Delhi High Court
Southern Petrochemical ... vs The Great Eastern Shipping Co. Ltd on 12 May, 2015
Author: S. Muralidhar
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. 498/2013
Reserved on: April 09, 2015
Decided on: May 12, 2015
SOUTHERN PETROCHEMICAL INDUSTIRES
CORPORATION LTD & ANR ..... Petitioners
Through: Mr. Gagan Gupta, Advocate.
versus
THE GREAT EASTERN SHIPPING CO. LTD .. Respondent
Through: Mr. Sandeep Sethi, Senior
Advocate with Mr. Amitava Majumdar,
Mr. Arvind Kumar Gupta, Mr. Siddharth
Ranka, Mr. Anshul Garg and Mr. Abhishek
Goyal, Advocates.
CORAM: JUSTICE S. MURALIDHAR
JUDGMENT
% 12.05.2015
Introduction
1. The challenge in this petition filed by Southern Petrochemical
Industries Corporation Ltd („SPICL‟) and the Government of India
through the Ministry of Chemicals and Fertilizers („MoCF‟) under
Section 34 of the Arbitration and Conciliation Act, 1996 („Act‟) is to
an award dated 10th January 2013 passed by the Arbitral Tribunal
(„AT‟) in the disputes between the parties arising out of a Charter
Party (C/P) Agreement dated 10th June 1992 whereby the Respondent
The Great Eastern Shipping Company Ltd. („GESCL‟) gave their
vessel „MV Jag Rahul‟ to the MoCF for carriage of 35,000 Metric
Tons (MT) (5% more or less) of bulk Di-ammonium Phosphate
(„DAP‟) from 1/2 safe ports/safe anchorages West or East Coast of
India excluding Calcutta.
2. It is not in dispute that the vessel carried DAP from the port of
More Head City and arrived at the Kakinada anchor at 07:06 hours on
8th August 1992 and completed the discharge on 23rd November 1992.
A dispute arose between the parties on the calculation of discharge
port demurrage. The case of the Petitioners was that there was a strike
of the stevedores/labourers at Kakinada port between 23rd August and
17th September 1992 and this was an event for which duration, in
terms of Clause 33 of the C/P Agreement, demurrage was not payable.
The case of GESCL on the other hand was that there was no such
strike and in any event the Statement of Facts (SoF) submitted by the
captain of the ship did not record any such strike between the said
dates. According to GESCL, the failure to allot a discharge turn to the
vessel by the port authorities was not due to any strike but possibly
due to congestion for which there was no exception under Clause 33
of the C/P for payment of demurrage.
Relevant Clauses of the C/P
3. In order to understand the background to the above dispute, it is
necessary to refer to the relevant clauses of the C/P Agreement which
read as under:
"24. Discharging port(s) stated in Bills of Lading are
not necessarily final discharge ports and actual
disc/arising ports to be declared by KRISHKHAD
NEW DELHI on vessel‟s passing Suez/Cape Town in
response to Master‟s telegram to KRISHKHAD NEW
DELHI, EMTICIFERT NEW DELHI and
TRAMSCHART NEW DELHI giving 96 hours notice
of ETA Suez/Cape Town. Orders for second
discharge port if required, can be given by Charterers
while the vessel is discharging at the first port unless
given earlier."
"33. If the cargo cannot be loaded by reason 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 constructions or stoppages beyond the
control of the Charterers caused by riots, civil
commotions or of 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 or 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 damages 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 and discharging as the case may be."
"40. Charterers shall not be liable for any delay in
loading or discharging including delay due to the
unavailability of cargo which delay or unavailability
is causes in whole or in part by an Act of God, War,
hostilities, political disturbances, rebellion,
mobilisation, revolution, insurrection. Acts of public
enemy, civil commotions, sabotages. Acts of
Government (including but not restricted to any
preference, priority allocation or limitation order and
any export or import control). Fires, Floods, Force
Majeure, Earthquakes, Storms, Land-slides, Frost or
Snow, bore tides, explosions or other catastrophes,
epidemics; quarantines, restrictions, strikes, embargo,
blockade, railways accident or impediments and any
other causes beyond the control of Charterers."
Relevant facts
4. Notice of readiness („NOR‟) was tendered on 8th August 1992 when
the vessel arrived at the Kakinada anchorage and lay time commenced
on 9th August 1992. The lay dates statement [which was appended as
Exhibit C to the Statement of Claims (SOC)] recorded that the
discharge turn was allotted to the vessel on 29th September 1992 and
the time of commencement of discharge was 10:45 hours on 1 st
October 1992. The discharge was completed at 08:00 hours on 23 rd
November 1992. Exhibit C showed the total period of demurrage to be
62 days 2 hours and 5 minutes. However, the lay time calculation
furnished by the MoCF under cover of their letter dated 7th April 1993
(Exhibit D ) indicated that from 24th to 30th August 1992 there was a
strike; from 31st August to 16th September there was a "labour
problem" and again there was a strike on 17th September 1992. After
accounting for rain days and public holidays, the MoCF calculated the
demurrage period as 27 days 17 hours and 22 minutes and paid
GESCL the corresponding demurrage charges. GESCL's remaining
claim was for the demurrage for the balance period of 31 days 13
hours and 38 minutes.
5. On 24th December 1993, Ministry of Surface Transport („MoST‟)
wrote to the GESCL drawing their attention to the fact that there was a
strike or labour trouble in the port of Kakinada from 24th August to
17th September 1992. MoST made a reference to the Statement of
Facts (SoF) of M.V. Betanavis which happened to be in Kakinada port
at the same time when M.V. Jag Rahul was there awaiting the
discharge of cargo.
6. However, by letter dated 16th May 1994 MoST informed GESCL
that the Charterers i.e. SPICL were "agreeable to counting of
strike/labour problem period as laytime used at discharge port on the
basis of the additional information furnished by GESCL". The letter
enclosed the Charterers' Revised Timesheet showing the demurrage as
59 days and 7 hours. In response, by letter dated 18 th May 1994
GESCL conveyed to MoST its acceptance of the aforesaid revised
calculation and requested MoST to authorise the Department of
Fertilisers (DoF) to release the payment of the additional demurrage of
31 days 13 hours and 38 minutes at the earliest. On the basis of the
above correspondence, on 2nd June 1994 MoST wrote to the Director
of Accounts (DoA) of the DoF requesting it to make payment of the
additional demurrage.
7. It was at this stage that the DoF conveyed to MoST that it was not
agreeable to the aforementioned calculation. The DoF furnished
additional information in the form of a certificate dated 3rd September
1994 of the Kakinada Steamer Agents Association (KSAA) and a
communication dated 1st October 1994 of the Commissioner of
Labour, Government of Andhra Pradesh stating that the Stevedores
and labourers at Kakinada Port were on strike from 23 rd August 1992
to 24th September 1992. Consequently, MoST wrote to GESCL on 27th
October 1994 asking it to convey its agreement to the earlier
calculation of demurrage i.e. 27 days 17 hours and 22 minutes to
"enable us to close the case."
The first round of arbitration and challenge
8. The C/P Agreement contained an arbitration clause. The above
dispute came to be referred to a three-Member AT comprising of
persons in the maritime industry. Initially, by an Award passed on 17 th
February 2010, the AT allowed the claim of GESPL to the tune of
Rs.44,19,527.78 together with interest @ 6.5% per annum from 18 th
May 1994 till the date of payment. The AT essentially went by the fact
that in the SoF for the vessel in question, which was signed by the
Master of the ship and the Charterers there was no mention of any
strike in the Kakinada port at the relevant time submitted.
9. The said Award was challenged in this Court by the Petitioners by
filing OMP No. 482 of 2010. The Court, in its judgment dated 20 th
July 2011 set aside the said Award and remanded the matter to the AT
for a fresh consideration.
10. The Court first held that the AT erred in considering the SoF as the
"be all and end all" as regards the occurrence of strike. The Court also
held that the AT had failed to appreciate the letters dated 30th April
1993 of the MoCF stating that the vessel had incurred demurrage of 27
days 17 hours and 22 minutes at the discharge port and the letter dated
24th December 1993 of the Ministry of Surface Transport („MoST‟) to
GESCL to the same effect stating that the payment already made on
that basis "was in full and final settlement of the subjected fixture".
