Dismissed

Faircot S.A. v. Tata Steel Ltd.

Bombay HC10 Oct 2007APP/435/2001

Case brief

AI extract

What is this about?

The Court dismissed an appeal against the dismissal of a petition for enforcement of a foreign award. It held that the Petitioners failed to establish an agreement in writing for arbitration due to conflicting versions regarding the conclusion of contract, rendering the award unenforceable under Section 7 of the Foreign Awards Act, 1961.

What did the court decide?

The appeal fails and is dismissed. No order as to costs.

Faircot S.A. Vs Tata Steel Ltd. — Arbitration | Bombay HC (2007)

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 IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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 O.O.C.J.

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 APPEAL NO.435 OF 2001

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IN

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 ARBITRATION PETITION NO.128 OF 1989

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 Faircot S.A ...Appellant

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 v/s.

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 Tata SSL Ltd. ...Respondents

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And

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 Liverpool Cotton Association Ltd...Intervenor

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 Mr.D.J.Khambata Sr.Counsel with Mr.R.I.Chagla i.b

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 M/s.Federal & Rashmikant for the Appellant.

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 Mr.Shyam Mehta with Ms.Neeta Dagli i/b M/s.Mulla &

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 Mulla & C.B.C. for the Respondents.

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 Mr.K.Desai i/b Kartikeyan & Associates for the

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 Intervenor.

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 Mr.Dinesh Kumar A. Dubey for Ahmadabad Advance

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 Mills.

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CORAM: D.K.DESHMUKH&

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 J.H.BHATIA, JJ.

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DATED:10TH OCTOBER, 2007

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P.C.:

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 1. This Appeal is directed against the order dated
 6/7th February, 2001 passed by the learned single
 Judge of this Court in Arbitration Petition No.128 of
 1989. That petition was filed by the present
 Appellants for enforcement of an award, which
 according to the Petitioners was a foreign award.
 That petition was filed under the Foreign Awards
 (Recognition and Enforcement) Act, 1961. The learned
 single Judge has dismissed that petition.

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 2. The present Appellants had filed the Arbitration
 Petition No.128 of 1989 for filing of the award,
 which was at Exh.B to the petition, in this court and
 for issuance of show cause notice to the Respondents

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 to show cause why the award should not be filed. The
 Petitioners also prayed for conversion of the award
 into a decree. According to the Petitioners, a
 contract was arrived at for sale of 340 tons of Sudan
 raw cotton by the Petitioners to the Respondents
 through the local agent of the Petitioners in India
 namely M/s. Gill & Co.Ltd. According to the
 Petitioners, the number of Contract is F.1636 dated
 18-1-1988. According to the Petitioners, the

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 Petitioners forwarded copies of the contract duly
 singed by the Petitioners to their local agent.
 Copies of the contract were delivered to
 Mr.S.S.Stalekar of the Respondents. According to the
 Petitioners, thus a binding contract was arrived at
 between the parties. According to the terms of the
 contract, the cotton was to be shipped during the
 month of February, March, April and May, 1988.
 According to the Petitioners, the Respondents
 committed breach of this contract because of which
 the Petitioners suffered loss. There was an
 arbitration clause in the contract. The contract was
 subject to Rules & By-laws of the Liverpool Cotton
 Association Ltd. Liverpool. Therefore that
 arbitration clause was invoked and the matter was
 referred to arbitrator and the award was made by the

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 arbitrator. The arbitrator by the award directed the
 Respondents to pay an amount of US$ 138294.56
 together with interest. It is for the enforcement of
 this award that the Petition was filed.

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 3. The petition was opposed by the Respondents. The
 principal ground of opposition was that there was no
 concluded contract between the parties. It was
 claimed that for the purpose of acceptance of the
 contract by the Respondents, as per the contract
 itself, contract had to be signed by the Respondents.
 Admittedly, the contract has not been signed by the
 Respondents. It was also the case of the Respondents
 that at no point of time the offer made by the
 Respondents was accepted by the Respondents. It was
 further the case of the Respondents that the
 Petitioners have given different dates on which,
 according to the Petitioners, a binding contract was
 arrived at between the parties.

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 4. The learned single Judge dismissed the petition
 holding that there was no concluded contract between
 the parties. The learned single Judge also held that
 the Petitioners had not been able to establish that
 there was a written contract of arbitration between

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 the parties.

