Bangalore District Court
M/S. Spices Trading Corporation vs M/S. Shivashankar Minerals Pvt. Ltd on 22 December, 2020
IN THE COURT OF THE LXXXIII ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU CITY [CCH84]
:Present:
Sri N.Sunil Kumar Singh, B.Com., LL.B.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this the 22nd day of December 2020
COM.A.S.No.121/2014
Plaintiff M/s. Spices Trading Corporation
Limited,
(Subsidiary of STC of India Ltd.
A Govt. of India Undertaking)
Registered under the provisions of the
Companies Act, 1956,
Formerly having its registered office at
No.166/2, 13th Main Road,
Vasanth Nagar, Bengaluru560052.
Presently at No.7A,
"STC Trade Center",
3rd Floor, Nandini Layout,
Bengaluru560096.
Represented Mr. N.Lakshmipathy,
Chief ManagerMarketing &
Administration,
Under the Letter of Authority
By its M.D Sri. H.P.Girish.
[By Sri. C.M.D, Advocate]
/v e r s u s/
Defendants: M/s. Shivashankar Minerals Pvt. Ltd.,
Plot No.739A, Road No.37,
Jubilee Hills,
2
CT 1390_Com.A.S.1212014_Judgment .doc
Hyderabad500033.
Represented by its AGM
(Contracts Claims & Legal)
Mr.P.Bharadwaja Sastry
And
Office also at 103, Lalezar,
Apartment, 45/12, Palace Road,
Bengaluru560001.
(By Sri.M.N.H, Advocate)
Date of Institution of the suit : 10/11/2014
Nature of the suit : Arbitration Suit
Date of commencement of :
recording of the evidence
Date on which the Judgment : 22/12/2020
was pronounced.
: Year/s Month/s Day/s
Total duration 06 01 12
JUDGMENT
This suit is filed by plaintiff against the defendants U/S.34 of the Arbitration & Conciliation Act 1996.
2. The facts in brief of the plaintiff's case is that plaintiff is company incorporated under Companies Act of 1956 having its registered office at Bengaluru and the plaintiff is subsidiary to state trading corporation of India Limited and defendant is company incorporated under the companies Act of 1956 and carrying on business of buying and selling Iron Ore mineral in the state of Karnataka & Andhra Pradesh. The defendant also conducting mining operations in the state of 3 CT 1390_Com.A.S.1212014_Judgment .doc Karnataka by obtaining Mining Lease belong to M/s. Mysore Minerals Limited. The plaintiff has invited tender from the eligible bidders for export of Iron ore Fines vide Notification dated 23/11/2009 offering buyers to quote their bids for export of Iron Ore Fines on FOB basis which is in the custody of plaintiff at Krishnapatnam Port, Visakhapatnam Port and Kakinada Port of Andhra Pradesh. As per the said notification since the defendant has got requisite qualifications and eligible criteria submitted three bids for purchase and export of 50,000 MT of Iron Ore Fines at Krishnapatnam Port and 40,000 MT+27,000 MT totaling 67,000 MT at Visakhapatnam Port.
3. The defendant has submitted the bids in two sealed covers containing technical bid price on 03/12/2009. The defendant also quoted price on the basis of Iron Ore Fines which were lying in the said ports. The defendant has submitted the said bid with respect to Krishnapatnam and Visakhapatnam ports and defendant is technically qualified for opening of the said bid and defendant also submitted bid to the plaintiff for delivering those Iron Ore Fines to be lifted to the ship on the terms of free on board. Since defendant was the sole bidder as per the tender committee decision and negotiations with the tender committee had on 14/10/2009 and the price was agreed to export entire quantity of Iron Ore Fines available at Krishnapatnam and Visakhapatnam ports and committee has recommended to accept the price quoted 4 CT 1390_Com.A.S.1212014_Judgment .doc by the defendant. As per the terms of agreement defendant required to open letter of credit for supply of Iron Ore Fines and shipment and required to make payment after shipment of Iron Ore.
4. After acceptance of the tender of defendant, plaintiff accepted to supply 50,000 MT of Iron Ore from Krishnapatnam Port to be lifted by the defendant and it was also agreed by the defendant that they will supply 67,000 MT of Iron Ore Fines from Visakhapatnam Port, after completing lifting of Iron Ore from Krishnapatnam Port and entered into agreement on 2/1/2010. As per the terms of agreement plaintiff was required to supply Iron Ore Fines of 50,000MT on FOB basis to the defendant. The defendant is required to pay to the plaintiff as per the price quoted in the tender after lifting of Iron Ore Fines. As per the Tender Notification earnest money of Rs.35,37,500/ was deposited by defendant with the plaintiff. Out of which Rs.15,12,000/ was towards Krishnapatnam Port tender and Rs.12,09,000/ towards Visakhapatnam port tender and Rs.8,16,500/ was EMD amount which was submitted through Demand Draft by defendant to the plaintiff on 3/12/2009. Later defendant has completed entire shipment of Iron Ore at Krishnapatnam Port on 29/1/2010. The plaintiff has received entire consideration from the defendant for having lifted Iron Ore from Krishnapatnam Port. But not refunded EMD amount and the said EMD amount was retained by the plaintiff without any 5 CT 1390_Com.A.S.1212014_Judgment .doc justification. Thus defendant is entitled to receive EMD amount of Rs.35,37,500/ together with interest @24% per annum.
