TMI Blog2020 (12) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... ard made in India after 23.10.2015, when the Amendment was brought into force. We, therefore, proceed to consider this case on the pre-existing law, which is contained in the seminal decision of Associate Builders [ 2014 (11) TMI 1114 - SUPREME COURT ]. The judgment in Associate Builders examined each of the heads set out in Renusagar Power Co. Ltd. v. General Electric Co., [ 1993 (10) TMI 232 - SUPREME COURT ], together with the addition of the fourth head of patent illegality laid down in ONGC Ltd. v. Saw Pipes Ltd., [ 2003 (4) TMI 438 - SUPREME COURT ] - it was held in the case that It must clearly be understood that when a court is applying the public policy test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Associate Builders and its progeny. All these judgments turn on their own facts. None of them can have any application to the case before us, as it has been found by us that in the fact situation which arises in the present case, the Majority Award is certainly a possible view of the case, given the entirety of the correspondence between the parties and thus, cannot in any manner, be characterised as perverse. Appeal allowed. - Civil Appeal No. 4083 of 2020 (Arising out of Special Leave Petition (Civil) No. 11431 of 2020) - - - Dated:- 17-12-2020 - Rohinton Fali Nariman and K.M. Joseph, JJ. For the Petitioner : Mr. Kapil Sibal. Sr. Adv., Mr. Neeraj Kishan Kaul. Sr. Adv., Mr. Aman Ahluwalia, Adv., Mr. Samar Singh Kachwaha,Adv., Ms. Ankit Khushu, Adv., Ms. Garima Bajaj, AOR, Mr. Raghavendra Mohan Bajaj, Adv., Mr. Agnish Aditya, Adv., Mr. Aayush Marwah, Adv., Ms. Chanan Parwani, Adv., Ms. Shivangi Nanda, Adv. For the Respondent : Mr. Mukul Rohatgi, Sr. Adv., Mr. Sanjiv Puri, Sr. Adv., Ms. Anuradha Dutt, Adv., Ms. Suman Yadav, Adv., Mr. Aditya Sarin, Adv., Ms. Divya Krishnan, Adv., Mr. Akhil Sachar, Adv., Ms. B. Vijayalakshmi Menon, AOR. JUDGMENT ROHINTON F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r German Creek coking coal) to this Agreement and which shall constitute an integral part of this Agreement, for use of imported coking coals in the coke ovens in its integrated iron and steel works for production of metallurgical coke. The quality of the prime washed coking coals to be supplied under this Agreement shall under no circumstances be inferior to the Technical Specifications as contained in Annexure IIA, Annexure IIB and Annexure IIC to this Agreement as applicable. 1.1.1 Annual base quantity from 1st July, 2007 to 30 June, 2009, in case Purchaser exercises its option to extend the Agreement by 2 years, shall be 466,000 metric tonnes, subject to further discussions at the time of contract extension and the logical contract specification modifications to reflect the changing nature of existing reserves at the Moranbah North and German Creek mining operations will be mutually agreed. 1.2 For the purpose of this Agreement, the Delivery Period shall be reckoned as follows: First Delivery Period 1st July 2004 to 30th June 2005 Second Delivery Period 1st July 2005 to 30th June 2006 Third Delivery Period 1st July 2006 to 30th June 2007 The shipments will be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational arbitral award in New Delhi on 12.05.2014. It may be stated at the outset that the award is a majority award of Mr. Peter Leaver and Mr. Anthony Houghton [ Majority Award ], in favour of the Claimant, being the Appellant before us, a dissenting award being delivered by Justice V.K. Gupta [ Dissenting Award ], in which the claim of the Appellant was dismissed in its entirety. 5. The Majority Award was challenged Under Section 34 of the Arbitration and Conciliation Act, 1996 [ Arbitration Act ] before a learned Single Judge of the High Court of Delhi [ Single Judge ], who upheld the Majority Award by a judgment dated 10.07.2015. However, by the impugned judgment dated 02.03.2020, a Division Bench of the High Court of Delhi [ Division Bench ] set aside the judgment of the Single Judge and allowed an appeal filed Under Section 37 of the Arbitration Act by the Respondent, setting aside the Majority Award. 6. The Majority Award contains detailed reasons, and since it is the subject matter of intense debate between the parties, it is important to set out the facts found by the Majority Award, together with the material findings and ultimate award. 5a. Under the heading, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... $300 per MT during the Fifth Delivery Period. The first was on 30th October 2008, and was a quantity of 2,366 MT, and the second on 5th August 2009, when the Respondent lifted another 9,600 MT. 41. The first of these shipments was via the 'Furness Hartlepool' and was part of a larger shipment under which 48,655 MT was lifted in respect of balance quantities under the Fourth Delivery Period (at the agreed rate for that period of US$96.40 per MT). The Fifth Delivery Period component of this delivery was 2,366 MT and this was transacted at the agreed price of US$300 per MT. 42. The second of these shipments was an ad hoc agreement made in a meeting on 15th July 2009 and confirmed in writing by the Respondent on 22nd July 2009. That ad-hoc agreement ( the Sea Venus agreement ) was for 50,000 MT of coal under which 9,600 MT was to be purchased at the contractual price of US$300 per MT, but the balance 40,400 MT was to be sold at an ad hoc price of US$128.25 per MT. 43. Even after these two deliveries were made there was a considerable shortfall in deliveries against the contracted quantity for the Fifth Delivery Period. The total quantity actually lifted in respect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the arbitration, and interest, if any, on the costs awarded. 