AROSAN ENTERPRISES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THE subject matter of these proceedings is an award dated 18th August 1991 made by the arbitrators who were appointed by the respective parties. Under the award the respondents have been directed to pay to M/s Arosan Enterprises Limited (hereinafter referred to as the claimant) a sum of U.S. Dollars 29,28,000. THE arbitrators have further directed that the payment in US dollars will be subject to the permission being granted by the competent authorities under the Foreign Exchange Regulation Act 1973. In the event of the authorities not granting the permission, or even if such permission is granted but the respondents not paying the amount hereby awarded or not wanting to discharge their obligation by paying in foreign currency, the aforesaid amount be paid in equivalent Indian rupees calculated at the conversion rate prevailing on the date of decree by the court on the basis of the award.

(2.) THE award has been challenged by the Union of India as well as by the Food Corporation of India by filing objections. However, at the time of hearing, the Food Corporation of India alone was represented and pressed the objections filed on its behalf. THE challenge to the award by the claimant is on two grounds, namely, nonaward of interest and the permission granted to pay the awarded amount in the equivalent of Indian rupees.

(3.) BY this telex for the first time the claimant requested the respondents for acceptance of a fresh delivery date which was suggested as 14th November 1989 and for enhancement of the amount in the letter of credit. The enhancement of the amount was probably for the reason that additional cargo of 25,000 metric tonne was offered by the claimant to the Govt. of India. On 11th November 1989 the Govt. of India withdrew the letter dated 8th November 1989 whereby the contract had been cancelled. It is stated in the said letter that "the matter has since been reconsidered and the letter dated 8.11.89, referred to above, may betreated as withdrawn, without prejudice to the claims of the Govt. of India in terms of the contract". On 14th November,1989 the local representative of the claimant sent a telex to the Food Corporation of India with copy to Joint Secrctary(Sugar) requesting for declaring the discharge ports as two vessels with their cargo of sugar were heading for Indian Western Coast and their expected date of arrival was 15th November,1989. He further pointed out that the cargo which was heading for India earlier had to be diverted. Therefore, fresh arrangement had to be made which caused delay. He requested for extension of delivery period upto 30th November,1989 and amendment of the Letter of Credit. On 15th November 1989 the claimant's representative at New Delhi wrote a detailed letter, addressed to the Food Corporation of India explaining the claimant's difficulty. It was particularly pointed out in that letter that on account of cancellation of the contract on 8th November 1989 the cargo had to be diverted which resulted in loss of time. They offered to do their best to ensure arrival of the second cargo at the earliest and requested for extension of delivery period upto 30th November 1989 with consequential amendment in the letter of credit for acceptance of document. This letter is significant particularly for two points, i.e. the claimant's request for extension of delivery period upto 30th November 1989 and amendment in L/c so that the documents mentioned in the L/c could be accepted by the bank with extension of the delivery. The delivery date in the document to be submitted in pursuance of the L/c had to be amended and, therefore, the documents to be submitted for the L/c could not be the same as stipulated when the delivery had to be effected by 31st October 1989, i.e. the original stipulated date. On 20th November 1989 the claimant's representative at New Delhi sent another communication to the Joint Secretary (Sugar), Department of Food, Govt. of India drawing his attention to the correspondence exchanged between the parties including those dated 8th November 1989, 11th November 1989 and 15th November 1989. It was pointed out that the claimant had requested for extension of the delivery period up to 30th November 1989. However, no communication in this respect had been received by the claimant. Thus the claimant made a grievance that the decision of the Govt. of India as to whether extension of time was granted or not had not been communicated to the supplier till then. The claimant assured of its continued best efforts to make the supplies and hoped that the Govt. of India would agree to the request of the claimant for extension of time upto 30th November 1989. In this letter it was also pointed out that the cancellation of the contract on 8th November 1989 bad adverse repercussions on the goodwill of the suppliers and bad caused grave loss to them.