorrect.
36. In relation to the same, the learned Counsel for the petitioner has relied upon the judgment of Seth Thawardas Pherumal v. Union of India where in it was held that an arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks just and reasonable. He is a tribunal selected by the parties to decide their disputes according to law and so, is bound to follow and apply the law, and if he does not, it can be set right by the courts provided his error appears on the face of the record.
37. In ONGC v. Saw Pipes it was held that the court may set aside an award if the award passed by the Arbitral Tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract; that the award could be set aside if it is against the public policy of India. An award may be set aside if it is contrary to the fundamental policy of the Indian Law or Justice or morality or if it is patently illegal.
38. Learned Counsels for the parties have been heard in detail.
39. The period during which the Respondents were prevented from discharging cargo by the lawful authority of the court has not been counted for the purposes of lay time by the Arbitral Tribunal. As per their finding this period would fall under the 'Force Majeure' clause of the contract as an act of the court would constitute the acts of the government. The said clauses read as under:
Clause XI of the contract reads as under:
if any wharfage or demurrage results at the port of discharge due to the negligence of the sellers or their nominee including negligence of sending correct documents in time connected with the ship of material under this contract and if consequence thereof, clearance of the consignment by the Buyers or delivery of goods to it is delayed resulting in wharfage or demurrage such wharfage or demurrage shall be to the account of the Sellers. Similarly any wharfage or demurrage resulting from the negligence or default on the part of Buyers shall be to the buyers account.
Clause XIX of the contract reads as under:
If at any time during the existence of this contract either party is unable to perform either in whole or in part any obligations under this contract because of war, hostility, civil commotion, sabotage, quarantine restrictions, acts of Gods and acts of Govt. (including but not restricted prohibition of exports or import), floods, explosions, epidemics, then the date of fulfilllment shall be of engagement shall be postponed during the time when such circumstances have operative.
40. Learned Counsel for the petitioner has relied upon two cases, J. Laurintzen AS v. Wijsmuller by (The Super Servant Two) (1990) 1 Lloyd's Rep. 1 and Maritime National Fish Ltd. v. Ocean Trawlers Ltd. (1935) A.C. 524 which illustrate the scope of self-induced frustration of a contract. In the former case, the Court of Appeal held that, whether or not the Super Servant Two (the vessel) sank as a result of negligence on the part of the defendants on their employees, the contract was not frustrated. If it sank as a result of negligence then, the court held that the contract was not frustrated because negligence did not constitute a supervening event. In the latter case, the Privy Council holding the charterers liable concluded that they could not rely on frustration, since they had by their own deliberate act and voluntary election prevented the vessel from being licensed for fishing with an otter trawl.
41. In my considered view, the tribunal has grossly erred in holding that the said period would not be counted for the purposes of lay time and that it would rather fall under the above said clause. By no stretch of imagination can an order of restraint passed by a court, governed by rule of law, at the instance of a party to a contract be considered as an act of the government. Further, no where in the said clause, an express or implied reference to orders passed by the court has been made. Under the long-established canon of ejusdem generis, where a general term follows a specific one, the general term should be construed to encompass only subjects similar in nature to those subjects enumerated by the specific words. The doctrine is equally applicable where specific words follow general ones: application of the general term is then restricted to matters similar to those enumerated. As per the terms of the contract, the buyers were liable if any wharfage or demurrage resulted from the negligence or default on the part of Buyers.
42. In my considered view, for appreciating the purport of the said clause, the real question is whether the frustrating event relied upon is truly an outside event or extraneous change of situation or whether it is an event which the party seeking to rely on had the means and opportunity to prevent it but nevertheless caused or permitted it to come about. In the present case also, the suit was filed by the Stevedores when their contract was unilaterally terminated by the respondents without settling their accounts. Such an event would not have arisen if the respondents would have acted with due care and caution.
43. The Arbitral Tribunal has also invoked clause 4 of the charter party in favor of the respondents holding them entitled to the Charter party exceptions taking into account that the courts are very much established authorities set up under the law of the country's constitution and directions in the nature of injunction orders would be sufficient to exclude the time from lay time calculations. In order to appreciate this finding, it is pertinent to reproduce the said clause under the Charter Party.