5. In view of the earlier agreement entered into between plaintiff and defendant, defendant has entered into back to back agreement with KINETA International Private Limited, Singapore for export and sale of entire quantity of Iron Ore from Visakhapatnam and Krishnapatnam Ports. However defendant was able to export 50,000 MT of Iron Ore Fines and was unable to supply balance 67,000 MT of Iron Ore due to breach of contract committed by plaintiff. The price agreed for supply of entire quantity of 1,17,000 MT was 89 US dolor per MT to be unloaded at China. But plaintiff has supplied only 50,000 MT of Iron Ore Fines from Krishnapatnam Port to the defendant. But did not supplied remaining 67,000 MT from Visakhapatnam Port. Instead of supplying 67,000 MT of Iron Ore Fines to the defendant, plaintiff has preferred to call fresh tender for supply of remaining 67,000 MT of Iron Ore Fines, due to which defendant has lost his business. If the plaintiff would have supplied 67,000 MT of Iron Ore to the defendant, the defendant would have earned considerable profit from the sale of said quantity of Iron Ore. Thus defendant has sustained loss of Rs.8,85,19,663/ which they are entitled to receive along with interest @24% per annum from the plaintiff. Due to loss of business in the international market defendant have sustained loss of reputation. Thus 6 CT 1390_Com.A.S.1212014_Judgment .doc defendant claimed that they are entitled for damages towards goodwill and reputation in sum of Rs.10 crores. Since there was dispute arisen between plaintiff and defendant in these aspects with regard to lifting of materials from Visakhapatnam Port and plaintiff has called for fresh tender. Thus defendant has left with no option and approached Hon'be High Court of Karnataka and filed WP No.8474/2010 challenging inviting fresh tender for lifting 67,000 MT of Iron Ore Fines from Visakhapatnam Port. In the said writ petition Hon'ble High Court of Karnataka has ordered that any sale made by plaintiff will be subject to the result of writ petition. But plaintiff appeared in the said writ petition and filed untenable reply and objections. The defendant was advised by the plaintiff to withdraw the writ petition and defendant proceeded to claim damages for breach of contract. Thus defendant has withdrew writ petition filed on the file of Hon'ble High Court of Karnataka.
6. Despite of mutual negotiations since the matter in dispute between plaintiff and defendant was not settled amicably and defendant demanded for payment of various claims by issuing notice invoked the arbitration clause as provided clause 14 of the agreement. Thus defendant herein was constrained to approach Hon'ble High Court of Karnataka U/S.11 of Arbitration & Conciliation Act seeking appointment of an Arbitrator in CMP No.54/2012 and the same was allowed and sole Arbitrator was appointed by 7 CT 1390_Com.A.S.1212014_Judgment .doc Hon'ble High Court of Karnataka before whom the present defendant appeared as claimant and putforth his claim as detailed below:
Sl. Description Claim amount
No. Rs.
1 Refund of Customs Duty 1,01,66,650/
Interest @24% from the date 73,19,988/
of payment (i.e.,22/01/
2010) till the date of filing of
claim statement
2 Refund of Wharfage/ 1,73,72,250/
stevedoring and handling
charges
Interest @24% from the date 1,25,08,020/
of payment (i.e.,28/01/
2010) till the date of filing of
claim statement
3 Refund of Earnest Deposit 35,37,500/
Interest @24% from 03/12/ 25,47,000/
2009) till the date of filing of
claim statement
4 Loss of Profit on 67000 MT 8,85,19,663/
Interest @24% from 03/12/ 6,37,34,157/
2009) till the date of filing of
claim statement
5 Loss of business and 10,00,00,000/
goodwill
6 Legal expenses 25,00,000/
8
CT 1390_Com.A.S.1212014_Judgment .doc 7 Pendent elite, post award interest @24% till realization of amount Total amount claimed: Rupee's 30,57,05,228/ Thirty Crores Fifty Seven Lakhs +Interest Five Thousand Two Hundred thereon Twenty Eight only and likewise plaintiff herein who was respondent before the sole Arbitrator also putforth their counter claim before the sole Arbitrator. After providing opportunity to both the sides to adduce evidence and after marking of documents sole Arbitrator has heard the matter and disposed off the same on 9/8/2014 and as per the award plaintiff herein was directed to pay sum of Rs.1,01,66,650/ along with interest @12% per annum from 1/4/2010 amounting to Rs.5,3,16,740/, totally amounting to Rs.1,54,83,390 to the defendant and also directed the plaintiff herein to pay sum of Rs.1,73,72,250/ along with interest @12% per annum from 1/4/2010 till date of award in sum of Rs.90,84,973/ in total sum of Rs.2,64,57,223/ to the defendant and also directed the plaintiff herein to pay sum of Rs.35,37,500/ along with interest @12% per annum from 1/4/2010 till date of award in sum of Rs.18,49,967/ in total sum of Rs.53,87,467/ to the defendant and also directed to pay interest @12% per annum on principal amount awarded in a sum of Rs.1,01,66,650/, Rs.1,73,72,250/ and Rs.35,37,500/ from the date of award till realization. Some of the counter claims of plaintiff was allowed and directed the defendant herein to pay sum 9 CT 1390_Com.A.S.1212014_Judgment .doc of Rs.25,23,864/ towards costs plus stamp duty of Rs.1,31,250/ to the plaintiff. It is also ordered that the above said amount of Rs.26,55,114/ shall be payable by defendant to the plaintiff within 60 days, otherwise which shall carry interest @12% per annum from the date of award till realization.
