Delhi High Court
J.K. Tyre And Industries Ltd vs Kailash Shipping Services Pvt Ltd on 3 December, 2020
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 456/2020
J.K. TYRE AND INDUSTRIES LTD ..... Petitioner
Through Ms.Aakansha Kaul, Adv. with
Mr.Nakul Jain, Adv.
versus
KAILASH SHIPPING SERVICES PVT LTD ..... Respondent
Through Mr.Vivek Kohli with Mr.Nalin
Talwar, Mr.Sunil Tyagi, Ms.Neetika Bajaj &
Mr.Ayushman Kecker, Advs.
CORAM:
HON'BLE MR. JUSTICE C.HARI SHANKAR
JUDGEMENT (ORAL)
% 03.12.2020
(Video-Conferencing)
1. This is a petition under Section 11 of the Arbitration &
Conciliation Act, 1996, for appointment of an Arbitrator.
2. The dispute, as set out by the petitioner in the petition, may be
reproduced thus:-
"7E. That being completely taken in by the representations
made by the Respondent during various rounds of the
negotiations and discussions held at Petitioner's Head Office at
New Delhi and believing them to be true and correct, Petitioner,
through its Materials Director, New Delhi, had granted/issued,
through its Head Office at New Delhi, the contract of clearance
of imported consignment of raw materials per Ship/Air at
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:10.12.2020
21:13:46
Chennai vide Agreement dated 30.03.2012 bearing Ref No.:
JKTL/CTP/NP/CHAKSS/2012 (hereinafter referred to as the
"said Agreement") containing the various terms and conditions as
mutually agreed between the parties. That it is a matter of record
that the validity of the said Agreement has been extended by the
Petitioner, through its Head Office in New Delhi, every year with
the mutual consent of the parties on the same terms and
conditions.
7F. That in terms of the said Agreement, Respondent had
confirmed to the Petitioner of having sufficient bonding space for
bonding of Petitioner's goods/consignment and that the same has
been permitted for bonding by the custom authorities. Also, it
was incumbent upon the Respondent, under the said Agreement,
inter alia to ensure effective utilization of bonding space for safe
storing of Petitioner's material(s) post completion of the custom
clearance formalities of the said goods by the Respondent.
7G. That for safe storing of Petitioner's merchandise,
Respondent had bonded the goods imported by the Petitioner
with one M/s R.R. Warehousing Pvt. Ltd, whom Respondent
represented to having a customs bonded warehouse situated at
Ariyalur Village, Andarkuppam Check Post, Red Hills Road,
Chennai - 600103, with sufficient bonding space and requisite
permission for bonding by the customs authorities.
7H. That Petitioner had imported the following raw materials, to
be used in the production/manufacturing of tyres, and which
were bonded by the Respondent with the said M/s R.R.
Warehousing Ltd, as aforementioned, after custom clearance of
the same by the Respondent, under the said Agreement:
S.No. PARTICULARS INVOICE VALUE OF
OF GOODS VALUE OF GOODS
IMPORTED GOODS (INR) AFTER
PAYMENT
OF
CUSTOMS
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:10.12.2020
21:13:46
DUTY (INR)
I. 18306 Kg of
Natural Rubber
Grade RSS1 from
M/s Petitioner
Kharishma
Pemasaran 21,27,878/ - 30,26,930/-
Bersama
Nusantara, Jakarta,
Indonesia, vide PO
No.4100005281
dated
13.10.2016
Date of Arrival on
Chennai Port:
22.10.2016
II. 100 MT of Natural 1,05,92,400/- 1,57,93,554/-
Rubber Grade
RSS3 from M/s
Binh
Thuan Rubber Co.
Ltd,
Vietnam vide PO
No.
4100005232 dated
02.08.2016 Date of
Arrival on Chennai
Port:
13.09.2016
III. 100.80 MT of 88,97,616/- 1,30,20,101/-
Natural
Rubber Grade
STR-20 from M/s
Rubber Land
Products Co. Ltd,
Thailand,
vide PO
No.4100005099
dated 27.05.2016
Date of Arrival on
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Digitally Signed By:SUNIL
Signing Date:10.12.2020
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Chennai Port:
25.08.2016
TOTAL 2,16,17,894/- 3,18,40,585/-
7I. That cyclonic storm Vardah made landfall near Chennai
on 12.12.2016 resulting in heavy rainfall. It is submitted that under
the said Agreement it was the legal obligation of the Respondent to
ensure the safe storage of Petitioner's goods stored by the
Respondent in the bonded warehouse of M/s R.R. Warehousing Ltd,
however, Respondent failed and neglected in taking prompt action
to secure the safety/protection of Petitioner's merchandise, thereby
causing damage to the goods as mentioned in Table 1 at para 7H of
the present petition.
7J. That the lackadaisical attitude, negligence and deficiency
in service of the Respondent resulted in causing damage to the
entire consignment of goods relating to Natural Rubber Grade RSS-
1 and RSS-3, as stated in Table 1 at para 7H of the present petition.
In respect of consignment relating to Natural Rubber Grade STR-
20, out of 100.80 metric tonnes imported by the Petitioner, goods
weighing 3955 Kgs thereof were affected.
