The Rejection Of An Application Under Section 34 Of The A&C Act Cannot Be Construed To Mean That The Court Has Concurred With The View Of The Arbitral Tribunal: Delhi High Court

The Rejection Of An Application Under Section 34 Of The A&C Act Cannot Be Construed To Mean That The Court Has Concurred With The View Of The Arbitral Tribunal: Delhi High CourtThe High Court of Delhi has held that merely because the challenge to an arbitral award is dismissed by the Court exercising powers under Section 34 of the A&C Act would not mean that the court has concurred with the view of the arbitral tribunal. The Bench of Justice Vibhu Bakhru the Court held that merely because a different view was taken in another arbitration and the challenge against the award was dismissed by the Court would not mean that the Court had concurred with the view of the tribunal. The decision of the Court not to interfere with the award cannot be held to be a binding precedent as the court has not decided the questions of law and facts on the merit of the case but merely dismissed the challenge because of the grounds under Section 34 were not met. The Court held that merely because the award is contrary to another arbitral award that was not interfered with by the court is not a ground to set aside the arbitral award under Section 34 of the A&C Act. Facts The parties entered into a 'Hypothecation Agreement' whereby MMTC (Respondent) agreed to grant Glitter (Petitioner) financial assistance up to 25 Lakhs and the petitioner agreed to pay interest at the rate of 15.5% per annum calculated on a daily balance basis plus in case of default agreed to pay interest at the rate of 1% per annum over and above the interest rates applicable to cash credit facilities. As per Clause 20 of the Hypothecation agreement, the parties entered into an 'Export Agreement' whereby the respondent was to supply to the petitioner gold worth Rs. 20 Crores. The respondent from time to time released 24 carats gold in favour and the petitioner for it to manufacture and export jewellery made out of the said gold within 120 days. In terms of Clause 3 of the Export agreement, the payment against the delivery of the gold was to be secured by a letter of credit in the name of the respondent. Clause 6 of the Export agreement stipulates that the exports which were not covered under Letters of Credit would be covered under an ECGC comprehensive policy by respondent, at the cost of the petitioner. A dispute arose between the parties related to shortfall in 12 invoices raised in respect of transactions that happened in the year 1993-1996 as the respondent claimed that the foreign buyer had taken the delivery of the jewellery but failed to make payment. The respondent claimed the payment from the petitioner. Furthermore, the respondent was aggrieved by the seizure of 6 kgs of gold supplied by it to the petitioner by the Indian Customs Authorities as the petitioner failed to manufacture and export the jewellery within 120 days. The respondent also claimed an amount for deferring the interest in respect of certain consignment. Thereafter, the respondent invoked the arbitration clause and the tribunal was constituted in 1996, however, the arbitration proceedings did not progress and the Court appointed the sole arbitrator on the application of the respondent in the year 2018. Before the arbitrator, the respondent raised 7 claims for outstanding amount against 12 invoices, seizure of 6 kgs of gold by Indian Customs Authorities, Deferment Charges, Penalty payable to Custom Authority, Amount due to non-submission of Sales Tax form 3B, Cost and Interest pendente lite at 24% respectively. The petitioner filed its statement and denied its liability. It also raised several counter-claims before the arbitrator. The Award The arbitrator held that in terms of Clause 4 of the Export Agreement the interest of the respondent regarding proceeds of the exports was fully safeguarded. It also held that in terms of Clause 24 of the Hypothecation Agreement, if for any reason, the sale proceeds are not received by the respondent, the petitioner would be liable for such shortfall. The arbitrator allowed the claim of the respondent along with 24% interest on the principal amount. The Arbitrator held that the petitioner was liable for 100% collection of the sale proceeds of the export. It further held that the respondent was not responsible for obtaining an ECGC cover for the exports and the same had to be taken at the cost of the petitioner, therefore, it allowed both claim of the petitioner. As against the payment for loss of gold due to seizure by the Indian Customs Authorities, the tribunal held that the petitioner was liable for the loss as it failed to export the gold with 120 days making it liable for seizure by the authorities. As against the claim of the respondent for payment of deferment charges, the tribunal held that the petitioner had admitted its liability to pay such charges and it accordingly issued two cheques that were dishonoured, therefore, ...

The Rejection Of An Application Under Section 34 Of The A&C Act Cannot Be Construed To Mean That The Court Has Concurred With The View Of The Arbitral Tribunal: Delhi High Court

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