GLITTER OVERSEAS Vs. MMTC LIMITED

JUDGEMENT

(1.) Glitter Overseas (hereinafter "Glitter"), a partnership firm and its constituent partners have filed the present petition under Sec. 34 of the Arbitration and Conciliation Act (hereinafter "the A&C Act") impugning an arbitral award dtd. 8/1/2020 (hereafter "the impugned award") rendered by an Arbitral Tribunal comprising of a learned Sole Arbitrator (hereinafter "the Arbitral Tribunal").

(2.) On 17/1/1992, Glitter and the respondent (hereinafter "MMTC") entered into a "Hypothecation Agreement for Pre and Post Shipment Credit Advance" (hereinafter "the Hypothecation Agreement"). In terms of the Hypothecation Agreement, MMTC agreed to grant Glitter financial assistance upto a limit of Rs.25.00 lakhs, which was to be secured by goods or documents or title deeds. In terms of Clause 2 of the Hypothecation Agreement, Glitter agreed to pay interest at the rate of 15.5% per annum calculated on a daily balance basis. Further, in case of default in payment of the dues, Glitter also agreed to pay interest at the rate of 1% per annum over and above the interest rates applicable to cash credit facilities. In consideration of the Hypothecation Agreement, on 17/1/1992, petitioner nos. 2 and 3 signed and executed a Demand Promissory Note of a sum of Rs.25.00 lakhs

(3.) In accordance with Clause 20 of the Hypothecation Agreement, the parties executed an agreement for "Export of Gold Jewellery" (hereinafter "the Export Agreement"). In terms of the Export Agreement, Glitter agreed to export goods worth Rs.20.00 crores through MMTC over a period of three years. Clause 3 of the Export Agreement stipulates that the foreign buyers would open "confirmed, irrevocable without recourse to drawer and divisible letter of credit in the name of MMTC" to effect payment against delivery of the goods. In terms of Clause 6 of the Export Agreement, the parties agreed that the exports which were not covered under the letters of credit, would be covered against an ECGC comprehensive policy by MMTC, at the cost of Glitter.