7. Aggrieved by the said award passed by the sole Arbitrator the present suit is filed by plaintiff on various grounds. Some of the grounds are the Arbitrator has not considered the terms and conditions contained in the contract dated 2/1/2010 in the right prospective. Thus the award passed by sole Arbitrator is perverse and opposed to the principles of natural justice. The learned Arbitrator has evolved into accounting procedures which do not suit to the circumstances of the case and against to the established standard and procedures. The learned Arbitrator wrongly taken into consideration the claims made by the defendant which is opposed to the conditions stipulated in the contract. The learned Arbitrator came to the wrong conclusion that EMD falls within the purview of of the contract under which the dispute arised. The findings given by the sole Arbitrator in awarding amount under various heads to the defendant are not in contravention to the terms of the contract. The findings of the Arbitrator is opposed to the evidence and documents placed by both the sides in the present suit. The findings arrived at by the Arbitrator was ignoring the material 10 CT 1390_Com.A.S.1212014_Judgment .doc documents and evidence available on record. The award passed by the Arbitrator is otherwise unlawful and call for interference since it is opposed to the provisions U/S.34 of Arbitration & Conciliation Act. The sole Arbitrator has granted expenses of the arbitral proceeding to the defendant which is contrary to the terms of the agreement and also contrary to the provisions of Arbitration & Conciliation Act. It is also contented that the sole Arbitrator has erroneously awarded interest @12% per annum which is not provided under the agreement or under the provisions of Arbitration & Conciliation Act. The award passed by the sole Arbitrator suffers from legal infirmities which shall be setaside since it is opposed to the public policy as provided U/S.34 of the Arbitration & Conciliation Act. It is also contended that the findings given by the sole Arbitrator in passing award is opposed to the public policy, morality and justice and liable to be setaside. Hence it is prayed to setaside Arbitral Award passed by the sole Arbitrator dated 09/08/2014.
8. The brief averments of statement of objections filed by defendant is that plaintiff is subsidiary to STC India Limited which is Government of India Undertaking engaged in business of buying and selling of various minerals of all kinds. The defendant is company incorporated under the provisions of Companies Act of 1956 carrying on business of buying and selling Iron Ore in the State of Karnataka and Andhra Pradesh. The defendant is conducting mining 11 CT 1390_Com.A.S.1212014_Judgment .doc operations in the State of Karnataka by obtaining mining lease belong to M/s. Mysore Minerals Limited. It is submitted that plaintiff has called for tender for lifting Iron Ore Fines from Krishnapatnam Port, Visakhapatnam port and also Kakinada port as per tender notification No.23/2009. It is also admitted that as per tender notification 50,000 MT of Iron Ore Fines has to be lifted from Krishnapatnam port and 40,000 MT + 27,000 MT of Iron Ore shall be lifted from Visakhapatnam port. It is admitted that 1st defendant has submitted tender on 3/12/2009 and since defendant is the sole bidder his bid was accepted by tender committee and called defendant for negotiations on 14/12/2009. After negotiations defendant was permitted to lift 50,000 MT of Iron Ore Fines from Krishnapatnam port and 67,000 MT of Iron Ore Fines from Visakhapatnam port and agreement was entered into between plaintiff and defendant on 2/1/2010. It is also admitted that defendant has lifted 50,000 MT of Iron Ore Fines from Krishnapatnam port as per tender conditions. But plaintiff not permitted the defendant to lift 67,000 MT of Iron Ore Fines from Visakhapatnam port. The defendant has paid Rs.1,73,72,250/ as stevedoring charges, Wharfage charges and transportation charges and Rs.1,01,66,550/ as customs duty for lifting of Iron Ore from Krishnapatnam port. The defendant also deposited EMD @1% of total cost of tender and also deposited Rs.35,37,500/. Out of which Rs.15,12,000/ for Krishnapatnam port and Rs.12,09,000/ towards Visakhapatnam port and EMD of Rs.8,16,500/ was 12 CT 1390_Com.A.S.1212014_Judgment .doc paid on 3/12/2009. Despite of their contractual obligations defendant has entered into contract with KINETA International Private Limited, Singapore for export of Iron Ore and defendant has lifted 50,000 MT of Iron Ore Fines and exported the same. But the plaintiff has not allowed defendant to lift 67,000 MT of Iron Ore from Visakhapatnam port. Due to which defendant has sustained loss and reputation in the international business. Instead of permitting the defendant to lift 67,000 MT of Iron Ore from Visakhapatnam port, plaintiff has called for fresh tenders. For which defendant has filed W.P.No.8474/2010 challenging the tender process called by the plaintiff to lift 67,000 MT of Iron Ore Fines from Visakhapatnam port and the said writ petition was withdrawn by the defendant. But they are entitled for damages for breach of contract by the plaintiff. The defendant has approached Hon'ble High Court of Karnataka invoking Section 11 of Arbitration & Conciliation Act for appointment of Arbitrator to decide the matter in dispute between plaintiff and defendant in CMP No.54/2012 and the same was allowed and sole Arbitrator was appointed before whom the defendant has appeared as claimant and he has putforth his claim as detailed below:
Sl. Description Claim amount
No. Rs.