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 5. This appeal is directed against that order. The
 learned Counsel appearing for the Appellants submits
 that the finding recorded by the learned single Judge
 that the requirement of the Rules of the Liverpool
 Cotton Association that the contract should be in the
 prescribed form and should be signed by both the
 parties is mandatory is a wrong finding. According
 to him, the form is merely directory. The learned
 Counsel further submits that a binding contract was
 arrived at between the parties on 19-1-1988 when on
 behalf of the Respondents an amendment was suggested
 in the contract and that amendment was accepted. The
 learned Counsel submits that the telex dated 2-4-1988
 sent by the Respondents clearly shows that the
 Respondent had applied for the import licence for
 importing cotton, which shows that the contract was
 accepted by the Respondents and there was a concluded
 contract between the parties. The learned Counsel
 submits that it being a foreign award, the burden was
 entirely on the Respondents to show that the award
 was not enforceable. In support of this submission,
 he relied on the judgment of the Supreme Court in the
 case of Transocean Shipping Agency (P) Ltd. v/s.

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Black Sea Shipping and ors, AIR 1998 SC 707.

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 6. The learned Counsel appearing for the

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 Respondents, on the other hand, submits that so that
 the award in relation to which the petition was filed
 can be said to be a foreign award, it must be shown
 that the award has been made in pursuance of an
 agreement in writing for arbitration. According to
 the learned Counsel, there is no agreement in writing
 arrived at between the parties. On 18-1-1988 an
 offer was made by the Petitioners and that offer was
 delivered as per the affidavit of the Petitioners
 themselves at Ahmadabad to Mr.Stalekar for signature,
 but at no point of time even according to the
 Petitioners that contract was signed by Mr.Stalekar
 and therefore, according to the Respondents there is
 no concluded contract between the parties. It is
 submitted that so far as the conduct of the
 Respondents of making an application for import
 licence is concerned, even for consideration of the
 offer made by the Petitioners the import licence was
 necessary and therefore, the conduct of the
 Respondents of making an application for import
 licence cannot be construed to mean that there was a
 concluded contract between the parties.

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 7. Now, in the light of these rival submissions if

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 the record of the case is perused, it becomes clear
 that the petition was filed before the learned single
 Judge under Section 7 of the Foreign Awards
 (recognition and Enforcement) Act, 1961 (hereinafter
 referred to as "Foreign Awards Act"). Perusal of
 Section 7 shows that an application can be filed
 under Section 7 for enforcement of a foreign award.
 The term "foreign award" is defined by Section 2 of
 the Act. It reads as under:-

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 2. In this Act, unless the context otherwise

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 requires, "foreign award" means an award on
 differences between person arising out of
 legal relationship, whether contractual or
 not, considered as commercial under the law in
 force in India made on or after the 11th day
 of October, 1960-

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 (a) in pursuance of an agreement in writing
 for arbitration to which the convention set

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 forth in the Schedule applies, and

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 (b) in one of such territories as the Central

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 Government being satisfied that reciprocal
 provisions have been made may, by notification
 in the official Gazette declare to be
 territories to which the said convention
 applies.

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 8. Perusal of the definition quoted above shows that
 in order that a particular award can be described as
 a foreign award, it must be shows that the award has
 been made by the arbitrator in pursuance of an
 agreement in writing for arbitration. It is,
 therefore, necessary for the Petitioners to
 establish, before the burden shifts to the
 Respondents, to show as to how and why the award is
 not enforceable, that there is an agreement in
 writing for arbitration between the parties.
 According to averments in the petition, that was
 filed before this court in paragraph 2 of the
 petition, the Petitioners state that a contract was
 arrived at between the parties on 18-1-1988. Then,
 it is stated,

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 "The Petitioner further says that along with a letter
 dated 10th February, 1988 addressed by the said local
 agents of the Petitioner, the Original of the said

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 Contract bearing No.F.1636 together with three copies

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 thereof duly signed by the Petitioner were delivered
 to the Respondent by Hand Delivery and the same were
 duly received by one Mr.S.S.Stalekar of the
 Respondent. The Petitioner further says that the
 Respondent duly received, retained and accepted the
 said Contract bearing No.F.1636 dated 18th January,
 1988."

