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1994 Supreme(Bom) 235
BOMBAY HIGH COURT
S.M. Jhunjhunwala, J.
FOOD CORPORATION OF INDIA - PETITIONER
v.
GREAT EASTERN SHIPPING CO. LTD - RESPONDENT.
Arbitration Petition No. 208 of 1991 in Award No. 98 of 1991,
Decided on: June 14, 1994
Mr. R.V. Govilkar, for the Petitioner
Mr. S. Sen. I/b. M/s. Bhatt & Saldanna, for the Respondent
The interpretation of a Charter Party clause regarding the validity of notices of readiness is a question of law that can be decided by arbitrators, and their decision cannot be challenged in proceedings to set aside the award.
Headnote:
ARBITRATION - AWARD - SETTING ASIDE - GROUNDS - MISCONDUCT OF ARBITRATORS - NOTICES OF READINESS GIVEN AT PILOT'S STATIONS INSTEAD OF BERTH - INTERPRETATION OF CHARTER PARTY CLAUSE - VALIDITY OF NOTICES OF READINESS - QUESTION OF LAW - DECISION OF ARBITRATORS - NOT OPEN TO CHALLENGE IN PROCEEDINGS TO SET ASIDE AWARD - ARBITRATION ACT, 1940, SECTIONS 30, 35.
Fact of the Case:
Petitioners, a government corporation engaged in foodgrain trading, and respondents, a shipping company, entered into a Charter Party for the carriage of rice from Bassein and Rangoon to India. Disputes arose regarding demurrage charges at loading and discharging ports. The matter was referred to arbitration, and the arbitrators awarded a sum in favor of the respondents.
Finding of the Court:
The court held that the arbitrators did not misconduct themselves or overlook factual aspects by considering the notices of readiness given at the Pilot's Stations instead of the berth. The interpretation of the Charter Party clause regarding the validity of the notices of readiness was a question of law decided by the arbitrators, and their decision could not be challenged in proceedings to set aside the award. The court also found that the arbitrators applied their minds while deciding the disputes and that the award was not vitiated by non-application of mind.
Issues: 1. Whether the arbitrators misconducted themselves by considering the notices of readiness given at the Pilot's Stations instead of the berth? 2. Whether the interpretation of the Charter Party clause regarding the validity of the notices of readiness was a question of law that could be challenged in proceedings to set aside the award? 3. Whether the arbitrators applied their minds while deciding the disputes and whether the award was vitiated by non-application of mind?
Ratio Decidendi: 1. The court held that the arbitrators did not misconduct themselves or overlook factual aspects by considering the notices of readiness given at the Pilot's Stations instead of the berth. The interpretation of the Charter Party clause regarding the validity of the notices of readiness was a question of law decided by the arbitrators, and their decision could not be challenged in proceedings to set aside the award. The court also found that the arbitrators applied their minds while deciding the disputes and that the award was not vitiated by non-application of mind. 2. The court relied on the principles that an award is conclusive as a judgment between the parties and that the court is entitled to set aside the same only on specific grounds, such as misconduct of the arbitrators or invalidity of the award under the Arbitration Act, 1940. The court also noted that an award may be set aside on the ground of error on the face thereof, but it is not invalid merely because the arbitrator may have committed some mistake in arriving at a conclusion.
Final Decision: The petition to set aside the award was dismissed with costs.
S. M. Jhunjhunuwala, J. - By this petition, the petitioners seek to have the Award dated 21st June, 1991 filed in this court and numbered as 'Award No. 98 of 1991' (for short 'the said Award') set aside.
2. The petitioners are a Corporation established under The Food Corporation Act, 1964 and are a Government of India undertaking having an office at Bombay. The petitioners are engaged in activities, inter alia, like movement, storage and trading in foodgrains and other foodstuffs including edible oils. The respondents are a Company duly incorporated and registered under the provisions of the Companies Act, 1956 and are engaged in the shipped business. The respondents have their registered office situate at Bombay.
3. By a Charter Party dated Bombay, 7th October, 1983 made between the respondents as owners of the Motor Vessel "Jag Rakshak" and the President of India of behalf and for the benefit of the petitioners, the said vessel "Jag Rakshak" was lot out to the petitioners through the Union of India for loading, carriage and delivery of a cargo of 12,000 Metric Tons, 5% more or less at respondent's option, rice in bags about 50 kgs. net each from two parts namely Bassein and Rangoon at Burma to any port either on the East Coast or the West of Coast of India at the Charterer's option on the terms and conditions mentioned therein. Pursuant to the said Charter Party, the said vessel loaded 4999.986 M/Tons net at Bassein and thereafter 6333.706 M/Tons net at Rangoon rice in bags and carried it for discharge at Cochin Port nominated by the petitioners. The said vessel arrived at Polit Station, Dalhousie Point/Diamond Island, Bassein at 1602 Hrs. on 23rd October, 1983 and Bassein harbour at 1423 Hrs, on 24th October, 1983. Notice of Roadlines was tendered at 1602 Hrs, on 23rd October, 1983 and Laytime commenced at 1602 Hrs. on 24th October, 1983 in accordance with clauses 36(vi) of the Charter Party. According to the respondents, on the basis of cargo quantity loaded, the petitioners had available to them 16th Days, 17 Hours, 16 Minutes as laydays. The said laydays as per the respondents laydays statement expired on 23rd November, 1983 at 1938 Hrs, and the said vessel was thereafter on demurrage until completion of loading at Rangoon on 5th December, 1983 at 1130 Hrs. According to the respondents, the said vessel remained on demurrage for 12 Days, 15 Hours, 52 Minutes and the rate of Rs. 30,000 per day or pro-rata for part of a day as per Clause 7 of the Chapter Party, a sum of Rs. 3,79,833.33 became due from the petitioners to the respondents as demurrage.
4. The said vessel earned the cargo for discharge at Cochin Port nominated by the petitioners. The said vessel arrived at Cochin Port, Pilot Station at 1256 hrs. on 13th December, 1983. Notice of Roadlines was tendered which according to the respondents was accepted at 1000 Hrs. on 14th December, 1983. Laytime Commenced at 1000 Hrs. on 15th December, 1983 in accordance with the said Clauses 37 of the Charter Party. On the basis of cargo quantity as per Bill of Lading the petitioners had available to them 14 Days. 14 Hours, 36 Minutes as the laydays. The said laydays as per respondent's laydays statement expired on 0312 Hrs on 5th January, 1984 and the said vessel was thereafter on demurrage. According to the respondents, the said vessel remained on demurrage for 7 Days, 9 Hours, 29 Minutes and at the rate of Rs. 15,000/- per day, the sum of Rs. 1,10,937.50 become due from the petitioners to the respondents as demurrage at the discharging port.
5. The petitioners, while settling balance freight, had deducted Rs. 9,968.75 and Rs. 95,031.25 being dispatch earned by them according to their calculations for the period 15 Hours, 57 Minutes and 6 Days, 08 Hours, 03 Minutes at loading and discharging ports respectively according to the respondents, the petitioners were liable to pay to the respondents. According to the respondents, the petitioners became liable to pay to the respo
