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2015 DIGILAW 179 (CAL)

Sensea Marine Pvt. Ltd. v. Shipping Corporation of India

2015-02-25

PATHERYA

body2015
Judgment :- Patherya J. This is an application filed under Section 34 of the 1996 Act for setting aside the award dated 16th August, 2004. The case of the petitioner is that it was engaged to man the ship M.V. Dering (vessel) of the Andaman & Nicobar Administration under an agreement dated 14th September, 1993. Difficulties arose between the parties and the vessel was handed to Shipping Corporation of India, the respondent. The respondent took over management of the vessel on the condition that the claimant would provide service till arrangements were made by the respondent. This resulted in a supplementary agreement dated 30th August, 1994. Clause 3.2 and 6.1 of the 1993 agreement was amended. Clause 6.1 of the 1993 agreement fixed the monthly manning fees at Rs.3,39,000/- per month. This as per clause 5.8 of the 1993 agreement covered the existing wage for 10 officers and in case of increase in number or certification, the cost would be extra on the owner’s account. From the initial amount of Rs.3,39,000/- per month, the monthly fees was increased to Rs.3,99,000/- by the supplementary agreement of August, 1994. Additional man power had to be deployed and as the respondent refused to make payment not only of the monthly fees at the periodically enhanced rates but also for the additional man power deployed, disputes and differences arose between the parties and in view of the Arbitration clause the same was invoked and Arbitrator appointed. The Arbitrator after hearing the parties passed an award on 16th August, 2004 whereby both the issues were decided against the petitioner. Hence, the instant application has been filed. The original agreement between the owner of the vessel and the petitioner of September, 1993 contemplated enhancement of the monthly fees. This will also be borne out from the supplemental agreement of August, 1994 whereby the monthly fee was enhanced and the supplemental agreement of September, 1994. On 1st July, 1994 the said vessel was handed over to the respondent on the same terms and conditions as agreed in the 1993 agreement. Therefore, enhancement was inevitable. The Arbitrator has proceeded on the basis of the agreement, which according to him, postulates payment at the rate mentioned therein and did not postulate any enhancement. On 1st July, 1994 the said vessel was handed over to the respondent on the same terms and conditions as agreed in the 1993 agreement. Therefore, enhancement was inevitable. The Arbitrator has proceeded on the basis of the agreement, which according to him, postulates payment at the rate mentioned therein and did not postulate any enhancement. In fact, an observation has been made by the Arbitrator that if the respondent produced the records the petitioner would have been entitled to the enhancement and that the conduct of the respondents left much to be desired. In view of the said observation an adverse inference ought to have been drawn and sums awarded to the petitioners. In fact, the Arbitrator was entitled to exercise summary powers and under Section 19 of the 1996 Act conduct the proceeding in the manner he considered appropriate. For non-production of record an adverse inference ought to have been drawn. No opportunity was given to the petitioners to seek directions under Section 27 of the 1996 Act. As there was an implied contract between the parties with regard to enhancement and payment of additional man power deployed and the same was not considered by the Arbitrator the award is liable to be set aside. Reliance is placed on AIR 2003 SC 2629 . As interpretation of the contract was sought, the Arbitrator was entitled to do so in view of AIR 2003 SC 4519 . Reliance is placed on AIR 1953 SC 225 and AIR 1960 SC 335 , for the proposition that the right to sue accrues on rejection of the claim. Additional man power was deployed from 1994 to 1999. The rejection in respect of the said claim is in 2001 and arbitration was initiated in 2002. Therefore, the claim on account of additional man power is not barred by laws of limitation and the finding in this respect is also bad in law. For all the said reasons, the award dated 16th August, 2004 be set aside. Counsel for the respondent in opposing the said application submits that the Arbitrator is bound by the terms agreed between the parties and the Arbitration Court cannot sit in appeal over the award. For the said proposition reliance is placed on AIR 1971 SC 1646 and 2007 (8) SCC 466 . The initial objection taken was that there was no Arbitration clause which objection was overruled. For the said proposition reliance is placed on AIR 1971 SC 1646 and 2007 (8) SCC 466 . The initial objection taken was that there was no Arbitration clause which objection was overruled. The award has proceeded on the basis of the agreement between the parties. The statement of claim also proceeds on the basis that 20% enhancement was postulated. No document for such enhancement was produced, although the petitioner pleaded an agreement between the parties. Additional documents could have been sought taking recourse under Section 27 of the 1996 Act. If the view taken by the Arbitrator is plausible the Court ought not to