GANESH BENZOPLAST LTD Vs. SAF YEAST COMPANY LTD

JUDGEMENT

(1.) This appeal arises from the order dated 30-4-1998 passed in Arbitration Petition No.122 of 1998. By the impugned order, the appellants petition under Section 34 of the Arbitration and Conciliation Act, 1996, hereinafter called as "the said Act", has been dismissed. The challenge in the matter is three-fold. Firstly, that the award declared by the arbitrator is beyond the scope of the reference to arbitration. Secondly, the arbitrator failed to consider the important and relevant document, namely, the letter dated 15-7-1996 while the document, if considered, the conclusions arrived at by the learned arbitrator would have been different from those arrived at. Thirdly, the finding of the arbitrator about the shortage of 1350 metric ton (for short, M.T.) in loading the material is contrary to the materials on record in as much that in fact the shortage was only to the extent of 350 M.T..

(2.) The respondents herein received an order on 16-4-1996 from a French buyer S.I. Lessafre for export of 60,000 M.T. of molasses, to be shipped in three lots of 20,000 M.T. each. The buyer agreed to pay the actual freight and demurrage charges in addition to the price of US$ 40 per M.T. FOB, JNPT. Negotiations were held between the appellants and the respondents for handling and storage of the molasses in the tanks of the appellants at JNPT. Consequent to such negotiations, the appellants sent MoU dated 25-5-1996 to the respondents incorporating the terms and conditions in relation to such contract. The arrangement was to be for twelve months with a clause entitling termination by 30 days notice by either of the parties. The storage charges were payable at the rate of Rs.250/- per M.T. in the first week of every month in advance and one month s charges were to be deposited with the appellants, to be returned after 30 days from the date of termination of the contract. On 30-5-1996 the respondents accepted the MoU subject to the modification suggested in Clauses 11 and 14 regarding the rate, guarantee for loading and for a bank guarantee for performance in lieu of deposit. The respondents also forwarded an amount of Rs.50,00,000/- towards the advance payment for the month of June, 1996 and after survey of the tanks, started storing molasses from the first week of June, 1996. On 5-6-1996 the respondents forwarded bank guarantee along with a letter stating that the tank would be vacated by 7-8-1996 and in the event of the respondents failing to do so, the bank would pay Rs.50,00,000/- being the rent for August, 1996. On 6-7-1996 and 19-7-1996 the respondents paid a sum of Rs.27,00,000/- and 20,00,000/- respectively to the appellants towards the storage charges. Consequent to the request by the appellants, the loading of molasses began by direct pipeline method from 24-7-1996 and it was completed on 1-8-1996. On 1-8-1996 the appellants issued a debit note for pumping charges at the rate of Rs.75/- per M.T.. The respondents under the letter dated 5-8-1996 disputed the liability for storage charges as also for pumping charges and also claimed about Rs.23,00,000/- being due from the appellants. The respondents also refused to pay any further amount to the appellants.

(3.) The respondents invoked the arbitration clause under the letter dated 3-9-1996 and referred the same to the sole arbitrator Shri Justice M.L. Pendse (Retd.). On 23-10-1996 the respondents filed statement of claim for Rs.405,25,60,001/- on various grounds including sum of Rs.1,86,23,950/- being the value of the molasses lying in the tank. The appellants filed their reply and counter-claim on 1-11-1996. On 11-11-1996 leakage developed in one of the tanks and consequently the molasses started leaking out and they were transferred to another tank. The respondents applied for amendment of the claim and made further claim of Rs.3,32,01,792/- on the basis of loss of the quantity of molasses. The application for amendment was allowed. On 4-1-1997 the appellants made an application to the arbitrator for sale of the molasses during the pendency of the arbitration proceedings and the appellants were allowed to sell the molasses on condition that the sale proceeds should be deposited with the appellants Solicitors. The respondents, however, on 3-2-1997 applied for review of the order dated 24-1-1997 which was allowed. In February, 1997 a sum of Rs.2,14,40,875/- was deposited with the appellants Solicitors consequent to export of the molasses in terms of the order dated 3-2-1997. The respondents amended their statement of claim on 5-3-1997 and made additional claim in respect of shipment pursuant to the order dated 3-2-1997. The appellants filed their reply on 26-3-1997. On 27-3-1997, the appellants amended their counter-claim to Rs.5,83,85,081/- being the amount claimed by Bannari Amman on account of non-supply of goods. Under the award dated 8-12-1997, it was directed that: