MMTC LTD. Vs. CHAUHAN JEWELLERS & ORS.

JUDGEMENT

(1.) MMTC Ltd. (hereafter 'MMTC') has filed the present petition under section 34 of the Arbitration and Conciliation Act, 1996 (hereafter 'the Act') impugning an arbitral award dated 26.04.2016 (hereafter 'the impugned award') passed by an Arbitral Tribunal constituted of Justice S.N. Sapra (Retired), Presiding Arbitrator, Justice S.K. Mahajan (Retired) and Mr D.R. Jain. By the impugned award, the Arbitral Tribunal has dismissed the claims made by MMTC against the respondents and further directed MMTC to release and handover the title deeds of the property being Oberoi Club House, Apartment No.3, Oberoi Apartments, 2, Shamnath Marg, Civil Lines, Delhi, which was retained by MMTC as security for performance of the Agreement.

(2.) MMTC had made certain claims aggregating a sum of Rs. 57,74,349/-, inter alia, on account of interest on delayed payments as well as short/non-payment of certain consignments of gold jewellery exported out of India.

(3.) Briefly stated, the necessary facts to consider the controversy involved in the present petition are as under:- 3. 1 MMTC is a Government of India undertaking and is, inter alia, engaged in the business of commercial import and export of minerals, metals and other such items. Respondent no.1 is a firm (hereafter referred to as 'Chauhan Jewellers') and other respondents are the constituent partners of the said firm. The disputes between the parties relates to an Agreement entered into between MMTC and Chauhan Jewellers on 09.10.1990 (hereafter 'the Agreement') for export of gold jewellery to overseas buyers. At the material time, MMTC had floated a scheme under which MMTC was lending gold to entrepreneurs engaged in manufacturing jewellery. The arrangement was that MMTC would lend gold to the manufacturers of jewellery who would then export the same to various overseas buyers either introduced by MMTC or otherwise. The manufacturers would raise their invoice on MMTC and the shipment would be made on account of MMTC. MMTC in turn would raise invoice on the overseas buyers and also collect the sale proceeds of the jewellery. On receipt of the sale proceeds, MMTC would deduct the difference in the price of material supplied; pre-shipment or post shipment credit extended to the manufacturers; service charges; and other amounts on account of penalty or deductions made by the foreign buyers. The remaining balance would, thereafter, be released to the manufacturers. 3. 2 The claims made by MMTC essentially relate to five consignments of jewellery exported to overseas buyers and in respect of five invoices, being invoice nos. CJ-25 dated 14.07.1993; CJ-26 dated 16.07.1993; CJ-27 dated 27.07.1993; CJ-31 dated 11.11.1993 and CJ-1 dated 28.06.1994. 3. 3 In respect of the first two invoices being CJ-25 and CJ-26, MMTC received the payments from foreign buyers albeit belatedly and, therefore, MMTC's claim is limited to the interest on delayed realisation of sale proceeds. In respect of invoice nos. CJ-27 and CJ-31, MMTC asserted that it had received only part payments and, therefore, made a claim for the balance of the remaining amount. In respect of CJ-1, the consignment was collected by the buyer and was returned. It is asserted that on the return of the consignment, the same was opened by the custom authorities and it was found that the jewellery contained was less than as claimed to have been exported. 3. 4 The Arbitral Tribunal considered the claims made by MMTC. Insofar as the claim of interest on delayed realisation (relating to invoice nos. CJ-25 and 26) is concerned, the Arbitral Tribunal held that the payments for the consignments were to be received by MMTC from the foreign buyers as the exports had been made in the name of MMTC. The Arbitral Tribunal noted that the exports were to be made under letter of credit (L/C) to be opened by the foreign buyer. However, the foreign buyer, M/s Devji Prushottam Jewellers of Dubai, did take delivery of the consignments and MMTC redirected the consignments to another buyer, namely, M/s Al-Aseer Jewellers. Since the original buyer, M/s Devji Prushottam Jewellers, did take the delivery within time, there was some delay in realisation of the sale proceeds. The Arbitral Tribunal held that since the consignments were exported by MMTC and it was MMTC's decision that the consignments be directed to another buyer, Chauhan Jewellers had no role to play either in the export or receipt of payments and, therefore, could be held responsible for delayed receipt. In the case of invoice no. CJ-27, MMTC had claimed that it had received the full remittance. However, this was disputed by Chauhan Jewellers. The Arbitral Tribunal held that although MMTC had claimed that it had received full remittance, it had disclosed as to what was the shortfall in the amount received. The Arbitral Tribunal also noted that there was nothing on record to show the shortfall in the amounts received by MMTC against the aforesaid consignment and in the absence of any evidence, Chauhan Jewellers could be held liable for making any payment. The Arbitral Tribunal also held that Chauhan Jewellers was responsible for ensuring payments by foreign buyers against consignments, which were sent against L/C. 3. 5 With respect to the consignment of jewellery sent against invoice no. CJ-31, the Arbitral Tribunal observed that the said consignment was sent against L/C but 'against DA basis'. The Arbitral Tribunal noticed that a foreign buyer had issued a cheque for payment, which had bounced, however, MMTC had taken no action to recover the balance from the foreign buyer. The Arbitral Tribunal had also observed that it was "not understood as to why the consignment was sent on DA basis instead of LC basis" and, accordingly, held that Chauhan Jewellers would be held liable for any short payment. 3. 6 In regard to the consignment sent against CJ-1, it is admitted that the foreign buyer did take delivery of the consignment and the same was redirected to India. The said consignment was opened by the custom authorities in the absence of any representative of Chauhan Jewellers and an examination report was prepared. The Arbitral Tribunal noted that as per the examination report, the seals on the parcel were shown to the appraisers who confirmed that they were tampered with and were intact. This established that there was no evidence of pilferage from the parcel. The Arbitral Tribunal also observed that the report indicated that the jewellery which had come back from the buyer was intact and there was no loss of jewellery. The Arbitral Tribunal found that since the parcel was exported by MMTC, it was only MMTC who could take delivery of the same and since MMTC had proceeded to claim the same, Chauhan Jewellers could be blamed for the same. Submissions