M.M.T.C vs M/S Al Bamar Company Ltd.
2009 Latest Caselaw 1843 Del

14

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

+                            FAO(OS) 124/2006

                                        Reserved on : April 30, 2009
                                        Pronounced on : May 04, 2009

        M.M.T.C                                           ..... Appellant
                             Through:   Mr. Rakesh Tikku, Advocate.
                    versus


        M/S AL BAMAR COMPANY LTD.              ..... Respondents

Through: Mr. O.P.Gaggar, Advocate.

CORAM:

HON'BLE MR. JUSTICE MUKUL MUDGAL HON'BLE MR. JUSTICE VALMIKI J. MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment? No.

2. To be referred to the Reporter or not? Yes.

3. Whether the judgment should be reported in the Digest? Yes.

%                            JUDGMENT

VALMIKI J. MEHTA, J

1       This appeal challenges the impugned order dated 25.10.2005 of the

learned Single Judge, whereby, the learned Single Judge was pleased to FAO(OS) 124/2006 Page 1 dismiss the objections filed by the appellant to the award dated 31.01.2002.

2. By the award, the respondent was held entitled to an amount of USD

52,913.97 being the balance of the freight charges payable by the appellant

to the respondent with respect to a charter party agreement entered into

between the parties. The award also granted interest at international lending

rates (LIBOR) of 7% from the date of reference till the date of payment.

3. Before the learned Single Judge, there were principally four

objections which were raised by the appellant to the award:-

(i) that the counter-claim filed by the appellant has been wrongly

dismissed as time barred and not permitting adjustment for the

short delivery of goods,

(ii) the respondent ought not to have been granted at least the

freight charges on said short delivery of goods,

(iii) the rate of interest granted until the award is on the higher side,

(iv) the award should have been passed in rupees and not in dollars

because there has been appreciation of value of dollars as

against the Indian rupee.

4. For the reasons stated hereinafter, we find that the reasoning of the

learned Single Judge while upholding the award and dismissing the

objections to the same are completely justified. So far as the issue with FAO(OS) 124/2006 Page 2 regard to the interest is concerned, we feel that in the facts and

circumstances of the case, the same requires certain modifications as stated

hereinafter.

5. The reasoning given by the learned Single Judge on all the three

aspects of the dis-entitlement of the appellant for adjustment of its claim of

short delivery on account of the same being barred by limitation, entitlement

of the respondent to claim freight charges for short delivery and entitlement

of the respondent to claim the award in dollars, we find, is detailed and

correct, and we would do no better if we would simply adopt the said

reasoning and reproduce the relevant portions of the impugned judgment.

6. On the issue with regard to the claim to the short delivery being

barred by limitation, the learned Single Judge has referred to Clause-3, para-

6 of Article III of the schedule to the Indian Carriage of Goods by Sea Act,

1925 and as per which provision, the claim of short delivery has necessarily

to be filed within one year after delivery of the goods or the date when the

goods should have been delivered. Applying the relevant provision of law,

the learned Single Judge has affirmed the finding in the award that

admittedly the claim was not brought within one year as required under law.

On the related aspect of the contention of the appellant that even if, a claim

with respect to short delivery is time barred, yet, the appellant was entitled to FAO(OS) 124/2006 Page 3 adjust or make a counter-claim or at least a defence on such basis has also

been rightly rejected by learned Single Judge by reference to the Supreme

Court judgment in The East and West Steamship Company Vs.

S.K.Ramalingam Chettiar: 1960 SCR (3) 820, which holds that not only the

remedy is extinguished after the limitation expires but the right itself is

extinguished.

Thus, we see no reason to differ with the reasoning of the learned

Single Judge and portion that the appellant was not entitled to make a claim

with respect to short delivery of the goods as alleged by it.

7. As regards the contention of the appellant that the respondent should

not have been allowed the freight charges for the short delivery, the learned

Single Judge in exhaustive reasoning from paras 11 to 17 of the judgment

has considered the respective documents and the evidence which were

considered for passing of the award and has thereafter arrived at the

following finding in para 17 with which we agree and which reads as under:-

" In my considered view the objection of the respondent cannot be accepted for two reasons: The first is that the methodology of draught measurement was adopted at the load port itself and was further the basis while discharging goods at Bhavnagar port. Even if there was some discrepancy in the total which was arrived at Kandla port on draught

FAO(OS) 124/2006 Page 4 measurement being made for the remaining goods, the petitioner cannot be deprived of the freight charges for the goods shipped as per the bill of lading on the basis that on actual measurement only at Kandla port, a different figure would be arrived at. The second aspect is that if the respondent was particular about the issue of short delivery of goods which itself would result in the plea of the respondent for non payment of freight charges on short delivery, the respondent would have taken recourse to legal proceedings to recover the amount. The respondent failed to take such recourse with the result that the respondent must be deemed to have accepted the delivery of goods by the petitioner as was so required to be done. Having failed to follow up its right for the same, in my considered view, it cannot now be said that the freight charges payable on such alleged short delivery of goods, for which short delivery no claim was filed in accordance with law, an adjustment should be made".

