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M/s. ARS Energy Private Ltd, Rep by its Authorised Signatory, Chennai v/s M/s. K.I. International Ltd, Rep by its Authorised Signatory, V. Ravi, Tondiarpet, Chennai

    O.P. No. 291 of 2020
    Decided On, 18 August 2022
    At, High Court of Judicature at Madras
    For the Petitioner: T. Ramesh, Advocate. For the Respondent: S.R. Raghunathan, Advocate.

Judgment Text
(Prayer: Original Petition filed under Section 34(2A) of the Arbitration and Conciliation Act, 1996, (a) to set aside the award dated 07.11.2019 passed by the Sole Arbitrator in the Arbitration Case A.F. No.23 of 2019; (b) order costs of the petition to be paid by the respondent to the petitioner; and (c) to pass such order or further orders as this Court may deem fit and proper in the facts and circumstances of the case.)

1. This consent order will now dispose of the captioned matter.

2. This Court issued notice on 02.11.2020 and the proceedings made in the listing on 02.11.2020 reads as follows:


Mr.AR.L.Sundaresan, learned senior counsel instructed by Mr.T.Ramesh, learned counsel on record for sole petitioner is before this Court in this web hearing on a video conferencing platform.

2. Captioned 'original petition' ('OP' for the sake of brevity) is an application under Section 34 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)', which shall hereinafter be referred to as 'A and C Act' for the sake of brevity.

3. Captioned OP has been filed, assailing an 'arbitral award dated 07.11.2019 bearing reference No.A.F.No.23/2019' (hereinafter 'impugned award' for the sake of convenience) made by an 'Arbitral Tribunal' ('AT' for the sake of brevity) constituted by a sole Arbitrator appointed by this High Court vide order dated 04.12.2018 made in O.P.No.1001 of 2018 which obviously is a OP under Section 11 of A and C Act.

4. From the submissions of learned senior counsel for petitioner and from case file placed before me, it comes to light that nucleus of this OP is a 'Coal Sale Purchase Agreement dated 25.04.2018' (hereinafter 'said contract' for the sake of convenience). The crux and gravamen or in other words core bone of contention turns on specification of coal that was supplied by respondent to petitioner. To put in a nutshell, it is the case of petitioner that agreed 'Gross Calorific Value' ('GCV') is 4200 Kcal/Kg and rejection value is 3900 Kcal/Kg. To be noted, the subject matter of said contract is 20,840 metric tonnes of Steam (non coking Coal) of Indonesian origin. It is submitted that on a issue raised by respondent that GCV of coal supplied fell short of rejection value, reports were obtained and these reports, acceptance of the same and a further issue as to whether report was by a mutually agreed evaluating entity or mutually agreed team constitute subject matter of the lis before AT.

5. AT entered upon reference and made the impugned award (after full contest including oral and documentary evidence). To be noted, 1 witness on behalf of respondent in captioned OP, (claimant before AT) was examined. No witnesses on behalf of petitioner in captioned OP, (respondent before AT). Six exhibits on behalf of claimant before AT namely, Ex.C1 to Ex.C6 and no exhibits on behalf of respondent before AT. As the parties stand swapped in terms of ranks before AT and captioned OP, for the sake of clarity, from here on in captioned OP, petitioner shall be referred to as 'ARS' and respondent in captioned OP shall be referred to as 'KI'. To be noted, all the aforementioned short forms and abbreviations will be continued to be used in ensuing proceedings.

6. Inter alia, primary contention of learned senior counsel is that, the report which has been accepted by AT is not by a mutually agreed evaluating team whereas said contract stipulates a mutually agreed evaluating team.

7. This Court is inclined to issue notice in captioned OP. Mr.S.R.Raghunathan, learned counsel for caveator on behalf of KI is before this Court in this web hearing on a video conferencing platform and learned counsel accepts notice on behalf of KI. Learned counsel on both sides agreed that captioned main OP itself can be taken up for final disposal and heard out in the next listing. Both sides agreed that next listing can be on 05.11.2020.

8. Mr.S.R.Raghunathan, learned counsel submits that he has emailed typed set of papers and he would do physical filing today. Registry to put up typed set of learned counsel for caveat (now respondent) also in the next listing. Learned counsel to file separate Vakalatnama in the captioned main OP before the next listing.

9. List under the caption 'FOR FINAL DISPOSAL/ARGUMENTS' on 05.11.2020.


3. Aforementioned proceedings/orders shall now be read as an integral part and parcel of this order. This means that the short forms, abbreviations used in the aforementioned proceedings will continue to be used in the instant order also, obviously for the sake of clarity and convenience.

