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2020 Supreme(Mad) 1948
IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR, J.
The Board of Trustees of the Port of Chennai – Petitioner
Versus
M/s. X-Press Container Line (UK) Ltd. Mumbai and Others – Respondents
O.P. No. 511 of 2009
Decided On : 17-09-2020
Advocate Appeared:
For the Petitioners: Richardson Wilson, Adithyaraj of M/s. P. Wilson Associates.
For the Respondents: J. Sivanandaraaj, N. Senthil Kumar, V. Sankaranarayanan.
The main legal point established in the judgment is the conflict with public policy and lack of judicial approach in condoning the delay, as well as the non-compliance with the contract terms and lack of evidence in computing the quantum of charges.
Headnote:
Arbitration and Conciliation Act - Challenge to Arbitral Award - Section 34(2) - Summary of Acts and Sections: A and C Act, 1996 - Section 34(2), Section 21, Section 11, Section 5, Section 43, Article 137 of the Limitation Act, 1963 - The court discussed the legal framework of the Arbitration and Conciliation Act, 1996, focusing on the application of Section 34(2) and Section 21 for challenging the arbitral award, the interpretation of Section 11 as a request, and the application of Section 5 for condoning delay. The court also examined the limitation period under Article 137 of the Limitation Act, 1963, and the implications of the Ion Exchange India Ltd. Vs. Angeripalayam Common Effluent Treatment Plant Ltd. case. The judgment highlighted the principles laid down in Fiza Developers and Inter-Trade Private Limited vs. AMCI (India) Private Limited, (2009) 17 SCC 796, Emkay Global Financial Services Ltd. vs. Girdhar Sondhi, (2018) 9 SCC 49, and M/s. Canara Nidhi Limited vs. M. Shashikala, 2019 SCC Online SC 1244, emphasizing the one-issue summary procedure for disposal of the case.
Fact of the Case:
The case involved a challenge to an arbitral award under Section 34(2) of the Arbitration and Conciliation Act, 1996. The Chennai Port filed an application to set aside the arbitral award dated 17.01.2009, which directed the port to refund excess penalty and berth hire charges to the Licensee. The case revolved around an agreement for berth reservation between the Chennai Port and the Licensee, which included an arbitration clause. The Licensee triggered the arbitration proceedings on 01.08.1997, and the arbitral tribunal adjudicated the disputes between the parties, ultimately making the impugned award in favor of the Licensee.
Finding of the Court:
The court found that the arbitral tribunal's decision to condone the delay in filing the Section 11 application was in conflict with public policy and lacked judicial approach. The court also held that the computation of the quantum of penal wharfage charges and berth hire charges collected from third parties was not in accordance with the terms of the contract and lacked evidence, leading to the decision to set aside the arbitral award.
Issues: The issues in the case included the application of Section 34(2) for challenging the arbitral award, the interpretation of Section 11 as a request, the condonation of delay, and the computation of quantum of charges in accordance with the contract terms.
Ratio Decidendi: The court's decision was based on the conflict with public policy and lack of judicial approach in condoning the delay, as well as the lack of evidence and non-compliance with the contract terms in computing the quantum of charges.
Final Decision: The court allowed the original petition and set aside the impugned award, ruling in favor of the Chennai Port.
JUDGMENT :
M. SUNDAR, J.
Prayer: Original Petition filed under Section 34(2) of the Arbitration and Conciliation Act, 1996 to set aside the majority Arbitration Award dated 14.09.2013 passed by the 2nd and 3rd respondent arbitrators.
1. Over one decade and one year ago or in other words more than 11 years ago, to be precise on 13.04.2009 captioned ‘Original Petition’ (‘OP’ for the sake of brevity) was presented in this Court. ‘The Arbitration and Conciliation Act, 1996 (Act 26 of 1996)’ shall hereinafter be referred to as ‘A and C Act’ for the sake of brevity/convenience and captioned OP is an application under Section 34 of A and C Act.
2. Arbitral award, which is sought to be set aside in instant OP is dated 17.01.2009 (hereinafter ‘impugned award’ for the sake of convenience) and the impugned award was made by a three member ‘Arbitral Tribunal’ (‘AT’ for the sake brevity). To be noted, impugned award is a unanimous award, but two Arbitrators have given additional reasons.
3. 11 years is a long time in one tier of litigation and in this sense of the matter, case on hand is vintage and can even be described as ancient owing to arbitration being one of the important pillars of Alternate Dispute Resolution (ADR) mechanism with emphasis on timelines.
4. Applications under Section 34 of A and C Act are neither appeals nor revisions. Such applications are not even those which entail a full-fledged judicial review, but are mere challenges to arbitral awards within the 8 slots adumbrated in sub-section (2) of Section 34 of A and C Act and the juristic doctrines culled out by Courts/facets elucidated by Court qua those 8 slots. Besides this, going by Fiza Developers principle, being the principle laid down by Hon’ble Supreme Court in Fiza Developers and Inter-Trade Private Limited vs. AMCI (India) Private Limited, (2009) 17 SCC 796, which was reiterated in Emkay Global Financial Services Ltd. vs. Girdhar Sondhi, (2018) 9 SCC 49, as a step in the right direction and further reiterated very recently in M/s. Canara Nidhi Limited vs. M. Shashikala, 2019 SCC Online SC 1244, a one issue summary procedure has to be adopted for disposal of case on hand. To be noted, Fiza Developers principle also lays down that Section 34 proceedings are one issue proceedings meaning the presentation of Section 34 (on one or more slots adumbrated thereunder) is to be construed as a issue by itself.
5. Instant case being a mere challenge to an arbitral award within the limited legal perimeter, contours, confines of Section 34 of A and C Act, legal landscape being nanoscopic and procedure being summary, factual matrix in a nutshell or in other words short facts shorn of particulars not imperative for appreciating this order, will suffice. In this view of the matter, this Court proceeds to set out factual matrix in a nutshell.
6. Factual matrix in a nutshell is that there is an agreement between Chennai Port (to be noted, Chennai Port which is petitioner before this Court is respondent before AT) and one X-press Container Line (UK) Ltd. (Claimant before AT and contesting First respondent before this Court) being ‘an agreement dated 18.01.1995 captioned Agreement for Berth Reservation’ (hereinafter ‘said contract’ for the sake of convenience and clarity); that said contract is for reservation of 200 meters of berth length at West Quays I and II in Dr. Ambedkar Dock; that period of said contract was originally from 18.01.1995 to 24.01.1997 with first extension upto 24.12.1997 and second extension upto 31.03.1998; that in the said contract there was a provision for guaranteed throughput berth hire charges, penal wharfage charges etc. besides several other covenants; for the sake of convenience and clarity, petitioner before this Court/respondent before AT shall be referred to as ‘Chennai Port’ and contesting first respondent before this Court/claimant before AT shall be referred to as ‘Licensee’ that Article X of said contract is an arbitration clause, the same serves as
