M.M.T.C. Limited vs Paras Kumar Jain
2011 Latest Caselaw 1627 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                    Reserved on: 1st March, 2011
%                                Date of decision: 22nd March, 2011

+      FAO (OS) 80/2006

M.M.T.C. LIMITED                                      .....Appellant
               Through:          Mr. Rohit Puri, Advocate

               -versus-

PARAS KUMAR JAIN                                   .....Respondent
             Through:            Mr. K. Venkatraman, Advocate

       CORAM:
       HON'BLE MR. JUSTICE VIKRAMAJIT SEN
       HON'BLE MR. JUSTICE SIDDHARTH MRIDUL


       1.      Whether 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

SIDDHARTH MRIDUL, J.

1. The present Appeal under Section 37 of the Arbitration

and Conciliation Act, 1996 (hereinafter referred to as 'the Act')

is directed against the judgment and order dated 1st September,

2005 passed by the learned Single Judge in OMP No.310/2003

dismissing the petition under Section 34 of the Act filed by the

Appellant for setting aside the Award dated 9th May, 2003

passed by the sole Arbitrator Mr. Justice P.K. Bahri(Retd.).

2. The brief facts as are necessary for adjudication of the

present Appeal are that:

(a) The Appellant is a Government Company duly

incorporated under the Companies Act, 1956 and is

engaged in the business of import, export and

trading of various commodities.

(b) In its business of exporting gold jewellery, the

Appellant enters into agreements and arrangements

with interested parties dealing in manufacture and

export of the same. The Appellant provides financial

assistance to parties, in the instant case the

Respondent, in the shape of packing credit limit and

also lending gold on loan basis for manufacture of

gold jewellery, subject to the condition that the

entire gold jewellery would be exported within a

stipulated period in the name of the Appellant only

and in turn the Appellant would levy service and

administrative charges.

(c) The Appellant had entered into an agreement dated

25th October, 1991 for manufacture and export of

gold jewellery with the Respondent. The agreement

specified that gold was to be given on loan by the

Appellant to the Respondent for the purpose of

manufacture and export of gold jewellery. Various

export documents and invoices for export of the

jewellery to the foreign buyer were to be prepared

by the Respondent in the name of the Appellant. The

aforesaid loan was to be repaid to the Appellant

through the export remittances received from the

export of gold jewellery to a foreign buyer.

(d) It is the case of the Appellant that under the terms

of the agreement the Respondent was granted

packing credit to the extent of `25,00,000/-

equivalent to the value of gold loan limit of 8 KG.

The Appellant was to recover its dues in the packing

credit from the sale proceeds received from the

exports of the goods by the Respondent.

(e) Certain disputes arose between the parties with

respect to four consignments of export under the

agreement dated 25th October, 1991. The Appellant

claims that in lieu of the export made by the

Respondent from time to time, US $19517.90 still

remained to be received as balance remittances. The

Appellant, therefore, claimed a total sum of

`17,09,839/-, interest and other charges added, to

be due on 31st February, 2000 from the Respondent.

(f) The Respondent in his counter claim admitted to the

signing of the agreement dated 25th October, 1991

but pleaded that they were signed by him under

coercion and undue influence. Other liabilities and

claims of the Appellant were denied by the

Respondent.

(g) The learned sole Arbitrator rejected claims of the

Appellant as well as the counter claims filed on

behalf of the Respondent.

(h) Against the award dated 9th May, 2003 the Appellant

MMTC preferred an Appeal under Section 34(2) of

the Act contending the Award to be contrary to

public policy. The Single Judge dismissed the

petition of the Appellant under Section 34 vide the

impugned order dated 1st September, 2005.

Aggrieved by the said rejection the Appellant has

preferred the present Appeal.

3. On behalf of the Appellant, it was first urged that the

Award suffered from patent illegality and was contrary to public

policy inasmuch as the agreement transaction had been wrongly

interpreted by the Arbitrator. The second contention urged on

behalf of the Appellant was that the conclusions arrived at by

the learned Arbitrator were contrary to the facts on record and

the pleadings of the parties. In this behalf, it is seen that with

regard to the first contention the categorical finding of the

Arbitrator was that the Appellant was to recover all its dues

from the remittances to be received from the foreign buyer and

only in case of any shortfall the Respondent was to be liable.

Since the Appellant had failed to prove as to any shortfall in

remittances received in respect of the export transactions in

question, the Appellant was not entitled to recover any amount

from the Respondent. In this behalf, it was noticed in the Award

that the Appellant had produced a certificate dated 6th April,

1995 issued by the State Bank of India indicating that Saroia

Jewellers U.A.E. had remitted US $4,93,170 favouring the

Appellant. This payment included payment for shipment through

Swiss Air under Air Way Bill Nos. which included the Air Way

Bill Nos. of the four consignments in question as well. Thus, it is

observed that the amount received by the Appellant related not

only to those four consignments but also to a large number of

other consignments as well and, therefore, it was not possible to

hold as to what amount pertained to the four transactions in

question. Therefore, the Award rejected the claim of the

Appellant upon their failure to prove that in fact remittances in

respect of the four transactions in question had not been

received by the Appellant. This, as was observed by the learned

Single Judge, was a pure appreciation of fact and did not

constitute a cogent ground for setting aside of the arbitral

Award.

4. The second contention made on behalf of the Appellant

also does not hold water for the reason that it deals with the

appreciation of the records and pleadings of the parties. The

Appellant has not been able to demonstrate either before the

Single Judge or before us as to how the view taken in the

arbitral Award is contrary to the material on record. Even

otherwise, it is not permissible for the Court to reappraise the

evidence or to go into the questions of quality and quantity of

evidence.

5. In the circumstances, we find that there is no merit in the

present Appeal and the same is hereby dismissed with no order

as to costs.

SIDDHARTH MRIDUL, J.

VIKRAMAJIT SEN, J.

March 22, 2011 mk