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2004 Supreme(AP) 106

Andhra Pradesh High Court
Judges : BILAL NAZKI, GOPALA KRISHNA TAMADA
National Aluminium Company Limited - Appellant
Versus
GERALD Metals - Respondent
Decided On : 02-03-04

Headnote:

Arbitration and Conciliation Act, 1996 – Section 9 – Arbitration – Appeal – This is an appeal against an order passed by the District Judge, under Section 9 of the arbitration and Conciliation Act, 1996 ("the Act") in l a in OP which has been filed by respondents herein – The counsel for appellant/nalco challenged the order of the District Judge mainly on four grounds – He submits that the District Judge had no jurisdiction to entertain an application under Section 9 of the Act – Secondly he contended that in terms of the agreement there was a stipulation of fixing "lay days" by a mutual agreement and if there were no lay days mutually agreed upon, the vessel could not be loaded – Thirdly he contended that the agreement in any case had come to an end on 31-12-2003 and the NALCO was not obliged to supply 33,300 Metric Tonnes of Aluminium to respondents after 31-12-2003 – Lastly he contended that the relief sought by respondents before the District Judge was that nalco should be restrained from moving, transferring alienating or otherwise dealing with the cargo earmarked for the plaintiff (respondents) and lying at the Port but the Trial Court granted a relief which was not even asked for – Held, Court hold that section 9 of the Act was applicable and the application filed before the District Judge was maintainable – There is sufficient material on record to prima facie suggest that the delay in reaching of the vessel was due to bad weather – Therefore this issue again will have to be finally decided in arbitration – But prima facie Court is of the view that the delay caused in the vessel reaching the port was due to bad weather, therefore a relief under Section 9 of the Act could not be denied to the respondents herein – Coming to the third point that the relief given by the District Judge was not sought by the respondents herein, their counsel has fairly conceded that there has been some lapse in drafting the application, but that should not deter the Courts from doing the justice in the matter – Court find that the application is an instance of bad drafting because what the respondents herein asked the Court would not be granted to them by any Court – They wanted that 33,300 M. T. of Alumina should be kept as it is in some containers at the Port which was also not practically possible – If that order was passed, perhaps the whole operation of the NALCO would come to a standstill – Keeping in view all the factors including the affidavit filed by the appellant and the international Trade Magazine i. e. , CRU alumina Monitor, Court is disposing of this appeal with the following order (1) That respondents herein shall be permitted to lift 33,300 MT +/- 5% of Alumnia on payment of agreed rates, (2) That in addition to agreed rates, the respondents herein shall also give a bank guarantee of an amount which is the difference between the agreed rate and the rate of US $ 430 per MT of alumina in favour of NALCO – The bank guarantee shall be furnished before the Registrar (Judicial) of this court to avoid delay in the matter who shall transmit it to NALCO – (3) The bank guarantee shall be encashable by NALCO if they succeed in the arbitration – Order Accordingly

BILAL NAZKI, J.

( 1 ) THIS is an appeal against an order passed by the District Judge, visakhapatnam under Section 9 of the arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") in la. No. 187 of 2004 in OP No. 21 of 2004 which has been filed by Gerald Metals. This appeal has been filed by National Aluminum company Limited (for short "nalco") who was respondent before the Trial Court. The parties shall be referred as they were placed before the Trial Court.

( 2 ) THERE is no dispute between the parties with regard to the facts. All relevant facts are almost admitted. The respondent- nalco is a producer of Aluminum and the petitioner- Gerald Metals is a company incorporated in Switzerland and carries on business at International level. NALCO entered into a contract with a company called Transworld (Aluminum) Limited on 30-11-1998 for sale of 79,000 Metric Tonnes +/- 5% of Sandy Metallurgical Grade collimated Alumina. The purchase had to be made in a period of five years from 1999 to 2003. The break up at which the quantities had to be shipped was spelt out in the contract. The port at Visakhapatnam was identified as a loading port for loading the cargo for transhipment. In between the petitioner i. e. , Gerald Metals came into the shoes of the Transworld (Aluminium) limited and it became a party to the contract in the year 2002. Thereafter a deed of novation was entered into on 5-12-2002. Among other things by this deed of novation, the petitioner-Gerald Metals agreed to take over the rights and obligations of Transworld (Aluminum) and purchase 2,00,000 Metric tonnes of Alumina in the year 2003. After this agreement of novation, NALCO began to supply Aluminum at the Port of visakhapatnam to Gerald Metals. Gerald metals made payment as agreed. In december, 2003 a load of 33,300 Metric tonnes was to be shipped. Initially it had been agreed that this quantity of Aluminum would be shipped through a vessel called arran Traders, but due to some problems with the said vessel, Gerald Metals nominated another vessel called M. V. Federal pescadores. This was brought to the notice of NALCO by a fax dated 11-12-2003. Ultimately the vessel was not ready and did not reach Visakhapatnam port till 1-1-2004. The original contract period between the parties was of five years and the contract had to be completed by 31-12-2003. When the vessel was available at Visakhapatnama port on 1-1-2004, NALCO refused to load the vessel on the ground that the terms of the agreement have been violated and the contract had come to an end on 31-12-2003. It is in this background that the application under Section 9 of the Act was moved by the petitioner-Gerald Metals before the district Judge, Visakhapatnam who passed the impugned order.

( 3 ) LEARNED Senior Counsel Mr. V. R. Reddy appearing for the appellant/nalco challenged the order of the District Judge mainly on four grounds. He submits that the District Judge had no jurisdiction to entertain an application under Section 9 of the Act. Secondly he contended that in terms of the agreement there was a stipulation of fixing "lay days" by a mutual agreement and if there were no lay days mutually agreed upon, the vessel could not be loaded. Thirdly he contended that the agreement in any case had come to an end on 31-12-2003 and the NALCO was not obliged to supply 33,300 Metric Tonnes of Aluminum to gerald Metals after 31-12-2003. Lastly he contended that the relief sought by Gerald metals before the District Judge was that nalco should be restrained from moving, transferring alienating or otherwise dealing with the cargo earmarked for the plaintiff (Gerald Metals) and lying at the Port of viskahapatnam, but the Trial Court granted a relief which was not even asked for.

( 4 ) LEARNED Senior Counsel Mr. Abhisek singhvi who appeared for Gerald Metals, on the other hand, contended that since there was an arbitration clause in the agreement, therefore the District Judge had jurisdiction to enter
























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