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2016 Supreme(Del) 2804
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
MMTC LTD. - Petitioner
Versus
NEW SIALKOTI JEWELLERS & ORS. - Respondents
O.M.P. (COMM) 361 of 2016, CAV No.678 of 2016 & IA Nos.9310-9311 of 2016
Decided On : 04-08-2016
For the Petitioner:Mr. Sandeep Sethi, Senior Advocate with Mr. Chinmoy P. Sharma and Mr. Vishal Balecha, Advocates.
For the Respondent: Mr. Asheesh Jain & Mr. Yudhister Singh, Advs.
The court emphasized the limited scope of interference with arbitral awards under Section 34 of the Arbitration & Conciliation Act, 1996, and upheld the principle that the court does not sit as an appellate court and cannot interfere with the findings of fact arrived at by the Tribunal unless the same are grossly perverse.
Headnote:
Arbitration & Conciliation Act - MMTC Ltd. - Section 34 - [Arbitration & Conciliation Act, 1996, Section 34] - The court discussed the scope of interference with an Award under Section 34 of the Act, emphasizing that the court does not sit as an appellate court and cannot interfere with the findings of fact arrived at by the Tribunal unless the same are grossly perverse. The court cited Associate Builders v. Delhi Development Authority and P.R. Shah, Shares and Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd. to support this principle.
Fact of the Case:
MMTC Ltd. filed a petition under Section 34 of the Arbitration & Conciliation Act, 1996, seeking to set aside an award passed by the Arbitral Tribunal. The claims made by MMTC against the respondents were rejected by the impugned award. MMTC raised disputes in connection with two agreements and made claims for overpayment and non-receipt of payment against the respondents.
Finding of the Court:
The court found that the Arbitral Tribunal's conclusion regarding the discovery of the alleged mistake of overpayment was not grossly perverse. The court also upheld the Tribunal's decision to reject MMTC's claim for non-recovery of price of consignments sent to M/s Patni Jewellers, citing MMTC's negligence and lack of explanation for the fate of the Letter of Credit.
Issues: The issues involved the discovery of the alleged mistake of overpayment and the non-receipt of payment against an invoice, leading to claims by MMTC against the respondents.
Ratio Decidendi: The court emphasized the restricted scope of interference with an Award under Section 34 of the Act, citing relevant case law. It upheld the Tribunal's findings and decisions, considering MMTC's negligence and lack of credible explanation for the disputed claims.
Final Decision: The petition filed by MMTC Ltd. was dismissed by the court.
VIBHU BAKHRU, J.
1. MMTC Ltd. has filed this petition under Section 34 of the Arbitration & Conciliation Act,1996 (hereafter 'the Act') , inter alia, praying that the award dated 14.04.2016 (hereafter the 'impugned award') passed by the Arbitral Tribunal comprising of Justice S.K. Mahajan (Retired), Justice S.N. Sapra (Retired) and Ms Justice Rekha Sharma (Retired) be set aside.
2. By the impugned award, the claims made by the petitioner (hereafter 'MMTC') against the respondents for an aggregate sum of Rs. 1,52,34,218.30/- were rejected.
3. MMTC is the Government of India undertaking and is, inter alia, engaged in the business of importing and exporting minerals and metals. MMTC has been assisting entrepreneurs inter alia in exporting gold and other jewellery items made of precious metals by rendering financial assistance under various schemes.
4. It is stated that the MMTC sanctioned and granted Packing Credit Facilities for pre and post shipment to respondent no. 1, M/s New Sialkoti Jewellers (hereafter 'NSJ'), for an amount of Rs. 25 lakhs which was later enhanced to Rs. 1 crore. In connection with the aforesaid facility, respondent Nos. 2 to 4 (the constituent partners of NSJ) executed the following documents:-
“(i) Hypothecation Agreements for pre and post shipment credit advances dated 21.05.1989 and 01.06.1989.
(ii) Agreement between MMTC and gold unit for export of gold jewellery dated 21.05.1989 and 01.6.1989 (hereafter 'the Associateship Agreement').
(iii) Agreement of Guarantee dated 21.05.1989 and 01.6.1989.
(iv) Promissory Notes dated 21.05.1989 for Rs. 25.00 lakhs and dated 01.6.1989 for Rs.50.00 lacs.”
5. In terms of the Associateship Agreement, MMTC agreed to release gold of 0.995 purity (24 carats) at the prevalent international price, in favour of NSJ for the manufacture of gold jewellery for export. In addition to the aforementioned agreements, MMTC also entered into a Tripartite Supplementary Agreement dated 02.08.1989 (hereafter 'the Tripartite Agreement') with M/s Ram Prakash Sunder Dass & Sons of London (hereafter 'RPSDS') and M/s NSJ. In terms of the aforesaid tripartite agreement, RPSDS was required to make payment of the invoiced value directly to MMTC and NSJ was entitled to 17% of the invoiced value of goods exported by NSJ to RPSDS as labour charges.
6. MMTC raised certain disputes in connection of the two agreements, namely the Associateship Agreement and the Tripartite Agreement; essentially, MMTC made two claims. The first claim being a claim for a sum of Rs. 55,55,942/- was in connection with the Tripartite Agreement dated 02.08.1989 and the second claim for a sum of Rs. 12,79,983/- was in connection with Associateship Agreement dated 21.05.1989. In addition to the aforesaid claims, MMTC also claimed interest and costs.
Re: the first claim of Rs. 55,55,942/-
7. Briefly stated, the facts relating to the first claim are that there were thirty-three transactions of export of gold to M/s RPSDS which were effected during the period 09.04.1991-31.10.1992. MMTC received the remittances against the said thirty-three transactions and remitted the labour charges at the rate of 17% to NSJ. It is the MMTC’s case that NSJ was entitled to 17% of the price of gold as on the date when the gold was purchased. After the purchase, there were fluctuations in the price of gold as well as in the exchange rate. Consequently, amounts received by MMTC as translated in Indian currency (INR) were in excess of the INR value of items as invoiced. According to MMTC, NSJ was not entitled to any part of the excess amount received on account of fluctuation in the exchange rate and the price of gold. However, MMTC remitted such excess amount to NSJ.
8. It is MMTC's case that an excess amount of Rs. 55,55,942/- was paid to NSJ by a mistake. MMTC claims that the said mistake was discovered on 30.09.1997 and accordingly, a Statement of Claims claiming the aforesaid amount of Rs. 55,55,942/- of over payment was filed on 18.11.1997.
9.
