Allowed

M/S Intermax Trading Corporation v. Garware Polyster Limited

Bombay HC24 Sept 2009ARBP/159/2008

Case brief

AI extract

What is this about?

The High Court dismissed a petition challenging an arbitral award on grounds of lack of hearing and erroneous interest rate. It held that the arbitator did not err as the petitioner availed adjournments and the interest rate was supported by the petitioner's counterclaim and Section 31(7). Court fees were ordered refunded.

What did the court decide?

The bond/proceeds of court fees paid by the petitioners were ordered to be refunded.

M/S Intermax Trading Corporation Vs Garware Polyster Limited — Arbitration | Bombay HC (2009)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.159 OF 2008

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M/s Intermax Trading Corporation

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...Petitioner.

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V/s

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Garware Polyster Limited ... Respondent.

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Mr. D.D. Madon, Senior Advocate with Mr. Cyrus Ardeshir & Yogini Gada i/b Harakchand & Co. for petitioner.

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Mr. Nikhil Sakardandekar with Mr. Mayur Khandeparkar i/b Kanga & Co. for respondent.

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WITH ARBITRATION PETITION NO.603 OF 2008

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Garware Polyester Limited .... Petitioner.

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V/s

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M/s Intermax Trading Corporation .... Respondent.

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Mr. Nikhil Sakardandekar with Mr. Mayur Khandeparkar i/b Kanga & Co. for petitioner.

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Mr. D.D. Madon, Senior Advocate with Mr. Cyrus Ardeshir & Yogini Gada i/b Harakchand & Co. for petitioner.

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CORAM: V.M. KANADE, J. DATE : 24th September, 2009

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P.C.:

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Arbitration Petition No.159 of 2008 has been filed under section 34 of the Arbitration & Conciliation Act 1996 (hereinafter referred to as “the said Act”), challenging the award dated 6/8/2007 passed by the sole arbitrator. Arbitration Petition No.603 of 2008 is filed under section 9 of the said Act, seeking various reliefs.

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The impugned award was passed by the learned arbitrator on 6/8/2007. The said award is challenged on two grounds. Firstly, it is submitted that no opportunity was given by the arbitrator to petitioners for appearing before the arbitrator and an ex parte award was passed without giving hearing to petitioners or their Counsel. It was secondly submitted that the arbitrator had awarded interest @ 21.4% from 1/3/2002 though the said interest was not agreed between the parties under the contract. It is, therefore, submitted that awarding interest @ 21.4% was contrary to the said Act and was not as per terms and conditions of the contract and that the said award on that

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ground was liable to be set aside.

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Mr. Madon, the learned Senior Counsel appearing on behalf of petitioners firstly submitted that petitioners’ Counsel was busy in Court and, therefore, could not appear before the arbitrator. He submitted that, however, arguments were closed on 3/5/2007 and, thereafter, almost after a period of three months the award was passed on 6/8/2007. It is, therefore, submitted that hearing of proceedings were abruptly concluded on 3/5/2007 and, thereafter, the award was passed on 6/8/2007. It is, therefore, submitted that the arbitrator should have given one more opportunity to petitioners’ Counsel. Secondly, Counsel for petitioners invited my attention to paras 20 to 23 of the said award. He submitted that the only reason why interest @ 21.4% was granted by the arbitrator was that the petitioners herein had claimed interest at the same rate in their counterclaim. He, therefore, submitted that the provisions of section 31(7) were not attracted, firstly, because it was not the agreed rate of interest and, secondly, the said order of awarding interest did not fall under the provisions of section 31(7) of the said Act. In support of the said submission, he relied upon the judgment in Oil & Natural Gas Corporation Ltd vs. SAW Pipes Ltd. reported in CDJ 2003 SC 484.

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Shri Sakardandekar, the learned Counsel appearing on behalf of respondents, on the other hand, submitted that the arbitrator had given sufficient opportunity to petitioners and the matter was adjourned atleast 7 to 8 occasions and though time was taken to file statement of claim, no such statement of claim was filed and, therefore, the arbitrator had no other option but to conclude the hearing of the arbitration proceedings. He invited my attention to the minutes of the proceedings which were recorded by the sole arbitrator. He submitted that in view of section 25 and 31 of the said Act, the arbitrator had not misconducted himself and after giving sufficient opportunity has passed the said order. In support of the said submissions, he relied upon the judgment of the Apex Court in Hari Om Maheshwari Vs. Vinitkumar Parikh reported in (2005) 1 SCC 379. Secondly, he submitted that the arbitrator had awarded interest @ 21.4% in the facts and circumstances of the said case and more particularly because petitioners themselves had claimed interest at the said rate in the counterclaim. He submitted that under section 31(7)(b) of the said Act interest can be awarded @ 18% per annum. He submitted that therefore awarding interest @ 21.4% was not arbitrary and, therefore, there is no reason for this Court to interfere with the

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said award. It is submitted that the said provision had given discretion to the arbitrator to award interest. It is submitted that it could not be said that the said award was contrary to any statutory provision or the provisions of the contract.

