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2013 Supreme(Del) 1379
High Court of Delhi
S. RAVINDRA BHAT & NAJMI WAZIRI, JJ.
Oswal Woollen Mills Ltd.
Versus
Oswal Agro Mills Ltd.
FAO.(OS) No. 211 of 2007 & C.M. Nos. 16579, 16580 of 2008, 4443 of 2009
Decided on : 22-10-2013
For the Appellant:Pramod B. Agarwala, Prashant Mehra, Apoorv Garg, Advocates.
For the Respondent:Rakesh Tiku, Senior Advocate with Prakash Gautam, Vivek Ojha, Advocates.
The exclusive domain of the arbitrator in deciding claims and the limited scope of the court's interference with an arbitration award.
Headnote:
Arbitration Act - Dismissal of Appellant's Challenge to Arbitration Award - Sections 30 and 33 of the Arbitration Act, 1940 - The court discussed the legal principles of de novo proceedings, waiver by conduct, and the scope of the court's interference with an arbitration award. The court affirmed the award based on the totality of circumstances and the exclusive domain of the arbitrator in deciding the claims.
Fact of the Case:
The dispute arose from an agreement between Oswal Woollen Mills Ltd. and Oswal Agro Mills Ltd. regarding the import and sale of Crude Palm Kernal Oil (CPKO). After disputes arose, the matter was referred to arbitration, and an award was made in favor of Oswal Agro.
Finding of the Court:
The court found that the arbitrator's decision was based on the totality of circumstances and legal principles, and there was no manifestly erroneous approach or omission in applying legal principles to the facts. The court affirmed the award and dismissed the appeal.
Issues: The issues included the need for de novo proceedings, waiver by conduct, and the scope of the court's interference with an arbitration award.
Ratio Decidendi: The court held that the arbitrator's decision should not be set aside unless there is a legal error, not a mistake of fact, and that the court should not re-appreciate the material on the record.
Final Decision: The appeal was dismissed, and there was no order as to costs.
Ravindra Bhat, J.
1. The present appeal is directed against the judgment and order of a learned Single Judge dated 17.04.2007 dismissing the appellant’s challenge to an award preferred under Sections 30 and 33 of the Arbitration Act, 1940.
2. The brief facts are that on 30.03.1982, the Appellant – Oswal Woollen Mills Ltd. (hereinafter referred to as “Oswal Woollen”) entered into an agreement with the Respondent herein Oswal Agro Mills Ltd.(hereinafter referred to as “Oswal Agro”). In terms of the agreement, Oswal Woollen appointed Oswal Agro as its agent under the Import Export Procedure Handbook 1981-82 for advising, assisting and guiding it (Oswal Woollen) to import material under REP Licences issued in its favour. The goods to be imported were Crude Palm Kernal Oil (CPKO). Oswal Woollen had 9 REP licenses for an aggregate CIF value of Rs.1,85,95,100/-. In terms of Clause 4 of the agreement, Oswal Agro was to be paid a remuneration of 5% of the CIF value of the goods imported along with all cost and expenditure incurred for import of the material.
3. The agreement was followed by another agreement dated 13.09.1982 in terms of which the parties agreed that the material imported by Oswal Agro under the REP licenses (on behalf of Oswal Woollen) was be sold to Oswal Agro after Oswal Woollen processed oil at its factory premises. The oil after processing would be Palm Kernal Oil. The sale price of the processed oil by Oswal Agro was agreed to be the actual reimbursement of the landed cost of the imported oil plus 25% of CIF value of the imported material towards manufacturing charges.
4. Later some disputes arose between the Oswal Woollen and Oswal Agro with respect to the arrangement between the parties. As out of the total value of materials to be imported under the licenses, Oswal Woollen made available licenses to Oswal Agro of the value of Rs.1,16,00,800/-. Thus, material value of CIF value of Rs.69,94,300/- could not be imported by the Oswal Agro in the absence of the REP licenses for that value. Oswal Agro claimed losses on account of breach of contracts. These claims included:
(a) the amount of remuneration of Oswal Agro of 5% under the agreement dated 30.03.1982,
(b) loss of profit which Oswal Agro based on what it would have gained by the sale of the balance of un-imported oil on account of non-supply of the REP licenses.
(c) A third claim was also laid on account of cost of short supply of the oil after processing by the Oswal Woollen apart from the claim of interest.
5. Oswal Woollen disputed the aforesaid claims and, on the other hand, lodged counter claims against Oswal Agro on account of sale value of semi-refined oil, share/loss of profit and interest. This Court by its order dated 18.07.1991 referred the disputes to two arbitrators on the petitions filed under Section 20 of the Indian Arbitration Act, 1940 (hereinafter referred to as the Act) by both the parties. The two Arbitrators, who ultimately heard the matter, could not agree to a common award; therefore the matter was referred to the Umpire, Justice Charanjit Talwar (Retd.).
6. A letter was sent on behalf of Oswal Woollen on 21.05.1999 to the Umpire enclosing a copy of a Petition under Section 5 of the Act, 1940 and other provisions which had been moved on behalf of Oswal Woollen before this Court. The petition requested for de novo proceedings before the Umpire, inter alia, because:
“XXXXXX XXXXXX XXXXXX
6.4 In the submission of the Petitioner in view of the above the proceedings have to start de novo. It is significant to note that the first Respondent confronted with the question as to the date of the breach reduced its claim from Rs.28,000 per MT to Rs.14,500 per MT
XXXXXX XXXXXX XXXXXX”.
7. By the letter dated 24.05.1999 from Oswal Woollen to the Umpire, it was said that its counsel had objected to the fixing of the matter for hearing arguments because the case should have been heard de novo for various reasons. Later, on 12.01.2000 anothe