The Court also found that the AT had erred in rejecting the "weighty
evidence" produced by the Petitioners in the form of certificate dated
23rd September 1994 of the KSAA and the communication dated 1st
October 1994 of the Commissioner of Labour. The inconsistency, if
any, in the dates mentioned in the said documents could not have led
conclusion that there was no strike at all. Thirdly, the Court held that
the plea of GESCL that the Petitioners ought to have nominated a
second port as mandated by Clause 24 of the C/P, was not supported
by the pleadings of GESCL in its statement of claims. Fourthly, even
if the communication dated 16th May 1994 of the MoST could be
attributed to the Petitioners, they were entitled under Section 31of the
Evidence Act to explain the so-called admission, "which could not be
taken to be a conclusive proof of the fact that there was no
strike/labour unrest during the relevant period." Lastly, the Court
while remitting the matter back to the AT for reconsideration of the
claim of GESCL on merits, after taking into consideration the
observations made by the Court, also observed that the AT had not
considered "the relevant and pertinent evidence led before it by the
Petitioners while concluding that there was no strike/labour unrest at
the relevant time."
The second Award
11. Pursuant to the said remand, GESCL again filed an SOC before
the AT with documents under cover of letter dated 16th January 2012.
This was replied to by the Petitioners on 10th April 2012 along with
documents. A rejoinder was filed by GESCL on 16th June 2012. By a
letter dated 8th August 2012, the AT informed that since till that date
the parties had not indicated that they wished to examine witnesses,
the AT would proceed on the basis of the documents, pleadings and
relevant judgments placed on record.
12. By a unanimous Award dated 10th January 2013, the AT held that
GESCL was entitled to be paid Rs.44,19,527.78 towards additional
demurrage. Interest @ 6.5% per annum on the said sum from 2 nd June
1994 till the date of the Award was quantified as Rs.53,13,367. The
fees and costs of arbitration were quantified as Rs.2,60,000 to be paid
by both parties in equal proportion. In the impugned Award, the AT
concluded that the Petitioners were unable to satisfactorily explain
their defence to the claim that during the relevant period there was a
labour strike at the Kakinada Port.
13. In the impugned Award, the AT found it intriguing that the strike
which started on 23rd August 1992 and lasted till the third or fourth
week of September 1992 could go completely un-noticed not only by
the Master of the Vessel i.e. M.V. Jag Rahul but also by the Port
Officials, Charterers and company representatives. The AT noticed
that since the SoF did not refer to the said strike, there was a need for
the AT to look for the possible other evidence.
14. The AT examined the certificate dated 23rd September 1994 of the
KSAA and the communication dated 1st October 1994 of the Labour
Commissioner and concluded that these were issued at the instance of
the Petitioners and long after actual discharge of cargo and in any
event later that the letter dated 16th May 1994 by which the MoST
had conveyed the Charterer's acceptance of the laytime calculations.
15. The AT noted that the SoF of M.V. Betanavis was produced. What
was produced was a copy of the said Award which gave no details
normally given in a SoF. As regards the Award relating to M.V.
Prabhu Daya, it showed that no oral evidence had been tendered and
even the written evidence produced was not before the AT. The
Award was between two parties whose names were not mentioned
and, therefore, it was of no use in considering the issues before the
AT. The AT noted that even after almost a year since the completion
of discharge of M.V Jag Rahul, the Petitioners had not made any effort
to get any certificate from the Port Officer of Kakinada or other
contemporaneous evidence about the alleged strike and labour
problem at Kakinada port. There was no consistency in the stand of
the Petitioners on when the strike actually ceased and in particular,
whether the strike period should be excluded for the purpose of
calculation of laytime.
Submissions of counsel
16. Mr. Gagan Gupta, learned counsel for the Petitioners, submitted
that there was no occasion in the first place for the AT to permit the
Respondent to file a fresh SOC. Referring to the decision in ASCU
Arch Timber Protection Ltd. v. Commissioner of Central Excise,
Calcutta (2004) 10 SCC 653 he submitted that the AT was bound to
restrict itself to the material already on record. Secondly, he submitted
that the AT failed to take into account the findings of the Court in the
order dated 20th July 2011 which were binding on it. Thirdly, it was
submitted that the veracity of the documents filed by the Petitioners
had already been considered by this Court and, therefore, could not be
doubted. Fourthly, the AT erred in holding the letter dated 16 th May
1994 sent by the MoST to be an admission on the part of the
Petitioners when this Court had already discussed the said letter and
held that it had been issued without the approval of the Petitioners.
The Award was contrary to Clauses 33 and 40 which permitted the
days of strike to be excluded while calculating the laytime. Fifthly,
GESCL could not have been permitted to raise a plea on the basis of
Clause 24 of the C/P when no such plea had been urged in the
pleadings in the first round of litigation.
