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2017 Supreme(Ker) 974

IN THE HIGH COURT OF KERALA AT ERNAKULAM
C.K. ABDUL REHIM, K.P. JYOTHINDRANATH, JJ.
Job. G. Oommen, Proprietor, M/s. Peniel Cashew Company, Kollam - Appellant
Versus
M/s. Ahcom Sarl, Galerie Du Grand Large, Monaco - Respondent
Arb.A. No. 54 of 2017
Decided On : 25-10-2017

Advocate Appeared:
For the Appellant :N.D. Premachandran, D. Ajithkumar, Advocates
For the Respondent:T.R. Aswas, Advocate

Headnote:Arbitration and Conciliation Act 1996, S. 34 -Arbitration agreement can be applied with the law and provisions declared by the Supreme Court as in the same case agreement was taken into account before the decision of the BALCO's case -As per section 9 court has the right to exclude and not to include certain provisions as under part I of the act as Section 34 was not valid with respect to the foreign award.

JUDGMENT :

Abdul Rehim, J.

1. The unsuccessful petitioner in an Arbitration Original Petition before the District Court is challenging the order in O.P. (Arb) 01/2013 of the II Additional District Court, Kollam, dated 6th July 2017. The respondent herein is the respondent before the court below.

2. Bare facts required for disposal of the appeal is as follows: The appellant entered into a contract with the respondent, who is a foreign supplier of raw cashew nuts, for purchase of raw cashew nuts. The contract was signed on 21.8.2012. According to the appellant, there was fraudulent inducement from the side of the respondent in arriving at the terms of the contract, because the respondent had suppressed the material fact that the cargo was already on sail and it was intended to another buyer and that the said buyer had declined acceptance of the goods due to its substandard quality. According to the appellant, when the issue was discussed with the respondent, it was agreed upon to draw up a fresh contract and accordingly a fresh contract was drawn up on 22.8.2012, which was signed by the respondent and received back by the petitioner on 24.8.2012. In Ext.A2 contract dated 21.8.2012 there is a provision incorporated for dispute settlement through arbitration at the “Combined Edible Nuts Trade Association” (CENTA for short). It is the case of the appellant that the cargo was almost damaged and the appellant had to incur heavy expenditure including demurrage, detention charges, transportation charges, drying charges and expenses under other heads. It is stated that the parties have come to a settlement and considerable amount was paid by the appellant. But on 20.11.2012 the appellant received a notice intimating about the reference of the dispute for arbitration by CENTA, issued by the respondent, to which he replied through a letter dated 10.12.2012. The appellant took a contention that CENTA has no role as there was no arbitration clause in the fresh contract executed, Ext.A3. But on 1.1.2013 the appellant received copy of the arbitration award passed by CENTA, dated 20.12.2012. The said arbitration award was challenged before the District Court under Section 34 of the Arbitration and Conciliation Act, 1966 (hereinafter 'the Act' for short) contending that the same is opposed to public policy of India. Inter alia, it was contended that there exists no arbitration agreement between the parties and CENTA had no jurisdiction to entertain the dispute and to pass the impugned award.

3. The original petition before the District Court was resisted by the respondent, inter alia contending that the seat of arbitration was at London and the conditions of the Trade Association Centre, U.K., including its Rules of arbitration and Rules of appeal is applicable, which provides for an in-house appeal within CENTA itself. Therefore, without exhausting the said remedy the appellant cannot approach the court. It was further contended that the goods were supplied pursuant to Ext.A2 contract and the said contract includes a clause for arbitration and the parties have agreed to be governed by the terms and conditions of CENTA. It was pointed out that the contention of the appellant that Ext.A2 contract is not in existence, is only a futile attempt to get out of the liabilities arising out of the original contract. It is pointed out that the award in question was passed by CENTA with due notice to the petitioner, with respect to nomination of the arbitrator, which was intimated to the petitioner through e-mail on 29.11.2012. But the petitioner had failed to participate in the proceedings. Therefore the petitioner is estopped from challenging the award, was the contention raised.

4. Before the court below the appellant was examined as PW1. The court below had dismissed the application holding that the impugned award being a foreign award passed by CENTA, where the seat of arbitration is at London, Part I of the Act is excluded and the application filed under











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