Delhi High Court
Palmyra Tsiris Lines S.A. Of ... vs Union Of India on 10 March, 1998
Equivalent citations: 72 (1998) DLT 490, 1998 (45) DRJ 223
Author: C.M.Nayar
Bench: C.M.Nayar
ORDER
C.M.Nayar, J.
1.
This judgment will dispose of the objections filed by the respondent Union of India under Sections 30 and 33 of the Arbitration Act, 1940 against the Award dated July 25, 1995.
2. The reading of paragraphs 1,2,3 and 4 of the Award will give the relevant facts which may be reproduced as follows:
"1. By a Charter Party dated 21st June 1993, the respondents (the Union of India) - hereinafter referred to as "Respondents") chartered the vessel M.V. City of Beirut from M/s Palmyra Tsiris Lines S.A. of Piraeus, 85, Akti Miaoulii, 18538, Piraeus, Greece, (hereinafter referred to as "Claimants") for the carriage of 13000 MTs (5% more of less at owners' option) of Bulk Urea from Ummsaid port for discharge at any Indian Port, excluding Haldia Calcutta on terms and conditions set out in the said Charter Party.
2. Pursuant to the said Charter Party, the vessel loaded at Ummsaid Port a quantity of 12850.793 Mts. of Bulk Urea as per the Bill of Lading dated 29.06.93 and sailed on 29.06.93. The Respondents (Charterers) nominated Krishnapatnam Port as Port of discharge for the vessel. The Vessel arrived at Krishnapatnam on 09.07.93 at 1600 hrs, commenced discharge at 1900 hrs on 15.07.93 and completed discharge at 1245 hrs. on 14.08.93.
3. Clause 48 of the said Charter Party provided for all disputes arising under the Charter Party to be settled in India in accordance with the provisions of the Arbitration Act, 1940 of India each party appointing an Arbitrator from out of the Panel of Arbitrators maintained by the Indian Council of Arbitration, New Delhi and the two Arbitrators appointing an Umpire, whose decision, in the event of disagreement between the Arbitrators, shall be final and binding upon both the parties hereto. The Arbitrators and the Umpire shall be commercial men.
4. Disputes did arise between the aforesaid parties and the Ship owners/Claimants appointed Capt. S.M. Berry, S-202, Greater Kailash - II, New Delhi - 110048, as the Arbitrator on their behalf. The Charterers/Respondents initially appointed Shri V. undararaman, 30, II Main Road, Kothari Gardens, Madras - 600085, as the Arbitrator on their behalf. In view of the objection raised by the Claimants to the appointment of Shri V. Sundarara man for the reason that his name did not appear in the Maritime Panel of Arbitrators of the Indian Council of Arbitrators, the Respondents appointed Shri N. Gopalakrishnan, B-55, South Extn.- II, New Delhi - 110049, as the Arbitrator on their behalf, vice Shri Sundararaman on 21.10.94. The Claimants filed their State ment of Claim with the Indian Council of Arbitration on 19.07.94. he Respondents filed their counter statement on 17.10.94. The
Claimants filed their rejoinder on 18.01.95."
3. The claimant claimed from the respondent a sum of US$ 103383/48 with interest and costs as per details below:
Amount due to owners/Claimants :
1. Freight Quantity 12850.793 MTs US $
or 12647.795 LTs @ US $ 21/PLT 265603.69
2. Demurrage at discharge port 83300.00
_________
348903.69
_________
Less deductions :
1. Commission @3.75% 13083.88
2. Amount received from Charterers 229083.00
3. Despatch at Ummsaid 3353.33
---------
245520.21
---------
Balance due to owners 103383.48
---------
(b) The Charterers remitted to the owners a further sum of US $
30162.75 on 04.10.94 towards "undisputed balance amount" as under
:
US $
10% Freight payment 26560.55
Add Demurrage at Disport 9096.67
---------
35657.22
Less :
2.5% Address Commission on
Demurrage 227.42
1.25% Brokerage on Demurrage 113.71
Despatch at Loadport 5153.34
--------
5494.47
--------
Net amount remitted : 30162.75
--------
4. Taking into account this remittance, the Claimants revised their claim to US $ 73220.73 on 18.01.95.
5. The respondent also made a cross claim against the claimant for US $21105.55 towards short landing of 202.938 MTs of Urea. In this regard they claimed a sum of US $38617.73 towards refund of excess payment made. The Arbitrators examined the pleas of both the parties and framed the following issues:
1. Whether M/s. Nagarjuna Fertilisers and Chemicals Ltd. are a party to the Arbitration proceedings.
2. Whether the period of waiting at Krishnapatnam from 09.07.93 to 15.07.93 would count as laytime or not.
3. Whether during the period from 15.07.93 to 21.07.93, only four hatches were made available by the ship for discharge for want of power and if so whether the discharge rate should pro-rata be reduced for this period.
4. whether the Holidays on 9th and 10th August, 93 were declared as Charter Party holidays.
5. Whether the period from 01.08.93 to 06.08.93 when discharge operations were disrupted due to strike called by All India Motor Vehicles Transporters Association and the reported strike in support by the boat crew is eligible for exclusion from laytime.
6. Whether interruptions to discharge due to Surf and Swell at the shore are eligible for exclusion form laytime.
7. Whether the respondents Charterers are entitled for compensation for the short landed quantity of 202.830 MTs as per draft survey, claim for which was preferred on 29.04.95.
6. The findings and the award in respect of the above issues are recorded in the following manner:
(I) ISSUE NO.1 :
As M/s. Nagarjuna Fertilisers and Chemicals Ltd. are not a party to the Charter Party agreement in respect of the subject ship ment, WE hold that they cannot be a Party to these Arbitration proceedings. Even as per Dept. of Fertilisers, Authorisation letter No.4-39/93 DD dt.18.04.95, M/s. N.F.C.L. have only been authorised to act for and on behalf of the Union of India in the matter of these proceedings.
7. (II) ISSUE NO.2
The vessel admittedly arrived at Krishnapatnam on Friday 09.07.93 and the N.O.R. was tendered at 1600 hours on 09.07.93. After excluding 24 running hours under clause 27 of Charter party and the excepted periods on Saturday (1600-2400 hrs.), Sunday (0000-2400 hrs) and Monday (0000-0800 hrs), WE hold that the Laytime shall commence from 0800 hrs on Monday the 12th July 1993.
8. (III) ISSUE NO.3
For the period from 1900 hours on 15.07.93 to 0700 hours on 21.07.93, the Discharge rate shall be reckoned at 960 MTs per w.w.d. on the basis of four workable hatches made available by the ship for discharge.
9. (IV) ISSUE NO.4
Only 10th August 1994 (Shri Krishna Janmashtami) which has been declared as a Charter Party Holiday by the Nellore District Chamber of Commerce and Industry shall be excepted as a Charter Party Holiday.
10. (V) ISSUE NO.5
The period of strike from 01.08.93 to 06.08.93 of All India Motor Vehicles Transporters Association included in the Statement of facts is not entitled for exception and shall count for laytime.
11. (VI) ISSUE NO.6
The period of interruptions to discharge from the ship due to Surf and Swell as declared by the Port authorities and included in the Statement of Fact shall be excluded from the laytime.
12. (VII) ISSUE NO.7
The Counter claim of the Respondents preferred on 29.4.95 for compensation for the short landing of 202.938 MTs as per Draft Survey is rejected as it was not referred within the time-limit of one year from the date of completion of discharge.
13. (VIII) In terms of our above mentioned decisions. We have re-worked the Laytime Statement of the subject shipment, which is annexed. On this basis, the vessel had incurred Demurrage at the discharge port for DHM 08-22-20 amounting to US $42866.67 at US $ 4800 per day.
14. The Arbitrators as a consequence adjudicated the matter on the above findings and came to the conclusion that the sum of Rs.31,179.90 was payable to the claimant by the respondent which is worked out on the following
basis:
i) Freight payable on 12850.793 MTs US$
OR 12647.795 LTs @ US $ 21 PLT 265603.69
(ii) Less :
(a). Commission @3.75% 13083.88
(b). Despatch at Ummsaid 3353.33
---------
16437.21
---------
249166.48
(iii). Add Demurrage at Disport :
(a) DHM 08-22-20 @$4800 p.d. 42866.67
(b) Less Comm. @ 3.75% 1607.50
---------
41259.17
---------
290425.65
(iv). Amount due to owners:
(v). LESS:
Amounts already paid
by Charterers: 229083.00
+ 30162.75
---------
259245.75
---------
(vi). Balance Net amount payable to owners 31179.90 by Respondents (Union of India)."
