The court upheld the arbitral award, confirming that the petitioner breached the contract and consent orders, making them liable for damages.

JUDGMENT :

Krishna Rao, J.

1. This is an application under Section 34 of the Arbitration and Conciliation Act, 1996 filed by the petitioner challenging the Award passed by the Learned Sole Arbitrator dated 16th October, 2023 wherein the Statement of Claim of the petitioner was rejected but held that the petitioner will be entitled to adjustment of Rs. 4,49,55,000/-paid to the respondent on 30th April, 2022 being the 10% of the total contract price of the goods from the compensation payable to the respondent and the Counter Claim of the respondent was allowed in part directing the petitioner to pay a sum of Rs. 1,57,95,372/- as compensation after adjustment of the amount of Rs. 4,49,55,000/- with interest at the rate of 18% per annum from 25th April, 2022 till the date of realization to the respondent. The Learned Sole Arbitrator also directed the petitioner to pay a sum of Rs. 52,43,696/- as cost to the respondent with interest at the rate of 18% per annum from the date of Award.

2. As per agreement entered between the petitioner and the respondent dated 22nd February, 2022, the respondent agreed to sell and the petitioner agreed to purchase 10,000 MT of Lam Coke of the specification mentioned in the contract. The petitioner in discharge of its obligation as per the contract has paid Rs. 4,49,55,000/- to the respondent being the 10% of the contract amount on 22nd February, 2022. The balance consideration was to be paid by the petitioner by opening a required Letter of Credit seven days prior to arrival of the vessel and the said Letter of Credit would be in a mutually agreed format from a First Class Bank.

3. The petitioner by an email dated 1st April, 2022, requested the respondent to share the format of the proposed Letter of Credit and on 8th April, 2022, the respondent forwarded a format of the Letter of Credit to the petitioner. On receipt of format of Letter of Credit, the petitioner had sent an email dated 9th April, 2022 suggesting track changes to the format of Letter of Credit. On 9th April, 2022 and 13th April, 2022, the petitioner sent reminders to the respondent requesting confirmation of the draft Letter of Credit.

4. The respondent transferred the 10% advance amounting to Rs. 4,49,55,000/- to the petitioner and the same was also informed to the petitioner by email dated 14th April, 2022. The respondent refunded the advance of Rs. 4,49,55,000/- to the petitioner on the ground of breach of contract by the petitioner failing to establish a Letter of Credit leading to termination of the contract. On 16th April, 2022, the petitioner sent an email to the respondent stating that it was unable to understand the reason for the transfer of an amount of Rs. 4,49,55,000/- to the petitioner. The petitioner further requested for confirmation of draft Letter of Credit and date of arrival of vessel so as to enable the petitioner for opening Letter of Credit and other facilities. On 18th April, 2022, the petitioner again sent reminder to the respondent for confirmation of draft Letter of Credit.

5. The petitioner has filed a suit on 25th April, 2022 against the respondent being T.S. No. 519 of 2022 praying for delivery of 10000 MT of Lam Coke, Specific Performance of Contract, perpetual injunction and other reliefs. The petitioner has also filed an application for grant of ad-interim order under Order 39, Rule 1 and 2 of the CPC. On the same day, the Learned Civil Judge (Sr. Division) 4th Court, Alipore granted an ad-interim injunction restraining the respondents not to deal with or disposing of or alienating or encumbering or creating any third party right or interest or from removing the goods from the vessels M.V. Akij Pearl or making over the same to any third party or storing the same in warehouse or precincts of any third party in any manner whatsoever till 21st May, 2022.

6. Being aggrieved and dissatisfied with the order dated 25th April, 2022, the respondent has preferred an appeal before the Hon’ble Division Bench of this Cou