5b. Under the heading, M. The Correspondence Regarding Deliveries , the Majority Award referred to the various emails and letters exchanged between the parties, as follows: M. The Correspondence Regarding Deliveries 56. The correspondence directly concerning deliveries in mid 2009 comprises only a few documents. Firstly, on 11th March 2009 the Claimant wrote to the Respondent: We refer to discussions in New Delhi on 24th February 2009 between Mr. Suresh Babu and our Mr. John Wilcox at your office. Anglo remains very concerned that deliveries for the Fifth Delivery Period of the Agreement remain unperformed by MMTC, and that to date MMTC has not intimated arrangements for performance of obligations arising under the Agreement. Accordingly, kindly send MMTC's proposed Delivery Schedule for the Fifth Delivery Period, as referred to in Clause 4 of Annexure IV of the Agreement, for our consideration. Under the circumstances, we seek your response by close of business Brisbane time on Friday 20th March 2009. 57. On 2nd July 2009 the Respondent wrote to the Claimant, requesting, the Respondent submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has now finished bringing the terms of the Agreement to an end. However, to date, MMTC has only taken delivery of 11,966 tonnes of coal out of a total contracted tonnage of 466,000 tonnes for the Fifth Delivery Period. Despite our repeated requests MMTC has not provided Anglo with a Schedule for taking delivery of the remaining 454,034 tonnes of coal from the Fifth Delivery Period ('Carryover'), other than to say that it will agree to the same arrangements made between Anglo and SAIL and RINL with regards delivery of 2008 carryover tonnes. 64. The author of the letter (Mr. Elliott, the General Manager, Marketing and Transportation of the Claimant) then set out the terms which had been agreed with SAIL/RINL and set out a proposal for delivery of the carryover quantity and for renewal of the agreement with the Respondent. 65. On 25th September 2009 the Respondent (Mr. Babu) responded to that letter. The response stated that the proposal was near to impossible in that it envisaged the Respondent lifting a very substantial quantity of the carryover quantity by end March 2010. The letter then stated: In this connection, It may please be appreciated that RINL is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure smooth shipments. He stated that at the relevant time the market was affected by the global financial crisis which brought about a crash in the demand for steel and, consequently, for the relevant type of coking coal. He said that, at the relevant time, the Claimant had a large quantity of surplus production, some of which was sold off by way of distress sales during the Fifth Delivery Period. 121. Mr. Wilcox was challenged in cross examination (Q40) as to the availability of cargo to supply to the Respondent between July 2009 and 21st September 2009. He disagreed that the Claimant had no supply, stating that the Claimant was producing around 1,000,000 tonnes per month during this period. He said that it would have been very easy for the Claimant to produce coal for the Respondent had they been willing to pay the contract price. Subsequently (Q43-Q45) he was challenged about the alleged distress sales. He confirmed that such distress sales were made. His affidavit indicated such sales amounted to approximately 712,000 MT, and that these sales were made at between US$83 and US$113 per MT, far below the price agreed with the Respondent. 122. The Tribunal accepts Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t accept that the Agreement required the Claimant to take the initiative and offer stem wholly without reference to any obligation on the part of the Respondent. Viewed overall, it is clear to us that the Agreement envisaged and required the parties to coordinate supply and delivery. The primary document for this was intended to be the Delivery Schedule. Indications of stem availability and nomination of vessels were steps to be taken in the implementation of the Delivery Schedule, not preparatory to it. It follows from this, it appears to us, that there is no contractual basis on which the Respondent can contend that the Claimant was in breach in failing to offer stem to the Respondent. Absent an agreed Delivery Schedule there was no obligation to do so. 5e. Under the sub-heading, Offer of Supply , the Appellant's letter dated 11.03.2009 was set out in which the Appellant demanded that the Respondent propose a Delivery Schedule for the coal in question. The Respondent denied the receipt of this letter. However, the Majority Award found as follows: Offer of Supply xxx xxx xxx 139. Mr. Babu does not rebut the existence of the meeting in April. Nor does he deny havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to balance quantities under the Fourth Delivery Period, and one delivery on 5th August 2009, when the Respondent lifted another 9,600 MT. The second of these shipments was the ad hoc Sea Venus agreement for delivery between 10th and 20th July 2009 (Vol. 2, pages 9-12). 