Orissa Minerals Development Company Limited's Appeals Dismissed; Arbitral Tribunal's Decision Affirmed
In a significant ruling, the Calcutta High Court has dismissed the appeals filed by Orissa Minerals Development Company Limited against the arbitral awards in their dispute with Jai Balaji Industries Limited. The Division Bench, comprising Justices Sabyasachi Bhattacharyya and Supratim Bhattacharya, upheld the decisions of the Arbitral Tribunal, affirming the awards and dismissing the challenges brought under Section 34 of the Arbitration and Conciliation Act, 1996.
The legal battle stemmed from two agreements between the parties for the supply of calibrated iron ore. Orissa Minerals was accused of stopping supply without proper justification, leading Jai Balaji to seek arbitration. The Tribunal ruled in favor of Jai Balaji, awarding damages for excess amounts spent due to stoppage in supply and loss of profits. Simple interest was also granted on these amounts from specified dates till realization.
Orissa Minerals contested the awards, arguing that the Tribunal had overlooked mandatory provisions in the agreements, including the requirement for 100% advance payment and participation in tenders. They claimed that the Tribunal erroneously found a breach of contract, rewriting the agreements contrary to their terms. Furthermore, they challenged the calculation of loss of profits, alleging it was based on hypothetical and unrealistic figures.
The High Court meticulously examined the issues, including whether the agreements mandated pre-conditions such as prior demand for goods and participation in tenders. The court found no provisions requiring prior demands and determined that non-participation in tenders was not fatal to the agreements. The court also upheld the Tribunal's finding of waiver regarding advance payment, noting that supply was made for considerable periods without insisting on advance payment.
Addressing the claim of breach of contract, the court concluded that Orissa Minerals was indeed in breach by stopping supply due to non-payment. The Tribunal's calculation of damages and loss of profits was deemed reasonable, supported by purchase orders and evidence.
Ultimately, the High Court found no grounds for interference under Section 34, as the awards did not shock the court's conscience or conflict with public policy. The appeals were dismissed, affirming the judgments of the Additional District Judges and the arbitral awards.
Bottom Line:
The arbitral awards under Section 37 of the Arbitration and Conciliation Act, 1996, are to be interfered with only if they fail the tests under Section 34, including being in conflict with public policy or shocking the court's conscience.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 31(7), 34, 34(2)(a)(iv), 37