15. The claimant was also awarded interest at the rate of 12 per cent perannum with effect from 13th December, 1993 till date of payment or decree whichever is earlier.
16. The dispute, prima facie, relates to the demurrage for the delay occurred as the vessel commenced discharging from July 15, 1993 and completed the same on August 14, 1993. The Arbitrators have only awarded for the period of Days 8 Hours 22 and Minutes 20 at the rate of US$ 4800 per day. The details were submitted before the Arbitrators in the form of "Time
Sheet" from the arrival of the vessel till the completion of discharge and may be reproduced as under:
M.V.CITY OF BEIRUT C/P DATED 21.6.93
TIME SH T AT KRISHNAPATNAM
Vessel arrived Krishnapatnam 09.07.93 @ 1600 Hrs.
Notice of Readiness tendered 09.7.93 @ 1600 Hrs
Notice of Readiness accepted 09.07.93 At 1800 Hrs.
(with Remarks)
Time to count 12/7/93 @ 0800 Hrs.
Vessel commenced discharging 15.7.93 @ 1900 Hrs.
Vessel completed discharging 14.8.93 @ 1245 Hrs.
Qty (As per B/L)Discharged 12,850,793 MTons Blk Urea
Discharge rate: 1200MT/WWD OF 24 CONS. Hrs. SAT. AFTER
SUNDAYS AND CHARTER PARTY HOLIDAYS EXCEPTED EVEN IF USED.
_________
Time allowed for Discharge : 5280 MT/960 = 5 Days 12 Hrs 00
Mins.
(150 MT 15.07.93 1900 TO 21.03.93 0700 ONLY 4 HATCHES
AVAILABLE)
Time allowed for Discharge : 7570.793/1200=6 Days 07 Hrs 25
Min.
Total Time allowed : 11 Days 19 Hrs 25 Mins.
TIME WORKED
DAY DATE FROM TO TIME TO COUNT REMARKS.
(DD-HH-MM)
MON 12.07.93 0800 2400 00-16-00 TIME TO COUNT
FRM 0800H
TUE 13.07.93 0000 2400 01-00-00
WED 14.07.93 0000 2400 01-00-00
THU 15.07.93 0000 2030 00-20-30 BAD WEATHER
..... 2030 2400 00-00-00
FRI 16.07.93 0000 0615 00-00-00 BAD WEATHER
..... 0615 0800 00-01-45
.... 0800 1400 00-00-00 RAIN/NO POWER ALL HATCHE
.... 1400 1600 00-02-00
.... 1600 2400 00-00-00 RAIN
SAT 17.07.93 0000 0600 00-00-00 RAIN
.... 0600 1200 00-06-00
.... 1200 2400 00-00-00 EXCEPTED
SUN 18.07.93 0000 2400 00-00-00 EXCEPTED
MON 19.07.93 0000 0800 00-00-00 EXCEPTED
..... 0800 1900 00-11-00
..... 1900 2400 00-00-00 BAD WEATHER
TUE 20.07.93 0000 0600 00-00-00 BAD WEATHER
..... 0600 1800 00-12-00
..... 1800 2400 00-00-00 BAD WEATHER
WED 21.07.93 0000 2400 00-00-00 BAD WEATHER
THU 22.07.93 0000 0600 00-00-00 BAD WEATHER
..... 0600 1715 00-11-15
..... 1715 2400 00-00-00 BAD WEATHER
FRI 23.07.93 0000 0600 00-00-00 BAD WEATHER
.... 0600 0630 00-00-30
.... 0630 2400 00-00-00 BAD WEATHER
SAT 24.07.93 0000 0600 00-00-00 BAD WEATHER
.... 0600 1200 00-06-00
.... 1200 2400 00-00-00 EXCEPTED
PERIOD
SUN 25.07.93 0000 2400 00-00-00 EXCEPTED
PERIOD
MON 26.07.93 0000 0800 00-00-00 EXCEPTED
PERIOD
..... 0800 1545 00-07-45
..... 1545 2400 00-00-00 RAIN
TUE 27.07.93 0000 0700 00-00-00 RAIN
..... 0700 1515 00-08-15
..... 1515 2400 00-00-00 BAD WEATHER
WED 28.07.93 0000 0600 00-00-00 BAD WEATHER
..... 0600 2400 00-18-00
THU 29.07.93 0000 1800 00-18-00
..... 1800 2400 00-00-00 BAD WEATHER
FRI 30.07.93 0000 0600 00-00-00 BAD WEATHER
..... 0600 1730 00-11-30
..... 1730 2400 00-00-00 BAD WEATHER
SAT 31.07.93 0000 0530 00-00-00 BAD WEATHER
..... 0530 1200 00-06-30
..... 1200 2400 00-00-00 EXCEPTED
PERIOD
SUN 01.08.93 0000 2400 00-00-00 EXCEPTED
PERIOD
MON 02.08.93 0000 0800 00-00-00 EXCEPTED
PERIOD
..... 0800 2400 00-16-00
TUE 03.08.93 0000 2400 01-00-00
WED 04.08.93 0000 2400 01-00-00
THU 05.08.93 0000 1425 00-14-25
TOTAL : 11-19-25 LAYTIME
