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GUJARAT HIGH COURT
M S Shah
SOCIETY COMMERCIAL COREALES & FINANCIAL, - PETITIONER
v.
STATE TRADING CORPN. OF INDIA, -RESPONDENT.
Appeal From Order No. 128 of 1982,
Decided on : September 9, 1997.
Foreign Awards (Recognition and Enforcement) Act, 1961 – Section 3 – This appeal is directed against the order passed by the learned Civil Judge (S.D) below application Ex. 10 in Special Civil Suit rejecting the prayer of defendant No. 1 to stay the suit under the provisions of Section 3 of Act, 1961 – Respondent No. 1- plaintiff filed the present civil suit for recovering damages contending that plaintiff had purchased 20,000 M. Tons of Soyabean Oil from defendant No. 1- appellant and that the said cargo was shipped by defendant No. 1 through Vessel M.T. Split belonging to defendant No. 2 – The said shipment was make pursuant to contract between the plaintiff and defendant No. 1 – Cargo arrived at Kandla on February 27, 1978 but total quantity of cargo actually discharged, according to the plaintiff, came only to 19877.376 M. Tons – According to Survey record, natural loss would come to about 24.841 M. Tons – Plaintiff claimed damages for net shortage of 97.783 M. Tons of Soyabean Oil – Amount of damages was quantified as mentioned above and plaintiff filed the present suit against the defendants in Court – whether the Court should impose any condition about the place of arbitration – Whether arbitration proceedings shall be held at Kandla where the cargo was delivered or at any other place. Mr. Shelat for appellant was however, not very sure whether it would be open to this Court to impose such a condition – Held, plaintiff has already lost the advantage of time factor on account of the present appeal and interim stay fo If there is any difference between the parties, the plaintiff will be entitled to appoint its own arbitrator within one month from the date of receipt of the request from defendants and thereafter the arbitrators appointed by the parties shall enter upon reference within one month from the date of appointment of arbitrator by the plaintiff and submit their award within three months from the date of entering upon reference 15 years. It would, therefore, be quite unfair and unjust to require to the plaintiff to incur heavy expenses of attending arbitration proceedings at London or in any other foreign country. As far as the defendants are concerned, they already have their agents at Kandla and have also engaged lawyer(s) at Bhuj which is very close to Kandla and at Ahmedabad for this appeal. It is therefore, directed that the arbitration proceedings shall take place – If for, any reason, both the parties find it more convenient to have the arbitration proceedings at any other place in India, the parties may do so – Order of Trial Court is hereby set aside and the proceedings of Special Civil Suit are stayed pending the decision of the disputes by arbitration – The parties are directed to take appropriate steps for referring the dispute to arbitration which shall take place – If for, any reason both parties find it more convenient to have the arbitration at any other place in India, they may do so – If there is any difference between the parties, the plaintiff will be entitled to appoint its own arbitrator within one month from the date of receipt of the request from defendants and thereafter arbitrators appointed by the parties shall enter upon reference within one month from the date of appointment of arbitrator by the plaintiff and submit their award within three months from the date of entering upon reference – Appeal allowed. (Paras 14 to 18)
M. S. Shah, J. - This appeal is directed against the order dated December 4, 1981 passed by the learned Civil Judge (S.D.), Bhuj, below application Ex. 10 in Special Civil Suit No. 36 of 1979 rejecting the prayer of defendant No. 1 to stay the suit under the provisions of Section 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961 (hereinafter referred to as 'Foreign Awards Act').
2. Respondent No. 1 (hereinafter called 'the plaintiff') filed the present civil suit for recovering damages for a sum of Rs. 5,17,232/- contending that the plaintiff had purchased 20,000 M. Tons of Soyabean Oil from defendant No. 1 (the appellant herein) and that the said cargo was shipped by defendant No. 1 through Vessel 'M.T. Split' belonging to defendant No. 2. The said shipment was make pursuant to the contract dated August 17, 1977 between the plaintiff and defendant No. 1. The cargo arrived at Kandla on February 27, 1978 but the total quantity of cargo actually discharged, according to the plaintiff, came only to 19877.376 M. Tons. According to Survey record, natural loss would come to about 24.841 M. Tons. Therefore, the plaintiff claimed damages for the net shortage of 97.783 M. Tons of Soyabean Oil. The amount of damages was quantified as mentioned above and the plaintiff filed the present suit against the defendants in the Court of learned Civil Judge (S.D.), Kutch at Bhuj.
3. Defendant No. 1 (the appellant herein) submitted application Ex. 10 under Section 3 of the Foreign Awards Act, relying on Clause 25 (i.e., the Arbitration Clause) in the contract entered into between the parties and prayed for stay of the suit proceedings.
4. Defendant No. 2 also submitted an application for stay of the suit under Section 34 of the Arbitration Act and under Section 3 of the Foreign Awards Act pointing out that the Charter Party entered into between the parties provide for resolution of disputes through arbitration and the plaintiff itself had written a letter to M/s. J.M. Baxi & Co. Bombay dated 7th March stating that they had referred their claim for short delivery of 96.783 M. Tons of cargo in terms of chapter party to arbitration at London and have nominated Mr. Ralphlewzis, Manager, Berisform Commodities Ltd., 50 Mark lane, London EC 3 as their arbitrator. A photocopy of the said letter was also produced by defendant No. 2 along with the application. Defendant No. 2 therefore, submitted that since the plaintiff itself had taken recourse to arbitration proceedings, the Civil Court at Bhuj may not proceed with the present suit and the suit proceedings may be stayed.
5. The Trial Court rejected both the applications on the following grounds :
(i) The arbitration Clause in the contract would be applicable only if the oil is of non-USA Origin but there is nothing an record to show that the suit cargo was of non-USA Origin.
(ii) Only the plaintiff and defendant No. 1 were parties to the suit contract under which defendant No. 1 had sold the suit cargo, but defendant No. 2 was not a party to the contract and, therefore, the matter cannot be split up for referring the matter to arbitration. For this purpose reliance was placed by the Trial Court on decisions of the Andhra Pradesh, Calcutta and Nagpur High Courts.
The present appeal is directed against the aforesaid order of the Trial Court.
6. While admitting the appeal in 1982 this Court had granted ad-interim stay of the suit proceedings and the said stay has continued to operate since then.
7. At the hearing of the appeal, learned Counsel for the appellant (defendant No. 1), has made the following submissions to assail the order of the Trial Court :
(i) The cargo in question, that is, Soyabean Oil, was loaded at a Port in Brazil and the appellant/defendant No. 1 had made a specific averment in the application Ex. 10 that the Oil was on non-USA origin. There was no denial by the plaintiff of the aforesaid specific assertion made by defendant No. 1 and, therefore, the Trial Court e
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