Swadeshi Cables (I) Ltd. vs National Aluminium Co. Of India ...
2009 Latest Caselaw 1861 Del

*          HIGH COURT OF DELHI : NEW DELHI

+                     O.M.P. No. 25/2002

%                     Judgment reserved on :             17th February, 2009

                      Judgment pronounced on :           5th May, 2009


Swadeshi Cables (I) Ltd.                  ....Petitioner
          Through : Mr. Pramod B. Agarwala with Ms. Praveena
                     Gautam, Mr. Manmohan Sharma and Mr.
                     Abhishek Baid, Advs.

                      Versus

National Aluminium Co. of India Ltd.     ....Respondents
          Through : Mr. V.P. Singh with Mr. Anuj Berry, Advs.


CORAM:
HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                                  Yes

2. To be referred to Reporter or not?                               Yes

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

MANMOHAN SINGH, J.

1. This petition has been filed by the petitioner for setting aside

the award dated 1st October, 2001 whereby the learned Arbitrator

awarded an amount of US$ 12698 with interest at 6% per annum from

4th September, 1998 till payment to the respondent. The respondent was

also awarded cost at US$ 1000.

2. The petitioner, Swadeshi Cables Industries (in short SCI) is a

company incorporated in Nepal. The respondent, NALCO is a Public

Sector Enterprise. NALCO released the sale order to buy aluminium

wire rod of about 300 MT at a fixed price of US $ 2070 per MT with a

delivery schedule from July to December 1995, dated 17th June, 1995 to

SCI containing all terms, conditions of sale, delivery, price etc. and the

arbitration clause.

3. SCI issued the necessary bank guarantees, three Letters of

Credit and lifted 142.057 M.T. of goods and the deliveries were

scheduled to be made in the month of July, August and September, 1995

to the respondent. However, by letter dated 13th September, 1995 SCI

informed NALCO that due to political disturbances in Nepal, the

deliveries scheduled for October, November and December could not be

lifted and to postpone them to January, February and March, 1996.

NALCO refused to reschedule the deliveries.

4. It is alleged by SCI that NALCO did not inform them that the

manufactured goods were lying ready with it for delivery in January,

February and March, 1996 or that they could lift them in the above said

months on payment of delayed charges or damages. There were price

fluctuations during the months from November to March and the price

of aluminium was continuously falling. NALCO did not offer to deliver

the goods during January to March, 1996. By letter dated 4th May,

1996, NALCO requested SCI to lift the goods in May to July, 1996 but

SCI refused to accept the demands to take the deliveries in May to July,

1996. It is averred that neither party cancelled the contract till March,

1996.

5. Thereafter, NALCO filed an Arbitration Petition against the

SCI before the learned Arbitrator which was decided in his favour

holding that SCI committed the breach of the agreement by refusing to

accept the supply for the months of October to December, 1995.

6. The petitioner has raised objections to the impugned award

mainly contending that the award is contrary to Section 28 of the

Arbitration and Conciliation At, 1996 (hereinafter referred to as 'the

Act'). The award is contrary to the evidence on record as it was the case

of NALCO that it had already planned, produced and kept ready for

delivery the said contracted goods and that they were available for

delivery even on 4th May, 1996. The Arbitrator has ignored the letter

dated 4th May, 1996 which expressly states that the contract was not

ended till December, 1995. The damages occurred not naturally in the

usual course of things but it was caused due to political disturbances in

Nepal which was going on that time.

7. It is submitted in the petition in para 24 that the copy of

award was given to the petitioner on 12 th October, 2001 and they have

filed the objection petition within 90 days of the said service of the

award. The petition was filed on 15th January, 2002.

8. The respondent refuting the allegations of the petitioner, has

submitted that under Section 34 of the Act, the petition is not

maintainable as the scope of interference is very restricted in objection

petition. He relied upon Section 5 of the Act to emphasize that under

the Act of 1996, minimal judicial intervention of the Court is provided.

Learned counsel for the respondent has relied upon the case of

Olympus Superstructures Pvt. Ltd. V. Meena Vijay Khetan, AIR

1999 SC 2102 at para 17 and has argued that the scope of Section 34 of

the Act to set aside the award is far less than under Section 30 and 33 of

the Arbitration Act, 1940.

9. He has also argued that the Court should not reappraise the

evidence intrinsically or embark on a close scrutiny of the same for

arriving at the conclusion that the findings given by the learned

Arbitrator are erroneous. It is only where the error of law or finding of

fact, if any, is patent or is easily demonstrable without the necessity of

carefully weighing the various possible views for it, that the Courts can

interfere with the award. The award made by an Arbitrator is conclusive

as a judgment between the parties and the Court would be set aside only

when Arbitrator has misconducted himself or the award has been made

contrary to the provisions of the Contract.