ALLOWED
EXPIRED
VESSEL ON DEMURRAGE FROM 05.08.93 1425 HRS
TO 14.08.93 1245 HRS VESSEL COMPLETED
DISCHARGE
= 08-22-20 DHM
US $ 4800 = US $ 42866.67"
17. Clauses 9 and 10 which are of some relevance relating to the demurrage and the responsibility of the parties may be reproduced as follows:
"9. If the Vessel is detained longer than the time allowed for loading and/or discharging, demurrage shall be paid at US$ 4800/- (U.S.Dollars Four thousand eight hundred only) per running day.
10. The Vessel shall be reported and/or cleared at the Custom House at loading and discharging ports by the Shipowners'agents."
18. The demurrage is to be assessed on the basis of clause 9 as referred to above and agreed to between the parties. The Vessel was reported and cleared for discharging at port and the shipowners' agents had, therefore, discharged their liability in terms of clause 10 as notice of readiness was given and duly conveyed to the respondent.
19. The learned counsel for the respondent has vehemently argued that the delay, if any, has occurred due to the reasons beyond the control of the respondent and no liability can be fastened for demurrage in view of the same. The relevant clauses of the contract which will indicate the time for discharge of the cargo as well as the reasons for delay are incorporated in
Clauses 27 and 32 which are reproduced as below:
"27. The cargo shall be loaded at the average rate of 4500 MT basis 5 or more hatches and prorata for less number of hatches per weather working day of 24 consecutive hours, Friday and legal holiday excepted, unless used, if used actual time used to count.
At loading port time shall not count between noon on Thursday and 8 a.m. Saturday nor between 5 p.m.(noon if Thursday) on last working day preceding a legal holiday and 8 a.m. on first working day thereafter, unless used and if used actual time used to count, unless the vessel is already on demurrage.
At loading port laytime is to count from 1300 hours if notice vessel's readiness for loading is tendered and accepted before noon (noon included) and 0800 hours on the next day if notice is tendered and accepted afternoon. The notice of readiness shall be tendered by Master of the vessel during official working hours of the port whether in berth or not whether in free critique or not.
The cargo shall be discharged at the average rate of 1200 MT basis 5 or more hatches and prorata for less number of hatches per weather working day of 24 consecutive hours, Saturday afternoon, Sundays and charter-party holidays excepted, even if used, provided vessel can deliver at this rate. Time at each discharging port(s) shall not count between noon on Saturday and 8.00 am on Monday nor between 5.00 pm (noon if Saturday) on the last working day preceding a charter-party holiday and 8.00 am on the first working day thereafter, even if used, unless the vessel is already on demurrage.
RIDERS TO MV "CITY OF BEIRUT" CP DATED 21.06.1993
At each discharging port time shall begin to count from 24 running hours after vessel's arrival within port limits and notice of readiness tendered and accepted during official working hours, reported and in free practique, whether in berth or not, but not between the hours of 5.00 pm and 8.00 am on a week day or during any of the period above excepted even if used, unless the vessel arrived on demurrage.
