Madras High Court
Kamarajar Port Limited vs International Seaport Dredging ... on 16 August, 2021
Author: N.Sathish Kumar
Bench: N.Sathish Kumar
Arb.O.P.(D) No.55269 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
CORAM
DATED: 16/8/2021
THE HONOURABLE Mr.JUSTICE N.SATHISH KUMAR
Arb.O.P.(D) No.55269 of 2021
Kamarajar Port Limited
rep. By its General Manager (Operations)
II Floor (North Wing) III Floor
Jawahar Building
No.17 Rajaji Salai
Chennai 600 001. ... Petitioner
Vs
International Seaport Dredging Private Limited
No.62/113, 5th Floor
Challam Towers
Dr.Radhakrishnan Road
Chennai 600 004. ... Respondent
Arbitration Original Petition has been filed under Sections 34 (2) &
(2A) of the Arbitration and Conciliation Act, 1996, r/w. Section 2 (1) (c) &
10 (2) of the Commercial Courts Act, 2015, to set aside the interim Arbitral
Award dated 12/5/2021.
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Arb.O.P.(D) No.55269 of 2021
For petitioner ... Mr.V.Vijay Narayanan
Senior Counsel
for Mr.Menon.
For respondent ... Mr.Murari
Senior Counsel
for Mr.Allwin Godwin.
------
ORDER
This Arbitration Original Petition has been filed to set aside the interim Arbitral Award, dated 12/5/2021.
2. Today, this matter has come up under the caption “For Maintainability”.
3. Heard Mr.V.Vijay Narayanan, learned Senior Counsel for Mr.Menon, for the petitioner and Mr.Murari, learned Senior Counsel for Mr.Allwin Godwin for the respondent.
4. The respondent had moved an application in I.A.No.2 of 2020 before the Arbitral Tribunal, for passing an interim award, in terms of Section 31 (6) r/w. Section 16 and 32 (2) (c) of the Arbitration and 2/15 https://www.mhc.tn.gov.in/judis/ Arb.O.P.(D) No.55269 of 2021 Conciliation Act, 1996, to declare the Arbitration proceedings commenced purportedly, vide, notice, dated 2/2/2019 and all consequent actions of the claimant, as invalid and consequently, terminate the Arbitration proceedings.
5. Learned Arbitral Tribunal, vide, order, dated 12/5/2021 has ordered thus:-
“We are of the considered view that a final decision on the issue number one, on merit with further evidence if any would fairly decide the disputes between the parties finally and in their interest. Any interim decision at this stage may be time consuming and expensive and may not be in the interest of both the parties. Therefore, we restrain ourselves from making any decision or observation on any of the matters raised in I.A by both parties except narrating the contentions 3/15 https://www.mhc.tn.gov.in/judis/ Arb.O.P.(D) No.55269 of 2021 raised by the learned counsel and permitting both the parties to raise all the points raised by them in I.A., while deciding the original claim petition. With the above liberty, I.A. No.2 of 2020 stands closed.”
6. Being aggrieved, the petitioner has come forward with the instant Arbitration Original Petition, to set aside the interim Arbitral Award, dated 12/5/2021.
7. When the matter is taken up for hearing, through Video Conferencing, Mr.V.Vijay Narayanan, learned Senior Counsel appearing for the petitioner submitted that order passed by the Tribunal is nothing but an interim award. Three grounds have been raised before the Tribunal and they are (i). there was no resolution by the Board of Company to maintain the claim; (ii). Invocation letter sent by the independent person and (iii). Pleadings signed by the counsel has not been properly authorised. 4/15 https://www.mhc.tn.gov.in/judis/ Arb.O.P.(D) No.55269 of 2021
8. However, the learned Arbitrator has not decided the above issues and concluded that those issues can be decided at the time of passing of final award. Hence it is the contention that the interim award can be challenged, under Section 34 of the Act, as held by the Hon'ble Supreme Court, in INDIAN FARMERS FERTILIZER COOPERATIVE LIMITED Vs. BHADRA PRODUCTS (2018) 2 SUPREME COURT CASES – 534. It is his further contention that Section 4 of the Act will not be applicable, for the reason that when there is a specific power under Section 16 (4) of the Act, there can be no question of deemed waiver.
