9911796707
TMI Blog2010 (1) TMI 1306X X X X Extracts X X X X X X X X Extracts X X X X ..... e and finalize shipments with the ship owners and arrange for the shipment of Minerals across the world. The Respondent is a Company registered in India using Aluminium Ore as one of the major inputs for their operations. 3. On 15.10.2007, the petitioner submitted a commercial offer through e-mail for the supply of Bauxite to the respondent. After several exchanges of e-mails and after agreeing on the material terms of the contract, the respondent conveyed their acceptance of the offer through e-mail on 16.10.2007 confirming the supply of 5 shipments of Bauxite to be supplied from Australia to Vizag/Kakinada. On the basis of the acceptance by the respondent, the petitioner concluded the deal with the Bauxite supplier in Australia on the same day and entered into a binding Charter Party Agreement with the ship owner in Oslo on 17.10.2007. A meeting was held between the representatives of the respondent and the petitioner at Lanjigarh, Orissa on 26.10.2007 and the minutes of this meeting were signed by them. The acceptance of the offer is acknowledged by the respondent in these minutes. A formal contract containing a detailed arbitration clause was also sent by the respondent to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot ad idem in respect of various essential features of the transaction. Further the draft contract received from the petitioner was yet to be accepted/confirmed by the respondent. The commercial offer provided two options of shipment lot, namely, 2 shipments and 5 shipments. The only understanding that had been arrived at between the parties as a result of the correspondence subsequent to the receipt of the commercial offer from the petitioner was that the transaction would be in respect of 5 shipments. All other terms and conditions pivotal and essential to the transaction were under negotiation as is evident from the correspondence between the parties. The product specifications, price, inclusions in the contract price, delivery point, insurance, commencement and conclusion dates of the contract, transfer of title, quality check and demurrage are all factors that are at large and remain undecided. In such a scenario, where the parties were not in one mind with respect to any aspect of the transaction, the contention of the petitioner that there existed a binding contract between the parties as also a binding arbitration agreement is wholly erroneous and misleading. Apart from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties, he contended that the charter was entered into a contract by the parties on 17.10.2007 i.e. the next day. He finally submitted that from the materials it was established beyond doubt that the intention of parties in case of any dispute between them arising out of the contract which was concluded on 16.10.2007 at 3.06 p.m. shall be settled through arbitration. On the other hand, Mr. C.A. Sundaram, learned senior counsel for the respondent contended that there was no concluded contract between the parties and that the agreement between the petitioner and the respondent was only in respect of the number of shipments (two or five) and nothing more. According to him, there is no arbitration agreement and that Clause 6 is vague and ambiguous. He further contended that even in the legal notice dated 01.09.2008 issued by the petitioner's counsel, there is no specific reference to Clause 6 of the commercial offer but mentioned only Clause 29 of the purchase order exchanged between the parties on 08.11.2007 but the present petition before this Court mentions both of them. He also pointed out that the Charter Party Agreement (CPA) entered into between the petitioner and the ship own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition that we are not able to accurately measure reactive silica at our Weipa lab for us to place a bonus/penalty on and that any rejection criteria on silica is unreasonable. It is for this reason that we are only prepared to revise our offer on total silica with a Base Grade of 4.5%. We are prepared to increase this bonus/penalty to US$1.50 per % total silica either side the Base Grade. This we believe is a fair compensation to Vedanta and is our final offer. Unfortunately we cannot make this an open ended offer as we need to fill our shipping slots set aside for these cargoes in November and December. We have already lost the October opportunity. Freight and spot prices for bauxite have all moved up since we started this negotiation and we are making offers for 2008 cargoes at $4 higher than your offer. Therefore, we have to put a validity on this until close of business Friday, 12 October after which this offer will be subject to re-confirmation. "Unquote" We have prepared a revised schedule of specs which is attached. This is not yet confirmed with RTA but once you agree to go by this then we can take up with them. Rejection points are also to be agreed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to us before close of office hours today. Regards Swami D) Shanika From: Swayam Mishra [[email