Case Note & Summary
The appellant, Titagarh Wagons Limited, entered into a purchase order dated 20.02.2006 with the respondent, Chowgule and Company Private Limited, for supply of 122 wagons under the Wagon Investment Scheme of Indian Railways. The purchase order stipulated that the wagons were capital goods exempt from duties and taxes, and were to be supplied under an EPCG licence to be secured by the respondent and an Advance Intermediate Licence to be secured by the appellant. The respondent paid an advance of Rs. 1,02,00,000/-. The appellant failed to supply the wagons, citing force majeure due to non-issuance of the EPCG licence by the respondent. The respondent invoked arbitration. The learned Arbitrator passed an award on 30.05.2012 directing the appellant to refund the advance with interest at 12% per annum from the date of demand. The appellant challenged the award before the Principal District Judge, Panaji, who dismissed the petition on 10.06.2015. The appellant then filed the present appeal under Section 37 of the Arbitration and Conciliation Act, 1996. The High Court held that the scope of appeal under Section 37 is limited and the court cannot re-appreciate evidence. The concurrent findings of the arbitrator and the District Judge that the appellant failed to prove force majeure and was in breach of contract were not perverse. The court dismissed the appeal, confirming the award.
Headnote
A) Arbitration Law - Appeal against Arbitral Award - Section 37 of the Arbitration and Conciliation Act, 1996 - Scope of interference - The court held that an appeal under Section 37 is not a regular first appeal and the court cannot re-appreciate evidence or interfere with findings of fact unless perverse or contrary to law. The learned District Judge had correctly applied the limited scope of interference. (Paras 1-10)
B) Contract Law - Force Majeure - Interpretation of Contract - The appellant failed to establish that the non-supply of wagons was due to force majeure as defined in the purchase order. The arbitrator and the District Judge concurrently found that the appellant did not prove that the alleged force majeure event (non-issuance of EPCG licence) was beyond its control or that it took reasonable steps to mitigate. (Paras 11-20)
C) Contract Law - Refund of Advance Payment - Interest - The purchase order provided for refund of advance with interest in case of default. The arbitrator awarded refund of Rs. 1,02,00,000/- with interest at 12% per annum from the date of demand till realization. The court upheld the award as the appellant had failed to supply the wagons and was in breach. (Paras 21-30)
Issue of Consideration
Whether the learned District Judge erred in confirming the arbitral award which directed the appellant to refund the advance payment with interest, and whether the appellant was entitled to claim force majeure as a defence for non-supply of wagons.
Final Decision
The High Court dismissed the appeal, confirming the judgment of the Principal District Judge and the arbitral award. The appellant was directed to refund the advance amount of Rs. 1,02,00,000/- with interest at 12% per annum from the date of demand till realization.
Law Points
- Arbitration and Conciliation Act
- 1996
- Section 37
- Scope of appeal against arbitral award
- Force majeure
- Interpretation of contract
- Refund of advance payment
- Interest
Case Details
2018 LawText (BOM) (04) 113
Appeal Under Arbitration Act No. 8 of 2016
Shri Sudin Usgaonkar, Senior Advocate with Shri R. Choudhary and Ms. Tanvi Kamat Ghanekar, Advocates for the Appellant; Shri S.D. Lotlikar, Senior Advocate with Shri Prasheen Lotlikar and Ms. Aditi Naik, Advocates for the Respondent
Chowgule and Company Private Limited
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Nature of Litigation
Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against judgment confirming arbitral award.
Remedy Sought
Appellant sought to set aside the judgment of the Principal District Judge confirming the arbitral award directing refund of advance payment with interest.
Filing Reason
Appellant challenged the arbitral award and the confirming judgment on the ground that the arbitrator and the District Judge erred in not accepting the defence of force majeure.
Previous Decisions
Arbitral award dated 30.05.2012 directed appellant to refund Rs. 1,02,00,000/- with interest at 12% per annum. The Principal District Judge, Panaji, by judgment dated 10.06.2015, dismissed the petition challenging the award.
Issues
Whether the learned District Judge erred in confirming the arbitral award which directed the appellant to refund the advance payment with interest?
Whether the appellant was entitled to claim force majeure as a defence for non-supply of wagons?
Submissions/Arguments
Appellant argued that the non-supply was due to force majeure as the respondent failed to secure the EPCG licence, which was a condition precedent.
Respondent argued that the appellant failed to prove force majeure and that the advance was refundable with interest as per the purchase order.
Ratio Decidendi
The court held that the scope of appeal under Section 37 of the Arbitration and Conciliation Act, 1996 is limited and does not permit re-appreciation of evidence. The concurrent findings of fact by the arbitrator and the District Judge that the appellant failed to prove force majeure and was in breach of contract were not perverse and hence not liable to be interfered with.
Judgment Excerpts
This is an Appeal, under Section 37 of the Arbitration and Conciliation Act, 1996 (Act, for short), challenging the judgment and order dated 10.06.2015, passed by the learned Principal District Judge, Panaji, in Arbitration and Conciliation Petition No. 43/2012.
The brief facts necessary for the disposal of the appeal may be stated thus: On 20.02.2006, the respondent placed an order for supply of 122 wagons, comprising in two rakes of 58 wagons each plus 4% (60/61 wagons), with the appellant.
The purchase order stipulated that the wagons were to be supplied by the appellant under the EPCG licence, to be secured by the respondent and an Advance Intermediate Licence, to be secured by the appellant.
Procedural History
The respondent placed a purchase order on 20.02.2006. The appellant failed to supply. The respondent invoked arbitration. The learned Arbitrator passed an award on 30.05.2012 directing refund of advance with interest. The appellant filed Arbitration and Conciliation Petition No. 43/2012 before the Principal District Judge, Panaji, which was dismissed on 10.06.2015. The appellant then filed the present appeal under Section 37 of the Arbitration and Conciliation Act, 1996, which was dismissed on 10.04.2018.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 37
