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2019 Supreme(Del) 522

IN THE HIGH COURT OF DELHI AT NEW DELHI
NAVIN CHAWLA, J.
Campos Brothers Farms – Appellant
Versus
Matru Bhumi Supply Chain Pvt. Ltd. and Others – Respondents
Original Miscellaneous Petition (EFA)(Comm ) No. 1 of 2017, Interlocutory Application Nos. 680, 681, 5164, 5165, 5166, 5167, 5169, 5171, 7939, 7957, 12465, 12471, 12503, 12533 of 2017
Decided On : 02-05-2019

Advocates Appeared:
Tanmaya Mehta, Siddhant Kr. Singh, Raghav Wadhwa, Anurag Sahay, Mallika Bhatia, Jayant Mehta, Sulabh Rewari, Kaustav Saha, Drishti Harpalani, Amit Agrawal.

Headnote:

ARBITRATION - FOREIGN AWARD - ENFORCEMENT - CONDITIONS - AWARD PASSED IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE - AWARD NOT ENFORCEABLE - PUBLIC POLICY OF INDIA.

Fact of the Case:

Petitioner, an almond seller, entered into three Contracts with respondent no. 1 and one Agreement with respondent no. 2 for the sale of Non-Pareil In-shell Almonds (NPIS). Disputes arose between the parties as respondents did not pay the price for the quantity shipped and accepted by them and the petitioner claimed losses for the shipments that were made but not accepted by the respondents and for the shipment that was cancelled. Petitioner sent separate legal notices to respondent nos. 1 and 2 claiming the amount due from them. Respondent nos. 1 and 2 denied the existence of the Arbitration Agreement between the parties. Petitioner filed a Statement of Claim clubbing the claims against respondent nos. 1 and 2 and under all the contracts together. Respondent nos. 1 and 2 did not file any reply to the Statement of Claim. TNA called upon the respondent nos.1 and 2 to appoint their nominee Arbitrator by no later than 19.05.2016. Respondent nos.1 and 2 neither responded to the above e-mail nor appointed their nominee Arbitrator. Arbitrator called upon the petitioner and respondent no. 1 to submit additional documents. Respondent nos. 1 and 2 submitted the documents sought for by the Arbitrator. Arbitrator passed the Impugned Award in favour of the petitioner.

Finding of the Court:

The Arbitrator has not considered any of the submissions made by the respondents in their e-mails dated 08.04.2016, 06.05.2016, 13.06.2016, 22.06.2016, 06.07.2016 and 13.07.2016. The Arbitrator has ignored the submissions of a party in totality, whatever be the merit of the submissions, in the opinion of the Court, such Award cannot be enforced being in violation of the Principles of Natural Justice and contrary to the public policy of India.

Issues: 1. Whether the Arbitrator has considered the submissions made by the respondents in their e-mails dated 08.04.2016, 06.05.2016, 13.06.2016, 22.06.2016, 06.07.2016 and 13.07.2016? 2. Whether the Award passed by the Sole Arbitrator can be enforced as it has been passed in violation of the Principles of Natural Justice?

Ratio Decidendi: 1. The Arbitrator has not considered any of the submissions made by the respondents in their e-mails dated 08.04.2016, 06.05.2016, 13.06.2016, 22.06.2016, 06.07.2016 and 13.07.2016. 2. The Award passed by the Sole Arbitrator cannot be enforced as it has been passed in violation of the Principles of Natural Justice and contrary to the public policy of India.

Final Decision: Petition dismissed.

JUDGMENT :

NAVIN CHAWLA, J.

1. This petition has been filed by the petitioner under Sections 48 and 49 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") seeking enforcement of a Foreign Award dated 25.07.2016 passed by the Sole Arbitrator under the Arbitration Rules of Combined Edible Nut Trade Association (CENTA), now known as The Nut Association (TNA).

2. The petitioner had entered into three Contracts with the respondent no. 1 (being contract Nos.10377, 10413 and 10428) and one Agreement with the respondent no. 2 (being contract no. 10529) for the sale of Non-Pareil In-shell Almonds (NPIS).

3. One of the conditions of the contract was that the parties agree to abide by the Uniform Almond Export Contract (UAEC 2007) terms and conditions.

4. UAEC 2007 in Clause 42 thereof provides for arbitration in accordance with the Arbitration Rules of CENTA. Clause 41 further provides for the contract to be governed by the English Law.

5. There were to be ten shipments in all under the contracts between the petitioner and the respondent no. 1. Of these five were delivered: invoices for two of them were raised in the name of respondent no. 1 and invoices for 3 were raised in the name of respondent no. 2 at the request of respondent no. 1. Three shipments were delivered at the port, however, respondent no. 1 refused to take delivery thereof on account of fall in prices. Out of these, for one shipment the invoice was in the name of respondent no. 2.

6. As far as the contract between the petitioner and respondent no. 2 is concerned, there were supposed to be two shipments, out of which one was made, however, respondent no. 2 refused to accept the same on account of fall in prices, while for the second one, the shipment was not made by the petitioner at the request of respondent no. 2.

7. As the respondents did not pay the price for the quantity shipped and accepted by them and the petitioner claimed losses for the shipments that were made but not accepted by the respondents and for the shipment that was cancelled, disputes arose between the parties.

8. I may only note that for the shipments that were made but not accepted by the respondent nos. 1 and 2, the petitioner alleged that to mitigate its losses, the petitioner sold these shipments to a third party, however, before doing so a No Objection Certificate (NOC) was required to be issued by the respondent nos. 1 and 2. Respondent nos. 1 and 2 used this as a ransom and refused to issue the NOCs without payment of costs that they had allegedly incurred in relation to local taxes and import charges. Having been left with no alternative, the petitioner agreed to provide credit notes for such claims, on the condition that the respondent nos. 1 and 2 will make full payment for the five shipments that they have taken possession of.

9. In the meantime, parties also entered into negotiations, with the respondent nos. 1 and 2 admitting to a liability of USD 494,676 vide their e-mail dated 24.02.2016, whereas the petitioner replied vide e-mail dated 24.02.2016 stating that it would not settle for an amount lower than USD 675,000 to be paid immediately and the remaining differential between USD 844,367.01 and USD 675,000 being added to the price of NPIS to be shipped from 2016 crop.

10. As the parties could not arrive at a settlement, the petitioner sent separate legal notices both dated 26.02.2016 to the respondent nos. 1 and 2 claiming USD 1,025,611.11 from respondent no. 1 and USD 223,930.09 from respondent no. 2.

11. Respondent nos. 1 and 2, by their common reply dated 11.03.2016 refuted the claim of the petitioner for damages, while reiterating their liability to pay USD 494,676 for the shipments duly made and accepted by the respondents.

12. The petitioner vide two separate notices dated 23.03.2016, one in relation to the three contracts with respondent no. 1 and the





















































































































































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