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2009 Supreme(Bom) 1420
High Court of Judicature at Bombay
THE HONOURABLE MR. JUSTICE ANOOP V. MOHTA
Ispat Industries Ltd.
Versus
Shipping Corporation of India Ltd.
Arbitration Petition No.343 of 2009
Decided on : 16-10-2009
For the Petitioner:Aspi Chinoy Sr. Counsel with Ms. Shamina Lakdawala, Gaurav Mitra, Gautam Mitra i/by Juris Corp., Advocates. For the Respondent:F. Divitre, Sr. Counsel with Rahul Naricharia, Atul Thakkar & Ms. Vaishnavi Nair i/by M/s. Mulla & Mulla & C.B.C., Advocates.
Headnote:Arbitration & Conciliation Act, 1996 - Section 34 - Arbitral award - Challenged - Two ships chartered for carriage of iron ore for a given period - Short delivery of contents and delay in discharge of goods at port resulting in demurrage etc. - Claim allowed by arbitrator in part - Held - Mosters of both ships examined - Commitment of carriage of 8000 MT. as against option of 2500 MT. fulfilled - Claim of owners for premature termination of charter calculated on a hypothetical figures - Not sustainable - No evidence in support of counter claim of charters - Rightly rejected - Award of interest @8% p.a. also fair and reasonable. - The findings so given by the learned arbitrator need no interference. It is well within the framework of law and the record. There is no perversity and or any illegality. The view so expressed, based upon the clauses of the COA cannot be said to be of illegal and or wrong in any sense. The view expressed by the learned arbitrator by interpreting the clauses and after analysing the material available on record need no interference.
The aspect of adverse inference as the owners failed to produce the Chief Officer as a witness has been dealt with rightly as the masters of both the vessels who were in command of the vessels were extensively cross examined. There is nothing to show any prejudice caused to the charterers.
It is rightly observed that the Chief Officer could not have possibly shed any more light as such decision is on simple arithmetical calculation derived from parameters by the charterers.
With regard to the payment of the bills amounting to Rs. 176,921/- for damage by stevedore labour to Mandakini the owners failed to place on record the proof of payment of the bills. The claim of physical damage caused to the vessel is rejected rightly.
The claim of the owners for loss of profit owing to premature termination of the COA calculated on a hypothetical figure based on some PTI Bulletins is not sustainable. There is nothing to support the actual loss of profit and or calculation and material in support of the same loss of profit just cannot be granted on the basis of hypothecation on presumption and or assumption the dismissal of this claim therefore, is correct.
With regard to the counter claim of charterers under various heads, also dismissed rightly for want of supporting evidence including of the witness who had no personal knowledge of the fact of the case. No proof has been placed/produced for any payment to the authorities. Apart from that the counter claim would have survived if the claimants were in breach of contract. In view of the finding that the claimant is not in breach of contract all the counter claims raised in the arbitration therefore has been rightly rejected.
The arbitrator has awarded the interest @8% p.a. as the claim is awarded in USD currency. The power of Tribunal to grant pre-arbitration interest is correct as there was no contract to the contrary. There was no agreed express bar. The interest @ 8% p.a. is therefore fair and reasonable.
1. Heard finally, by consent of the parties.
2. The Petitioner has invoked Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act), in the matter of disputes arising out of the Contract of Affreightment (for short, the COA) dated 12th April, 1996 between the Shipping Corporation of India (for short, SCI) and the Petitioner Ispat Industries Ltd., formerly known as Nippon Denro Ispat Ltd. (for short, IIL).
3. The parties entered into the COA and accordingly the ship owners gave two vessels “Mandakini” and “Uttar Kashi” on charter to the charterers for the carriage of iron ore in bulk from Vishakhapatnam to Mumbai. The disputes arose between the parties during the performance of the COA because of disablement of cranes and the matters related to the same. The parties have appointed, by consent, Mr. R.S. Cooper as a Sole Arbitrator.
4. The relevant facts as noted in the award are as under:-
“I. FACTS:-The main facts relevant to the disputes are as under:
i) Quantity: 400,000 mt 10% MOL in CHOP to be transported between 15-4-1996 to 31-3-1997.
ii) Discharge Rate:7,500 mt SHINC per day of 24 consecutive hours. Basis 4 cranes/ grabs available at all times. The cargo was to be discharged on FOIST basis. Discharging was at cost and at responsibility of the charterer.
iii) Demurrage: $ 11,000 per day or pro rata.
iv) In the event of failure of Charterers to provide the required quantity, owners to be suitably compensated. Neither party to be liable for consequential damages.
v) The two vessels, Mandakini and Uttar Kashi each performed one voyage – Mandakini loaded 45590 mt. And Uttar Kashi loaded 46411 mt. There is no dispute regarding the loading operations at Vishakhapatnam in respect of both the vessels.
95% of the freight on cargo loaded by the two vessels was duly paid to the owners by the charterers. The balance 5% remained unpaid and is one of the items in dispute between the parties.
vi) After the vessels had performed their respective first voyages, the charterers refused to load any further cargo and repudiated the COA. The ground advanced by the charterers was that the vessels were unsuitable for the contract as their cargo gear was inefficient and was incapable of performing according to the contractual conditions.
vii) Details of the performance of the two vessels at Mumbai during discharging are summarized hereunder.
Mandakini arrived Mumbai 15-5-1996
Discharge commenced 19-5-1996.
Discharge completed 26-5-1996.
Uttar Kashi arrived Mumbai 4-6-1996
Discharge commenced 9-6-1996.
Shifted to high seas after partial discharging 18-6-1996.
Reberth on 28-6-1996
Discharge completed 5-7-1996
Consequently, according to the owners both vessels exceeded the agreed lay time during discharge and ran into demurrage which is one of the issues in dispute.
II. Owners Claim Details:
1) Mandakini:
a) Owners claimed demurrage incurred by the vessel for 4 days 3 hours and 2 minutes totaling US$ 42817.88 b) Additionally, owners have claimed Rs. 176921/- being cost of repairing damage alleged to have been caused by the stevedores of the charterers made up of the following bills: SSK Eng Rs. 21,934/-SSK Eng Rs. 91,000/-Indo Marine Rs.63,987/-======= Total: Rs.1,76,921/-
c) Owner’s claim also includes 5% net unpaid freight amounting to US$ 10,000.31 which is in addition to the demurrage.
d) Charterers earned agreed dispatch of US$4170 at the load port Vishakhapatnam and owners have given credit to the charterers for this amount when computing the demurrage of US$ 42900.
e) Owners have also claimed interest at 8% per annum from 28-10-1996 upto the date of the Award and thereafter until payment or realization.
2) Uttar Kashi:
a) Owners have claimed demurrage incurred by the vessel for 25 days 2 hours and 6 minutes. However, after some adjustment downwards owners to avoid controversies have agreed to reduce the time in excess of lay days to 22.57 days and have revised the demurrage claim to US$