1 Refund of Customs Duty 1,01,66,650/
13
CT 1390_Com.A.S.1212014_Judgment .doc Interest @24% from the date 73,19,988/ of payment (i.e.,22/01/ 2010) till the date of filing of claim statement 2 Refund of Wharfage/ 1,73,72,250/ stevedoring and handling charges Interest @24% from the date 1,25,08,020/ of payment (i.e.,28/01/ 2010) till the date of filing of claim statement 3 Refund of Earnest Deposit 35,37,500/ Interest @24% from 03/12/ 25,47,000/ 2009) till the date of filing of claim statement 4 Loss of Profit on 67000 MT 8,85,19,663/ Interest @24% from 03/12/ 6,37,34,157/ 2009) till the date of filing of claim statement 5 Loss of business and 10,00,00,000/ goodwill 6 Legal expenses 25,00,000/ 7 Pendent elite, post award interest @24% till realization of amount Total amount claimed: Rupee's 30,57,05,228/ Thirty Crores Fifty Seven Lakhs +Interest Five Thousand Two Hundred thereon Twenty Eight only and the plaintiff herein also appeared before the sole Arbitrator and putforth their counter claim and after adducing evidence of both the sides and after producing 14 CT 1390_Com.A.S.1212014_Judgment .doc material evidence and documents, the sole Arbitrator has rightly passed an award which is not opposed to the public policy as provided U/S.34 of Arbitration & Conciliation Act. The grounds taken by the plaintiff in the present suit are not sufficient to set aside the Arbitral Award and sole Arbitrator has considered all the legal aspects and passed an award which is not opposed to the morality or justice and cannot be set aside. Hence it is prayed to dismiss the suit of plaintiff with costs.
9. Heard arguments of both the sides and perused written arguments submitted on behalf of the plaintiff and 1 st defendant and perused LCR.
10. The points that arise for consideration are:
1. Whether the plaintiff made out sufficient grounds to set aside the Arbitral Award passed by the sole Arbitrator dated 9/8/2014 U/S.34 of Arbitration & Conciliation Act 1996 ?
2. What order?
11. My finding to the above points are as follows:
POINT No.1 : Negative.
POINT No.2 : As per final order for the following:
REASONS
12. POINT No.1 : The case of plaintiff is that plaintiff is company incorporated under Companies Act of 1956 and plaintiff is carrying on business of buying and selling Iron Ore mineral in the state of Karnataka & Andhra Pradesh. The 15 CT 1390_Com.A.S.1212014_Judgment .doc plaintiff also conducting mining operations in the state of Karnataka by obtaining Mining Lease belong to M/s. Mysore Minerals Limited. The 1st defendant is subsidiary of the STC of India Limited which is Government of India Undertaking engaged in business of buying and selling various minerals of all kinds. The 1st defendant has invited tender from the eligible bidders for export of Iron ore Fines vide Notification dated 23/11/2009 offering buyers to quote their bids for export of Iron Ore Fines on FOB basis which is in the custody of 1st defendant at Krishnapatnam Port, Visakhapatnam Port and Kakinada Port of Andhra Pradesh. As per the said notification since plaintiff has got requisite qualifications and eligible criteria submitted three bids for purchase and export of 50,000 MT of Iron Ore Fines at Krishnapatnam Port and 40,000 MT+27,000 MT totaling 67,000 MT at Visakhapatnam Port.
13. The plaintiff has submitted the bids in two sealed covers containing technical bid price on 03/12/2009. The plaintiff also quoted price on the basis of Iron Ore Fines which were lying in the said ports. The plaintiff has submitted the said bid with respect to Krishnapatnam and Visakhapatnam ports and plaintiff is technically qualified for opening of the said bid and plaintiff also submitted bid to the 1st defendant for delivering those Iron Ore Fines to be lifted to the ship on the terms of free on board. Since plaintiff is the sole bidder as per the tender committee decision and 16 CT 1390_Com.A.S.1212014_Judgment .doc negotiations with the tender committee on 14/10/2009 the price was agreed to export entire quantity of Iron Ore Fines available at Krishnapatnam and Visakhapatnam ports and committee has recommended to accept the price quoted by the plaintiff. As per the terms of agreement plaintiff required to open letter of credit for supply of Iron Ore Fines and shipment and required to make payment after shipment of Iron Ore.
14. After acceptance of the tender of plaintiff, 1st defendant accepted to supply 50,000 MT of Iron Ore from Krishnapatnam Port to be lifted by the plaintiff and it was also agreed by the plaintiff that they will supply 67,000 MT of Iron Ore Fines from Visakhapatnam Port, after completing lifting of Iron Ore from Krishnapatnam Port and entered into agreement on 2/1/2010. As per the terms of agreement 1 st defendant was required to supply Iron Ore Fines of 50,000MT on FOB basis to the plaintiff. The 1 st defendant is required to pay to the plaintiff as per the price quoted in the tender after lifting of Iron Ore Fines. As per the Tender Notification earnest money of Rs.35,37,500/ was deposited by plaintiff with the 1st defendant. Out of which Rs.15,12,000/ was towards Krishnapatnam Port tender and Rs.12,09,000/ towards Visakhapatnam port tender and Rs.8,16,500/ was EMD amount which was submitted through Demand Draft by plaintiff to the 1st defendant on 3/12/2009. Later plaintiff has completed entire shipment of Iron Ore at Krishnapatnam 17 CT 1390_Com.A.S.1212014_Judgment .doc Port on 29/1/2010. The 1 st defendant has received entire consideration from the plaintiff for having lifted Iron Ore from Krishnapatnam Port, but not refunded EMD amount and the said EMD amount was retained by the 1st defendant without any justification. Thus plaintiff is entitled to receive EMD amount of Rs.35,37,500/ together with interest @24% per annum.