Charterers have the right to work during excepted periods, such time used not to count as laytime.
Laytime allowed for loading and discharging to be non-reversible.
32. If the cargo cannot be loaded by reasons of riots, civil commotions, or of a strike or lockout of any class of workmen essential to the loading of the cargo, or by reason of obstructions or stoppages beyond the control of the charterers caused by riots, civil commotions, or a strike or lockout on the railways, or in the docks, or other loading places, or if the cargo cannot be discharged by reason of riots, civil commotions, or of a strike
or lockout of any class of workmen essential to the discharge, the time for loading and discharging as the case may be, shall not count during the continuance of such causes, provided that a strike or lockout of the Shippers and/or receivers men shall not prevent demurrage accruing if by the use of reasonable diligence they could have obtained other suitable labour at rates current before the strike or lockout.
In case of any delay by reason of the before mentioned causes, no claim for damage or demurrage shall be made by the charterers, Receivers of the cargo or owners of the steamer. For the purpose, however of settling despatch money accounts, any time lost by the steamer through any of the above causes shall be counted as time used in loading or discharging as the case may be."
20. The Arbitrators were duly seized of the pleas raised by the respondent with regard to the delay and, therefore, did not award for the demurrage for the whole period as raised in the statements of claim and only confined on the basis as referred in accordance with the terms of the Contract. The Time Sheet which has already been referred to above gives full details of
the period for which the demurrage was accepted and for the period it was refused. The Arbitrators have, accordingly, given minute to minute account as well as awarded the amount in favour of the claimant on appreciation of material evidence placed before them. The scope of interference in such matters is limited and the learned counsel for the respondent has not indicated any error of law or material irregularity which will call for interference in the present case.
21. It is not open for the Court to interfere even if the Arbitrator reached wrong conclusion or failed to appreciate facts when the Award was a reasoned one. Paragraph 2 of the judgment as reported in M/s Hindustan Tea Co. Vs. M/s K.Sashikant & Co. and another may be cited as below:
"The Award is reasoned one. The objections which have been raised against the Award are such that they cannot indeed be taken into consideration within the limited ambit of challenge admissible under the scheme of the Arbitration Act. Under the law,the Arbitrator is made the final arbiter of the dispute between the parties. The Award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate facts. Strong reliance was placed by the appellant's learned counsel on an old Madras decision in Yogambal Boyee Ammani Ammal v. Naina Pillai Markayar (1909) ILR 33 Mad 15. In
our view, on the facts of this case challenge to the Award is not permissible by taking the stand that the Arbitrator acted contrary to the provisions of Section 70 of the Contract Act. In
these premises the objection filed to the Award has to be rejected. We direct the Award to be made a rule of the Court. The parties shall bear their own costs troughout."
22. Similarly, the law is well settled that this Court cannot sit in appeal over views of Arbitrators by re-examining and reassessing the materials. The learned Judges stated the law in paragraph 10 of the judgment as reported in Food Corporation of India Vs. Joginderpal Mohinderpal and another which reads as under:
"10. Dr.Singhvi drew our attention to the observations of this Court in M/s. Sudershan Trading Co. of the report where it was stated that if it was apparent from the award that a legal proposition which formed its basis was erroneous, the award was liable to be set aside. Dr.Singhvi sought to urge that when the arbitrator observed that "Corporation is not entitled to recover such a claim particularly when the `Economic Rate' has not been defined" this, according to the statement of Dr.Singhvi, the arbitrator was mistaking the law, such a mistake of law is apparent on the face of it. It has to be borne in mind, however, that wrong
statement or conclusion of law, assuming even that it was a wrong statement of law, was not wrong statement of the proposition of law which was the basis for decision in this award. Error of law as such is not to be presumed, if there is legal proposition which is the basis of the award and which is erroneous as observed in Champsey Bhara & Co.,(AIR 1923 PC 66) (supra), then only the award can be set aside. There was no proposition of law; there was a legal deduction of law arrived at to say that the provisions of Cl.g(i) of the contract would be penal rate and such penal rate cannot be sustainable without evidence of the damages suffered to that extent. We are of the opinion that the arbitrator had taken a view which is a plausible view. Beyond this, the court has nothing to examine. It is not necessary for a court to examine the merits of the award with reference to the materials produced before the arbitrator. The Court cannot sit in appeal over the views of the arbitrator by re-examining and reassessing the materials. See the observations of this Court in Puri Construction Pvt. Ltd.Vs. Union of India ."