17. Countering the above submissions, it was submitted by Mr.
Sandeep Sethi, learned Senior counsel appearing for GESCL, that the
scope of interference by this Court under Section 34 of the Act is
extremely limited. Reliance was placed on the decision in State
Trading Corporation of India Ltd. v. Toepfer International Asia
PTE Ltd. 2014 (5) R.A.J. 301 (Del) to urge that "an error by the
Arbitrator relatable to the interpretation of contract was an error within
his jurisdiction and not an error on the face of the Award and was not
amenable to correction by the Courts." It was pointed out that in the
instant case, the three Arbitrators comprising the AT were persons of
the same industry and after a detailed analysis of the evidence, had
returned findings on facts. Therefore, the Award was not amenable to
interference. Reference was also made to the recent decision of the
Supreme Court in Associate Builders v. Delhi Development Authority
2014 (13) SCALE 226 and in particular to the observation that "a
possible view by the arbitrator on facts has necessarily to pass muster
as the arbitrator is the ultimate master of the quantity and quality of
evidence to be relied upon when he delivers his arbitral award." Mr.
Sethi also took the Court through the relevant evidence to show that
the view taken thereon by the AT could not be held to be perverse or
irrational.
Decision of the Court
18. At the outset the Court would preface its discussion of the
submissions with the remark that in this second round of litigation the
scope of judicial review would be even narrower than the first round,
since the remand of the case to the AT for it to reconsider GESCL's
claims in light of the observations in the judgment dated 20th July
2011 of the Court.
19. The central issue that had to be considered by the AT was whether
the evidence on record was sufficient to show that there was a strike at
the Kakinada Port between 23rd August and 17th September 1992? In
terms of the remand order the AT was bound to consider the evidence
produced by the Petitioner and not go by either the SoF alone or the
letter dated 16th May 1994 of the MoST.
20. The two pieces of evidence that were required to be considered
were the certificate dated 23rd September 1994 issued by the KSAA
and the letter dated 1st October 1994 from the office of the Labour
Commissioner, Andhra Pradesh. The Court in its previous order felt
that the AT had not considered the probative value of the above
documents. The AT was obliged in terms of the law explained in
ASCU Arch Timber Protection Ltd.(supra) to examine the above.
Also in terms of the decision in Chairman, Life Insurance
Corporation of India v. A. Masilamani (2013) 6 SCC 530, the AT
was required to form an opinion by the active application of the mind.
21. The Court finds that the AT has indeed discussed both pieces of
evidence. The task before the AT was to examine whether these
documents satisfactorily proved the fact of there having been a strike.
The AT answered the question in the negative. Among the reasons
given by the AT are that both documents were issued at the request of
the Petitioners nearly two years after the discharge of the cargo. In that
sense, they were not contemporaneous documents. Another reason
was that the letter dated 1st October 1994 of the Labour
Commissioner was derived from the report of the Assistant Labour
Commissioner and that report had not been placed before the AT.
Therefore the information was in the nature of hearsay evidence
whose reliability would be seriously open to doubt.
22. When there were periodic certificates regarding the weather issued
by the Kakinada port authority, there is no reason why a certificate
issued by that authority regarding the strike was not produced by the
Petitioners. Better still, the record of discharge of ships generally as
maintained by the port authority for the relevant period could have
been produced. The members of the AT, who belonged to the
maritime trade, have appreciated the above evidence in light of their
own experience of the industry practices. It could well be argued that
another view on the same evidence is possible. But then that by itself
does not attract any of the grounds under Section 34 of the Act to
enable the Court to interfere. As has been reiterated in several
decisions of the Supreme Court including Associate Builders v. Delhi
Development Authority (supra) to warrant interference, the
conclusions of the AT should be found to be perverse, irrational or
contrary to the evidence on record or arrived at by overlooking the
evidence. In the present case, it cannot be said that in allowing the
claim of GESCL by the second impugned Award the AT ignored any
relevant evidence, or failed to analyse the evidence on record or given
reasons for the conclusions on such analysis. While the AT need not
have again discussed the effect of the letter dated 16th May 1994 of the
MoST, or the failure of the Petitioners to name an alternate port under
Clause 24 of the C/P Agreement, since both those issues were already
decided by the Court in its judgment dated 20th July 2011, the overall
conclusion of the AT on whether the Petitioners were able to show
that there was a strike between 23rd August and 17th September 1992
remains unaffected.
23. For the aforementioned reasons, no grounds have been made out
for interference with the impugned Award of the AT. The petition is
dismissed.
S. MURALIDHAR, J
MAY 12, 2015
dn