144. The ad-hoc Sea Venus agreement was for 50,000 MT of coal under which 9,600 MT, or thereabouts was transacted at the price of US$300 per MT, with the balance 40,400 metric tonnes sold at an ad hoc price of US$128.25 per MT. This was said to have been a goodwill gesture (Vol. 2, page 9). 145. The market price remained low throughout the Fifth Delivery Period (see for example the agreement made by the Claimant with SAIL/RINL on 15th July 2009 (Vol. 2, pages 13-20) agreeing rates at below US$129.00 per MT) and, viewed commercially there was little incentive for the Respondent to continue to purchase from the Claimant at the agreed rates. 146. The Tribunal's view of the correspondence is that the Respondent saw matters similarly, and was seeking to purchase further quantities of coal at the lower rate obtained in the Sea Venus agreement. In the e-mail of 2nd July 2009 Mr. Babu referred to the Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Claimant with SAIL/RINL, to purchase only 18.7% of the carry over quantity, and was, in the correspondence, balking at the suggestion made on behalf of the Claimant that 56.7% of that quantity be lifted by 31st March 2010. This was described by the Respondent as near to impossible , and the Respondent asked the Claimant not to ignore the economic realities completely. 151. Thus, the first relevant letter written by the Respondent during the Fifth Delivery Period [C-5] on 20th November 2008 sought a reduction in the price of coal to be delivered under the Fifth Delivery Period as did the last such letter, that of 25th September 2009. Following the conclusion of the Fifth Delivery Period the Claimant made a further offer of supply (on 25th November 2009) which the Respondent was prepared to accept only at a price reduced from the contractual rate (Respondent's letter of 27th November 200[9]). The Respondent's arguments now are predicated on there having been a temporary change of stance during the course of the year such that, in June and July 2009 it was seeking no more than to avail itself of supplies of coal at the contract rate. Seen in context, the correspondence re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material times in a position to perform its obligations under the Agreement by supplying the requisite quantities in a timely manner in accordance with the Agreement. (d) The Claimant's claims are not barred by limitation. 5j. The award, therefore, in favour of the Appellant, was then stated as follows: Dispositive Section 181. For the above reasons the Tribunal Orders and Directs that: (1) By a majority, the Claimant is entitled to damages from the Respondent in the sum of US$78,720,414.92. (2) By a majority the Tribunal concludes that the Claimant is entitled to simple interest on such damages in the sum of US$27,239,420.29 in respect of interest up to the date of this Award, and at a rate of 15% p.a. on the principal sum from the date of this Award until payment. (3) The Claimant is entitled to its costs of the arbitration which, by a majority we assess in the amount of US$977,395.00. (4) The sums set out above as being due to the Claimant are due as at the date of this Award and are to be paid by the Respondent. (5) This Award is final as to the matters in dispute between the parties and referred to arbitration before us. All other requests and cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Dissenting Award also found that the Appellant had failed in discharging its burden of proving the quantum of damages as on the date of breach of the LTA. 8. The learned Single Judge, by a judgment dated 10.07.2015, after setting out the relevant facts, dismissed the Respondent's plea of limitation and then found: 45. The majority Award concluded that there was in fact no repudiation of the contract by Anglo and that in any event no acceptance of such repudiation by MMTC. The Court is required to examine whether such conclusion is perverse or patently illegal as contended by MMTC. In the first place it appears that it was not the case of MMTC earlier that the letter dated 21st September, 2009 constituted repudiation by Anglo of the contract. In its reply dated 25th September, 2009, MMTC did not suggest that Anglo had repudiated the contract. It viewed the said letter dated 21st September, 2009 as a request from Anglo to start lifting the contractual quantities. This explains why MMTC in the said reply expressed inability to lift 2,25,174 MT by 31st March, 2010 since it seemed near to impossible as it worked out to 56.7% of the carryover tonnage. It sought a reductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 300 per metric tonne; and that the Respondent meant that it did not have coal available at USD 128 per metric tonne. The majority of the Arbitral Tribunal as well as the single Judge therefore read the aforesaid emails to mean that the Appellant was requesting supply of coal only at USD 128 per metric tonne, which is something that has nowhere been said in any of these e-mails. As a result, the Division Bench concluded: 29. We are aware that a court seized of proceedings Under Section 37 of the A C Act is not to re-appreciate evidence, muchless in a case where the Arbitral Tribunal as well as the single Judge Under Section 34 have agreed with a certain view on the facts of the case. However, it is also the law that where a factual inference is based on no evidence, the court may interfere with such inference even Under