Great Eastern Shipping Co. , Worli, Mumbai v. Food Corporation of India, Visakhapatnam
2004-10-15
L.NARASIMHA REDDY
body2004
DigiLaw.ai
L. NARASIMHA REDDY, J. ( 1 ) THESE three civil miscellaneous appeals arise between the same parties and out of the same transaction. Hence, they are disposed of through a common judgment. ( 2 ) M/s Great Eastern Shipping company is the appellant in C. M. A. Nos. 3514 and 3635 of 2000 and it is the 1st respondent in C. M. A. No. 3119 of 2001. It shall, hereafter, be referred to as the appellant . The Food Corporation of India is the appellant in C. M. A. No. 3119 of 2001 and the respondent in C. M. A. Nos. 3514 and 3635 of 2000 and shall be referred to as the respondent . ( 3 ) THE respondent chartered a ship, by name, M. V. Jag Dharma, owned by the appellant, for carriage of cargo of wheat from Columbia and other countries, to Indian ports. The necessary Charter-party was executed on 9-3-1983. One of such cargoes was to be delivered at Vishakapatnam Port. ( 4 ) THE important conditions of contract (Charter-party) from the point of view of these appeals are, that the respondent is allowed a particular period, known as lay-time , for unloading the vessel. Any activity of unloading for the purpose of making the vessel to gain the necessary draft depth up to which the vessel is in the sea water known as lightening shall be at the cost of the appellant. If the unloading takes place before the expiry of lay-time, the respondent would be entitled for reimbursement under a head known as dispatch money , and if unloading is delayed beyond that time, it would be liable to compensate the appellant for that. ( 5 ) THE ship arrived at the visakhapatnam Port on 19-5-1983. At that time it was having a draft of 34 feet. The unloading point for wheat at Visakhapatnam port is accessible to ships having a draft of 30 feet. Therefore, it was berthed at OBII for the purpose of lightening. The process of lightening is said to have been completed on 25-8-1983. On the ground that there was no nominated berth, it was shifted to berth EQ 6. Unloading to a substantial extent has taken place at that berth. On the next day, it was shifted to berth EQ 2 and the unloading was completed.
The process of lightening is said to have been completed on 25-8-1983. On the ground that there was no nominated berth, it was shifted to berth EQ 6. Unloading to a substantial extent has taken place at that berth. On the next day, it was shifted to berth EQ 2 and the unloading was completed. ( 6 ) WHILE making the payment of the amount, the respondent withheld certain amounts. They are; a sum of Rs. 2,00,340/-, towards charges for transporting the cargo from berths OBn and EQ 6, and a sum of Rs. 61,312/-, towards dispatch money, on the ground that the unloading has taken place much before the expiry of the lay-time. The appellant objected to the said deductions in terms of the clauses of the charter-party. The matter was referred to arbitration by two Arbitrators, named by each of them. Since there was difference of opinion, the matter was referred to an umpire. In the arbitration proceedings, the appellant made several claims and the respondent made a counter claim for a sum of Rs. 2,62,031/-, towards cost of the short delivery of the wheat. ( 7 ) THE Umpire passed an award, dated 17-6-1988, allowing the claim of the appellant for a sum of Rs. 2,00,340/-, deducted towards transporting the material from berths OBII; and EQ6; and for rs. 61,317/-, withheld towards dispatch money. It rejected the counter claim of the respondent. The respondent filed O. P. No. 374 of 1988 in the Court of II Additional senior Civil Judge, Visakhapatnam, under sections 30 and 33 of the Indian Arbitration act, 1940 (hereinafter referred to as "the act"), to set aside the award insofar as it allowed the claims of the appellant. It also filed O. P. No. 556 of 1988 in the same court under the same provision aggrieved by the award, insofar as it rejected the counter claim. The Trial Court required the umpire to pass a reasoned award. In compliance with the same, the Umpire passed a reasoned award on 21-7-1991. On a consideration of the material before it, the Trial Court allowed both the O. Ps. , through separate judgments, dated 2-5-2000.
The Trial Court required the umpire to pass a reasoned award. In compliance with the same, the Umpire passed a reasoned award on 21-7-1991. On a consideration of the material before it, the Trial Court allowed both the O. Ps. , through separate judgments, dated 2-5-2000. C. M. A. No. 3514 of 2000 is filed by the appellant against the order in O. P. No. 374 of 1988, and C. M. A. No. 3635 of 2000 is filed by it against the order in O. P. No. 556 of 1988. The respondent filed C. M. A. No. 3119 of 2001 alleging that though the trial Court held that the rejection of its counter claim by the Umpire was not valid, it did not issue any further directions in that regard. ( 8 ) SRI D. V. Sithararn Murthy, learned counsel for the appellant, submits that the trial Court proceeded, as though it is an appellate Authority, to re-appreciate the award, and the material relied upon by the umpire, and has set aside the reasoned award. He submits that the Umpire assigned valid and cogent reasons for allowing two claims made by the appellant. He contends that even if the findings recorded by the Umpire were to have been examined by the Trial Court, as an Appellate Authority, there was absolutely no basis to interfere with the same. He submits that the Umpire furnished sufficient and valid reasons for rejection of the counter claim and still the trial Court interfered with the award. He has placed reliance upon certain judgments rendered by the Supreme Court in support of his contentions. ( 9 ) SRI M. Ratna Reddy, learned counsel for the respondent, on the other hand, submits that the Umpire mis-conducted himself in allowing certain claims contrary to the terms of Charter-party and the trial Court was justified in unsettling the findings. He submits that the freedom of an Umpire does not extend to the level of ignoring the specific terms of a contract and the very purpose of providing jurisdiction in the Courts under Sections 30 and 33 of the Act, is to ensure that the award rendered by the Umpire does not go outside the scope of the terms of the contract.