protected]] Sent: Wednesday, October 10, 2007 7:17 PM To: Swaminathan G Cc: Chinmayee Panda; Hukum Chand Dahiya N. Chellappa; Rajesh Mohata; Shanika; SR Subramanyam; Subject: Re: LM Grade Bauxite specs ₹ 1 (2). Doc Dear Mr. Swaminathan, Please send your rates at your proposed quality parameters on FOB basis and on CIF basis, separately. We would also be interested to have separate rates for 2 shipments and for the complete offer of 2 Lac MT. Thanks Swayam Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt: Kalahandi Pin: 766 027 Orissa E) Shanika Annexure P-2 From: Swaminathan G [[email protected]] Sent: Monday, October 15, 2007 4:46 PM To: Rajesh Mohata; Swayam Mishra Cc: S R Subramanyam; Shanika Importance: High Attachments: Offer for Mono Bxt.Pdf Dear Rajeshji, Please find attached our offer for the two options as desired by you. Please note the validity of the offer until 1200 IST tomorrow. Freights are going up continuously and have jumped since we last gave you the offer. A quick dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts between us. Neither our agents nor our associated companies are authorized to vary these terms. 1. We shall not be liable by reason of any defect (including non- conformity with specification or sample) unless we receive written notice of the defect within 15 days of delivery. Our liability in that event will be limited to product related compensation after discussions and suitable joint analysis wherever applicable. In case of joint analysis being agreed upon for confirming the product quality/penalty determination, the above should be arranged by the buyer within 30 days of product delivery to the customer. 2. We shall have no liability under this contract or by reason of any representation, warranty or duty for any direct, indirect, special or consequential loss or damage, costs or expenses arising out of the composition, supply, packaging, handling or use of products. 3. Unless stated otherwise, products are sold strictly to the offered sale condition and payments are due on the dates as applicable. 4. Prices are valid upto 1200 hrs IST 16.10.2007 unless withdrawn by notice from us during that period. 5. Interest may be charged on overdue amount wherever applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mported bauxite Dear Mr. Swaminathan, As assured by Mr. SRS that the material is homogeneous in nature, and looking at the result of the present shipment, we do not think that keeping a rejection limit at 6% is a risk for you. Please let us have the cost break-up (Material+Coastal Freight). We would also like to have a rate for CIF Kakinada port. Thanks Swayam Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt: Kalahandi Pin: 766 027 Orissa I) Shanika From: Swaminathan G [[email protected]] Sent: Tuesday, October 16, 2007 11:48 AM To: [email protected]; Swayam Mishra Cc: S R Subramanyam; Shanika Subject: Offer for bauxite Importance: High Urgent Dear Swayam, The time has just expired. We still have a little more than 1 hour before our offer from Owners expires. Hence we can extend this by another 1 hour which is 1300 hrs IST today. Please let us know your decision either way as we would like to keep all parties informed in time about the developments. Regards Swami J) Shanika From: Swaminathan G [[email protected]] Sent: Tuesday, October 16, 2007 11:54 AM To: Swayam Mishra Cc: ChinmayeePand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nathan G' Cc: [email protected]; [email protected]; [email protected]; Shanika; S.R. Subramanyam; T. Prasanna Kumar Patro; N. Chellappa Subject: Re: Offer for imported bauxite Dear Swaminathan, We confirm the deal for 5 shipments. Thanks Swayam Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt: Kalahandi Pin: 766 027 Orissa O) Shanika From: Swaminathan G [[email protected]] Sent: Tuesday, October 16, 2007 3:49 PM To: [email protected] Cc: [email protected]; [email protected]; [email protected] Shanika; SR Subramanyam; tpk. [email protected]; n. [email protected] Subject: Re: Offer for imported bauxite Dear Swayam, Thanks for the confirmation just in time to go to Owners Regards Swami P) Shanika From: Swaminathan G [[email protected]] Sent: Tuesday, October 16, 2007 3:57 PM To: [email protected]; [email protected] Cc: Shanika Subject: 200K Bauxite for Vedanta Dear Shaun Deal is through for 5 Shipments. Shall give you shipping schedule agreed with owners and details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter most urgent. Regards, Swami Annexure P-4 VAL SITE, Lanjigarh Minutes of the Meeting *The Agenda of the meeting was: 1. Supply of Bauxite from Katni 2. Supply of Bauxite from Gujarat 3. Imported Bauxite from Australia Bauxite from Katni 1. Trimex will give its commercial offer within 20th Nov. 2007 to VAL. Bauxite from Gujarat 1. VAL has asked Trimex to re-work the offer to provide a supply schedule till March 30th, 2008 against Trimex's deadline of June 2008. 2. The rate offered by Trimex is Rs. 1250 PMT (FOB) Okha/Porbander). VAL has asked for a decrease in rates. Trimex will provide its final offer by 29.10.2007. 