15. In view of the earlier agreement entered into between plaintiff and 1st defendant, plaintiff has entered into back to back agreement with KINETA International Private Limited, Singapore for export and sale of entire quantity of Iron Ore from Visakhapatnam and Krishnapatnam Ports. However plaintiff was able to export 50,000 MT of Iron Ore Fines and was unable to supply balance 67,000 MT of Iron Ore due to breach of contract committed by 1 st defendant. The price agreed for supply of entire quantity of 1,17,000 MT was 89 US dolor per MT to be unloaded at China. But plaintiff has supplied only 50,000 MT of Iron Ore Fines from Krishnapatnam Port to the defendant. But did not supplied remaining 67,000 MT from Visakhapatnam Port. Instead of supplying 67,000 MT of Iron Ore Fines to the defendant, the plaintiff has preferred to call fresh tender for supply of remaining 67,000 MT of Iron Ore Fines, due to which defendant has lost his business. If the plaintiff would have supplied 67,000 MT of Iron Ore to the defendant, the defendant would have earned considerable profit from the 18 CT 1390_Com.A.S.1212014_Judgment .doc sale of said quantity of Iron Ore. Thus defendant has sustained loss of Rs.8,85,19,663/ which he is entitled to receive along with interest @24% per annum from the plaintiff. Due to loss of business in the international market defendant have sustained loss of reputation. Thus they are entitled to claim damages towards goodwill and reputation in sum of Rs.10 crores. Since there was dispute arisen between plaintiff and defendant in these aspects with regard to lifting of Iron Ore from Visakhapatnam Port and plaintiff called for fresh tender. Thus defendant has left with no option to approach Hon'be High Court of Karnataka and filed WP No.8474/2010 challenging inviting fresh tender for lifting 67,000 MT of Iron Ore Fines from Visakhapatnam Port. In the said writ petition Hon'ble High Court of Karnataka has ordered that any sale made by plaintiff will be subjected to the result of writ petition. But plaintiff appeared in the said writ petition and filed reply and objections. The defendant was advised by the plaintiff to withdraw the writ petition and proceeded to claim damages for breach of contract. Thus defendant has withdrew the writ petition filed on the file of Hon'ble High Court of Karnataka.
16. Despite of mutual negotiations since the matter in dispute between plaintiff and defendant was not settled amicably and defendant demanded for payment of various claims by issuing notice invoked the arbitration clause as provided clause 14 of the agreement. Thus defendant herein 19 CT 1390_Com.A.S.1212014_Judgment .doc was constrained to approach Hon'ble High Court of Karnataka U/S.11 of Arbitration & Conciliation Act seeking appointment of an Arbitrator. Thus the sole Arbitrator was appointed by Hon'ble High Court of Karnataka before whom the present defendant appeared as claimant and putforth his claim as detailed below:
Sl. Description Claim amount
No. Rs.
1 Refund of Customs Duty 1,01,66,650/
Interest @24% from the date 73,19,988/
of payment (i.e.,22/01/
2010) till the date of filing of
claim statement
2 Refund of Wharfage/ 1,73,72,250/
stevedoring and handling
charges
Interest @24% from the date 1,25,08,020/
of payment (i.e.,28/01/
2010) till the date of filing of
claim statement
3 Refund of Earnest Deposit 35,37,500/
Interest @24% from 03/12/ 25,47,000/
2009) till the date of filing of
claim statement
4 Loss of Profit on 67000 MT 8,85,19,663/
Interest @24% from 03/12/ 6,37,34,157/
2009) till the date of filing of
claim statement
20
CT 1390_Com.A.S.1212014_Judgment .doc 5 Loss of business and 10,00,00,000/ goodwill 6 Legal expenses 25,00,000/ 7 Pendent elite, post award interest @24% till realization of amount Total amount claimed: Rupee's 30,57,05,228/ Thirty Crores Fifty Seven Lakhs +Interest Five Thousand Two Hundred thereon Twenty Eight only and likewise plaintiff herein who was respondent before the sole Arbitrator also putforth their counter claim before the sole Arbitrator. After providing opportunity to both the sides to adduce evidence and after marking of documents sole Arbitrator has heard the matter and disposed off the same on 9/8/2014 and as per the award plaintiff herein was directed to pay sum of Rs.1,01,66,650/ along with interest @12% per annum from 1/4/2010 amounting to Rs.5,3,16,740/, totally amounting to Rs.1,54,83,390 to the defendant and also directed the plaintiff herein to pay sum of Rs.1,73,72,250/ along with interest @12% per annum from 1/4/2010 till date of award in sum of Rs.90,84,973/ in total sum of Rs.2,64,57,223/ to the defendant and also directed the plaintiff herein to pay sum of Rs.35,37,500/ along with interest @12% per annum from 1/4/2010 till date of award in sum of Rs.18,49,967/ in total sum of Rs.53,87,467/ to the defendant and also directed to pay interest @12% per annum 21 CT 1390_Com.A.S.1212014_Judgment .doc on principal amount awarded sum of Rs.1,01,66,650/, Rs.1,73,72,250/ and Rs.35,37,500/ from the date of award till realization. Some of the counter claims of plaintiff was allowed and directed the defendant herein to pay sum of Rs.25,23,864/ towards costs plus stamp duty of Rs.1,31,250/ to the plaintiff. It is also ordered that the above said amount of Rs.26,55,114/ shall be payable by defendant to the plaintiff within 60 days, otherwise which shall carry interest @12% per annum from the date of award till realization. Aggrieved by the said Arbitral Award, present suit is filed by plaintiff claiming that Arbitral Award is opposed to public policy as provided U/S.34 of Arbitration & Conciliation Act.
