Back
High Court Of Calcutta
A. K. GANGULY
HINDUSTHAN PAPER CORPORATION LTD. - Appellant
Versus
WELLBRINES CHEMICALS PRIVATE LTD - Respondent
A. P. 56 Of 2001
Decided On : 03/07/2002
The petition for setting aside the award was dismissed. The court held that the joint arbitrators acted within their jurisdiction and did not commit any error in holding that the NOR dated 25.11.1991 was a valid notice. The court also held that the arbitrators did not err in awarding demurrage as liquidated damages and that the arbitrator had the jurisdiction to award interest.
Fact of the Case:
The petitioner, HPCL, had entered into a charterparty agreement with the respondent, M/s. Shipping Corporation of India Ltd., for the transportation of coal from Haldia Port to Cochin Port. The charterparty agreement contained an arbitration clause. A dispute arose between the parties and the matter was referred to arbitration. The joint arbitrators awarded damages to the respondent for delay in loading and demurrage.
Finding of the Court:
The court held that the joint arbitrators acted within their jurisdiction and did not commit any error in holding that the NOR dated 25.11.1991 was a valid notice. The court also held that the arbitrators did not err in awarding demurrage as liquidated damages and that the arbitrator had the jurisdiction to award interest.
Issues: 1. Whether the joint arbitrators acted within their jurisdiction and committed an error in holding that the NOR dated 25.11.1991 was a valid notice? 2. Whether the arbitrators erred in awarding demurrage as liquidated damages? 3. Whether the arbitrator had the jurisdiction to award interest?
Ratio Decidendi: 1. The court held that the joint arbitrators acted within their jurisdiction and did not commit any error in holding that the NOR dated 25.11.1991 was a valid notice. The court relied on the following principles: * The sandheads are within Haldia Port Complex and are included within the Port of Haldia. * The joint arbitrators, as commercial men, have given a construction to clause 21 of the charterparty by holding that NOR issued on 25.11.1991 on the arrival of the ship at Haldia on 23.11.1991 is a valid notice, and this interpretation cannot be called perverse or made in disregard of the clauses to the contract. * The petitioner cannot demand that NOR could be given only after the vessel has been berthed when the reason of the vessel not getting its the berth is the failure of the petitioner to arrange for a berth in derogation of their obligation under clause 23 of the charterparty. 2. The court held that the arbitrators did not err in awarding demurrage as liquidated damages. The court relied on the following principles: * The term 'demurrage' has two meanings: (i) a sum agreed by the charterer to be paid as liquidated damages for the detention of the ship beyond its stipulated or reasonable time for loading or unloading, and (ii) a liquidated sum payable by the charterer to the owner for the further time taken in loading or unloading after the expiry of the lay time. * In the instant case, the stipulation relating to the demurrage in the charterparty sounds more in debt than in damages. * The statutory law in India also shows that the term demurrage has been employed more in the sense of liquidated charge or debt rather that as liquidated damages. * Liquidated damages is a genuine pre-estimated sum of damages where proof of damage is not possible or is very onerous. In such a situation, the liquidated damages is adopted as the reasonable compensation. 3. The court held that the arbitrator had the jurisdiction to award interest. The court relied on the principle that if there is no express prohibition in the contract or in the arbitration clause, the arbitrator has the jurisdiction to award interest.
Final Decision: The petition for setting aside the award was dismissed. The court held that the joint arbitrators acted within their jurisdiction and did not commit any error in holding that the NOR dated 25.11.1991 was a valid notice. The court also held that the arbitrators did not err in awarding demurrage as liquidated damages and that the arbitrator had the jurisdiction to award interest.
( 1 ) THIS petition has been filed under sections 30 and 33 of the Arbitration Act, 1940 (hereinafter referred to as AA 1940) challenging on various grounds the award made and published by the Joint Arbitrators dated 17. 10. 2000. The material facts of the case are noted below.
( 2 ) ON or about 10th May 1991, the petitioner invited a tender for transportation of approximately 25,000 MT to 50,000 MT of coal from the Port of Haldia to the Port of Cochin. The said coal was required for the consumption of the subsidiary of the petitioner, viz. M/s. Hindusthan Newsprint. Pursuant to the said tender, the respondents submitted their quotation on or about 12th June 1991 and, ultimately, on 18th September 1991, the quotation of the respondent was accepted on certain conditions.
( 3 ) IN order to carry out the obligation under the said contract, the respondent, as a disponent owner chartered a Vessel, viz. M. V. Lok Prakash from M/s. Shipping Corporation of India Ltd. and, thereafter, a Charter Party agrement was entered into between the petitioner and the respondent.
( 4 ) UNDER the said Charter Party Agreement, clause 47 contains an arbitration clause. The said clause is set out below :clause 47: All disputes arising under this charter shall be settled in India in accordance with the provision of the Indian Arbitration Act, 1940, each party appointing an Arbitrator and the Two Arbitrators in the event of disagreement appointing an umpire, whose decision shall be final and binding upon both parties hereto. The Arbitrators shall be commercial men. ?
( 5 ) IN the Letter of Intent dated 18. 09. 91, the following terms were indicated: (A) Loading rate and Discharge rate: (i) 7000 MT WWD SHEX-UU (ii) Discharge rate: 3,000 MT WWD SHEX-EIU (iii) 24 Hours turn time both ends (iv) Lay time - reversible. (B) The clause relating to demurrage and discharge money was as follows: (i) Demurrage: Rs. 1,50,000. 00 per day or pro-rata and dispatch money Rs. 1,12,500/- per day or pro-rata on working time saved both ends.
( 6 ) THE clause of the letter of intent, which was much debated before this Court, is set out below:please note that the expected date of loading of the vessel at Haldia Prot would be around 2nd week of November. In case of any change, the loading date will be intimated to you well in advance, so that you can arrange placement of the vessel accordingly. We may be extending the contract on the same terms and conditions for placement of another vessel of around 25,000 tones which will be loaded somewhere in the month of January, 1992 or such date to be intimated to you well in advance. ?
( 7 ) THEN a Charter Party agreement was entered between the parties on or about 18. 10. 1991. In that agreement the usual Charter Party clauses were included along with the clauses in the letter of intent. In the course of hearing the learned counsel for the petitioner very much relied on the following clauses of the Charter Party:clause 21: At the Port of loading (Haldia), time shall begin to count after 24 hours of vessel's arrival and Notice of Readiness tnendered during official working hours, whether in berth or not. If vessel is unable to give Notice of Readiness by reason of congestion at Haldia, time shall commence to count 24 hours after Notice of vessel's arrival off Sandheads has been given by radio, to Charterers/suppliers or their Agents. If vessel is already in Haldia at the discharge berth, Notice of Readiness can be served from that berth on completion of discharge of previous cargo. If the 24 hours turntime expires on Saturday afternoon, Sunday or holiday, laytime shall commence at 0800 hours on next working day. Any time lost by vessel in waiting for berth shall also count as loading time. If any time is used by the suppliers/shippers on Saturday afternoons, Sundays, or holidays to deliver/load the materials into the vessel, the time actually used shall count as laytime. ?clause 23: The Charter shall arrange for
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
