Steel Authority of India Ltd v. M/S Seaspray Shipping Co Ltd

NAVIN CHAWLA, J FEBRUARY 28, 2019/Arya

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + O.M.P. 76/2015 & I.A. No.13588/2017 Reserved on: 20.12.2018 Date of decision : 28.02.2019 STEEL AUTHORITY OF INDIA LTD ..... Petitioner Through Mr.Sanjay Jain, Sr. Adv. with Mr.Sunil K. Jain, Mr.Madhur Jain, Mr.Abhishek Jain, Ms.Anusha Agarwal and Mr.Yuvraj Sharma, Advs. versus M/S SEASPRAY SHIPPING CO LTD ..... Respondent Through Mr.Gaurav Mitra, Mr.Dhruv Kapur,Ms.Deepali Dwivedi, Mr.Aliff Fazelboy and Mr.Adit Singh, Advs. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") challenging the Arbitral Award dated 20.08.2014 passed by the Arbitral Tribunal adjudicating the disputes that had arisen between the parties in relation to the Agreement dated 04.12.2007 executed between the parties. 2. In the order dated 22.02.2017 passed by this Court, it was observed that the Arbitral Tribunal has not given reasons for its conclusions in respect of issues at paragraphs 71.5 to 71.7 of the Award. Consequently, it was directed that the Arbitral Tribunal which gave the Award will, for the limited purpose of giving the reasons in respect of the conclusions in Page 2 the Impugned Award with regard to the paragraphs (issues sic) 71.5 to 71.7, reconvene and furnish reasons to the Court. 3. In compliance with the above directions, the Arbitral Tribunal has passed an Additional Award dated 10.06.2017 giving reasons in support of its conclusions in paragraphs (issues sic) 71.5 to 71.7 of the Award dated 20.08.2014. The petitioner has thereafter filed I.A. No.13588/2017 challenging the Additional Award and the reasons given therein. 4. The disputes between the parties are in relation to the Contract of Affreightment dated 04.12.2007 (hereinafter referred to as the "COA") whereby the petitioner as Charterer had engaged the services of the respondent as owners to ship a Cargo of 2,000,000 MT 5% more or less in Charterer"s Option (5% Charterer Option to be declared latest on 30.09.2012) of Coking Coal in bulk from Queensland, Australia for discharge at the East Coast in India. The Shipment period was April, 2008 to December, 2012. The Shipment was provided to be on "evenly spread per month basis". 5. Disputes arose between the parties due to non supply of cargo under the COA by the petitioner, leading to invocation of Arbitration. 6. The petitioner thereafter, by an e-mail dated 11.09.2012 exercised its option to reduce the quantity of shipment by 5%. Immediately thereafter, by a separate Fax Message dated 11.09.2012, the petitioner terminated the Agreement invoking "Default Clause" in the Agreement. This gave rise to a dispute between the parties, with the respondent claiming that the petitioner had no unilateral right to terminate the Page 3 Agreement, and the petitioner claiming that such right was vested in it as per Clause 62 of the COA. 7. The respondent filed its claims before the Arbitral Tribunal, which have been allowed by the Arbitral Tribunal by its Award dated 20.08.2014 holding that the termination of the Contract was invalid and that the respondent was entitled to damages of USD 14,596,890.11 less 2.5% address commission for the petitioner and 1.25 % brokerage to be deducted and paid to the Indian Broker as per Clause 48 of the COA. The Arbitral Tribunal further directed the payment of interest at the rate of 6% p.a. from 01.12.2012 to the date of the Award and thereafter at the same rate till the date of payment. 8. As noticed above, pursuant to the order dated 22.02.2017 passed by this Court, the Arbitral Tribunal by its Additional Award dated 10.06.2017 supplied reasons for its conclusions on issues in paragraphs 71.5 to 71.7 of the Award. In the said Additional Award, the Arbitral Tribunal held that Clause 62 of the COA has to be read in context with the other provisions of the COA and when so read, it could apply only to circumstances constituting frustration