2005 Supreme(Del) 417
High Court Of Delhi
GURU OVERSEAS PVT LTD - Appellant
Versus
STATE TRADING CORPORATION OF INDIA LTD. - Respondent
C.S.(O.S.) : 2661-A of 1996
Decided On : 04/04/2005
C.S.Prashar, Kunal Sinha
Headnote:Arbitration Act, 1940 - Sections 30 & 33 — Objections to Arbitration — Award — Contract for purchase of goods for the purpose of export — Failure to take delivery of goods in terms of agreement in the nature of vicarious performance — The award on the basis of interpretation of the terms of agreement by the arbitrator that no enforceable contract came into existence — Objections to award rejected.
( 1 ) HAVING lost the battle before the arbitrator, M/s. Guru Overseas Private limited, the claimant, has filed objections to the award by and under IA No. 1/1998. Objections have been captioned as under Section 33 of the Arbitration Act, 1940, but a perusal thereof would reveal that the objections have been filed under Section 30 of the said Act.
( 2 ) ON 24th January, 2005, learned counsel for the objector prayed for an adjournment. Taking note of the fact that the matter pertains to the year 1996, I had declined to grant any further time. However, objector was granted two weeks time to file written submissions with advance copy to the respondent who was permitted to file response thereto within two weeks thereafter. Written submissions were directed to be handed over to the court master. It was recorded that no oral hearing would be granted. Matter was reserved for judgment.
( 3 ) TILL date counsel for the objector has not filed any written submissions.
( 4 ) SOMEWHERE in October, 1990, objector had discussions with STC regarding possibilities of export of leather garments. Discussions fructified, in that, objector was enrolled as an associate with STC. Objector got itself enrolled as an associate of STC and made available to STC details of the infrastructure available as also a catalogue of its products. Scouting around for a foreign buyer, STC found one, named "spair". Foreign buyer was in U. S. S. R. On 27. 2. 1991, STC entered into a contract with the foreign buyer for supply of finished leather products at a value of Rs. 48,87,596. 00. On 7. 3. 1991, objector and STC entered into an associate agreement. Evidenced by the recitals thereof, object of the agreement was to develop exports of Indian leather garments. On 18. 5. 1991, another agreement was entered into between the objector and STC. Object of this agreement was to pass on to the objector the obligations of STC under the agreement dated 27. 2. 1991 entered into between STC and the foreign buyer. Export contract dated 27. 2. 1991 was made an integral part of the agreement dated 18. 5. 1991.
( 5 ) OBJECTOR claims to have manufactured the goods as per specifications of the contract dated 27. 2. 1991, benefit whereof was assigned to it by STC. Export did not materialize. Objector claims to have made a distress sale and incurred a loss of rs. 55,74,183. 70.
( 6 ) CASE of the objector was that STC asked it to manufacture the contract goods under the export contract as it was awaiting opening of a letter of credit from a foreign buyer. STC was, thus liable to recompense the objector for the loss sustained as a result of STC not taking delivery of the goods as per agreement dated 18. 5. 1991 entered into between the objector and STC.
( 7 ) RESPONSE of STC was that it never called upon the petitioner to manufacture the goods and alternatively, since foreign buyer did not open the letter of credit, STC cannot be held liable for the alleged loss as STC was not a buyer.
( 8 ) DISPUTE between the parties came to be referred to the sole arbitration of justice Avadh Behari Rohatgi (Retd. ).
( 9 ) BY and under the impugned award dated 4. 6. 1996, learned arbitrator held in favour of STC and against the petitioner.
( 10 ) PLEADINGS of the parties before the learned arbitrator, as indeed, the objections filed show that the core area of the dispute between the parties was as to what was the jural relationship between the objector and STC.
( 11 ) CLAIM of the objector was that the agreement dated 27. 2. 1991 between stc and the foreign buyer was a contract for sale of goods; that the agreement dated 18. 5. 1991 between the objector and STC was also a contract for sale of goods; that stc was not acting as agent of the objector. As per the objector, opening or non- opening of letter of credit of the foreign buyer was irrelevant for the purposes of decision on the dispute between the parties.
( 12 ) ON a perusal of the agreement dated 18. 5. 1991 between the obj