Madras High Court
M/S.Mmtc Limited vs M/S.Sanco Trans Ltd on 25 April, 2024
Author: M.Sundar
Bench: M.Sundar
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 25.04.2024
CORAM
THE HONOURABLE MR.JUSTICE M.SUNDAR
and
THE HONOURABLE MRS.JUSTICE K.GOVINDARAJAN THILAKAVADI
O.S.A (CAD) Nos.474 and 475 of 2018
&
C.M.P.No.22619 of 2018 in O.S.A (CAD) No.474 of 2018
&
C.M.P.No.22629 of 2018 in O.S.A (CAD) No.475 of 2018
M/s.MMTC Limited
Represented by its Deputy General
Manager P.Ramachandran
“Chennai House”
No.7, Esplanade
Chennai – 600 108 ... Appellant
in both OSAs
Vs.
1. M/s.Sanco Trans Ltd.,
Rep. By its Managing Director
19, Moore Street
Chennai – 600 001
2. Mr.Justice K.Swamidurai (Retd.,)
Sole Arbitrator
223, YMCA Building
N.S.C Bose Road
Chennai – 600 001 .. Respondents
in both OSAs
(Second respondent deleted vide this order)
https://www.mhc.tn.gov.in/judis
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Prayer in O.S.A.No.474 of 2018: Original Side Appeal filed under
Section 37 of the Arbitration and Conciliation Act, 1996 read with
Clause15 of the Letters Patent read with Order XXXVI Rule 1 of the
Original Side Rules to said aside the order in O.P.No.930 of 2005 dated
22.12.2017.
Prayer in O.S.A.No.475 of 2018: Original Side Appeal filed under
Section 37 of the Arbitration and Conciliation Act, 1996 read with
Clause15 of the Letters Patent read with Order XXXVI Rule 1 of the
Original Side Rules to said aside the order in O.P.No.20 of 2006 dated
16.02.2017.
For Appellant : Mr.AR.L. Sundaresan
Additional Solicitor General
Instructed by Mr.AR.Ramanathan
For Respondent : Mr.K.Bijai Sundar
COMMON JUDGMENT
(Judgment of the Court was delivered by M.Sundar, J.) This common order will now dispose of the captioned two 'Original Side Appeals' ['OSAs' in plural and 'OSA' in singular for the sake of brevity] and captioned two 'Civil Miscellaneous Petitions' ['CMPs' in plural and 'CMP' in singular for the sake of brevity] thereat.
2. Captioned OSAs are intra-court appeals under Section 37 of 'The Arbitration and Conciliation Act (Act No.26 of 1996)' [hereinafter 'A and C Act' for the sake of convenience and clarity]. Claimant before https://www.mhc.tn.gov.in/judis 2/12 'Arbitral Tribunal' ['AT' for the sake of brevity] i.e., MMTC [MMTC Limited] and respondent before AT i.e., 'Sanco Trans Ltd.' ['Sanco' for the sake of brevity] are the petitioner and R1 respectively before Section 34 Court. To be noted, before this Section 37 Court, MMTC is the appellant and Sanco is R1.
3. Before we proceed further, we deem it appropriate to delete R2 from the array of parties by applying Vinay Heavy Equipments principle [Zonal. Gen.Manager, Ircon Inter. Natnl. Ltd., vs. Vinay Heavy Equipments reported in 2007 SCC OnLine SC 4 and Zonal General Manager, Ircon International Limited Vs. Vinay Heavy Equipments reported in (2015) 13 SCC 680] and the sublime philosophy underlying Section 42-B of A and C Act. It is also to be noted that AT was a sole Arbitrator, who was a former Hon'ble Judge of this Court and he is now no more. This leaves the captioned OSAs with a sole appellant and a lone respondent i.e., MMTC and Sanco respectively.
4. For appellant MMTC, learned Additional Solicitor General https://www.mhc.tn.gov.in/judis 3/12 instructed by Mr.AR.Ramanathan and for respondent learned counsel Mr.Bijai Sundar were before us.
5. Before the AT, claim of MMTC was partly allowed but counter claim of Sanco, which was larger in terms of quantum was allowed in full. This meant that MMTC became an award debtor qua the award made by AT. In the light of the legal perimeter qua a Section 37 of A and C Act legal drill, we are of the view that it is not necessary to dilate much on facts and this is more so in the light of the submissions that were made by learned Additional Solicitor General.