8. The next aspect is the contention of the appellant that the award

should not have been passed in dollars. The learned Single Judge has by

reference to the claim petition arrived at a finding that the claim of the

respondent in the claim petition was for dollars and therefore, it was justified

for the award to grant dollars and not in rupees. We have seen the claim

petition and particularly paras 9 to 11 and all of which paras clearly

specified the claim only in US Dollars, and the figure in rupees is only as an FAO(OS) 124/2006 Page 5 equivalent alternative. In addition to this, we may notice another basic fact

which entitles the respondent to seek payment under the award in terms of

US Dollars. The reason is that the Charter Party Agreement between the

parties was for payment in US Dollars and therefore this factor clearly

entitles the respondent for payment of freight in US Dollars and

consequently, the respondent was entitled to and did in fact make a claim in

US Dollars. The respondent therefore, was entitled to claim the award to be

passed in dollars. At the very best the claim petition can be said to make a

claim in the alternative either in the form of US Dollars or in the form of

rupees and therefore, there can be said to be nothing amiss with the award

when the same grants the awarded amount in US Dollars to the respondent.

9. We may note in the judgment of Forasol Vs. ONGC 1984 Suppl.

SCC 263 (and which was also considered by the learned Single Judge in

another context), it is stated in paragraph 40 thereof that in case a person

who is entitled to receive a foreign currency under an award/judgment is not

able to remit the foreign currency from India due to certain legal restrictions,

then at the option of the successful decree holder, he is entitled to claim,

purely at his option, Indian rupees equivalent to the amount awarded in

foreign currency. Though, we are affirming the award for grant of the

amount to the respondent in dollars, however, we give liberty to the FAO(OS) 124/2006 Page 6 respondent that in case at its sole option it is interested in receiving the

amount in Indian rupees, then it will be entitled to the equivalent of Indian

rupees of the US Dollars in terms of the Forasol's case. We would put it on

record that counsel for the respondent had however stated that the

respondent is only interested in receiving the amount in US Dollars,

however, the above directions as stated in this para is given in order to

further secure the respondent in terms of the said para 40 of the Forasol case.

10. That leaves us with the issue with regard to the interest and in fact was

the only issue seriously urged before us by the counsel for the appellant. As

per the award, the respondent has been granted its claim of US Dollars

52,913.97 along with interest at International Lending Rate (LIBOR) of 7%.

We are inclined to interfere with this part of the award and the judgment of

the learned Single Judge whereby interest has been granted at 7%. We find

that in international transactions interest at 7% is indeed on the higher side

more so, when the appellant is already prejudiced by the increase in the

value of the dollar as compared to the Indian rupee. Also, internationally,

and of which we take judicial notice, that the LIBOR rate has fluctuated in

the intervening period and is presently around 3%. From January, 2002, till

2009, the LIBOR rate has fluctuated from around 3% in 2002 to 6/7%

during 2006-2007 and thereafter came down again to about 3% and even FAO(OS) 124/2006 Page 7 less. Therefore, considering the facts and circumstances of the case, and

more particularly the trend in the reasoning in the recent judgments of the

Hon'ble Supreme Court in reducing the interest granted in the award on

account of passage of time from the date of passing of the award till the time

the matter comes up in the court, we reduce the rate of interest as granted

under the award from 7% to 3 ½% . The relevant judgments of the Supreme

Court on this issue are the judgments of Rajendra Construction Co. Vs.

Maharashtra Housing & Area Development Authority & ors.2005 (6) 678,

McDermott International Inc. Vs. Burn Standard Co. Ltd.& ors 2006 (11)

SCC 181, Rajasthan State Road Transport Corpn. Vs. Indag Rubber Ltd.

(2006) 7 SCC 700 and Krishna Bhagya Jala Nigam Ltd. Vs.

G.Harischandra, 2007 (2) SCC 720.

11. We, therefore, dismiss the appeal and sustain the award and the

finding and the judgment of the learned Single Judge with the modification

as to the rate of interest and hold the respondent will be entitled to the

awarded amount with interest at 3 ½ % from the date of reference till the

date of payment by the respondent.

                                              VALMIKI J. MEHTA, J


                                                MUKUL MUDGAL, J
MAY 04, 2009/ib
FAO(OS) 124/2006                                                        Page 8