PENIEL CASHEW COMPANY Vs. AHCOM SARL

JUDGEMENT

(1.) Respondent herein had entered into a contract with petitioner for the supply of 16 containers of raw cashew nuts. When the load reached the port, the petitioner refused to take delivery of it on an allegation that, it was of substandard quality and that the consignment was earlier rejected by another dealer. Invoking arbitration clause in the contract, respondent initiated arbitration proceedings and an ex parte foreign arbitration award dated 20.12.2012 was obtained. The award obliged the original petitioner herein to pay the difference between the invoice value and the amount which was paid on 02.11.2012 with interest from 01.09.2012. The award did not stipulate the quantum of the interest payable.

(2.) The respondent levied execution before the Additional District Court, Kollam on 11.12.2013. The petitioner appeared and filed his objections. Respondent thereafter filed a calculation statement produced as Ext.P5 in the original petition. According to the calculation statement, the amount due under the award was 288125.02 US Dollars and the fee payable to the arbitrator was 2770 Pound Sterling. It was stated that, exchange rate for the US Dollars and the Pound Sterling were Rs.64.9 and Rs.90.39 respectively as on the date when the award became enforceable under section 49 of the Arbitration Act, which was reckoned as 15.03.2018. Respondent claimed interest @18% per annum. Consequently, the total amount recoverable was claimed at Rs.3,79,94,134/-. Subsequently, a revised statement was filed by the award holder on 05.11.2018. It was clarified that the objection of the award debtor (original petitioner herein) regarding the enforceability of the award under section 49 of the Arbitration Act was rejected by the court below on 15.03.2018. It was challenged by the original petitioner before this Court in an original petition. It was finally dismissed on 30.10.2018. Hence, it was claimed in the revised statement that, conversion rate has to be reckoned as on the date when this Court finally rejected the objection regarding the executability of the award, which was 30.10.2018. According to the respondent, corresponding rates were Rs.73.66 for US Dollars and Rs.93.96 for Sterling Pound.

(3.) Original petitioner filed a detailed objection traversing the various claims made in the petition. It was stated that the original award did not specify any rate of interest or provision for conversion. It was contended that, in the absence of any specific rate of interest, the only conclusion that could have been arrived at was that, arbitrator intended the rate of interest prevailing in US dollars, during December 2012, the date of award. It was contended that the maximum rate of interest that existed at that time was 3% per annum. Even assuming that the United Kingdom rates were applicable, the maximum receivable was 2% above the rate of interest prevailing on the date of award. It was claimed that the amounts payable in India during the corresponding period of December 2012 was 8.5% to 9%. The interest rate @18% claimed was absolutely baseless and could not be granted. It was also stated that conversion rate ought to have been fixed as on the date of award, since the execution proceedings were not delayed by the respondent.