23. It will, therefore, be not open for this Court to sit in appeal to examine the correctness of the findings of the arbitrators where no patent error of law is obvious from the reading of the award and when the Arbitrators have examined the evidence and have given their findings on the basis of the appreciation of material on record. The supreme Court has gone to the extent of holding that even non-speaking Award is not per se bad as the Arbitrator is not obliged to give reasons for his decision. Even if giving of reasons is held to be obligatory it is not obligatory to give detailed judgment. Paragraphs 9 and 10 of the judgment as reported in Gujarat Water Supply & Sewerage Board Vs. Unique Erectors (Gujarat) (P) Ltd. and another
will reiterate the proposition as stated above and the same read as under:
"9. The scope and extent of examination by the Court of the award made by an arbitrator has been laid down in various decisions. It has to be noted that there is a tread in modern times that reasons should be stated in the award though the question whether the reasons are necessary in ordinary arbitration awards between the parties is pending adjudication by the Constitution Bench of this Court. Even, however, if it be held that it is obligatory for the arbitrator to state reasons, it is not obligatory to give any detailed judgment. An award of arbitrator should be read reasonably as a whole to find out the implication and the meaning
thereof. Short intelligible indications of the grounds should be discernible to find out the mind of the arbitrator for his action even if it be enjoined that in all cases of award by an arbitrator reasons have to be stated. The reasons should not only be intelligible but should also deal either expressly or impliedly with the substantial points that have been raised. Even in a case where the arbitrator has to state reasons, the sufficiency of the reasons depends upon the facts and the circumstances of the case. The Court, however, does not sit in appeal over the award and review the reasons. The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusion or if the award is based upon any legal proposition which is erroneous. See the observations of this Court in Indian Oil Corporation Ltd. Vs. Indian Carbon Ltd. ."
10. In the instant case, the arbitrator by virtue of the terms mentioned in the order of this Court had to decide which of the disputes were arbitrable and which were not. It is true that the arbitrator has not specifically stated in the award that he had to decide the question of irritability. The arbitrator has rested by stating that he has heard the parties on the point of irritability of the claim and the counter-claim. He has further stated that after considering all the above aspects and the question of irritability or non-irritability he had made the award on certain aspects. Reading the award along with the preamble, it appears clear that the arbitrator had decided the irritability and the amount he has awarded was on the points which were arbitrable. The contention that the arbitrator had not decided the question of irritability as a preliminary issue cannot also be sustained. A reference to the arbitrator's proceedings which were discussed in detail by the High Court in the judgment under appeal reveal that the procedure adopted by the arbitrator, i.e., that he will finally decide the matter, indicated that the parties had agreed to and the arbitrator had proceeded with the consent of the parties in deciding the issues before him and in not deciding the question of irritability as a separate, distinct and preliminary issue. The arbitrator has made his award bearing all the aspects including the question of irritability in mind. It was contended before us that the arbitrator has made a non-speaking award. It was obliged to make a speaking award, it was submitted by terms of the order of this Court. We cannot sustain this submission because it is not obligatory as yet for the arbitrator to give reasons in his decision.The arbitrator, however, has in this case indicated his mind. It appears to us that the point that the non-speaking award is per se bad was not agitated before the High Court. We come to that conclusion from the perusal of the judgment under appeal though, however, this point has not been taken in the appellant's appeal. It is one thing to say that an award is unintelligible and is another to say that the award was bad because it was a non-speaking award. The point taken was that the award was unintelligible
and not that it was non-speaking, but there was nothing unintelligible about the award."
24. The Arbitrators who were nominated by both the parties were Experts in the field and they have carefully examined and analysed the demurrage and consequent loss as suffered by the claimant. The particular period for discharge of the Cargo was fixed in terms of the contract and demurrage had to be paid when the contractual obligations were not discharged.Paragraphs
667 and 668 of Halsbury's Laws of England,FOURTH EDITION (vol.43) pages 464-465 deals with the time or discharge of Cargo and when the consignee is not responsible for the delay. These paragraphs read as under:
"667. When time is fixed by the contract. Where the contract fixes the time within which the discharge of the cargo is to take place, the consignee's obligation to accept delivery within that time is absolute and unconditional. If, therefore, the unloading of the ship is delayed, he has failed to perform this obligation, and, except where he has some lawful excuse, he is liable to pay demurrage or damages for detention in respect of the period during which the ship is thereby delayed.