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After having heard the learned Counsel for petitioners and respondents at length, I am of the view that no case is made out by petitioners for interfering with the award passed by the arbitrator. Respondents have annexed minutes of the proceedings. Perusal of the said minutes clearly disclose that on 7 to 8 occasions, petitioners had taken time. The matter was pending before the arbitrator from 2003. Though sufficient opportunity was given, on each and every date time was taken by petitioners herein and atleast on 3 to 4 occasions petitioners and their counsel were absent, though the matter was specifically fixed by the consent of parties. Even on the last date i.e on 3/5/2003, neither the petitioners nor their counsel were present and, therefore, the matter was kept back by the arbitrator at 3 O’clock. Counsel for respondents made a telephone call. However, petitioners’ Counsel did not answer the said call. Under these circumstances, arbitrator had no other option but to conclude hearing of the case. In my view, therefore, ratio of the judgment in Hari Om Maheshwari

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(supra) would squarely apply to the facts of the present case and no case is made out for interference by the High Court under these circumstances.

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There is also no reason to interfere with the award on the ground of interest being awarded @ 21.4%. Counsel for respondents has rightly pointed out that no specific ground has been raised in the petition on the point of interest, though one of the grounds viz ground (e) merely states that award is liable to be set aside being contrary to the laws of India and terms of contract. No specific ground is taken that the interest which is awarded is contrary to the said Act and the terms of contract. Apart from that, the learned arbitrator in his award has stated in paragraphs 20 to 22 as under:-

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“20. The invoices do not make a claim for interest from any particular date or rate. It is by the letter of the Advocates for the Claimants dated 13th February 2002 that the interest is claimed at 21.4% per annum from the due dates payment of each invoice till payment. Due dates are mentioned in

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Annexure A to the said letter. The due dates give credit to the Respondents of 120 days. There is no written reply except two formal letters from the Advocates for the Respondents dated 25th June 2002 and 30th July 2002. In the second letter it is stated that the Respondents already replied to the alleged claim in the proceedings adopted by the Claimants in U.S.A.

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In view of the aforesaid position, I hold that the claim is proved. It is a claimed for the amount due under the said 22 invoices. The statement filed before me at the meeting held on 3rd May 2007 stated the amount of commission payable to the Respondents. The amount of commission admitted by the Claimants has to be accepted by me in the absence of any evidence showing

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that more commission is due.

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According to me the interest is to be calculated on the amount of unpaid invoices less the commission admitted as due. Thus the amount payable will be US $ 356,000/- and interest at the rate of 21.4% p.a. from 1.3.2002, in light of the notice dated 13.2.2002. Even the respondent has claimed interest at the same rate in its counter claim.”

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The arbitrator, therefore, has, under the facts and circumstances of the case, awarded the said interest. It cannot be said that the said order awarding interest at the said rate is contrary to the said Act. Section 31(7)(a) of the said Act, clearly lays down as under:-

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“31(7)(a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may

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include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made”

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Perusal of the said provision clearly discloses that discretion is vested in the arbitrator in the matter of awarding interest. In my view, the arbitrator has judicially exercised the said discretion and awarded interest @ 21.4% which incidentally was the same rate of interest claimed by petitioners in their counter-claim. The ratio of the judgment in the Oil Natural Gas Corporation Ltd. (supra), therefore, would not apply to the facts of the present case.

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Arbitration Petition No.159 of 2008 is, therefore,

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dismissed.

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Since the Arbitration Petition No.159 of 2008 is dismissed, Arbitration Petition No.603 of 2008 has become infructuous and does not survive and, as such, is disposed of.

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Counsel appearing on behalf of petitioners in Arbitration Petition No.159 of 2008 submitted that when the Petition was filed, there was a dispute regarding payment of court fees which dispute has been finally concluded by virtue of the judgment of the Full Bench in the case of Puneet Malhotra and another Vs. R.S. Gai, Sole Arbitrator and others reported in 2008 (6) Mh.L.J. 867. He submitted that in view of the judgment of the Full Bench, no court fees were payable under the Bombay Court Fees Act when the award was challenged under section 34 of the said Act. He submitted that, therefore, the court fees which were paid by the petitioners may be refunded to petitioners.

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In view of the judgment of the Full Bench in Puneet Malhotra (supra), court fees which have been paid by petitioners will have to be refunded. Therefore court fees paid by petitioners be refunded to petitioners.

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Both the Arbitration Petitions are disposed of.

M/S Intermax Trading Corporation v. Garware Polyster Limited

Case brief

What is this about?

What did the court decide?

M/S Intermax Trading Corporation v. Garware Polyster Limited

Case brief

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