3. For the existing contract of supply of 10000 MT of bauxite through rakes, further movements will ensue after the due discussions. For the punitive charges levied by railways against the 1st Rake moved from Okha, Trimex has been advised to take up the issue with the Railways officials at Okha. Imported Bauxite from Australia 1. For the shipments under the proposed new contract of 2 Lacs MT. Trimex requested to clearly mention the following clauses: i) As per Trimex offer No. TID/F/223/2007 dated 15th October 2007 and accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shanika, SR Subramanyam; Venkateshwar Rao; KS Bala Subject: Re: Import Consignment (2 lacs) Importance: High Top Priority/Most Urgent Dear Swayam, At the outset wish you all a very Happy Diwali. We got a feed back from owners late last night that they will look at your request on arrival draft at 11.5 mts and Kakinada port on a case basis at the time of each nomination without Guarantee. This is due to the reason they are not sure what kind of vessel will be in position in that area. Meanwhile, as already mentioned let us proceed with contract and L/c as we are left with bare minimum time before Owner will nominate a vessel for the first laycan starting 15-30 Nov anytime from tomorrow. We have to establish our L/c on RTA and this is already overdue. We should have too much pressure at last minute and could result in demurrage at load port as holidays are on from tomorrow in Middle East and India. Please rush the agreement for signature. Best Regards Swami V) Shanika From: Shanika [[email protected]] Sent: Wednesday, November 07, 2007, 11:20 AM To: Swayam Mishra Cc: [email protected] [email protected]; S R Subramanyam; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputes and differences relating to and/or arising out of the Contract amicably. In the event of the Parties failing to resolve any dispute amicably the same shall be referred to Arbitration in accordance with the Arbitration and Conciliation Act 1996, as is prevalent in India. Each Party shall be entitled to nominate an Arbitrator and the two Arbitrators so nominated shall jointly nominate a third presiding Arbitrator. The Arbitrators shall give a reasoned award. The place of arbitration shall be Mumbai, Maharashtra in accordance with Indian Law and the language of the arbitration shall be English. The Parties further agree that any arbitration award shall be final and binding upon both the Parties. The Parties hereto agree that the Seller shall be obliged to carry out its obligations under the Contract even in the event a dispute is referred to Arbitration. 30. Governing Law This Contract shall be construed in accordance with and governed by the laws of Indian and in the event of any litigation the Courts in Mumbai shall have exclusive jurisdiction. This order is being issued in duplicate. You are requested to send the duplicate copy duly signed as a token of acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed by you on phone. In that case there will be two vessels in December subject to RTA agreement. There might be claims from them. But before we talk to them we need VAL's confirmation that any claims from Owners for the delay or cancellation of any or all shipment(s) under this contract will be fully guaranteed to us and that VAL will pay the amount without demur. Matter urgent as we have to act fast before Owners nominate any vessel. As far as RTA is concerned we shall take-up and hope they will agree to a revised schedule as they are fully booked for December and thereafter this will have also to be agreed with Owners. Please respond by return mail for us to talk to RTA/Owners. We shall try and do our best but before that we need VAL's clear confirmation on above. Regards Swami From the materials placed, it has to be ascertained whether there exists a valid contract with the arbitration clause. It is relevant to note that on 15.10.2007 at 4.26 p.m. the petitioner submitted commercial offer wherein Clause 6 contains arbitration clause i.e. "this contract is governed by Indian law and arbitration in Mumbai courts". At 5.34 p.m. though respondents o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other factors, coupled with the e-mail sent on 16.10.2007 at 3.06 p.m. under the subject "re: offer for imported bauxite" stated in unequivocal terms, i.e. "we confirm the deal for five shipments", would clearly go to show that after understanding all the details and the confirmation by the respondent, the petitioner sent a reply stating that "thanks for the confirmation, just in time to go to the ship owners". All the above details clearly establish that both the parties were aware of various conditions and understood the terms and finally the charter was entered into a contract by the parties on 17.10.2007. 