MMTC Ltd. petitioned under Section 34 to set aside an arbitral award rejecting its claims for overpayment and non-received payments against New Sialkoti Jewellers. The court dismissed the petition, upholding the Tribunal's finding on limitation and negligence.
Petition to set aside arbitral award was dismissed. No interim orders recorded.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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MMTC LTD. ..... Petitioner
Through: Mr Sandeep Sethi, Senior Advocate with Mr Chinmoy P. Sharma and Mr Vishal Balecha, Advocates. versus NEW SIALKOTI JEWELLERS & ORS. ..... Respondents Through: Mr Asheesh Jain & Mr Yudhister Singh, Advs for R-1/applicant.* CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU VIBHU BAKHRU, J (ORAL)
OMP (COMM) 361/2016 Page 1 of 12
other jewellery items made of precious metals by rendering financial
assistance under various schemes.
25 lakhs which was later enhanced to 1 crore. In connection with the aforesaid facility, respondent Nos. 2 to 4 (the constituent partners of NSJ) executed the followingdocuments:-
“i) Hypothecation Agreements for pre and post shipment credit advances dated 21.05.1989 and 01.06.1989.
ii) Agreement between MMTC and gold unit for export of gold jewellery dated 21.05.1989 and 01.6.1989 (hereafter 'the Associateship Agreement').
iii) Agreement of Guarantee dated 21.05.1989 and 01.6.1989.
iv) Promissory Notes dated 21.05.1989 for Rs. 25.00 lakhs
OMP (COMM) 361/2016 Page 2 of 12
and dated 01.6.1989 for Rs.50.00 lacs.”
55,55,942/- was in connection with the Tripartite Agreement dated 02.08.1989 and the second claim for a sum of 12,79,983/- was in connection with Associateship Agreement dated 21.05.1989. In addition to the aforesaid claims, MMTC also claimed interest and costs.OMP (COMM) 361/2016 Page 3 of 12
Re: the first claim of ` 55,55,942/-
55,55,942/- was paid to NSJ by a mistake. MMTC claims that the said mistake was discovered on 30.09.1997 and accordingly, a Statement of Claims claiming the aforesaid amount of 55,55,942/- of over payment was filed on 18.11.1997.OMP (COMM) 361/2016 Page 4 of 12
gold jewellery by NSJ to RPSDS under the Tripartite Agreement; these were effected during the period 09.04.1991 to 31.10.1992. The last payment against the aforesaid transaction was made on 22.04.1993 and the statement of claim claiming the aforesaid amount was filed on 18.11.1997. In these circumstances, the respondents raised an objection that the aforesaid claim
was barred by limitation. MMTC contended that the mistake regarding the over payment was discovered on 30.09.1997 and therefore, its claim was within time.
that he had found that there was over payment from verification of the agreement between the parties. More importantly, the Arbitral Tribunal noted that Mr Joy had not made any noting regarding the discovery of the alleged mistake. Before the Arbitral Tribunal, another officer (Deputy
OMP (COMM) 361/2016 Page 5 of 12
General Manager) also claimed that he discovered the mistake of over payment. However, it was not MMTC's case that the mistake was discovered by the said Deputy General Manager. After appreciation of the testimony of the witness, the Arbitral Tribunal concluded that the story of the alleged mistake having been discovered on 30.09.1997, was a concocted
one and therefore, the Tribunal held that the claim was barred by time.
OMP (COMM) 361/2016 Page 6 of 12
are grossly perverse. In the Associate Builders v. Delhi Development Authroity : ( 2015) 3 SCC 49 , the Supreme Court has explained the above principle in the following manner:-
“It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. 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. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts."
Shares and Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd : (2012) 1
SCC 594 wherein the Court observed as under:
" 21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or reappreciating the
OMP (COMM) 361/2016 Page 7 of 12
evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second Respondent and the Appellant are liable. The case as put forward by the first Respondent has been accepted. Even the minority view was that the second Respondent was liable as claimed by the first Respondent, but the Appellant was not liable only on the ground that the arbitrators appointed by the Stock Exchange under Bye-law 248, in a claim against a nonmember, had no jurisdiction to decide a claim against another member. The finding of the majority is that the Appellant did the transaction in the name of the second Respondent and is therefore, liable along with the second Respondent. Therefore, in the absence of any ground Under Section 34(2) of the Act, it is not possible to reexamine the facts to find out whether a different decision can be arrived at.”
OMP (COMM) 361/2016 Page 8 of 12
Re: the second claim of ` 12,79,983/-
`12,79,983/- for jewellery exported to M/s Patni Jewellers of London, U.K and, therefore, respondents are liable to make good the aforesaid amount. In
terms of the Associateship Agreement, deliveries to foreign buyers were to be against the confirmed letters of credit. Clause 2 and 3 of the Associateship Agreement are relevant and are reproduced below:-
“2. The foreign buyers shall open confirmed, irrevocable without recourse to drawer & divisible letter of Credit in the name of MMTC. After effecting shipments, the unit will deliver shipping and other documents prepared as provided in clause (2) above to MMTC. MMTC will, in turn, present those documents to their bankers for negotiations/collection as the case may be.
i) All dues accruing to MMTC in repayment of credit sale price difference of the material supplied.
ii) Pre-shipment/post-shipment credit extended against the order. Iii) MMTC’s service charges which will be @ 0.25% of the value of exports.
iv) Any other claim lodged and/or penalty or deductions imposed by foreign buyers or any other dues of the Corporation.”
OMP (COMM) 361/2016 Page 9 of 12
its Delhi Office but MMTC had not received any such payment. In the aforesaid circumstances, the Arbitral Tribunal held that in either event MMTC was not entitled to enforce the payment from the respondents and its claim for non-recovery of price of consignments sent to M/s Patni Jewellers
OMP (COMM) 361/2016 Page 10 of 12
was without basis.
OMP (COMM) 361/2016 Page 11 of 12
drawn is that MMTC has been grossly negligent. I find it difficult to accept the proposition that notwithstanding the negligence on the part of MMTC, it would be still entitled to recover the amount from the respondents. Merely because payments were guaranteed, would not entitle MMTC to recover the
sums from the respondents unless it could explain as to how it was transacted with the consignment and the letter of credit. MMTC has offered no explanation whatsoever as to how its bankers had negotiated the letter of
credit.
VIBHU BAKHRU, J
AUGUST 04, 2016 pkv
*Note: The attendance of the Advocates added vide order dated 09.08.2016.
OMP (COMM) 361/2016 Page 12 of 12
2 issues framed by the court
Whether the High Court can interfere with the Arbitral Tribunal's finding that the petitioner's claim for alleged overpayment was barred by limitation.
Whether the petitioner is entitled to recover the amounts from respondents despite its admitted negligence in handling the letters of credit.
Colour shows how this judgement treated each authority
Associate Builders v. Delhi Development AuthorityExplained¶39
Associate Builders v. Delhi Development Authroity : (2015) 3 SCC 49 · Who else cites this
P.R. Shah Shares and Stock Brokers (P) Ltd. v. B.H.H. Securities (P) LtdExplained¶4145
P.R. Shah, Shares and Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd : (2012) 1 SCC 594 · Who else cites this
1 provisions across 1 enactments
MMTC LTD.
NEW SIALKOTI JEWELLERS
VIBHU BAKHRU
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court