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TMI Blog2019 (2) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... nd marketing of the copper rods produced by the Respondent. Such rods were to be stored at various godowns of the Appellant. The agreement dated 14.12.1993 contained an arbitration clause. 3. Importantly, under the aforementioned agreement, the Appellant raised its own invoices in the name of the customers of the products sold and delivered. Goods were to be sold only against payment of 100% advance by the customer to the Appellant, who then had to remit the same to the Respondent after deducting service charges (i.e. commission) at the rate of Rs. 500/per metric tonne. 4. The aforementioned agreement was materially altered for the first time on 06.01.1994, in terms of a Memorandum of Understanding between the parties. This amendment enabled the Appellant to supply goods to customers against a letter of credit (usance or standby), i.e. without advance payment, while maintaining that it was the "total responsibility" of the Appellant to ensure the bona fides of the letter of credit furnished and that the principal and interest were paid on the due date for the supplies made against the letter of credit. In case of a standby letter of credit, it was further specified that it was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ored in the Appellant's godowns. It is further the case of the Appellant that whenever it made this deviation, the Appellant was not bound by the contract between the Respondent and the relevant customer, inasmuch as such contract was independent of and totally different from the agreement dated 14.12.1993. Whenever there was a direct agreement between the Respondent and its customers (not arranged through the Appellant), the payment was to be made directly by the customers to the Respondent for which the Appellant would not be responsible. However, if the transaction took place pursuant to the agreement dated 14.12.1993, i.e. if the Appellant was supplying the Respondent's goods to customers booked through the Appellant, the Appellant would be responsible for collecting the sale consideration from the customers, and to remit the same to the Respondent by deducting commission as agreed. Therefore, the direct agreement between the Respondent and its customer HTPL in the instant case would not be binding on the Appellant, and consequently could not have been subjected to the arbitration proceedings that led to the arbitral award dated 27.06.2001. 9. On the contrary, the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious or perverse, or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter. An arbitral award may not be interfered with if the view taken by the arbitrator is a possible view based on facts. (See Associate Builders v. DDA, (2015) 3 SCC 49). Also see ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705; Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4 SCC 445; and McDermott International v. Burn Standard Co. Ltd., (2006) 11 SCC 181). It is relevant to note that after the 2015 amendments to Section 34, the above position stands somewhat modified. Pursuant to the insertion of Explanation 1 to Section 34(2), the scope of contravention of Indian public policy has been modified to the extent that it now means fraud or corruption in the making of the award, violation of Section 75 or Section 81 of the Act, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of justice or morality. Additionally, subsection (2A) has been inserted in Section 34, which provides that in case of domestic arbitrations, violation of Indian public policy also includes patent illegality appearing on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement does not make any distinction within the type of customers, and furthermore that the supplies to HTPL were not made in furtherance of any independent understanding between the Appellant and the Respondent which was not governed by the agreement dated 14.12.1993. 16. The Appellant has highlighted before us several correspondences addressed to it from the Respondent that refer to the fact that sales to HTPL had been made under the Respondent's contract with HTPL. Indeed, it is evident from the agreement dated 28.07.1994 between HTPL and the Respondent that a direct agreement existed between them. However, as is undisputed, the Appellant received its commission in its entirety for the HTPL transaction, and thus clearly was a beneficiary of the agreement between the Respondent and HTPL. Moreover, in this regard, it was rightly observed in the Majority Award that the Appellant could not show under what separate agreement it was entitled to commission from such sales other than the agreement dated 14.12.1993, and for what services, if its only role in the transaction was to allow HTPL to lift goods from its godowns. 17. Indeed, it is not the case of the Appellant that it only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 06.12.1995 from the Respondent to the Appellant adverting to the terms and conditions of the contract between the parties and referring to the fact that in respect of the sales made to HTPL in the period of April, May and July 1995, an amount of Rs. 9.2 crores together with interest was still to be received. The response to the above communication, from the Appellant to the Respondent, dated 08.12.1995, stated that the Appellant had taken steps to set the matter right, and that the Appellant had had certain internal difficulties which had since been resolved and the Respondent would have no grounds to complain thereafter. This communication clearly demonstrates the duty of the Appellant to recover the dues from HTPL and forward the same to the Respondent. 21. Another important communication rightly relied upon by the Courts is the Appellant's letter dated 24.01.1996 to the Respondent, informing it about the institution of a suit for damages by HTPL with respect to the quality of the goods supplied. This correspondence refers to HTPL as a customer introduced to the Appellant by the Respondent. Crucially, it was addressed in terms of the agreement dated 14.12.1993, which amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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