8. Mr. C.A. Sundaram, learned senior counsel for the respondent taking me through the same emails/correspondence submitted that such clauses being unclear and ambiguous, cannot be permitted to stand on its own footing so as to deprive the respondent of its valid defence. He also reiterated that in the absence of a concluded and binding contract between the parties, the arbitration clause contained in draft agreement cannot be relied on by the petitioner. He further pointed out that the arbitration clause as contained in the commercial offer suffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed as follows: It is sometimes said that the parties must agree on the essential terms and that it is only matters of detail which can be left over. This may be misleading, since the word `essential' in that context is ambiguous. If by `essential' one means a term without which the contract cannot be enforced then the statement is true: the law cannot enforce an incomplete contract. If by `essential' one means a term which the parties have agreed to be essential for the formation of a binding contract, then the statement is tautologous. If by `essential' one means only a term which the Court regards as important as opposed to a term which the Court regards as less important or a matter of detail, the statement is untrue. It is for the parties to decide whether they wish to be bound and, if so, by what terms, whether important or unimportant. It is the parties who are, in the memorable phrase coined by the Judge, "the masters of their contractual fate". Of course, the more important the term is the less likely it is that the parties will have left it for future decision. But there is no legal obstacle which stands in the way of the parties agreeing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t nor the General Conditions contained any arbitration agreement, in the case on hand, the arbitration agreement is found in Clause 6 of the Commercial Offer. In view of the same, reliance placed by the respondent on Dresser Rand S.A (supra) is wholly misplaced and cannot be applied to the case on hand where the parties have arrived at a concluded contract. 13. Mr. Venugopal pointed out that the Charter Party Agreements are governed as per international shipping practices. The normal procedure is that the brokers from both sides first agree on the vital terms over phone/telex (these terms relate to Freight, Type of Ship, Lay Can (Period of shipping), Demurrage Rate, Cranes, etc.) At this stage, no agreement is formally signed but the terms are binding on both the parties, as per the Contract of Affreightment (CoA), which in the present case was entered into on the next day, i.e. 17.10.2007. Certain minor modifications could go on from either side on mutual agreement but in the absence of any further modification, the originally agreed terms of the CoA are binding on both the parties. Till the agreement is actually signed by both the parties, the term draft is used. This does not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions, in view of clear materials in the form of emails/correspondence between the parties, those decisions are not germane to the issue on hand. 19. Before winding up, it is useful to refer the latest decision of this Court about the object of Arbitration and Conciliation Act, 1996. In Great Offshore Ltd. v. Iranian Offshore Engg. & Construction Co. MANU/SC/7970/2008 : (2008) 14 SCC 240, this Court while considering the objects and provisions of the Arbitration and Conciliation Act, 1996, held: 59 The court has to translate the legislative intention especially when viewed in light of one of the Act's "main objectives": "to minimize the supervisory role of courts in the arbitral process." [See Statements of Objects and Reasons of Section 4(v) of the Act.] If this Court adds a number of extra requirements such as stamps, seals and originals, we would be enhancing our role, not minimizing it. Moreover, the cost of doing business would increase. It takes time to implement such formalities. What is even more worrisome is that the parties' intention to arbitrate would be foiled by formality. Such a stance would run counter to the very idea of arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordance with Clause 6 of the Purchase Order dated 15.10.2007 and subsequent materials exchanged between the parties. Inasmuch as in respect of the earlier contract between the same parties, Justice B.N. Srikrishna, former Judge of this Court is adjudicating the same as an Arbitrator at Mumbai, it is but proper and convenient for both parties to have the assistance of the same Hon'ble Judge.
21. Accordingly, Hon'ble Mr. Justice B.N. Srikrishna, former Judge of this Court is appointed as an Arbitrator to resolve the dispute between the parties. It is made clear that this Court has not expressed anything on the merits of the claim made by both parties and whatever conclusion arrived at is confined to appointment of an Arbitrator. It is further made clear that it is for the Arbitrator to decide the issue on merits after affording adequate opportunity to both parties. In terms of the Arbitration clause, the place of Arbitration is fixed at Mumbai. The Arbitrator is at liberty to fix his remuneration and other expenses which shall be borne equally by both the parties.
22. Arbitration petition is allowed on the above terms. No costs. X X X X Extracts X X X X X X X X Extracts X X X X
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