He further submits that though the Trial Court was convinced that the rejection of counter claim made by the respondent was improper and illegal, it did not provide the necessary relief, in that, it did not indicate the steps to be taken thereafter. ( 10 ) IN view of the claims made by the parties before the Trial Court and submissions made on their behalf before this court, the following questions arise for consideration: (a) Whether the Trial Court was justified in setting aside the award insofar as it relates to the claims made by the appellant in relation to transport charges and dispatch money? (b) Whether the award suffered from any infirmity or illegality insofar as it rejected the counter claim made by the respondent? as observed earlier, the Umpire allowed two claims made by the appellant and rejected the counter claim submitted by the respondent. Through its separate orders, the Trial Court has set aside the award in both respects. Before undertaking the discussion on this aspect, certain principles enunciated by the Supreme Court as to the power of the Courts to interfere with the awards rendered in arbitration, need to be noted. ( 11 ) ARBITRATION is a mechanism of resolution of disputes, in which the adjudicator is chosen by the parties themselves. Impliedly, it means that the parties agree to, are abide by the verdict that may be rendered by the Umpire chosen by them. The same principle applies even where the umpire is appointed by the Court. It is for this reason, that law accords almost finality to the verdict given by an Arbitrator-Umpire, except where it is patently illegal. Even where two views are possible or the appreciation of the facts by the Court may result in a different conclusion, the award cannot be unsettled on such grounds. ( 12 ) IN State of Rajas than v. Puri construction Co. Ltd. , 1994 (6) SCC 485 , the Supreme Court held that an award cannot be set aside merely because an alternative view is possible on Courts own assessment. In Puri Construction Pvt. Ltd. v. Union of India, AIR 1989 SC 777 , it was observed that a Court has no jurisdiction to sit in an appeal to examine the correctness of an award, on merits. Similarly, in M/s. Sudarsan Trading Co.
In Puri Construction Pvt. Ltd. v. Union of India, AIR 1989 SC 777 , it was observed that a Court has no jurisdiction to sit in an appeal to examine the correctness of an award, on merits. Similarly, in M/s. Sudarsan Trading Co. v. Government of Kerala, AIR 1989 SC 890 , it was held that a Court has no jurisdiction to substitute, its own evaluation or conclusion of law or fact, for that of an umpire. In M/s Hind Builders v. Union of india, AIR 1990 SC 1340 , the circumstances under which an award can be set aside on the ground that it suffers from error apparent on the face of the record, are enunciated. ( 13 ) NOTWITHSTANDING these authoritative pronouncements, one thing can be said I with an amount of certainty that, it is too I difficult to maintain the parameters of interference with the award or the restraint to be observed in that behalf, in watertight compartments. The broad principles have to be kept in mind and the effort shall, as far as possible, be to add finality to the award, except where it is patently illegal. ( 14 ) REVERTING to the facts of the case, it may be noted that on reaching visakhapatnam on 19-5-1983, the vessel was berthed at OBII for the specific purpose of lightening i. e. , to reduce the vessels draft from 34 feet salt water to 30 feet. After lightening up to the required level, it has proceeded to EQ 6. The respondent insisted that EQ 6 is not the berth for regular unloading of foodgrains and that the vessel was expected to unload at EQ 3. Obviously, realizing this, the vessel proceeded to EQ 3 after unloading the material at eq 6 for about one day. The respondent effected deduction of a sum of Rs. 2,00,340/-, towards freight charges for transporting the wheat at berths OBII and EQ 6. The umpire treated that the unloading at both the berths, referred to above, have to be treated as the process of lightening. The respondent would certainly have been entitled to deduct the charges, for transporting the wheat from the said two berths, if it were to be a case where it incurred any additional expenditure for that purpose, compared to the transport of the same from the notified or nominated berth.
