JAGSON AIRLINES LTD Vs. BANNARI AMMAN EXPORTS LTD

JUDGEMENT

(1.) AN Award dated 10th July 2006 is the subject-matter of challenge in OMP No. 478 of 2006 filed by Jagson Airlines Limited ('JAL') and O.M.P. No. 482 of 2006 filed by Indian Ports Warehousing Co. Ltd. ('IPWC'), a unit of Jagson International Ltd. ('JIL'), under Section 34 of the Arbitration & Conciliation Act, 1996 ('Act').

(2.) THE background facts are that on 10th April 1996, Bannari Amman Exports Ltd. ('Bannari') entered into a lease agreement with IPWC for the lease of Tank No.6 at New Mangalore Port ('NMP') for storage of cane molasses. The lease was for a period of six months, commencing from 7th May 1996. Bannari placed a security deposit of Rs.42,58,500 with IPWC and advance storage charges for three months in the like sum which was to be adjusted against 50% of the monthly hire charges of Rs.26,44,950.

(3.) JAL took on lease Tank No.5 at the NMP from IPWC. The said lease agreement between IPWC and JAL contained a clause that permitted it to further sub-lease Tank No.5. Bannari desired additional space for storing the molasses for export that it was procuring from suppliers in Karnataka and elsewhere after obtaining necessary statutory permission from the Karnataka Excise Authorities. On coming to know of Bannari's plan to increase the volume of molasses exports, IPWC offered Tank No.5 also to Bannari. Tank No.5 had a larger capacity of 17,633 Metric Tonnes (MTs) as compared to Tank No.6 which had a capacity of 5,678 MTs. According to Bannari, during the course of negotiations IPWC revealed that it would not be directly leasing Tank No.5 to Bannari, but it would first lease it to JAL, which, in turn, would lease it to Bannari.