H J HAKER AND BROS INC Vs. MMTC

JUDGEMENT

(1.) The petitioner herein, M/s H. J. Baker & Bros. Inc., New York (for short 'M/s Baker') entered into long term agreement dated 14/01/1986 with respondent herein viz. The Minerals and Metals Trading Corporation Ltd. (for short 'MMTC') for sale/purchase of sulphur of US origin. Under this agreement, MMTC was to buy on annual basis 60000 MT. (+/ -5 per cent for shipping convenience). This agreement was to be operated for three years from 1/01/1986 and thereafter was to be extended annually on evergreen basis unless terminated by either party by six months' written notice. Annexure-ll to this agreement contained terms and conditions of purchase. Clause-6 related to Wharfage and Demurrage and by Clause 7 Force Majeure was incorporated. These two clauses read as under

(2.) Annexure-III to this provided shipment terms and Clause 3 thereof reads as under: Vessel nominated by Buyers to be dry and clean before tendering notice of readiness duly supported by a certificate from a recognised agency."

(3.) As per this contract, MMTC purchased the material upto 1991. On 20/12/1991 MMTC sent a telex to M/s Baker confirming for supply/price for period January-June, 1992. However, as no vessel was nominated for this purpose fax dated 27/01/1992 was sent by M/s Baker to MMTC requesting nomination of vessel. In reply MMTC sent fax dated 31/01/1992 that it would nominate its vessel only in March, 1992 for 25000 MT in May-June, 1992. Some correspondence thereafter was exchanged between the parties over the nomination of vessel. Fact remains that the quantity of 50000 MT meant for January-July, 1992 was not lifted by MMTC. Instead MMTC sent telex dated 8/04/1992 informing M/s Baker that import of sulphur was decanalised by Government of India on 29/02/1992 and hence it would not be possible for MMTC to nominate vessel against balance quantity in contract. M/s Baker did not accept this ground for not nominating its vessel and lifting the the balance quantity and kept on requesting for lifting the desired quantity and also stated that because of inaction of the MMTC, M/s Baker was incurring storage expenses as well. MMTC replied vide letter dated 21st- 22/05/1992 stating that import of sulphur directly from Gulf was at lower landed cost and because of changed scenario, namely, the decanalising the import of sulphur by Government of India, importing sulphur from USA/Canada was not competitive. MMTC requested for C & F prices mentioning that it was eager to continue relations with M/s Baker. M/s Baker maintained that decanalisation would not affect the contract between the parties and MMTC was required to purchase the quantity on agreed prices. Some further correspondence was exchanged between the parties both parties sticking to their respective stand. Ultimately M/s Baker sent legal notice dated 12/07/1993 through their Advocates to MMTC claiming damages for the past three half years i.e. January-June, 1992, July-December, 1992 and January-June, 1993. It was also stated that MMTC should perform its contract and in so far as request of MMTC to negotiate the price in line with Canadian Producers is concerned, it could be discussed from July, 1993 onwards. It was followed by another legal notice dated 19/07/1993 from M/s Baker to MMTC demanding US $ 5195121.65 with interest at the rate of 18 per cent per annum. By this legal notice lawyers of M/s Baker also invoked the arbitration by intimating that M/s Baker would file statement of claim before Indian Council of Arbitration (for short 'ICA') as per the arbitration agreement between the parties. This resulted in arbitration proceedings. As per the arbitration agreement, both the parties nominated their arbitrators and Chairman of the Bench was appointed by ICA.