10. The respondent also relied upon the case of Indu

Engineering and Textiles Ltd. v. DDA (2001) 5 SCC 691, para 6 & 7,

wherein it is held that Courts endeavour should be to preserve the award

as far as possible and a close scrutiny of the findings of the Arbitrator is

not possible. The Hon'ble Supreme Court in this case has further held

that even in the case of misconstruction or misappreciation of the

material on record, if any, the award may not be interfered with, even if

this Court may have come to different conclusion.

11. It is submitted by the learned counsel for the respondent that

as a measure of goodwill, NALCO despite having suffered losses gave

an opportunity to SCI to mitigate their losses by lifting the goods at a

later date by letter dated 4th May, 1996 which SCI refused but it cannot

be pleaded as a waiver or abandonment by NALCO. The learned

counsel relied upon the case of Mangal Sen vs. Kanchid Mal 1981 (4)

SCC 117 to contend that issue of plea of waiver cannot be allowed to be

raised when not pleaded.

12. It is also argued that under Section 34(3) of the Act,

limitation period of three months is prescribed for filing the objection

application from the date the party received the award. The petitioner

was admittedly served a copy of the award on 12 th October, 2001,

however, the objections to the award were filed on 15th January, 2002.

In the objection petition, the petitioner submitted that the petition has

been filed within 90 days of the service of the award. No application for

extension of time of 30 days as prescribed under Section 34 has been

filed, hence the court has no power to condone the delay even for a

single day without any application having the ground of sufficient

cause/reasons and thus the petition is liable to be dismissed.

13. In the rejoinder filed by the petitioner, it is stated that three

months of filing the petition expired only on 15th January, 2002, 12th

January, 2002 being second Saturday and 13 th January, 2002 being

Sunday, the court was closed. 14th January, 2002 being Makar Sankranti

was also declared a local holiday and the court was closed.

Consequently, the petition could be filed only on 15 th January, 2002.

The same is, therefore, within time. It is further submitted in the

rejoinder that without prejudice to the aforesaid, even if there is a delay

of a few days as alleged, in the said event this Court has

ample power to condone the delay. In the present case, the petitioner is

located at Kathmandu - Nepal. It takes time to communicate and to

receive papers. Even though the affidavit was affirmed as early as on

29th December, 2001, it took time for papers to reach to Delhi for filing

in court. Consequently, the delay, if any, was due to unforeseen reason

being postal delays, for papers and documents to reach Delhi from

Kathmandu. It is submitted that the postal delay being beyond the

control of the petitioner, the same be considered as sufficient cause for

delay, if any, in filing the captioned petition.

14. The learned Arbitrator has considered the contentions and

pleadings on record of both the parties including the letter of respondent

dated 4th May, 1996 and the letter of the petitioner dated 13 th September,

1995. The learned Arbitrator after considering detailed arguments and

evidence held that the petitioner was guilty of breaching the contract by

failing to lift the goods from the respondent.

15. The petitioner relied upon various decision in support of his

submission but facts and circumstances in each case are different. None

of the decisions is applicable to the facts of the present case.

16. The Apex Court in the case of Oil & Natural Gas Corpn.

Ltd. v. Saw Pipes Ltd.,(2003) 5 SCC 705 clearly laid down the scope of

interference by the court in the award of the arbitrator under Section 34

of the Act. The relevant para is reproduced as under :

"Conclusions

74. In the result, it is held that:

(A) (1) The court can set aside the arbitral award under Section 34(2) of the Act if the party making the application furnishes proof that:

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration.

(2) The court may set aside the award:

(i)(a) if the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties,

(b) failing such agreement, the composition of the Arbitral Tribunal was not in accordance with Part I of the Act.

(ii) if the arbitral procedure was not in accordance with:

(a) the agreement of the parties, or

(b) failing such agreement, the arbitral procedure was not in accordance with Part I of the Act.

However, exception for setting aside the award on the ground of composition of Arbitral Tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of Part I of the Act from which parties cannot derogate.

(c) If the award passed by the Arbitral Tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract.

(3) The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to:

(a) fundamental policy of Indian law; or

(b) the interest of India; or

(c) justice or morality; or

(d) if it is patently illegal.

(4) It could be challenged:

(a) as provided under Section 13(5); and

(b) Section 16(6) of the Act."

17. The learned arbitrator considered the documents on record

and objections and arguments raised by both the parties. The learned

arbitrator in fact has framed an issue regarding the effect of writing

letter dated 4th May, 1996 and gave his findings in that regard. The plea

of the petitioner that the arbitrator ignored this letter is clearly

untenable. I find no ground to interfere with the findings and reasoning

given by the arbitrator on repudiation of contract by the petitioner.

18. With regard to the contention raised by the respondent that

the petition is not maintainable under Section 34 (3) as not filed within

time, considering overall circumstances of the matter, I will not go into

the question of delay as the petitioner has failed to make any case on the

basis of which the Award of the Arbitrator can be set aside.

19. I find no merit in the objections, the same are dismissed. No

costs.

MANMOHAN SINGH, J MAY 05, 2009 SD