Clause 4 of the Charter Party insofar is relevant reads as under:
...Any of the following causes are excepted, regardless of where they occur: strikes or lockouts at the Shippers' or Suppliers' mines or factory...restraints of established authorities; any delay caused by the Vessel, Master or crew; and any other causes whatsoever of howsoever arising happening without the fault of the Charterers preventing or delaying the mining or manufacturing, supplying, transporting, loading, discharging or receiving of the cargo charterers shall not be liable for any loss of damage resulting from any such excepted causes and time lost by reason thereof shall not count as used laytime or time on demurrage, unless vessel already on demurrage....
44. Learned Counsel for the respondent submits that in Nederlandsche Lloyd Stoomvaart Maatschappij v. Bernard Huyghe (1920) 2 Ll.L.R. 234, the Kings Bench Division held that the vessel having being stopped by the English with the concurrence of the French, the stoppage was not effectively withdrawn owing to the misunderstanding between the two authorities. The fact that it is a mistake does not prevent the stoppage, being quite effective and being within the clause "stoppage by authorities". In Adamson & Mail v. 4,300 Tons of Pyrites Ore (SC 1905), 137 F. 998, it was observed:
...By reason of the refusal of the 'constituted authorities' to allow him to take the No. 3 berth when his turn came, he was put behind all other vessels which at that time were ahead of him, and did not get to the pier until August 6th. I feel bound to conclude, therefore, that the delay and hindrance was due to the 'intervention of the constituted authorities'.
45. Learned Counsel for the respondent has also referred to Section 56 of the Contract Act in this behalf. Section 56 of the Contract Act reads as under:
56. An agreement to do an act impossible in itself is void.
A contract to do an act which after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
46. I am unable to accept to the submissions made by the learned Counsel for the respondent. In my view, Section 56 of the Contract Act is not applicable to the present case. The said provision clearly states "by some reason of some event which the promisor could not prevent" which means that such a contract would become void only if the act cannot be performed due to some event which was beyond the control of the person. That is not so in the present case.
47. A bare perusal of clause 4 of the Charter Party also shows that such an exception to lay time calculations would become operative only when there shall be no fault on the part of the charterers whereas this is not so in the present case. As already discussed, that the stevedores appointed by the respondents was admittedly inexperienced and inefficient. Further, it is admitted by the receivers that the contract with the said stevedores was terminated as he had failed to adhere to the discharge norms fixed by the port authorities which were less that that fixed under the contract. Since the receivers had unilaterally terminated the contract without settling their accounts, the stevedores had filed a suit and obtained an order of injunction against the discharge of the cargo in question. In my considered view, if the respondents' receivers would have been little more cautious in the appointment of the stevedores and would have appointed experienced and efficient stevedores, there would have been no occasion for an injunction order and thus no delay would have been caused. It cannot be lost sight of that as per the terms of the contract the buyers or their nominees were responsible for fulfillling the conditions of the Charter Party at the discharging port. Therefore, it cannot be said that there was no fault on the part of the charterers. Hence, the finding of the Arbitral Tribunal on the face of it is perverse and contrary to the terms of the contract.
48. The finding of the Arbitral Tribunal that the London Award was based on higher rates of loading and demurrage, that the petitioners could not have based their claim on the same and that the terms and conditions of the Charter party were not applicable to the respondents is again erroneous.
49. It may be pointed out that the London Award was based on the Charter Party and during the arbitral proceedings the respondent itself has relied on the charter party to make certain contentions which have been considered and accepted by the tribunal.
50. It may also be said at this juncture that the tribunal has failed to appreciate the shipment terms to the contract dated 25-05-1999 wherein it has been specifically mentioned that the sellers/petitioners shall be responsible for fulfillling the conditions of the Charter Party at the loading port and the buyers/respondents shall be responsible for fulfillling the conditions of the Charter Party at the discharging port.
