Research › Search › Judgment

Calcutta High Court · body

2012 DIGILAW 799 (CAL)

Islamic Republic of Iran Shipping Lines v. MNB Steel

2012-08-24

PATHERYA

body2012
Judgment Patherya, J. The decree-holder has filed E.C. 70 of 2008 for execution of award dated 14th August, 2007 while E.C. 166 of 2008 has been filed for execution of Award dated 14th August, 2007 as corrected on 5th August, 2008. Although the Award was passed on 14th August, 2007 reasons in respect thereof was given subsequently. The case of the decree-holder is that the charter party agreement of 12th January, 2005 contained an arbitration clause. As disputes arose between the parties, an arbitrator was appointed who after giving notice to the parties proceeded to decide the issues and passed an Award on 14th August, 2007. As the said Award was not challenged, after the limitation period of 120 days the same was put into execution. An affidavit was filed by the judgment debtors wherein the existence of the charter party dated 12th January, 2005 was disputed. As the said was a typographical error steps were taken by the decree holder to correct the said typographical error and steps have been taken by the arbitrator to issue a correction to the Award dated 14th August, 2007. In view of the correction to the Final Award dated 14th August, 2007 E.C. 166 of 2008 has been filed. On 5th August, 2008 the only correction made in the award was in respect of the date of the charter party which had been mentioned as 12th January, 2005 and was corrected to 12th January, 2006. Neither the original award nor the corrected award has been challenged under Section 48(1) of the 1996 Act. No defence was filed before the arbitral Tribunal nor counter claim made. The only objection raised is that the correction has been made beyond 28 days stipulated under Section 57 of the English Arbitration Act 1996 (English Act). In fact the time specified in Section 57 is not mandatory as will be evident from Schedule 1 of the English Act. Section 16(6) of the English Act deals with Constitution of the Tribunal by appointment of arbitrator by both parties, in default of such appointment a sole arbitrator is to be appointed under Section 17 of the English Act. There is no dispute of the existence of an arbitration agreement and the applicability of the Gencon form which has been accepted by both parties with certain riders included thereafter. There is no dispute of the existence of an arbitration agreement and the applicability of the Gencon form which has been accepted by both parties with certain riders included thereafter. The fixture note also establishes the agreement between the parties as held in (2009) 2 SCC 134 . Therefore, the arbitration clause is applicable and the award passed is justified. In the Rider clauses the corrected date of charter party is evident i.e. 12th January, 2006 and no dispute with regard to this date has been raised by the judgment debtor. The objection raised is that no charter party of 2005 exists. Therefore there is no arbitration agreement and the award is void ab initio. Therefore the appointment of the arbitrator is not as per the contract between the parties i.e. the fixture note and no opportunity was given to the judgment debtor to present his case. The demurrage levied is also contrary to public policy. Reliance is placed on (2004) 8 SCC 706 for the proposition that the plea of nonexistence of arbitration agreement could have been raised before the Arbitrator under Sections 30, 31 and 32 and the opportunity given was not availed by the judgment debtor. In fact the charter party and the Rider Clauses have been signed by the judgment debtor. The uncorrected award was received by the decree holder on 24th August, 2008, and thereafter the same was put into execution by filing E.C. No. 70 of 2008 and on correction E.C. No. 166 of 2008. Counsel for the Judgment Debtor opposes the said application and submits that two execution applications have been filed. To the first execution application the enforceability of the award dated 14th August, 2007 was challenged. It is only in the affidavit in reply that the corrected copy of the award was annexed wherefrom the Judgment Debtor came to know of the corrected award which by the second execution application is sought to be enforced. The only provision of the English Act under which the award could have been corrected is Section 57 of the English Act. The only provision of the English Act under which the award could have been corrected is Section 57 of the English Act. Section 57(3)(a) permits the arbitral Tribunal to correct an award for removal of clerical mistake or errors arising from accidental slip by filing an application under Section 57(4) of the English Act within 28 days of the date of the award and the correction is to be made within 28 days of such application as per Section 57(5) of the English Act. The said 28 days in view of the said provisions is mandatory. The application for correction was filed on 31st July, 2008 and could not have been entertained by the arbitrator as he had become funtus officio. To construe the meaning of “public policy” reliance is placed on 2006 (11) SCC 245 . In cases of nullity and lack of inherent jurisdiction, the executing Court can go behind the decree. For the said proposition reliance is placed on AIR (1999) SC 246, (2004) 8 SCC 706 and (2005) 9 SCC 686. As the Award is contrary to provisions of law renders the same null and void. For the said proposition reliance is placed on (2003) 5 SCC 705 . The documents on account of which demurrage was charged should have been placed by the decree holder before the arbitrator and in not doing so has suppressed facts. Suppression is nothing but fraud on Court and opposed to public policy as held in (2008) 12 SCC 306 . Reliance is placed on paras 6.193, 6.198, 6.199 of Russel on Arbitration (22nd edition) which stipulates that within the time limit set the correction ought to be made. The slip rule could not have been applied in view of para 6.195 of Russel on Arbitration 22nd edition. By the correction the objection of the judgment debtor that the correction is beyond the scope of Section 57 has been nullified. This issue in fact was raised before the arbitrator and there is a finding to that effect too by the arbitrator. Therefore there has been no slip by the arbitrator. The documents mentioned in the statement of claim was not supplied and service of the application filed for correction is in dispute. The Load Port is in India and the discharge port is in China. Damages suffered has been claimed. Therefore there has been no slip by the arbitrator. The documents mentioned in the statement of claim was not supplied and service of the application filed for correction is in dispute. The Load Port is in India and the discharge port is in China. Damages suffered has been claimed. The document evidencing no delay on the part of the judgment debtor has been suppressed and such suppression therefore is contrary to public policy. The letter issued by Haldia dock on 23rd January, 2006 was not placed before the arbitrator. Sufficient opportunity was also not granted to the judgment debtor to place its case and therefore the same is opposed to public policy. By virtue of the correction, the first award has merged with the corrected award. In fact the first award has lost its existence and therefore the correction be held as not valid. As the first award exists, therefore the question of enforcing the corrected Award will not arise. Counsel for the petitioner in reply submits that the agreement between the parties exists and Section 4 of the English Act lays down the mandatory and non-mandatory sections of the English Act. Section 57 of the English Act is not a mandatory provision and therefore the correction could have been made beyond the period specified. In the charter party the date mentioned is 12th January, 2005 but in the Rider clause the date mentioned is 12th January, 2006. In the statement of claim that the charter party is of 2006 has been mentioned so also in the Rider clauses. Therefore the judgment debtor was aware of the date of the charter party. In fact no appeal can be filed under Section 70 of the English Act without first taking recourse to Section 57. Part I of the Indian Act is applicable to Part II as held in 2002 (4) SCC page 105. The judgment debtor has not raised any objection before the arbitrator nor filed an application for setting aside the award therefore has waived its right to object. For the said proposition reliance is placed on 2009 (2) SCC 337 . A copy of the letter dated 31st July, 2008 was also sent to the Judgment Debtor. The arbitrator has also requested the Judgment Debtor to give a reply. For the said proposition reliance is placed on 2009 (2) SCC 337 . A copy of the letter dated 31st July, 2008 was also sent to the Judgment Debtor. The arbitrator has also requested the Judgment Debtor to give a reply. It was during the pendency of the first execution application that the said slip was detected and request made and correction effected. In the affidavit-in-reply filed in the first execution application the corrected award was enclosed. In fact under letter dated 17th November, 2008 a copy of the corrected award was forwarded to the Judgment Debtor and thereafter the second execution application filed. Inspite thereof no step has been taken by the Judgment Debtor to challenge the original award or the corrected award. The cases cited by the Judgment Debtor are distinguishable. 2005 (9) SCC 686 is under the 1940 Act and therefore no reliance can be placed thereon as held in 1999 (2) SCC 479 . 2006 (11) SCC 245 has restricted the grounds of challenge under the 1996 Act. In the Centotrade case there was a difference of opinion and the same has been referred to a larger Bench. Therefore no decision was reached. AIR 1999 SC 246 is not applicable on facts and the judgment debtor has not been specified which of the exceptions in Saw Pipes case will warrant interference. Reliance is also placed on the decision in the case of Eastern Sea Board Company Corporation delivered by the United States Court of appeal and 2002 (2) LLoyd’s Law Reports 512 which have allowed correction beyond the period specified. Having considered the submission of the parties disputes arose between the parties and was resolved by arbitration and an Award was passed on 14th August, 2007 and the same put into execution. At this stage it was detected that the year of the charter party mentioned in the Award was incorrect and instead of 12th January, 2006 was mentioned as 12th January, 2005. This was corrected subsequently and the only objection required to be considered is whether the correction could have been made by the arbitrator. The arbitration proceedings was conducted as per the English Laws applicable. In the Original Award dated 14th August, 2007 the charter party has been dated as 12th January, 2005. This was corrected subsequently and the only objection required to be considered is whether the correction could have been made by the arbitrator. The arbitration proceedings was conducted as per the English Laws applicable. In the Original Award dated 14th August, 2007 the charter party has been dated as 12th January, 2005. This is presumably on the basis of the date mentioned in the charter party but in the Rider Clause the date of the charter party mentioned is 12th January, 2006. This was brought to the notice of the arbitrator and the same was corrected. The judgment debtor seeks to make much of this correction on the ground that it was beyond the 28 days contemplated in Section 57 of the English Act. Therefore it will not be out of place to consider the English Act governing the proceedings and the relevant provisions. Section 57(3)(a) of the English Act empowers the arbitrator to on his own initiative or on an application of a party correct an accidental slip in the Award, after giving an opportunity of hearing to the parties. An enquiry was made by the managers of North of English P & I Association Ltd. from the arbitrator if under the slip rule the error could be corrected and on receipt of such