6. As regards short facts (shorn of particulars that are not imperative for appreciating this order), suffice to say that MMTC was appointed as a Canalizing Agent by the Agricultural Ministry, Department of Chemicals and Fertilizers, Union of India for import of Urea from other countries for distribution to various States as per the allocation; that for this purpose, Ministry appointed an handling agent at Chennai Port and that handling agent in turn appointed MMTC as their Consignment Agent for handling imported bulk Urea; that the claimant MMTC in turn appointed Sanco as their handling agent vide two https://www.mhc.tn.gov.in/judis 4/12 agreements, one dated 18.07.1995 and another dated 15.09.1995 [hereinafter 'said agreements' collectively for the sake of convenience and clarity]; that disputes arose / erupted qua said agreements and the same were referred to AT owing to arbitration clause in said agreements; that there is no disputation that this arbitration clause served as 'arbitration agreement' between the parties within the meaning of Section 2(1)(b) read with Section 7 of A and C Act; that AT entered upon reference and after completion of pleadings by both sides and after hearing both sides, rendered 'two separate awards, both dated 07.07.2004' [hereinafter 'impugned awards' collectively in plural for the sake of brevity, convenience and clarity]; that the impugned awards were put to challenge in Section 34 Court vide O.P.No.930 of 2005 and O.P.No.20 of 2006; that Section 34 Court, after hearing both sides, dismissed both the OPs; that captioned OSAs are directed against dismissal of both Section 34 petitions by way of two separate orders, 'one dated 16.02.2017 and another dated 22.12.2017' [hereinafter 'impugned orders' collectively for the sake of convenience and clarity]; that notice was issued in the captioned OSAs, contesting respondent Sanco, which is now the sole respondent entered appearance and the matter is before this Court on Board for final hearing.
https://www.mhc.tn.gov.in/judis 5/12
7. Though very many grounds have been raised in the memoranda of grounds of appeal qua OSAs, learned Solicitor very fairly restricted his submissions to two points and those two points are as follows:
(i) the impugned awards do not contain dispositive reasoning i.e., no reasons have been given or in other words they are unreasoned awards;
(ii) that there was inordinate delay on the part of AT in pronouncing the impugned awards as the contestation and disputation drill before the AT and filing of written arguments concluded as early as in October of 2002 but the impugned awards were rendered in 2004 (07.07.2004 to be precise).
8. We carefully considered the aforementioned two points and the manner in which the aforementioned two points projected before Section 34 Court were dealt with by the Hon'ble single Judge presiding over the Section 34 Court.
9. As regards the first point i.e., lack of reasons, Section 34 https://www.mhc.tn.gov.in/judis 6/12 Court, after capturing the rival contentions, has held that reading of the impugned awards would show that learned Arbitrator had after extracting and reproducing the rival contentions considered the effect of documents as well as the evidentiary value of the same and that the Arbitrator (AT) has reached independent conclusions and rendered findings on each of the contention raised before AT.
10. Law is well settled that a Section 34 Court will not review an arbitral award on merits. The lead case law which is now holding the field is Ssangyong [Ssangyong Engineering and Construction Company Limited Vs. National Highways Authority of India reported in (2019) 15 SCC 131]. Absent a legal drill of review on merits, reasons being terse cannot be a ground to interfere. In any event, even terse dispositive reasoning can be eloquent.
11. As regards dispositive reasoning qua arbitral awards, this Court deems it appropriate to remind itself of Dyna Technologies case law i.e., Dyna Technologies Pvt. Ltd. Vs. Crompton Greaves Ltd. reported in (2019) 20 SCC 1 = 2019 SCC OnLine SC 1656. A careful perusal of elucidation of Section 31(3) of A and C Act and more https://www.mhc.tn.gov.in/judis 7/12 particularly elucidation qua reasons to be given in a arbitral award, Hon'ble Supreme Court made it clear that an arbitral award need not be elaborate like a judgment. Elucidating the principle ingrained in Section 31(3) of A and C Act, it was held that there are three facets of the matter and those three facets are (a) proper; (b) intelligible; and (c) adequacy. We find that there is nothing to demonstrate that impugned awards are falling short or lacking in this regard as there is nothing to demonstrate to say that impugned awards are improper, unintelligible or inadequate qua reasons as all that can be said (at the highest) is that the reasons are terse. As Dyna Technologies is instructive, we respectfully follow the same and we have applied the same as a working principle in the case on hand. On a perusal of the impugned awards as well as the order of Section 34 Court, we find that the aforementioned view of Section 34 Court does not warrant interference and therefore the impugned awards do not deserve to be dislodged on the ground of not giving reasons. As rightly held by Section 34 Court, Hon'ble Arbitrator in the impugned awards has returned findings on each of the points raised and therefore, it cannot be gainsaid that reasons have not been given. This therefore is the end of the road for the first point.
