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IN THE HIGH COURT AT CALCUTTA
Shekhar B. Saraf, J.
Gainwell Commosales Private Limited – Petitioner
Versus
Minsol Limited (Formerly Cuprum Bagrodia Limited) – Respondents
APO /74 /2022 IA NO. GA /1 /2022
Decided On : 15-12-2022
Arbitration and Conciliation Act - High Wall Mining System - Section 37 of the Arbitration and Conciliation Act, 1996 - [Section 37] - [Section 17] - [Section 34] - The court discussed the powers under Section 17 of the Act and the guiding factors in the exercise of power under Section 9 of the Act. The court found no perversity to interfere with the Impugned Order and concluded that the Impugned Order is not to be interfered with.
Fact of the Case:
The petitioner challenged the Impugned Order passed by the arbitral tribunal under Section 37 of the Arbitration and Conciliation Act, 1996. The dispute arose from a Contract for supply of Gainwell High Wall Mining System, and the petitioner sought payment as per the Agreement.
Finding of the Court:
The court found no perversity to interfere with the Impugned Order and concluded that the Impugned Order is not to be interfered with.
Issues: The issues addressed by the court included whether the Tribunal acted dehors the Agreement while passing the Impugned Order and whether the Impugned Order deserves to be set aside.
Ratio Decidendi: The court discussed the powers under Section 17 of the Act and the guiding factors in the exercise of power under Section 9 of the Act. It concluded that the Impugned Order is not to be interfered with.
Final Decision: The arbitration application and IA NO. GA 1/2022 were dismissed, and there shall be no order as to cost.
JUDGMENT :
Shekhar B. Saraf, J.
1. The petitioner in the instant application [being A.P.O. No. 74 of 2022] under Section 37 of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as ‘the Act’] is a company incorporated as per the provisions of the Companies Act, 2013. The petitioner is a major supplier of Caterpillar construction, mining and power solutions and is one of the market leaders in the business of manufacturing of High Wall Mining Systems.
2. The respondent is a company incorporated as per the provisions of the Companies Act, 2013 and it carries on business in mining activities.
3. The petitioner has challenged the Order dated July 22, 2022 [hereinafter referred to as the ‘Impugned Order’] passed by the learned arbitral tribunal consisting of three arbitrators [hereinafter referred to as ‘the Tribunal’]. An application for stay of the Impugned Order [IA NO. GA 1 of 2022 in A.P.O. No. 74] has also been filed. Both the applications are being conjointly decided.
Relevant Facts
4. The petitioner entered into a ‘Contract for supply of Gainwell High Wall Mining System’ dated May 10, 2019 [hereinafter referred to as ‘the Agreement’] with the respondent. The petitioner was to supply a High Wall Mining System [hereinafter referred to as ‘HWM System’] together with a cutter module.
5. As per the Agreement, the consideration for the HWM System was Rs. 60,12,93,000/-(plus taxes) and was to be paid tranches as indicated in Clause 4 of the Agreement. The tranches are indicated below:
b) Rs. 6,00,00,000/-to be paid within 30 days from the date of signing of the Agreement against the receipt of the initial component packages of TRAM frames and Plantaris, Track Column etc., at Asansol from Caterpillar Inc.
c) Rs. 12,00,00,000/-to be paid within 90 days from the first payment and against receipt of major components like base frame, super beams and fair field gear cases at Asansol.
d) 50% of the basic contract value plus 100% of the taxes and duties to be paid against despatch of the HWM System.
e) Remaining amount of contract to be paid against acceptance of the HWM System.
6. A sum of Rs. 24,00,00,000/-(approximately) was received by the Petitioner without prejudice to its contention that these were delayed payments made by the Respondent.
7. The respondent filed an application on June 26, 2021 under Section 17 of the Act and prayed before the Tribunal for an independent third party/technical person/representative of Caterpillar Inc. in whose presence inspection and testing of HWM System and cutter module would be carried out.
8. The Tribunal vide order dated December 22, 2021 directed for depositing the entire balance price of the EWM System in an Escrow Account to be opened in the joint names of the advocates of the parties, who would act as escrow agents. It also directed that pre-despatch testing would be carried out in the presence of a special officer. It further ordered that in case the EWM System performs satisfactorily for a continuous period of 96 hours as per Exhibit C of the Agreement, the escrow agents would release the monies to the petitioner upon certification of such fact by the parties before the Tribunal.
9. The petitioner on January 18, 2022 filed another application under Section 17 of the Act before the Tribunal, praying for (a) appointment of a special officer for inspection of the site at Nimcha and to ascertain readiness and preparedness of the site for performing performance test and the reassembly site, in terms of the agreement, and (b) release of the balance amount in favour of the petitioner by the respondent. Thereafter, affidavits were exchanged in relation to the said application. The respondent on January 20, 2022 also filed an application under Section 17 of the Act, praying for rectification of the defects and/or discrepancies before the Tribunal.
10. The Tribunal vide order dated February 14, 2022 laid down the modus operandi for
Point of Law : Non-payment of escalation - Issue of whether the circumstances in which the appellant was placed, entitled him to plead force majeure, or not, is a pure question of fact.
An order passed by an authority without giving notice and opportunity of hearing to the affected parties is in violation of the principles of natural justice.
The court emphasized that an arbitral award must be reasoned and address core contractual issues, with judicial intervention restricted to cases of patent illegality under Section 34 of the Arbitrati....
The main legal point established in the judgment is that the order passed by the Arbitrator under section 17(1)(ii)(b) of the Arbitration and Conciliation Act, 1996 was a proper exercise of jurisdict....
An arbitral tribunal, while adjudicating an application for interim protection under Section 17, does not determine the lis between the parties.
Interim measures under the Arbitration and Conciliation Act allow arbitration tribunals to secure claims, especially under concerns of insolvency, as long as the actions align with just and convenien....
Principle of minimum judicial intervention is one of fundamental tenets of arbitration law.
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