9. Mr.Murari, learned Senior Counsel appearing for the respondent submitted that no decision has been arrived at by the learned Arbitral Tribunal. Therefore, without any decision being passed, the arbitrator has deferred the decision on the issues raised with regard to the maintainability of the application. Such order cannot be construed as an interim award.
10. It is his main contention that the judgment cited by the learned 5/15 https://www.mhc.tn.gov.in/judis/ Arb.O.P.(D) No.55269 of 2021 Senior Counsel for the petitioner will not be applicable to the facts of the present case. The above decision has been finally arrived binding the parties. Only in such a scenario, the interim award would be challenged under Section 34 of the Act. Therefore, the present Arb.Original Petition is not maintainable and hence prays for dismissal of the same.
11. A dispute has been referred to the arbitration for raising the following claims:-
S.NO. CLAIM DESCRIPTION CLAIM AMOUNT
(INR)
1 CSD Ambiorix Production loss and idle 33,732,660
time due to piles and mobilization of
IBIS
2 Force Majeure – Idle time due to 6,427,650
cyclone
3 Force majeure – Siltation due to cyclone 44,727,592
4 Force Majeure due to the death of 4,842,750
former Tamil Nadu Chief Minister
5 Idle time for CSD Ambiorix due to 16,259,900
obstructions while dredging Part 2
during Dec 16 – Jan 17
6 Idle time for TSHD Antigoon due to 6,415,543
obstructions while dredging in Part 2
area during Jan-Feb 2017
7 Consolidated claim due to lack of work 191,815,475
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Arb.O.P.(D) No.55269 of 2021
S.NO. CLAIM DESCRIPTION CLAIM AMOUNT
(INR)
front and delay in handing over of areas
as per MOM of Aug 2016 for dredging in
Part 2 during Dec 2016 – Feb 2017
8 Cost for mobilization of and dredging 102,533,253
with CSD Shanti Sagar VIII during April-
May 2017 9 Claim due to production loss of CSD 28,318,431 Ambiorix while dredging in Part 2 area during Aug-Sep 2017 10 Claim due to delay in handing over 77,484,000 CBIV – Idle cost of CSD Ambiorix from 20th July 2017 till 1/8/2017 11 Claim due to delay due to introduction of 177,133,993 GST – Idle cost of CSD Ambiorix and other resources from 2 August 2017 to 23 August 2017 12 Claim due to delay in issue of NOC for 89,811,000 CSD Ambiorix from 23 Sep 2017 till 5 October 2017 13 Claim due to obstructions at CBIII and 4,299,775 CBIV while dredging in Part 2 area during Aug/Sep 2017 14 Interest on delayed payment of certified 12,904,021 statements 15 Refund of wrongly deducted of port 11,298,401 dues and pilotage 16 Refund of deductions made towards 31,448,316 BOCW cess 17 Site cost and personnel costs idling 164,984,082 during intermittent periods of remobilizations TOTAL 1,004,436,842
12. Three Member Arbitral Tribunal was constituted to enter reference in this regard. Learned Arbitrator, after considering the 7/15 https://www.mhc.tn.gov.in/judis/ Arb.O.P.(D) No.55269 of 2021 submissions of both sides, concluded as follows-
“Considering all the above facts in the touch stone of the findings of the Hon'ble Supreme Court, referred to above, we are of the considered view that a final decision on the issue number one, on merit with further evidence if any would fairly decide the disputes between the parties finally and in their interest. Any interim decision at this stage may be time consuming and expensive and may not be in the interest of both the parties. Therefore, we restrain ourselves from making any decision or observation on any of the matters raised in the I.A by both parties except narrating the contentions raised by the learned counsel and permitting both the parties to raise all the points raised by them in the I.A., while deciding the original claim petition. With the above liberty, I.A.No.2 of 2020 stands closed.” 8/15 https://www.mhc.tn.gov.in/judis/ Arb.O.P.(D) No.55269 of 2021
13. A bare perusal of the entire order of the learned Arbitrator makes it very clear that there is no formal expression of an adjudication where the Tribunal conclusively determined the rights of the parties with regard to all the matters raised by the respondent Company.