51. In so far as the finding of the Arbitral Tribunal that the petitioners could not have based their claim on the London Award for it not forming as part of the pleadings is concerned, it has been pleaded that the claim petition before the tribunal was filed in April 2002 and the London Award was passed on 15-05-2002. Such award was filed thereafter along with the rejoinder on 25-10-2002. Further, it was one of the contentions raised by the Respondents wherein the respondents stated that the petitioner had not shown any liability incurred by it towards demurrage to the vessel owners as per the Charter Party and it is subsequent to this contention that the London Award was relied on. In view of the aforesaid, I find no merit in the finding of the Arbitral Tribunal.
52. One of the reasons for the Arbitral Tribunal to reject the claim of the petitioner was also that the petitioners had not made any payment towards the London Award and therefore had not any liability in the real sense. In my considered view, such finding of the tribunal again is patently erroneous and illegal and is liable to be set aside as it is an admitted fact that the petitioner has incurred a liability under the said award and merely because it has not yet satisfied the Award does not disentitle him from its right to make a claim for demurrage against the respondent.
53. In ONGC v. Saw Pipes (supra) it was held that the Arbitral Tribunal 's duty is to decide the disputes submitted to him according to the legal rights of the parties and not according to what he considers to be fair and reasonable. He cannot ignore the law or misapply it.
54. Further, the learned Counsel for the petitioner also drew the attention of this Court to the letter dated 20-02-2007 whereby the petitioner was ready and willing to freeze any benefit obtained before this Court to abide by their obligations towards the vessel owner which can be achieved by means of a banking escrow account. I am inclined towards taking the suggestion put forth by the learned Counsel whereby any order passed in favor of the petitioner towards satisfaction of its claim for demurrage shall be utilized to satisfy the London Award. This can be done through a banking escrow account.
55. The finding of the Arbitral Tribunal that the petitioner had been shifting positions and revising the claim figures cannot be sustained for the reason that a mere change or shift in the claim figure at the instance of the respondents cannot disentitle the petitioner from its right.
56. The claim of the petitioner has also been rejected on account of the delay on the part of the owners in appointment of the agents who were to declare the vessel to the Port Authority and file IGM so as to enable the port authorities to fix berthing schedule and allocate proper priority to the vessel.
57. It has been pleaded that it was the respondent's receivers who had to appoint the stevedores (which was delayed), which subsequently delayed the allotment of the berth of the vessel.
58. The Arbitral Tribunal has also dismissed the claim of the petitioner on the finding that the petitioner never submitted the revised lay time calculations. The learned Counsel for the petitioner has pleaded that the lay time calculations based on the Charter Party i.e. 1500 MT per day had formed part of the London Award and hence the tribunal gravely erred in dismissing the petitioner's claim on the said ground.
59. In my view, it is a matter of fact that the petitioner has incurred a liability under the London Award passed in favor of the vessel owner. Such Award was based on the Charter Party. As per the shipment terms set forth the contract, sellers/petitioners were responsible for fulfillling the conditions of the Charter Party at the loading port and the buyers/respondents were responsible for fulfillling the conditions of the Charter Party at the discharging port. One cannot be also lost sight of the fact that the petitioner has claimed only the amount as its claim for demurrage as in the London Award, nothing more or less. Hence, the respondents cannot cast off its liability towards the satisfaction of the claim made by the petitioner.
60. The Arbitral Tribunal has ex-facie erred in rejecting the claim made out by the petitioner. The award is completely arbitrary and perverse as it is opposed to justice and morality and contrary to the pleadings of the parties, the terms of the contract and the substantive law.
61. In view of the aforesaid, the said award dated 23-06-2005 passed by the Arbitral Tribunal is set aside and an award is passed in favor of the petitioners in the sum of US$ 216,531.92 along with interest at the rate of 7.5% per annum compounded at three monthly rests w.e.f. 8th November, 1999 until payment along with costs in the sum of 9850 pounds along with interest thereon at the rate of 7% per annum compounded at three monthly rests calculated from the date of publication of the London Award dated 15-05-2002 until payment. Such payment shall be made by means of a banking escrow account whereby the payment made by the respondent towards such claim of the petitioner shall be forwarded directly towards the fulfilllment of the London Award. Such payment shall be so forwarded only after the respondent receives a confirmation to that effect from both the petitioner and the vessel owner.