7K. That the damage caused to the consignments enumerated
in Table 1 at para 7H of the instant petition was assessed by the
surveyor appointed by M/s United India Insurance Co. Ltd, being
the insurer of M/s R.R. Warehousing Pvt. Ltd. It is submitted that
upon making the survey, the surveyor of the Insurance Company
opined that the damaged goods could be sold to a third party for
recovering the residual value, if any. Accordingly, the surveyor had
identified a buyer namely M/s Mahindra Rubber Industries,
Ludhiana and advised Petitioner to sell the damaged
materials/goods to the said buyer.
7L. That insofar as the consignment relating to Natural Grade
RSS-3 is concerned, as against the total value of the goods
(including custom duty) to the tune of Rs.1,57,93,554/- (Rupees
One Crore Fifty Seven Lakhs Ninety Three Thousand Five Hundred
Fifty Four only), the same was sold for a sum of Rs. 1,04,00,0001-
(Rupees One Crore Four Lakhs only). With regard to goods relating
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:10.12.2020
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to Natural Rubber Grade STR-20 are concerned, 3,955 Kg of the
damaged goods for a value of Rs.5,10,858/- (Rupees Five Lakh Ten
Thousand Eight Hundred Fifty Eight only) were sold for a sum of
Rs. 4,03,410/- (Rupees Four Lakhs Three Thousand Four Hundred
Ten only). In respect of the consignment relating to Natural Rubber
Grade RSS1 is concerned, the damaged goods could not be sold and
are lying idle as the same are not in a condition to be utilized by
Petitioner in the manufacturing process.
7M. That it is humbly submitted that owing to the inaction on
the part of the Respondent, goods worth Rs. 1,93,31,342/- (Rupees
One Crore Ninety Three Lakhs Thirty One Thousand Three
Hundred Forty Two only) of the Petitioner were damaged out of
which Petitioner could recover/realize only a sum of Rs.
1,08,03,410/- (Rupees One Crore Eight Lakhs Three Thousand Four
Hundred Ten only), thus causing a net loss of Rs. 85,27,932/-
(Rupees Eighty Five Lakhs Twenty Seven Thousand Nine Hundred
Thirty Two only), which the Respondent is liable to pay under the
terms of the said Agreement having expressly undertaken to protect
the interest of the Petitioner including ensuring that no damage is
caused to the material entrusted to the Respondent. In addition to
the forementioned, Respondent is also liable for the excess amount
paid by Petitioner for procuring raw material at higher cost to
compensate for the damaged raw material which could not be
utilized for production."
3. The petitioner issued a legal notice, dated 5th June, 2019, calling on
the respondent to pay ₹ 85,27,932/-, along with interest, to the petitioner.
It is claimed that there was no response from the respondent.
4. Attempts for amicable resolution of the disputes having failed, the
petitioner seeks to invoke Clause 8 of the Agreement between the parties,
which provides for arbitration as the mode of resolution of the disputes,
and reads as under:
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:10.12.2020
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"8 ARBITRATION
In the event of any dispute or difference arising under this
contract, the same shall be referred to Materials Director, JK
Tyre & Industries Limited, New Delhi or any person
authorized by him to act on his behalf and whose decision
shall be final and binding on both the parties."
5. On 29th November, 2019, the petitioner issued a legal notice to the
respondent invoking the above extracted arbitration clause. The petitioner
also points out, correctly, that, though Clause 8 (supra), provides for
arbitration by the Materials Director of the respondent, or any person
authorised by him to act on his behalf, as Arbitrator, the covenant cannot
operated in view of Section 12(5) of the 1996 Act, read with the Seventh
Schedule thereto and the judgment of the Supreme Court in Bharat
Broadband Networks Ltd. v. United Telecoms 1, and Perkins Eastmann
Architects DPC v. HSCC (India) Limited 2.
6. The petitioner has suggested names of three retired Judges of this
Court as the sole Arbitrator, to arbitrate on the dispute between the
parties.
7. Today, learned counsel for the respondent is agreeable to
arbitration of the disputes by Hon'ble Mr. Justice R.C. Chopra, a retired
Judge of this Court, who is one of the sole Arbitrators suggested by the
(2019) 5 SCC 755
(2019) SCC OnLine SC 1517
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Signing Date:10.12.2020
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petitioner.
8. In view thereof, arbitrable disputes having arisen between the
parties, Hon'ble Mr. Justice R.C. Chopra (Retired), is appointed as the
sole arbitrator to arbitrate on the disputes.
9. This Court has not expressed any opinion on the merits of the case
of the petitioner or the respondent. All contentions shall be left open to
be agitated before the learned sole Arbitrator. Should the respondent
seek to urge any counter claims, it would be at liberty to do so in
accordance with law.
10. The learned sole Arbitrator would arbitrate within the aegis of the
1996 Act and would be entitled to fees in accordance with Fourth
Schedule of the said Act.
11. The parties are directed to contact the learned sole Arbitrator with
a copy of this order, as would be e-mailed by the Registry within 48
hours of obtaining the copy, so as to take the concurrence of the learned
sole Arbitrator to arbitrate on the disputes and fix a schedule of the
arbitration.
12. The learned sole Arbitrator would, thereafter, proceed to enter on
the reference, within one week and furnish a requisite disclosure under
Section 12(6) of the 1996 Act
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:10.12.2020
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13. With these observations, this petition stands disposed of with no
orders as to costs.
C.HARI SHANKAR, J
DECEMBER 3, 2020/aa
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:10.12.2020
21:13:46