17. On going through the award passed by the sole Arbitrator and on hearing both the sides and on going through the evidence and documents produced before the sole Arbitrator, it is not in dispute that defendant conducting mining operations in the state of Karnataka by obtaining Mining Lease which belong to M/s. Mysore Minerals Limited and it is also not in dispute that plaintiff is subsidiary to STC India Limited which is Government of India Undertaking engaged in business of buying and selling various minerals of all kinds. It is also not in dispute that plaintiff has invited tender from the eligible bidders to export Iron ore Fines vide Notification dated 23/11/2009 and in pursuance of which defendant has applied for transportation and buying of 22 CT 1390_Com.A.S.1212014_Judgment .doc Iron Ore Fines from Krishnapatnam Port, Visakhapatnam Port and Kakinada Port of Andhra Pradesh. It is also not in dispute that as per the notification issued by plaintiff, the defendant has applied for the tender who is eligible to bid for purchase of 50,000 MT of Iron Ore Fines from Krishnapatnam Port and 40,000 MT+27,000 MT totaling 67,000 MT of Iron Ore Fines from Visakhapatnam port of Andhra Pradesh. It is also not in dispute that the sealed bid which is submitted by the defendant was accepted by the Technical committee constituted for accepting the tender on 14/10/2009. It is also not in dispute that the defendant has agreed to transport Iron Ore Fines available at Krishnapatnam and Visakhapatnam ports as per the tender notification issued by the plaintiff. After acceptance of tender notification, defendant was permitted by the plaintiff to transport 50,000 MT of Iron Ore from Krishnapatnam Port of Andhra Pradesh is not in dispute. But defendant claimed that at the same time plaintiff has agreed to permit the defendant to transport 67,000 MT of Iron Ore Fines from Visakhapatnam Port also and as per the tender notification the agreement was signed on 02/01/2010 and earnest money of Rs.35,37,500/ was deposited by the defendant to the plaintiff. Out of which Rs.15,12,000/ was earnest money towards Krishnapatnam Port tender and Rs.12,09,000/ earnest money was towards Visakhapatnam port tender and Rs.8,16,500/ was EMD amount paid by defendant to the plaintiff on 03/12/2009. All these facts are not in dispute between parties to the present suit. It is 23 CT 1390_Com.A.S.1212014_Judgment .doc admitted fact that the defendant has completed entire shipment of Iron Ore Fines from Krishnapatnam Port on 29/1/2010. It is also not in dispute that entire consideration for having lifted such Iron Ore from Krishnapatnam Port by the defendant and plaintiff has received entire consideration from the defendant. But defendant claimed that despite of completing the tender work, plaintiff not returned EMD amount towards the said tender which was received on the date of execution of Agreement dated 02/01/2010. Thus the defendant claimed that they are entitled to receive Rs. 35,37,500/ which is paid towards earnest money along with interest @24% per annum.
18. It is the claim of defendant that as per the terms of agreement the plaintiff has permitted them to lift Iron Ore Fines from Krishnapatnam port measuring 50,000 MT and also agreed to lift 67,000 MT of Iron Ore Fines from Visakhapatnam port and in view of the said contract the defendant has entered into an agreement with KINETA International Private Limited, Singapore to export and sale of entire quantity of Iron Ore from Visakhapatnam and Krishnapatnam Ports of Andhra Pradesh. However defendant was succeeded in lifting 50,000 MT of Iron Ore Fines from Krishnapatnam port and transported to the buyer. But plaintiff not permitted the defendant to lift 67,000 MT of Iron Ore Fines from Visakhapatnam Port. Due to which the defendant has sustained loss of business and reputation and 24 CT 1390_Com.A.S.1212014_Judgment .doc sustained total loss of Rs.8,85,19,663/ which they are entitled to receive from the plaintiff along with interest @24% per annum.
19. It is also the claim of defendant that due to loss of business in the International Market, defendant have sustained loss of reputation. Thus they are entitled to claim damages towards goodwill and reputation worth Rs. 10,00,00,000/ from the plaintiff. It is also claimed by the defendant that the dispute arisen between plaintiff and defendant with regard to lifting of Iron Ore Fines from Visakhapatnam port and plaintiff has called for fresh tender for lifting Iron Ore Fines from Visakhapatnam port. Thus the present defendant has filed WP. No. 8474/2010 challenging the act of the plaintiff in inviting fresh tender for lifting 67,000 MT of Iron Ore from Visakhapatnam port and admittedly the said Writ petition was withdrawn by the defendant and later the defendant has resorted for arbitration proceeding and filed proceeding U/S.11 of Arbitration & Conciliation Act in CMP No.54/2012 and the same was allowed and sole Arbitrator was appointed by Hon'ble High court of Karnataka before whom the present defendant appeared as claimant and put forth their claim as detailed below.
