NATIONAL ALUMINIUM COMPANY LIMITED Vs. GERALD METALS

JUDGEMENT

(1.) This is an appeal against an order passed by the District Judge, Visakhapatnam under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") in LA. No. 187 of 2004 in OP No.21 of 2004 which has been filed by Gerald Metals. This appeal has been filed by National Aluminum Company Limited (for short "NALCO") who was respondent before the Trial Court. The parties shall be referred as they were placed before the Trial Court.

(2.) There is no dispute between the parties with regard to the facts. All relevant facts are almost admitted. The respondent- NALCO is a producer of Aluminum and the petitioner- Gerald Metals is a company incorporated in Switzerland and carries on business at International level. NALCO entered into a contract with a company called Transworld (Aluminum) Limited on 30-11-1998 for sale of 79,000 Metric Tonnes +/- 5% of Sandy Metallurgical Grade Collimated Alumina. The purchase had to be made in a period of five years from 1999 to 2003. The break up at which the quantities had to be shipped was spelt out in the contract. The port at Visakhapatnam was identified as a loading port for loading the cargo for transhipment. In between the petitioner i.e., Gerald Metals came into the shoes of the Transworld (Aluminium) Limited and it became a party to the contract in the year 2002. Thereafter a deed of novation was entered into on 5-12-2002. Among other things by this deed of novation, the petitioner-Gerald Metals agreed to take over the rights and obligations of Transworld (Aluminum) and purchase 2,00,000 Metric Tonnes of Alumina in the year 2003. After this agreement of novation, NALCO began to supply Aluminum at the Port of Visakhapatnam to Gerald Metals. Gerald Metals made payment as agreed. In December, 2003 a load of 33,300 Metric Tonnes was to be shipped. Initially it had been agreed that this quantity of Aluminum would be shipped through a vessel called Arran Traders, but due to some problems with the said vessel, Gerald Metals nominated another vessel called M.V.Federal Pescadores. This was brought to the notice of NALCO by a fax dated 11-12-2003. Ultimately the vessel was not ready and did not reach Visakhapatnam port till 1-1-2004. The original contract period between the parties was of five years and the contract had to be completed by 31-12-2003. When the vessel was available at Visakhapatnama port on 1-1-2004, NALCO refused to load the vessel on the ground that the terms of the agreement have been violated and the contract had come to an end on 31-12-2003. It is in this background that the application under Section 9 of the Act was moved by the petitioner-Gerald Metals before the District Judge, Visakhapatnam who passed the impugned order.

(3.) Learned Senior Counsel Mr. V.R. Reddy appearing for the appellant/NALCO challenged the order of the District Judge mainly on four grounds. He submits that the District Judge had no jurisdiction to entertain an application under Section 9 of the Act. Secondly he contended that in terms of the agreement there was a stipulation of fixing "lay days" by a mutual agreement and if there were no lay days mutually agreed upon, the vessel could not be loaded. Thirdly he contended that the agreement in any case had come to an end on 31-12-2003 and the NALCO was not obliged to supply 33,300 Metric Tonnes of Aluminum to Gerald Metals after 31-12-2003. Lastly he contended that the relief sought by Gerald Metals before the District Judge was that NALCO should be restrained from moving, transferring alienating or otherwise dealing with the cargo earmarked for the plaintiff (Gerald Metals) and lying at the Port of Viskahapatnam, but the Trial Court granted a relief which was not even asked for.