interfere as held in AIR 1989 SC 1263 . The Arbitrator is to act within the contract as held in AIR 1992 SC 232 . Reliance is placed on AIR 1971 SC 696 . The findings in respect of the additional man power may be severable and for such purpose the award in its entirety be not set aside. A claim after three years is barred by laws of limitation. In September, 1999 manning of the vessel was taken by the respondent while the reference was initiated on 11th October, 2002. Therefore, the claim is barred by laws of limitation. Section 21 postulates commencement of Arbitration proceeding on the date such request for Arbitration is made. Reliance is placed on 2004 (7) SCC 288 and 2007 (2) Arb. LR 508. The reasonableness of the award cannot be gone into as held in AIR 1987 SC 2316 . For all the said reasons, therefore, the award be upheld. In reply, Counsel for the petitioner submits that Section 7(4)(d) of the 1996 Act contemplates agreement by exchange of letters correspondence, Telecommunications including Telegrams and Telex. The correspondence exchanged between the parties was not considered by the Arbitrator. The award is silent with regard to interpretation of the agreement. In AIR 1989 SC 1263 the grounds on which the award can be set aside is mentioned. In the letter of 18th June, 1994, it was specifically mentioned that the manning and maintenance of vessel M.V. “Dering” handled by the respondent would be on the same terms and conditions as that of M.S. “Sentinel” and M. V. “Chowra”. In AIR 1989 SC 1263 the grounds on which the award can be set aside is mentioned. In the letter of 18th June, 1994, it was specifically mentioned that the manning and maintenance of vessel M.V. “Dering” handled by the respondent would be on the same terms and conditions as that of M.S. “Sentinel” and M. V. “Chowra”. This was not considered by the Arbitrator and 2007 (8) SCC 466 while holding that Courts will not substitute its views has also said that in cases where the Arbitrator is acting without jurisdiction and has interpreted the clause of the agreement contrary to law then, in that case the Court is entitled to set things right. There has been no interpretation of issues under Section 34(2). Severalty of the award is not possible as there is no finding and the reasons are not reasonable. The disputes have not been considered, therefore, the award be set aside. Having considered the submissions of the parties by the award dated 16.8.2004 the petitioner’s claim has been rejected and the petitioner seeks to set-aside the said Award on several grounds. Each of the grounds will have to be considered in the light of Section 34(2)(a) or (b) of the 1996 Act. The instant case is not under Section 34(2)(a) of the 1996 Act, as the grounds therein has neither been pleaded nor argued for setting aside the Award. It is also not a case covered under Section 34(2)(b)(i) of the 1996 Act. The only provision under which it can be set-aside is Section 34(2)(b)(ii) of the 1996 Act. Public policy of India has been explained in (2003) 5 SCC 705 as under:- “74. In the result, it is held that: (A) (1) xxxxxxxxx (i) xxxxxxxxx (ii) xxxxxxxxx (iii) xxxxxxxxx (iv) xxxxxxxxx (2) xxxxxxxxxxxx (i)(a) xxxxxxxxxx (b) xxxxxxxxxx (ii) xxxxxxxxxxxx (a) xxxxxxxxxx (b) xxxxxxxxxx (c) xxxxxxxxxx (3) The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality; or (d) if it is patently illegal. (4) xxxxxxxxxxxxxx (a) xxxxxxxxxxxx (b) xxxxxxxxxxxxx” Section 27 of the 1996 Act permits a party to apply to Court or the Arbitral Tribunal for taking evidence. In the instant case no such application was filed. (4) xxxxxxxxxxxxxx (a) xxxxxxxxxxxx (b) xxxxxxxxxxxxx” Section 27 of the 1996 Act permits a party to apply to Court or the Arbitral Tribunal for taking evidence. In the instant case no such application was filed. Reliance has been placed by the petitioner on AIR (2003) SC 4519 for the proposition that a contract reduced in writing must be looked into to ascertain the terms of the agreement between the parties. The contract which guided the petitioner and the respondent was the agreement between the petitioner and the Andaman & Nicobar Administration and this was to guide the parties. Nowhere in the said agreement was there any mention of an enhanced rate for payment, therefore, in the absence of the aforesaid or an independent agreement, the findings of the arbitrator cannot be faulted. The petitioner was also entitled to call upon the respondents to produce its records in respect of other agreements of either the Andaman & Nicobar Administration or the respondents with persons similarly situate but no such exercise was undertaken. Therefore, the question of drawing adverse inference cannot arise as the same could have been reached if called records were not produced. As there was no call for production of records the question of drawing adverse inference will not arise and AIR (1953) SC 225 will not come to the aid of the petitioner. AIR (1960) SC 335 is distinguishable on facts as in the instant case the claim is a money claim for which the period of limitation is three years which gets extended from the date of acknowledgement relied on by the petitioner. Therefore, the Award cannot be faulted on the ground of either public policy or any other ground and calls for no interference. Accordingly, the application is dismissed.