668. Where consignee is excused for delay. The consignee is excused for his failure to take delivery of his cargo within the time fixed by the contract in two cases only.
(1) The consignee may be so excused where the delay is attributable to the negligence or default of the shipowner or of persons for whom he is responsible. Thus, the shipowner has no claim against the consignee where the shipowner wrongfully refuses to deliver the cargo, or where the delay is occasioned by his failure to provide a sufficient number of men, and his consequent inability to perform his part of the unloading within the required time, or by some other cause for which he is responsible. There must, however, be some default on the part of the shipown er; if the cause of the delay is beyond the shipowner's control, the consignee is responsible, even if the delay is, in fact,attributable to the shipowner's inability to perform his part of the contract. The consignee's engagement is absolute, whereas the shipowner's engagement is merely that he will not by his default prevent the consignee from performing his own part of the contract. it is therefore immaterial whether the shipowner's inability is due to some physical misfortune, such as bad weather interrupting the discharge or to the act of third persons over whom he has no control, such as a strike of dock labourers. In accordance with the same principle there is no default on the part of a shipowner who lawfully withholds delivery in the rightful exercise of his lien, and the consignee is responsible for any delay occasioned by it.
(2) The consignee may also be excused for delay where the cause of the delay is covered by an exception in the contract. The effect of an exception is merely to suspend the consignee's obligation whilst the excepted cause is in operation; it does not protect him against the consequences of his own defaults. Thus, where the contract contains a strike clause, and a strike breaks out during the unloading, the consignee is excused insofar as the
unloading is in fact delayed by the strike, but no further; the clause may, however, be so framed as to apply only if the strike arose before the ship came on demurrage or may apply only if the strike did not arise while the ship was on demurrage."
25. The period having been specific under the contract for discharge of the Cargo is to be adhered to and the delay which is attributable to the respondent's conduct obviously will result in the demurrage which has been awarded by the arbitrators. In view of the above reasons, there is no illegality or infirmity in the Award as rendered by the Arbitrators.
Faint attempt is next made to impugn the Award of interest in favour of the claimant. This point is also concluded by the judgment of the Supreme Court as reported in State of Orissa Vs. B.N.Agarwalla and subsequently followed by this Court in M.L.Sharma and Company, New Delhi Vs. State Trading Corporation of India 1997 V AD (Delhi) 1. Paragraphs 15,16,17 and 18 of the Supreme Court Judgment may be reproduced as under:
"15. Claim for interest for pre-reference period again came up for consideration before this Court in Jugal Kishore Prabhati lal Sharma v. Vijayendra Prabhati lal Sharma. It was contended in that case that the arbitrator could not award interest for pre-reference period. While Ranganathan, J.. with whom V. Ramaswami, J. concurred, only observed that "there is some force in this contention" but B.P. Jeevan Reddy, J. who was one of the members of the Bench which decided G.C. Roy case in his concurring judgment dealt with this question at some length. After referring to some of the observations in the judgment of the Constitution Bench in G.C.Roy case, it was observed by B.P. Jeevan Reddy, J. at p.139 as follows : (SCC para 39)
"In the circumstances, it would not be correct to read the first of the five principles set out in para 43 as overruling Jenainsofar as it dealt with the arbitrator's power to award interest for the pre-reference period. Principle No.(i) should be read alongwith principle No.(v) wherein it is clearly stated that the interest for the period anterior to the reference (pre-reference period) is a matter of substantive law unlike interest pendente lite. The conclusion in para 44 again deals only with the power of the arbitrator to award interest, pendente lite. It is, there fore, not right to read the said decision as overruling Jena insofar as it dealt with the power of the arbitrator to award interest for the pre-reference period."
