2013 (7) TMI 54 - HC - Companies Law

Arbitral Award of a Sole Arbitrator declined - Counter Claim for Variation in Custom Duty - Held that - As it is evident that the Appellant informed the Arbitrator that the exact amount could not be worked out in the absence of documentation for imported components. There is no dispute about the fact that the Appellant chose to lead no evidence in respect of its Counter Claim. The burden lay on the Appellant to establish, by leading cogent evidence, that there was a variation in the rate of customs duty and that as a result of a reduction in the rate of customs duty, the Appellant was entitled to the benefit thereof. The Counter Claim could not have been allowed merely on a hypothetical basis or on the basis of a generalised submission or conjecture absent documentary evidence. Thus the Appellant clearly, failed to discharge the burden of doing so. In these circumstances, the rejection of the Counter Claim cannot be faulted.

Issues:
1. Appeal against the decision of a learned Single Judge on a petition under Section 34 of the Arbitration and Conciliation Act, 1996.
2. Contesting the legality of the Arbitral Award on two aspects: (i) grant of claim no.1 for withheld payment and (ii) rejection of the Counter Claim.

Analysis:

Issue 1: Appeal against the decision of the learned Single Judge:
The appeal arose from a decision of a learned Single Judge who declined to set aside an arbitral Award of a Sole Arbitrator dated 4 November 2009. The Arbitral Tribunal allowed the first claim of the Respondent and directed the Appellant to pay the withheld amount. However, the deduction made by the Appellant on account of delayed delivery was upheld, resulting in the rejection of the second claim and the Counter Claim. The learned Single Judge dismissed the petition filed by the Appellant under Section 34 for setting aside the Award.

Issue 2: Contesting the legality of the Award:
The Appellant contested the decision of the learned Single Judge on two aspects: (i) the grant of claim no.1 for the payment withheld by the Appellant and (ii) the rejection of the Counter Claim. The Appellant argued that the deduction made was justified due to a discrepancy in the value of imported components. However, the Arbitrator and the learned Single Judge upheld the Respondent's claim, emphasizing that the contract price was firm and fixed except for statutory variations in customs duty. The Arbitrator's interpretation was deemed correct, and the learned Single Judge affirmed this reasoning.

Claim no.(1):
The Arbitrator correctly interpreted the contract terms, stating that the price was firm and fixed except for statutory variations in customs duty. The Arbitrator's decision to reject the deduction made by the Appellant was upheld by the learned Single Judge, as it aligned with the contract's provisions. The Arbitrator's interpretation was considered within jurisdiction, and the challenge was deemed meritless.

Counter Claim:
The Appellant's Counter Claim was rejected by the Arbitrator due to lack of evidence and reasoning. The Counter Claim was based on a variation in customs duty, but the Appellant failed to provide necessary documentation or evidence to support the claim. The rejection of the Counter Claim was justified as the Appellant did not discharge the burden of proof required. The learned Single Judge confirmed this conclusion, emphasizing the Appellant's failure to prove the loss on any account.

In conclusion, the appeal was dismissed, and no order as to costs was issued. The rejection of the Counter Claim and the decision on claim no.1 were upheld based on the correct interpretation of the contract terms and the lack of evidence provided by the Appellant to support their claims.

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