enquiry the arbitrator by email called upon the judgment debtor to reply and as no reply was received the Award dated 14th August, 2007 was corrected on 5th August, 2008. Although Section 57(4) of the English Act of 1996 is in Part I of the Act and contemplates that an application be made within 28 days of the Award, the said Section has not been included in Schedule I of the Act which deals with mandatory provisions of Part I. Assuming that the correction was not permissible under Section 57(4) of the English Act, the judgment debtor was entitled under Section 67 of the English Act to challenge the corrected Award. Section 67 of the English Act reads as follows :- “67. Challenging the award: substantive jurisdiction (1) A party to arbitral proceedings may apply to the court – (a) challenging any award of the arbitral tribunal as to its substantive jurisdiction; or (b) for an order declaring an award made by the tribunal on the merits to be of no effect, in whole or in part, because the tribunal did not have substantive jurisdiction. A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3).” No such recourse has been taken by the judgment debtor and in the execution proceedings it is seeking to challenge the corrected Award. In fact by virtue of Section 73 of the English Act, the right to object by the judgment debtor is lost to it. Section 73 of the English Act is as follows :- “73. Loss of right to object (2) Where the arbitral tribunal rules that it has substantive jurisdiction and a party to arbitral proceedings who could have questioned that ruling – (a) by any available arbitral process of appeal or review, or (b) by challenging the award, does not do so, or does not do so within the time allowed by the arbitration agreement or any provision of this Part, he may not object later to the tribunal’s substantive jurisdiction on any ground which was the subject of that ruling.” In spite of extension sought on 4th July, 2007 and granted as mentioned in the Award, to file defence, no defence was filed. The judgment debtor was also entitled to challenge the Award but failed to do so. Therefore in view of the aforesaid, objections raised in the execution application cannot be sustained. Admittedly the execution sought is of a foreign Award which is enforceable under Part II of the Arbitration and Conciliation Act, 1996. Section 48 of the 1996 Act lays down the situations when enforcement of a foreign Award may be refused. The reason for invoking Section 48 of the 1996 Act by the judgment debtor would be non-existence of the charter party dated 12th January, 2005, but in view of the corrected Award and no challenge to such Award the said objection is meaningless. To be contrary to public policy in the case of a foreign Award, it must be induced by fraud or corruption. No such argument has been advanced. No document of service of the Award dated 14th August, 2007 or the corrected Award on the judgment debtor has been disclosed in the pleadings. An email dated 10th November, 2008 has been disclosed by the decree-holder whereby the corrected Award was forwarded to the judgment debtor. No such argument has been advanced. No document of service of the Award dated 14th August, 2007 or the corrected Award on the judgment debtor has been disclosed in the pleadings. An email dated 10th November, 2008 has been disclosed by the decree-holder whereby the corrected Award was forwarded to the judgment debtor. E.C. 166 of 2008 was filed on 25th November, 2008 and it has been admitted that on 1st December, 2008, the said execution application was received by the judgment debtor wherefrom it came to know of the corrected Award. Inspite of knowledge on 1st December, 2008 no step has been taken by the judgment debtor to challenge the same. Although pursuant to order dated 14.5.2008 the judgment debtor has deposited Rs.15 lacs and though the territorial jurisdiction of this Court for enforcement of foreign Award was questioned, no such argument was pursued at the hearing. The Award dated 14th August, 2007 so also the corrected Award by virtue of Section 57 of the English Act is not non-est due to lack of inherent jurisdiction but may at best be an Award not in accordance with law or based on a mere wrong exercise of jurisdiction therefore erroneous and as held in (2004) 8 SCC 706 and AIR (1999) SC 246 cannot be challenged in collateral execution proceedings, and unless such an Award is set aside in appeal or revision is binding between the parties. “Must be made” mentioned in Section 53(4) of the English Act when read with Schedule 1 of the English Act, and omission of Section 53 of the English Act therefrom weighs in favour of the decree holder as admittedly the correction was not a redetermination on merits but a mistake, clerical arising from an accidental slip which was also in the charter party to which the judgment debtor is a party and is to its knowledge. Therefore the decision reported in (2006) 11 SCC 245 is not to apply. (2005) 9 SCC 686 will also not aid the judgment debtor as it was entitled to object to the jurisdiction of the arbitrator not only under the English Act but also by challenging the Award. The principle decided in (2008) 12 SCC 306 will not come to the judgment debtor’s aid at the execution stage but would assist it at the time of challenging the Award. The principle decided in (2008) 12 SCC 306 will not come to the judgment debtor’s aid at the execution stage but would assist it at the time of challenging the Award. In view of the aforesaid the decree-holder will be entitled to execution of the Award dated 14th August, 2007 as corrected on 5th August, 2008 and accordingly there will be an order in terms of prayers (a), (b) and (f) of Column 10 of the Tabular Statement. For such purpose Mr. Amit Gupta, Advocate, 1st Floor, Bar Library Club is appointed Receiver at an initial remuneration of 300 gms. Manager, Bank of Baroda, Bara Bazar Branch is directed to inform the Court on the next date of hearing the amount lying to the credit of the judgment debtor. Matter to appear in the list on 24th September, 2012.