1. By this notice of motion, the petitioners seek an order and direction under Order 39 rule 11 of the Code of Civil Procedure, 1908 striking off the respondent's defence in Arbitration Petition No.24 of 2010 and to allow Arbitration Petition No. 24 of 2010 in terms of prayer clause (a) thereof. In the alternative to prayer clause (a), the petitioners seek mandatory order/direction ordering/directing the respondent to comply with the order dated 20th December, 2010 and deposit the security amount of USD 24,157,442.00 and sterling pounds 5,000.00 in this court.

2. The Petitioners have filed Arbitration Petition (24 of 2010) under section 49 of the Arbitration and Conciliation Act, 1996 (for short Arbitration Act, 1996) seeking enforcement of the foreign arbitration award dated 8th July, 2009 and award on cost dated 15th March, 2010 made and published in its favour by Mr. Alan Oakley, the sole arbitrator by which the petitioner had been awarded various amounts. Some of the relevant facts for the purpose of deciding the issue raised in this Notice of Motion are as under:

3. On 25th October, 2007 a contract of affreightment (for short “COA”) was executed by and between the petitioners and the respondents by which the respondents agreed to load minimum of 6 shipments annually of 45,000 MTS to 50,000 MTS of Bauxite from various ports in Gujarat to be carried on board the petitioner's vessels for discharging at various ports in China. Clause 28 of the said COA provides that the disputes arising out of the COA to be referred to English Law Arbitration in London. Clause 28 reads as under:

“CLAUSE NO. 28” Any dispute arising under this C.O.A. is to be settled and referred to Arbitration in London. One Arbitrator to be employed by the Charterers and in case they shall not agree then shall appoint an Umpire whose decision shall be final and biding, the Arbitrators and Umpire to by Commercial Shipping Men, English Law to apply. Notwithstanding anything to the contrary agreed in the C.O.A. All disputes where the amount involved is less than USD 35,000/-(thirty five thousand) the Arbitration shall be conducted in accordance with the small claims Procedure of the L.M.A.A.”

4. On 24th November, 2007 the said C.O.A. was amended so as to increase the minimum number of annual shipments. The freight rate was also amended.

5. According to the petitioners, between January to April, 2008 three voyages under the said C.O.A. were performed and the respondents thereafter ceased to offer bauxite for shipment.

6. On 30th September, 2008 the respondents addressed a communication to the petitioners that due to governmental interference, they would not be able to perform C.O.A. According to respondents that amounted to force majure frustration of the C.O.A. The respondents sought to terminate the C.O.A. retrospectively with effect from June, 2008.

7. On 3rd October, 2008, the petitioners repudiated the contents of the notice of termination dated 30th September, 2008 and treated the said communication as an anticipatory breach of C.O.A. by the respondents. The Petitioners notified that the respondents would be held liable for all damages/losses occasioned to the petitioners.

8. On 3rd November, 2008, the petitioners commenced Rule B attachment proceedings in New York against the respondents to obtain security pending invocation and resolution of disputes by the arbitrators. Pursuant to the said proceedings the petitioners garnished the respondent's funds aggregating to USD 99426.04 in New York. According to petitioners, there were other creditors who led claims to those garnished funds.

9. By letter dated 10th November, 2008, the respondents called upon the petitioners not to proceed either with the arbitration or with Rule B proceedings in New York contending that the C.O.A. could not be performed since the DG Shipping had by letter dated 3rd November, 2008 refused to grant respondent's licence as contemplated under the Merchant Shipping Act, 1958.