4. Aforementioned proceedings captures the crux and gravamen of the captioned OP and sets out the dynamics and dimensions of the same in a nutshell.

5. Post 02.11.2020, there were multiple listings and the captioned OP was heard out today. Mr.T.Ramesh, learned counsel for ARS and Mr.S.R.Raghunathan, learned counsel for KI are before this Court.

6. Both learned counsel made detailed submissions in support of their respective stated positions. In the light of the consent order that is being made, this Section 34 Court deems it appropriate not to set out the rival contentions, discuss the same and give its dispositive reasoning much less dispositive reasoning in detail. Suffice to say that it emerged clearly in the hearing that the lis is largely anchored on a survey report which has been described as 'joint survey report' being a report given by three surveyors. To be noted, this survey report is dated 18.05.2018 and it has been marked as Ex.C6 before AT.

7. As the bone of contention has been captured in 02.11.2020 proceedings (extracted and reproduced supra) this Section 34 Court deems it appropriate to not to dilate on that again in this order.

8. Suffice to say that while learned counsel for ARS contended that Ex.C6 has not been contemplated in said contract between the parties and ARS did not agree to be bound by this latter (either), learned counsel for KI disputed this and drew the attention of this Court to Sections 42 and 59 of 'The Sale of Goods Act, 1930 [3 of 1930]' captioned 'Acceptance' and 'Remedy for breach of warranty' respectively. Learned counsel for KI submitted that ARS having lifted, consumed the commodity and not having made a claim for damages before AT, cannot now be heard to contend that the consignment did not meet 'GCV' and that they would make payment only in accordance with the report which is described as Alex Stewart Report dated 10.05.2018 [Ex.C4 before AT].

9. This Court refrains itself from expressing any opinion or view on these rival contentions as it came to light that aforementioned legal point has not been raised before AT and it would be desirable to go for re-arbitration on the available pleadings and evidence. As this legal plea was not raised before AT, it was agreed that the same can be thrashed out by way of re-arbitration as that comes across as a clincher in this cliffhanger bone of contention. This again shall not be treated as expression of any opinion by this Section 34 Court.

10. Learned counsel for KI while consenting for re-arbitration submitted that under normal circumstances when there is judicial intervention qua arbitral award, the presumption is that the impugned award is bad and that may weigh in the mind of new AT. For this purpose, it is made clear that in the case on hand, the legal point was not raised before AT and decided. This legal point will turn on appreciation of evidence and therefore, this course of action is being adopted. In other words, the new AT will now examine the matter uninfluenced and untrammelled by this order notwithstanding this being the judicial order which in any event is a consent order.

11. In the light of narrative thus far, the following order is passed :

a. the impugned award being award dated 07.11.2019 bearing reference No.A.F.No.23/2019 is set aside;

b. the impugned award is set aside solely for facilitating rearbitration for the reasons which have been alluded/delineated elsewhere supra in this order;

c. Hon'ble Justice Thiru.K.Kannan, (Retd.) former Judge of this Court and former Judge of High Court of Punjab & Haryana, having residence at New No.22, Gilchrist Avenue, Opp. Harrington Road, Chetpet, Chennai–600031, [Ph.No.28154145, Mobile No.097800-08145] is appointed as sole arbitrator;

d. Parties i.e., ARS and KI have agreed that they will resort to Fast Track Arbitration under Section 29B of A and C Act;

e. Arbitration shall be only on the basis of pleadings that have already been completed, documentary evidence i.e., exhibits which have been already marked and oral evidence which is available/already let in before AT which made the impugned award. In other words, there will be no fresh pleadings or letting in of evidence either oral or documentary. It also follows that there will be no further claims from either side. It follows as a further sequitur that the claim already made by KI will now be decided afresh uninfluenced by this order and all questions are left open for this purpose. In other words, it is no

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t a remand of sorts limited to the legal point that was not canvassed before AT which made the impugned award. Only pleadings and evidence are curtailed /restricted to what is on record qua AT which made the impugned award. f. Hon'ble Arbitrator is requested to conduct arbitration either by holding physical sittings or on virtual mode qua 'Madras High Court Arbitration Centre under the aegis of this Court' ['MHCAC'], in accordance with the Madras High Court Arbitration Proceedings Rules, 2017 and Hon'ble Arbitrator's fee shall be as per Madras High Court Arbitration Centre (MHCAC) (Administrative Cost and Arbitrator's Fees), Rules 2017. g. Though obvious, it is made clear that this order is made on the basis of consent by both sides i.e., ARS and KI for rearbitration. It is also made clear that this is a consent for rehttps:// arbitration and there is no concession or consent qua the lis by either side. 12. Captioned OP is disposed of in the aforesaid manner. There shall be no order as to costs.