https://www.mhc.tn.gov.in/judis 8/12
12. This takes this section 37 Court to the second point i.e., delay in making the impugned awards. A careful perusal of the impugned orders of Section 34 Court, more particularly paragraph 12 thereat makes it clear that the Section 34 Court has proceeded on the basis that Section 29A of A and C Act kicked in only in 2015. We deem it appropriate to add specificity to this by saying that it kicked in on 23.10.2015. As regards Section 29A of A and C Act when it kicked in, while it said that time line would run from the date AT enters upon reference, subsequently on 30.08.2019 this expression, 'date the arbitral tribunal enters upon the reference' was replaced with the expression 'date of completion of pleadings under sub-section (4) of Section 23'. It may not be necessary to dilate more on Section 29A as Section 34 Court has proceeded on the basis that the entire arbitration legal drill was prior to 2015 i.e., prior to kicking in of Section 29A of A and C Act. We find no error in this approach of Section 34 Court, as absent Section 29A, there was no provision in the A and C Act, which provided for termination of mandate or snapping of the mandate of the AT qua time line. In any event, Section 29A, snapping of mandate also is not absolute as mandate can also be resurrected/resuscitated initially by consent of parties and subsequently by way of a judicial order to be made by a supervisory https://www.mhc.tn.gov.in/judis 9/12 Court qua A and C Act. In this view of the matter, we are inclined to say that no ground has been made out for interference with the impugned orders and the impugned orders do not deserve to be interfered with much less dislodged.
13. Notwithstanding the statutory position/statutory trajectory as regards Section 29A of A and C Act, though it is desirable to deliver / pronounce awards at the earliest after conclusion of proceedings, the 21 months time consumed for pronouncing the awards does not tantamount to a non-judicious award as contended and it can at best be described as non-expeditious in the pre-section 29-A regime. Be that as it may, this Court has repeatedly held that a Section 34 legal drill is neither an appeal nor a revision. It is not even a full-fledged judicial review. It is only a limited challenge to an award under eight pigeon holes adumbrated in Section 34 Court. In the case on hand, absent Section 29A of A and C Act, the challenge does not fit into nay snugly fit into any or some of the pigeon holes adumbrated under Section 34 of A and C Act. This means we sustain the submission of Mr.Bijai Sundar that Section 34 Court has rightly negatived the two points i.e., lack of dispositive reasoning and delay in rendering the awards.
https://www.mhc.tn.gov.in/judis 10/12
14. Learned Solicitor for MMTC and Mr.Bijai Sundar for Sanco submit in one voice that pursuant to judicial orders made in CMP, a sum of Rs.1 Crore in all qua two impugned awards was paid by MMTC to Sanco. Now in execution of the impugned awards, obviously this amount already paid out by MMTC will stand reduced /subtracted/adjusted qua the impugned awards.
15. Ergo, the sequitur of narrative, discussion and dispositive reasoning thus far is, captioned OSAs fail and the same are dismissed. Consequently, the captioned CMPs also perish with the OSAs i.e., CMPs are also dismissed. There shall be no order as to costs.
(M.S.J.) (K.G.T.J.)
25.04.2024
Index:Yes/No
Neutral Citation: Yes/No
Speaking / Non-speaking order
gpa
To
The Sub-Assistant Registrar
Original Side
High Court, Madras.
M.SUNDAR.J.,
and
K.GOVINDARAJAN THILAKAVADI, J.,
https://www.mhc.tn.gov.in/judis
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gpa
O.S.A (CAD) Nos.474 and 475 of 2018
&
C.M.P.No.22619 of 2018 in O.S.A (CAD) No.474 of 2018 & C.M.P.No.22629 of 2018 in O.S.A (CAD) No.475 of 2018 25.04.2024 https://www.mhc.tn.gov.in/judis 12/12