The respondent would certainly have been entitled to deduct the charges, for transporting the wheat from the said two berths, if it were to be a case where it incurred any additional expenditure for that purpose, compared to the transport of the same from the notified or nominated berth. The loading and unloading is common for the wheat that is unloaded at any berth. The difference was only about the lead, that is the distance. The Umpire in his reasoned award clearly found that the respondent was not able to establish that they incurred any additional expenditure in transporting the wheat from berths OBII and EQ 3 and on that basis held that the deduction was impermissible. The relevant portion of the award reads as under:"ofcourse, had the respondents showed me that the transportation expenses from OBII to the respondents transit shed were to some extent more than the expenses the respondents would have had to incur for transportation of the cargo from EQ2 or EQ3 to the transit shed, I would have certainly considered this aspect. However, the respondents insisted on adhering to their stand that they were in no event liable for these expenses; therefore, I am unable to apportion the same. I have therefore fully allowed the Claimants claim for Rs. 2,00,340/- for re-imbursement of the expenses that they had to incur for transportation of the cargo from OBII berth and EQ6 berth to the transit shed of the respondents, as in my view they constitute liability of the respondents. " ( 15 ) THIS finding was set aside by the trial Court simply by observing that the delivery of wheat were to have been made at EQ 2 berth and the Umpire has misconducted the proceedings in allowing the claim. The finding of the Trial Court reads as under:"the Food Corporation of India is not liable for the expenses from OBII to EQ2 berth as it is the duty of the vessel to deliver at EQ 2 berth. The Umpire held that the F. C. I, did not show that the transportation expenses from OB II to the transit sheds is more than that of the transportation from EQ 2 to transit shed. So he did not consider this aspect. As per the agreement, delivery is to be made at EQ 2 berth. So the Umpire has mis-conducted the proceedings.
So he did not consider this aspect. As per the agreement, delivery is to be made at EQ 2 berth. So the Umpire has mis-conducted the proceedings. Hence, liable to be set aside as per the decision reported in Allen Berry and Company private Limited v. Union of India, AIR 1971 sc at Page 696. "having observed that the Court cannot sit as an Appellate Authority, the Trial Court did exactly the same. ( 16 ) ANOTHER limb of the first question is, in relation to the deduction of dispatch money of Rs. 61,312/ -. This, in turn, will have a bearing on the computation of lay-time. The lay-time starts after expiry of 24 hours from the time of reporting at the named berth. It is not in dispute that the vessel reported to EQ 2 berth on 26-5-1983. The contention of the appellant that the unloading at berth EQ 6 has to be treated as the one at nominated berth and not as a lightening process was negatived by the umpire. However, in the next breath, the umpire held that the time at which the vessel reported at that berth has to be taken into account for the purpose of calculating the lay- time. Such contradictory views cannot be sustained. Whatever be the latitude allowed to an Umpire in reaching his own conclusions, on facts, he cannot be permitted to blow hot and cold in allowing or disallowing the claims. This finding became the basis for allowing the claim of Rs. 61,312-50 ps. This Court finds that the claim is impermissible not on the basis of any re-appreciation of the award, or material, but on account of the internal contradictions contained in the award. Hence, the claim of the appellant for that amount cannot be sustained. ( 17 ) COMING to the second question, it may be noted that the respondents presented a counter claim for a sum of Rs. 2,62,000/-, on the ground that there was short supply of the wheat. If the short supply was noticed before the wheat was removed from the port area, there certainly would have been basis for such a claim. A reading of the award and the other material on record discloses that the discrepancy was pointed out after the wheat was transported through rail and road and much subsequent to the unloading operations.
If the short supply was noticed before the wheat was removed from the port area, there certainly would have been basis for such a claim. A reading of the award and the other material on record discloses that the discrepancy was pointed out after the wheat was transported through rail and road and much subsequent to the unloading operations. The Umpire assigned cogent reasons for rejecting the claim. Therefore, the Trial Court was not justified in holding that the award; insofar as it rejected the counter claim is unsustainable in law. At any rate, the Trial Court did not issue any further directions in relation to the counter claim, and thereby, it was an empty declaration of right without providing for any remedy. Further, the transaction is of the year 1983, and there is no point in continuing the proceedings two decades, thereafter. ( 18 ) FOR the foregoing reasons, C. M. A. No. 3635 of 2000 is allowed, and C. M. A. No. 3119 of 2001 is dismissed, and the order passed in O. P. No. 556 of 1988 on the file of the n Additional Senior Civil Judge, visakhapatnam, is set aside. C. M. A. No. 3514 of 2000 is partly allowed, and the order and decree in O. P. No. 374 of 1988 on the file of the n Additional Senior Civil judge, Visakhapatnam, insofar as it set aside the award of the Umpire in relation to the claim of the appellant for a sum of rs. 2,00,340/- is reserved. In other respects, the decree shall hold good. Accordingly, a decree shall ensue in O. P. No. 374 of 1988 to the effect that the award, dated 17-6-1988, passed by the Umpire in relation to the claim of the appellant for a sum of rs. 2,00,340/-, deducted by the respondent towards transport charges from berths obii and EQ 6, be made the rule of the Court. The said amount shall carry interest at 12% per annum, from the date of the, reasoned award, i. e. , 21-7-1991. In all other respects the award shall stand set aside. There shall be no order as to costs.