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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rekha Palli, J.
Rashmi Cement Ltd - Appellant
Versus
World Metals & Alloys (fzc) & Anr. - Respondent
Original Miscellaneous Petition (I)(Comm) No. 117 of 2020
Decided On : 18-06-2020
Arbitration - Force Majeure - Arbitration and Conciliation Act, 1996 - [FORCE MAJEURE] - [Cargo Dispute] - [Section 9 of the Arbitration and Conciliation Act, 1996] - [Section 6(2)(i) and Section 10(2)(i) of the Disaster Management Act, 2005] - [Clause 23 of the contract] - [Circulars issued by the Ministry of Shipping and Kolkata Port Trust]
Fact of the Case:
The petitioner entered into a contract to purchase Manganese Ore lumpy from the respondent. Due to the national lockdown announced on account of the COVID-19 pandemic, the petitioner claimed Force Majeure and sought release of the cargo without paying demurrage. The respondent demanded demurrage for the delay in taking delivery of the cargo.
Finding of the Court:
The Court found that the petitioner failed to establish a prima facie case for the applicability of the Force Majeure clause or exemption from paying demurrage. The Court held that the question of Force Majeure and demurrage payment should be decided in arbitration. The Court dismissed the petitioner's plea for interim relief under Section 9 of the Act, stating that the petitioner did not satisfy the parameters for grant of interim reliefs.
Issues: The primary issue was the applicability of the Force Majeure clause and the liability for demurrage payment in the context of the national lockdown due to the COVID-19 pandemic.
Ratio Decidendi: The Court held that the applicability of the Force Majeure clause and the liability for demurrage payment should be determined in arbitration. The Court also emphasized that the grant of relief under Section 9 is entirely dependent on the facts of each case and that the petitioner failed to satisfy the parameters for grant of interim reliefs.
Final Decision: The Court dismissed the petitioner's plea for interim relief under Section 9 of the Act, with a direction that if it were held in the arbitration proceedings that no demurrage was payable by the petitioner, the amount paid by the petitioner to the respondent by way of demurrage would be refunded with interest at a rate determined by the arbitrator.
JUDGMENT
Rekha Palli, J. - Allowed, subject to all just exceptions.
2. The applicant will deposit the court fees within two weeks of the normal functioning of the Court being restored.
O.M.P.(I)(COMM) 117/2020 & I.A. 4135/2020
O.M.P.(I)(COMM) 118/2020 & I.A. 4138/2020
3. The present petitions under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ''the Act''), both filed by M/s. Rashmi Cement Ltd. seek a direction to the respondents, i.e., World Metals and Alloys (FZC) and its agent, to forthwith release its cargo comprising of Manganese Ore Lumpy without claiming any demurrage.
4. For the sake of convenience, the facts as noted in O.M.P.(I)(COMM) 118/2020 have been referred to in this decision.
5. The petitioner entered into a contract with respondent no.1 on 13.12.2019 to purchase 3000 M.T. of Manganese Ore lumpy at USD 4.05 per Dry Metric Ton Units (DMTU). The cargo was to be transported by vessel ''Vega Aquarius'' between the agreed upon loading point, i.e., Port Gabon and the discharge point at Haldia Port, Kolkata. On 15.01.2020, in accordance with Clause 15 of the contract, the petitioner opened a Letter of Credit (LC) for a sum of USD 510300 in favour of respondent no.1. Thereafter, the respondent no.1 issued a commercial invoice No.13570 in favour of the petitioner on 08.02.2020 and the quantity of ore agreed to be supplied was confirmed. Subsequently, the vessel containing inter alia 3000 MT of Manganese Ore left the port at Gabon and arrived at the Haldia Port on 25.03.2020. At 20.30 hours on the same day, a notice of readiness was tendered by the Captain of the vessel, but the petitioner claims that in view of the national lock down announced w.e.f. 24.03.2020, it could not accept delivery of the cargo at that stage, which information had already been communicated to the respondent no.1 on 23.03.2020. In this email, the petitioner informed respondent that owing to the pandemic caused by COVID-19, a state emergency had been declared by the Government of India and there was a complete stoppage of work at the Haldia Port till 27.03.2020.
6. The petitioner, vide its letter dated 05.04.2020, invoked the Force Majeure clause contained in paragraph 23 of the contract between the parties and informed the respondent no.1 that lay time ought not be counted for this period. In this letter, the petitioner relied on the circulars dated 24.03.2020 and 31.03.2020 issued by the Ministry of Shipping, Government of India wherein guidelines had been issued to all major ports to consider exemption from penalties and invocation of force majeure. Soon thereafter, a trade circular was also issued by the Kolkata Port Trust on 05.04.2020 announcing waiver of port charges and other remissions to be granted by the port. This was followed by another circular issued by the Ministry of Shipping 21.04.2020 wherein, owing to disruptions in logistical chains attributable to the lockdown, certain concessions were announced for affected parties by way of directions to all major ports.
7. On 23.04.2020, the vessel began to discharge the cargo at Haldia Port, which process came to be completed on 25.04.2020. At this point, respondent no.2, who is an agent of respondent no.1issued a debit note to the petitioner, in accordance with Clause 21.8 of the contract, for a sum of USD 43016.94 towards demurrage for the period of 25 days during which the goods continued to be retained at Haldia Port on account of the petitioner''s failure to pay for them. This debit note was in accordance with the agreed upon demurrage rate of USD 14000 per day for the delay of 24.5811 days. On 07.05.2020, the petitioner, who was in urgent need of the cargo, approached respondent no.1 with a request for part-delivery of the cargo, which was conditionally agreed to. Accordingly, while 1650 MT of the ore was released to the petitioner, the remaining 1350 MT was retained upon the petitioner''s undertaking to pay demurrage after settlement of the di
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