16. Again in State of Orissa Vs. Lal Chand Kapani, after referring to the decision in Abhaduta Jena and G.C.Roy cases, it was observed at p.69 as under : (SCC para 3)
"It is thus clear that before the 1978 Interest Act came into force there was no provision under which the interest for the pre-reference period could be granted. In this case, the Supreme Court also held that the interest pendente lite i.e. from the date of reference to the date of the award, the claimants would not be entitled to the same for the reason that the arbitrator is not a court within the meaning of Section 34 CPC since the reference was not by a court in a pending suit. This view regarding the interest pendente lite however has been reversed in Secy.,Irrigation Deptt., Govt. of Orissa v. G.C.Roy. Regarding the interest during the pre-reference period, the view taken in Abhaduta Jena case is not disturbed. Therefore the interest during the pre-reference period can be awarded provided on the date of the award, 1978 Interest Act was in force."
17. In Sudhir Bros. Vs. Delhi Development Authority the question with regard to awarding interest for pre-reference period, but in a case arising after the commencement of the Interest Act, 1978, came up for consideration and the legal position emanating from earlier decisions of this Court including G.C.Roy case and Jena case, was stated to be as follows : (SCC p.34, para 7)
"The Constitution Bench in G.C.Roy case was dealing with the question relating to the award of interest pendente lite and not with the question of the award of interest for the prereference period and it was in that context that the Constitution Bench held that the view expressed in Jena case with regard to award of pendente lite interest could not be said to have laid down good law. The Constitution Bench did not deal with the question of pre-reference interest in cases coming after the enforcement of the Interest Act, 1978, which came into force from 19.8.1981. In G.C.Roy case itself, it is stated that the reference to the Constitution Bench had been necessitated only for deciding the question whether the decision in Jena case was correct insofar as it held that arbitrator had no power to award interest pendente lite. On a doubt being raised whether the Constitution Bench in G.C.Roy case had overruled the law laid down in Jena case relating to the power of the arbitrator to award interest for the prereference period in the post-Interest Act, 1978 era, the position was clarified by a three-Judge Bench in Jugal Kishore Prabhati lal Sharma v. Vijayendra Prabhati lal Sharma, wherein it was specifically held that the decision in G.C.Roy case was concerned only with the power of arbitrator to award interest pendente lite and that it was not concerned with his power to award interest for the pre-reference period."
18. In view of the aforesaid decisions there can now be no doubt with regard to the jurisdiction of the arbitrator to grant interest. The principles which can now be said to be well-settled are that the arbitrator has the jurisdiction to award pre-reference interest in cases which arose after the Interest Act, 1978 had become applicable. With regard to those cases pertaining to the period prior to the applicability of the Interest Act, 1978, in the absence of any substantive law, contract or usage, the arbitrator has no jurisdiction to award interest. For the period during which the arbitration proceedings were pending in view of
the decision in G.C.Roy case and Hindustan Construction Ltd. case, the arbitrator has the power to award interest. The power of the arbitrator to award interest for the post-award period also exists and this aspect has been considered in the discussion relating to Civil Appeal No.9234 of 1994 in the later part of this judgment."
26. The Arbitrators are perfectly within their rights to award interest for the pre-suit period as well as for the subsequent period which is not barred by any provisions as contained in the contract. However, the objection of the respondent with regard to the higher rate of interest may now be examined. Paragraph 11 of the Objections reads as follows:
"11. That the learned Arbitrators have grossly erred while awarding 12% rate of interest per annum on the sum payable. They erred in recognising that the amount payable in question is in US$ and not in Indian Rupees. The rate of interest which US$ earns in a deposit with any nationalised bank is 6% and not 12% which the Indian Rupee earns. The learned Arbitrators have not appreciated the linking formula between the two currencies and the award of 12% interest instead of 6% which is earned by the US$."
27. The interest has to be awarded by the Arbitrators on the basis of the current market rate which is stated to be 6 per cent. Therefore, the Arbitrators should have awarded interest at that rate taking into consideration the facts and circumstances of the present case, articularly, when the amount awarded is in US Dollars Currency.
In view of the aforesaid reasons, there is no force in the objections of the respondent. The same are, accordingly, rejected. The Award dated July 25, 1995 is made Rule of the Court subject to the modification that the petitioner shall be entitled to simple interest at the rate of 6 per cent per annum on the sum payable viz. US $ 31179.90 and it shall also be
payable at the same rate from the date of decree till realisation. There will be no order as to costs.