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 9. Thus, copies of the contract were forwarded to
 Ahmadabad to Mr.S.S.Stalekar alongwith letter dated
 10-2-1988. It is stated that the copies of the
 contract were duly received, retained and accepted by
 Mr.Stalekar. In this paragraph, the date on which
 the copies were delivered to Mr.Stalekar is not
 disclosed. The Petitioners had filed rejoinder
 before the learned single Judge. According to the
 statement made in the rejoinder on 18-1-1988, there
 were negotiations between the parties and agreement
 was arrived at on 19-1-1988 and amendment in the

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 quality of the cotton was suggested by Mr.Billimoria
 of Tata Textile Group, Bombay. That amendment was
 accepted and then in paragraph 8(d), it is stated
 thus:-

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 (d) The said Mr.Billimoria of the said Tata

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 Textile Group, Bombay requested the said
 Messrs. Gill & Co. Ltd. that the two
 contracts, one entered between the Petitioner
 and the said Swadeshi Mills Ltd. and the
 other between the Petitioner and the
 Respondent each for 340 tons of cotton be sent
 to Ahmedabad for signature and accordingly,
 the said contract dated 18th January, 1988
 between the Petitioner and the Respondent was
 received by Mr.S.S.Stalekar of the Respondent
 from Messrs.Gill & Co. Ltd., having office at
 Ahmedabad, on 15th February, 1988.

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 10. From the above quoted statement made on oath by
 the Petitioners, it is clear that according to the
 Petitioners, Mr.Billimoria told the Petitioners that
 the agreements are required to be signed and
 therefore they should be sent at Ahemadabad.
 Therefore, copies of the contract were sent to
 Ahmadabad to Mr.Stalekar on 15-2-1988. From the
 comparison of paragraph 2 of the petition along with
 above quoted paragraph of the rejoinder, it is clear
 that in paragraph (2) there is no date disclosed as
 to when the offer was accepted by the Respondents.

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 It is clear from the rejoinder that the copies were
 delivered to Mr.Stalekar on 15-2-1988 and according
 to averment in paragraph 2 of the petition the
 agreement was arrived at on copies of the contract
 being received, retained and accepted at Ahemedabad
 by Mr.Stalekar. Therefore, it appears that in the
 petition it was the case of the Petitioners that the
 contract was arrived at between the parties on
 15-2-1988. This is, in terms, contrary to the case
 of the Petitioners before the arbitrator and what is
 held by the arbitrator in their award. According to
 the award of the arbitrator, concluded contract came
 into existence on 19-1-1988. Thus, in the petition a
 stand contrary to the one taken before the arbitrator
 was taken by the Petitioners.

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 11. It is further to be seen that though it is true
 that in order to bring about the concluded contract
 between the parties, it is not necessary that the
 contract should be compulsorily signed by both the
 parties. But it is clear from the statement made in
 the rejoined quoted above that even according to
 Mr.Billimoria, signature of Mr.Stalekar on the
 contract was necessary for a concluded contract to be
 arrived at between the parties. It is nobody’s case

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 that at any point of time Mr.Stalekar has signed the

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 contract. The case before the arbitrator was that
 the concluded contract was arrived at between the
 parties on 19-1-1988 at Bombay, whereas the stand
 taken in the petition filed before the learned single
 Judge and the rejoinder filed before the learned
 single Judge is that the contract was arrived at by
 delivery of copies at Ahmedabad on 15-2-1988.

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 12. It was contended that by the conduct of the
 Respondents of making an application for import
 licence shows that the Respondents had accepted the
 offer and the contract was arrived at between the
 parties. But it is common ground that for importing
 cotton into India as per the policy then in force,
 acquisition of import licence was necessary. It is
 also on record that the application that was made by
 the Respondents for import licence was a general
 application and that the Respondents had entered into
 contract for import of cotton with others also. In
 our opinion merely from the conduct of the
 Respondents of application for import licence an
 inference cannot be drawn that the Respondents had
 accepted the contract. It is, thus, clear from the
 record that it cannot be definitely said, in view of

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 the contradictory stands taken by the Petitioners
 themselves, that on a particular date at a particular
 pace an agreement in writing was arrived at between
 the parties and therefore, in our pinion, it can not
 be definitely said that the award for the enforcement
 of which the petition was filed, was a foreign award.
 Perusal of the judgment of the learned single Judge
 shows that the learned single Judge has given
 elaborate reasons for holding why the award is not
 enforceable. We see no reason to take a view
 different from the view taken by the learned single
 Judge, as we find that the conclusions that have been
 reached by the learned single Judge are possible
 conclusion to be reached on the basis of the material
 on record.

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 13. In the result, therefore, the Appeal fails and
 is dismissed. No order as to costs.

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 (D.K.DESHMUKH, J.)

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 (J.H.BHATIA, J.)

Faircot S.A. v. Tata Steel Ltd.

Case brief

What is this about?

What did the court decide?

Faircot S.A. v. Tata Steel Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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