Sl. Description Claim amount
No. Rs.
1 Refund of Customs Duty 1,01,66,650/
25
CT 1390_Com.A.S.1212014_Judgment .doc Interest @24% from the date 73,19,988/ of payment (i.e.,22/01/ 2010) till the date of filing of claim statement 2 Refund of Wharfage/ 1,73,72,250/ stevedoring and handling charges Interest @24% from the date 1,25,08,020/ of payment (i.e.,28/01/ 2010) till the date of filing of claim statement 3 Refund of Earnest Deposit 35,37,500/ Interest @24% from 03/12/ 25,47,000/ 2009) till the date of filing of claim statement 4 Loss of Profit on 67000 MT 8,85,19,663/ Interest @24% from 03/12/ 6,37,34,157/ 2009) till the date of filing of claim statement 5 Loss of business and 10,00,00,000/ goodwill 6 Legal expenses 25,00,000/ 7 Pendent elite, post award interest @24% till realization of amount Total amount claimed: Rupee's 30,57,05,228/ Thirty Crores Fifty Seven Lakhs +Interest Five Thousand Two Hundred thereon Twenty Eight only Likewise the plaintiff herein also appeared before the sole Arbitrator and putforth their counter claim and after providing opportunities to both the sides the sole Arbitrator 26 CT 1390_Com.A.S.1212014_Judgment .doc has passed an award on 9/8/2014 and as per the award plaintiff herein was directed to pay sum of Rs.1,01,66,650/ along with interest @12% per annum from 1/4/2010 amounting to Rs.5,3,16,740/, totally amounting to Rs.1,54,83,390 to the defendant and also directed the plaintiff herein to pay sum of Rs.1,73,72,250/ along with interest @12% per annum from 1/4/2010 till date of award in sum of Rs.90,84,973/ in total sum of Rs.2,64,57,223/ to the defendant and also directed the plaintiff herein to pay sum of Rs.35,37,500/ along with interest @12% per annum from 1/4/2010 till date of award in sum of Rs.18,49,967/ in total sum of Rs.53,87,467/ to the defendant and also directed to pay interest @12% per annum on principal amount awarded sum of Rs.1,01,66,650/, Rs.1,73,72,250/ and Rs.35,37,500/ from the date of award till realization. Some of the counter claims of plaintiff was allowed and directed the defendant herein to pay sum of Rs.25,23,864/ towards costs plus stamp duty of Rs.1,31,250/ to the plaintiff. It is also ordered that the above said amount of Rs.26,55,114/ shall be payable by defendant to the plaintiff within 60 days, otherwise which shall carry interest @12% per annum from the date of award till realization.
20. Aggrieved by the said award passed by the sole Arbitrator the present suit is filed by plaintiff on several grounds alleging that the award passed by the sole Arbitrator rejecting the counter claims is erroneous and contrary to the 27 CT 1390_Com.A.S.1212014_Judgment .doc facts and circumstances of the case on hand. It is the claim of plaintiff that as per the terms of agreement dated 02/01/2010, plaintiff has permitted the defendant to transport Iron Ore measuring 50,000 MT from Krishnapatnam port which they have lifted and completed the tender process. But as per the said agreement plaintiff not permitted defendant to transport 67,000 MT of Iron ore from Visakhapatnam Port. Any how plaintiff has not permitted the defendant to lift the said Iron ore from Visakhapatnam Port and called for fresh tender which was not opposed to the tender process and agreement which is not taken note off by the sole Arbitrator while considering evidence and documents of both the sides in the present suit. But on going through the Arbitral award passed by the sole Arbitrator, the Arbitrator has considered the terms of agreement and after considering evidence of both the sides passed an award which is not perverse or opposed to the public policy as contended by the plaintiff. It is also argued by the learned counsel for plaintiff that even though the plaintiff is entitled for litigation expenses the same was not considered by the Arbitrator which is opposed to the public policy and contrary to the provisions of Arbitration and Conciliation Act. It is also contended that the sole Arbitrator has erroneously awarded interest @12% per annum which is not provided under the agreement or under the provisions of Arbitration & Conciliation Act. Thus the award passed by the sole Arbitrator suffers from legal infirmities which has to be set aside. But on going through 28 CT 1390_Com.A.S.1212014_Judgment .doc the award passed by the sole Arbitrator it is pertinent to note that considering the claims of defendant herein suitable award was passed taking into consideration the evidence available on record and also taking into consideration the provisions of agreement which was prevailing between plaintiff and defendant herein. Thus the award passed by the sole Arbitrator cannot be considered as opposed to the public policy as provided U/S. 34 of the Arbitration & Conciliation Act and finding given by the sole Arbitrator in passing award is not opposed to the public policy, morality or justice and it cannot be set aside as claimed by the plaintiff.