14. Section 2 (c) and (ca) of the Arbitration and Conciliation Act, reads as follows:-
(c). “arbitral award” includes an interim award.
(ca). “arbitral institution” means an arbitral institution designated by the Supreme Court or a High Court under this Act.
15. Section 36 of the Act deals with Enforcement of the Arbitral award and the same read as follows:-
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16. If any decision is arrived on the issues raised by any of the parties on merits, and if the same has an effect of deciding the right of the parties, it could be construed that binding decision has been made either by way of interim award or final award. However, no decision was taken by the arbitrator with regard to the issues raised. As indicated above, to construe the award there must be some element of adjudication touching upon the rights of the parties. Whereas in the given case, no occasion has come to such stage. What was done by the learned Arbitrator is that the very issues raised by the parties will touch upon the main decision itself 10/15 https://www.mhc.tn.gov.in/judis/ Arb.O.P.(D) No.55269 of 2021 and deferred the same for final decision.
17. In such a view of the matter, at no stretch of imagination such order passed by the Arbitrator would be classified as an interim award in this matter.
18. Much reliance has been placed in INDIAN FARMERS FERTILIZER COOPERATIVE LIMITED Vs. BHADRA PRODUCTS (2018) 2 SUPREME COURT CASES – 534. On a perusal of the above judgment, the Hon'ble Apex Court, after considering the various judgments has held that in the above cited case, interim award passed on 23/7/2015, which being an arbitral award, can be challenged separately and independently, under Section 34 of the Act. Such an award does not relate to the Arbitral Tribunal's own jurisdiction, under Section 16 of the Act, does not have to follow the drill of Sections 16 (5) and (6) of the Act. The Hon'ble Apex Court also opined that Parliament may consider for amending Section 34 of the Act, so as to consolidate all interim awards together with the final arbitral award, so that one challenge under Section 11/15 https://www.mhc.tn.gov.in/judis/ Arb.O.P.(D) No.55269 of 2021 34 can be made after delivery of the final arbitral award, whereas in this case, nothing has been decided conclusively between the parties. In the above case, issue of limitation was decided finally. In such a situation, the Hon'ble Apex Court has held that such an order is an interim award. Therefore, the above judgment cannot be made applicable to the facts of the present case.
19. A careful perusal of paragraph 10 of the judgment of the Delhi High Court in NOIDA TOLL BRIDGE COMPANY LTD Vs. MITSUI MARUBENI CORPORATION {ILR (2005) II DELHI 493}, relied upon by the learned Senior Counsel for the respondent, makes it very clear that the order passed by the learned Tribunal has decided a contentious issue with regard to the maintainability of the claim. Since the issue was not concerned with the competence of the arbitral Tribunal, impugned order cannot be placed in the category of ordes passed, under Section 16 (2) and 16 (3) of the Act. It negates the plea of a legal infirmity attributed to the claim itself. Therefore, it is not an interim order but an interim award which can be challenged under Section 34 of the Act. 12/15 https://www.mhc.tn.gov.in/judis/ Arb.O.P.(D) No.55269 of 2021
20. On a perusal of the entire award, this Court is of the view that no decision was made by the arbitral tribunal in respect of the grounds raised. Any decision on that ground will have an impact on the final order. The learned Arbitral Tribunal have deferred the decision on the above issues to the final stage. Therefore, that order cannot be considered as an interim award since there was no decision which conclusively determines the rights of the parties.
21. In such a view of the matter, application under Section 34 of the Act would not be maintainable and objection raised by the Registry is upheld and the petition is dismissed.
16/8/2021 mvs.
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