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2022 Supreme(Mad) 2935

IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR, J.
M/s. ARS Energy Private Ltd, Rep by its Authorised Signatory, Chennai - Appellant
Versus
M/s. K.I. International Ltd, Rep by its Authorised Signatory, V. Ravi, Tondiarpet, Chennai - Respondent
O.P. No. 291 of 2020
Decided On : 18-08-2022

Advocates appeared:
For the Petitioner:T. Ramesh, Advocate. For the Respondent:S.R. Raghunathan, Advocate.

The main legal point established in the judgment is the court's authority to set aside an arbitral award and order re-arbitration based on the available pleadings and evidence.

Headnote:

Arbitration and Conciliation Act - Coal Sale Purchase Agreement - Section 34(2A) of the Arbitration and Conciliation Act, 1996 - [A and C Act] - [Section 42, Section 59 of The Sale of Goods Act, 1930] - The judgment discusses the application of Section 34(2A) of the Arbitration and Conciliation Act, 1996 and the interpretation of the Coal Sale Purchase Agreement in relation to Sections 42 and 59 of The Sale of Goods Act, 1930. The court set aside the impugned award and ordered re-arbitration based on the available pleadings and evidence.

Fact of the Case:

The case involves an application under Section 34 of the Arbitration and Conciliation Act, 1996, assailing an arbitral award related to a Coal Sale Purchase Agreement. The core bone of contention revolves around the specification of coal supplied by the respondent to the petitioner.

Finding of the Court:

The court refrained from expressing any opinion on the rival contentions and ordered re-arbitration based on the available pleadings and evidence. The impugned award was set aside to facilitate re-arbitration.

Issues: The primary issue revolved around the acceptance of a survey report and the interpretation of the Coal Sale Purchase Agreement in relation to the Sale of Goods Act, 1930.

Ratio Decidendi: The court found that the legal point regarding the acceptance of the survey report was not raised before the Arbitral Tribunal and ordered re-arbitration to thrash out this legal plea.

Final Decision: The impugned award was set aside, and re-arbitration was ordered based on the available pleadings and evidence. The court appointed a sole arbitrator and directed the parties to resort to Fast Track Arbitration under Section 29B of the Arbitration and Conciliation Act, 1996.

JUDGMENT

(Prayer: Original Petition filed under Section 34(2A) of the Arbitration and Conciliation Act, 1996, (a) to set aside the award dated 07.11.2019 passed by the Sole Arbitrator in the Arbitration Case A.F. No.23 of 2019; (b) order costs of the petition to be paid by the respondent to the petitioner; and (c) to pass such order or further orders as this Court may deem fit and proper in the facts and circumstances of the case.)

1. This consent order will now dispose of the captioned matter.

2. This Court issued notice on 02.11.2020 and the proceedings made in the listing on 02.11.2020 reads as follows:

'M.SUNDAR.J.,

Mr.AR.L.Sundaresan, learned senior counsel instructed by Mr.T.Ramesh, learned counsel on record for sole petitioner is before this Court in this web hearing on a video conferencing platform.

2. Captioned 'original petition' ('OP' for the sake of brevity) is an application under Section 34 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)', which shall hereinafter be referred to as 'A and C Act' for the sake of brevity.

3. Captioned OP has been filed, assailing an 'arbitral award dated 07.11.2019 bearing reference No.A.F.No.23/2019' (hereinafter 'impugned award' for the sake of convenience) made by an 'Arbitral Tribunal' ('AT' for the sake of brevity) constituted by a sole Arbitrator appointed by this High Court vide order dated 04.12.2018 made in O.P.No.1001 of 2018 which obviously is a OP under Section 11 of A and C Act.

4. From the submissions of learned senior counsel for petitioner and from case file placed before me, it comes to light that nucleus of this OP is a 'Coal Sale Purchase Agreement dated 25.04.2018' (hereinafter 'said contract' for the sake of convenience). The crux and gravamen or in other words core bone of contention turns on specification of coal that was supplied by respondent to petitioner. To put in a nutshell, it is the case of petitioner that agreed 'Gross Calorific Value' ('GCV') is 4200 Kcal/Kg and rejection value is 3900 Kcal/Kg. To be noted, the subject matter of said contract is 20,840 metric tonnes of Steam (non coking Coal) of Indonesian origin. It is submitted that on a issue raised by respondent that GCV of coal supplied fell short of rejection value, reports were obtained and these reports, acceptance of the same and a further issue as to whether report was by a mutually agreed evaluating entity or mutually agreed team constitute subject matter of the lis before AT.

5. AT entered upon reference and made the impugned award (after full contest including oral and documentary evidence). To be noted, 1 witness on behalf of respondent in captioned OP, (claimant before AT) was examined. No witnesses on behalf of petitioner in captioned OP, (respondent before AT). Six exhibits on behalf of claimant before AT namely, Ex.C1 to Ex.C6 and no exhibits on behalf of respondent before AT. As the parties stand swapped in terms of ranks before AT and captioned OP, for the sake of clarity, from here on in captioned OP, petitioner shall be referred to as 'ARS' and respondent in captioned OP shall be referred to as 'KI'. To be noted, all the aforementioned short forms and abbreviations will be continued to be used in ensuing proceedings.

6. Inter alia, primary contention of learned senior counsel is that, the report which has been accepted by AT is not by a mutually agreed evaluating team whereas said contract stipulates a mutually agreed evaluating team.

7. This Court is inclined to issue notice in captioned OP. Mr.S.R.Raghunathan, learned counsel for caveator on behalf of KI is before this Court in this web hearing on a video conferencing platform and learned counsel accepts notice on behalf of KI. Learned counsel on both sides agreed that captioned main OP itself can be taken up for final disposal and heard out in the next listing. Both sides agreed that next listing can be on 05.11.2020.

8. Mr.S.R.Raghunathan, learned

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