21. On perusal of award passed by the sole Arbitrator and evidence available on record, it is pertinent to note that the sole Arbitrator has considered evidence of both the sides and on going through the documents produced suitable award was passed in accordance with law and there is no sufficient grounds to set aside the Arbitral Award passed by sole Arbitrator as provided U/S.34 of Arbitration & Conciliation Act. This court cannot examine the legality of award passed by the sole Arbitrator by going through the evidence and documents produced before the sole Arbitrator by the plaintiff and defendant herein. This court cannot re appreciate the evidence and documents placed before the sole Arbitrator by both the parties to the suit. If the finding given by the Arbitrator is opposed to the public policy or exceeding the limits of the Arbitrator are perverse while passing such 29 CT 1390_Com.A.S.1212014_Judgment .doc award and not considering the provisions and clauses of the agreement which was existed between parties to the suit, then only this court can interfere and set aside such award passed by the sole Arbitrator. On perusal of award passed by the sole Arbitrator there is no patent irregularities or opposed to the justice or morality and award passed is unfair and unreasonable as contended by the plaintiff. While arguing learned counsel for plaintiff relied upon decisions reported in (1999) 1 SCC 1 which is the case of Rickmers Verwaltung GMBH v/s Indian Oil Corporation Limited, 1969 (1) SCC 56 which is the case of B.C.Mohindra v/s The Municipal Board Saharanpur, (1984) 4 SCC 59 which is the case of M/s. A.T.Brij Paul Singh and others v/s State of Gujarat, (1999) 3 SCC 500 which is the case of Dwaraka Das v/s State of M.P and another, (2011) 10 SCC 573 which is the case of MSK Projects India (JV) Limited v/s State of Rajasthan and another, (2003) 5 SCC 705 which is the case of Oil & Natural Gas Corporation Limited v/s Saw Pipes Limited, (2015) 3 SCC 49 which is the case of Associate Builders v/s Delhi Development Authority. I have gone through the principles laid down in the said decisions which are not applicable to the present facts and circumstances of this case. Likewise learned counsel for defendant while arguing relied upon decisions reported in (1981) 1 SCC 80 which is the case of Ramji Dayawala and 30 CT 1390_Com.A.S.1212014_Judgment .doc sons Private Limited v/s Invest Import, (2006) 12 SCC 552 which is the case of Avtar Singh and others v/s Gurdial Singh and others, 1971 (3) SCC 273 which is the case of Amar Singh v/s The State of Bihar, AIR 1961 Cal 359 which is the case of A.E.G Carapiet v/s A.Y.Derederian, AIR 1965 SC 1288 which is the case of Central Bank of India Limited v/s Hartford Fire Insurance Company Limited, AIR 1952 SC 9 which is the case of Ganga Saran v/s Ram Charan Ram Gopal, (2007) 4 SCC 697 which is the case of Food Corporation of India v/s Chandu Construction and another, (2002) 2 SCC 388 which is the case of Konkan Railway Corporation Limited and another v/s Rani Construction Private Limited, (2015) 3SCC 49 which is the case of Associate Builders v/s Delhi Development Authority, 2018 SCC Online Delhi 12918: (2019) 256 DLT 42 (DB) which is the case of Vishwa Mittar Bajaj and sons v/s Shipra Estate Limited and Jaikishan Estates Developers Private Limited, (2018)1 SCC 656 which is the case of Venture Global Engineering LLC v/s Tech Mahindra Limited and another, (2003) 5 SCC 531 which is the case of Sukanya Holdings Private Limited v/s Jayesh H. Pandya and another. I have gone through the principles laid down in the said decisions which are not applicable to the present facts and circumstances of this case.
31CT 1390_Com.A.S.1212014_Judgment .doc
22. In view of the above said discussion, I am of the opinion that plaintiff has not at all made out sufficient grounds to prove that impugned award passed by the sole Arbitrator is opposed to the public policy or the Arbitrator has exceeded his limits in passing such award. Further the plaintiff has not at all made out cogent grounds to set aside the Arbitral Award and no grounds made out to prove that the Arbitral Award is perverse, unfair or unreasonable. The plaintiff has utterly failed to prove and establish that the award passed by the sole Arbitrator falls within any of the provisions prescribed U/S.34 of Arbitration & Conciliation Act 1996. On the other hand in the arguments of defendants side they have contended that as per the tender notification they have allowed by the plaintiff to lift 50,000 MT of Iron Ore from Krishnapatnam port and there was agreement between parties to provide the defendant to lift 67,000 MT of Iron Ore from Visakhapatnam port as per the terms of agreement dated 2/1/2010. All these aspects have been elaborately discussed and considered by the sole Arbitrator and given proper finding which is not opposed to the public policy or exceeding the limits of sole Arbitrator. Thus the Arbitral Award cannot be set aside, since it is not opposed to the morality or justice. Thus suit of plaintiff is deserves to be dismissed. Accordingly I hold point No.1 as negative.
23. POINT No.2 : In view of my discussion on point No.1 above, I proceed to pass following:
32CT 1390_Com.A.S.1212014_Judgment .doc ORDER The suit filed by the plaintiff U/S.34 of Arbitration & Conciliation Act 1996 is hereby dismissed.
In view of the circumstances of this case, the parties are directed to bear their own costs.
Draw decree accordingly.
[Dictated to the Judgment Writer; transcript thereof corrected, initialed and then pronounced by me, in the Open Court on this the 22nd day of December 2020] [N. Sunil Kumar Singh] LXXXIII Additional City Civil Judge.
Bengaluru.