Section 37. In our reading of the legal position, a factual inference that is based on what is not stated in a document or what may be called 'imaginary evidence', is the same as an inference based on 'no evidence'; or an inference derived ignoring vital evidence. A decision based on such inference would necessarily be perverse. If the majorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Takhatmal and Anr. (1964) 2 SCR 152, in which the court observed as follows: 8. ... Sections 94 to 98 of the Indian Evidence. Act afford guidance in the construction of documents; they also indicate when and under what circumstances extrinsic evidence could be relied upon in construing the terms of a document. Section 94 of the Evidence Act lays down a Rule of interpretation of the language of a document when it is plain and applies accurately to existing facts. It says that evidence may be given to show that it was not meant to apply to such facts. When a Court is asked to interpret a document, it looks at its language. If the language is clear and unambiguous and applies accurately to existing facts, it shall accept the ordinary meaning, for the duty of the Court is not to delve deep into the intricacies of the human mind to a certain one's undisclosed intention, but only to take the meaning of the words used by him, that is to say his expressed intentions. Sometimes when it is said that a Court should look into all the circumstances to find an author's intention, it is only for the purpose of finding out whether the words apply, accurately to existing facts. But if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the A C Act 10. Shri Kapil Sibal, learned Senior Advocate appearing on behalf of the Appellant, painstakingly took us through the LTA and the entire correspondence that ensued between the parties. He argued that all the findings given by the Majority Award were findings of fact, there having been little dispute on the construction of any term of the LTA; no dispute as to the contracted quantity of coal that was to be supplied in the Fifth Delivery Period, i.e., 466,000 metric tonnes; no dispute as to the price at which such coal was to be supplied, i.e., at the rate of $300 per metric tonne; and no dispute as to the quantity of coal that remained unlifted, i.e., 454,034 metric tonnes. The only issue before the Arbitral Tribunal was whether the Appellant was unable to supply the contracted quantity of coal at the contractual price, or whether the Respondent was unwilling to lift the quantity of coal at the contractual price, both being purely questions of fact as to the performance of contractual obligations stemming from the LTA. 11. Shri Sibal then argued that a crucial letter dated 11.03.2009, by which the Appellant requested the Respondent to propose a Delivery Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completely incorrect. 13. Shri Neeraj Kishan Kaul, learned Senior Advocate, supplemented the submissions of Shri Sibal and stated that the overall context of the correspondence showed that the Respondent repeatedly asked for supplies to be made at a price lower than the contractual price throughout the Fifth Delivery Period, since it was clearly unable to lift coal at the price of $300 per metric tonne. Even when only two months in the Fifth Delivery Period were left, a maximum of 50,000 metric tonnes of mixed supply was asked for, at a mixed rate of $300 per metric tonne and at a rate much lower than that. He also referred to Mr. Wilcox's testimony to argue that the Appellant was a major producer of coal and huge quantities of coal were produced at the time of the Fifth Delivery Period, in July 2009, which could have easily been supplied, had the Respondent demanded the balance unlifted quantity of 454,034 metric tonnes at the price of $300 per metric tonne. 14. Shri Mukul Rohatgi, learned Senior Advocate appearing on behalf of the Respondent, supported the impugned judgment of the Division Bench and took us through the correspondence between the parties, the Majorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions. 16. Having heard the learned Counsel appearing for the parties, there can be no doubt whatsoever that the Majority Award is a detailed award, which goes into the facts in great detail, outlines the issues to be answered, and then answers all the issues, with due regard to the oral and documentary evidence given in the case. 17. The first and most important point, therefore, to be noted is that this is a case in which there is a finding of fact by the Majority Award that the Appellant was able to supply the contracted quantity of coal for the Fifth Delivery Period, at the contractual price, and that it was the Respondent who was unwilling to lift the coal, owing to a slump in the market, the Respondent being conscious of the fact that mere commercial difficulty in performing a contract would not amount to frustration of the contract. It was for this reason that the Respondent decided, as an afterthought, in reply to the Appellant's legal notice dated 04.03.2010, to attack the Appellant on the ground that it was the Appellant that was unable to supply the contracted quantity in the Fifth Delivery Period. Once this becomes clear, it is obvious that the Majority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Appellant that it was unable to supply the contracted quantity of coal during the remainder of the Fifth Delivery Period. However, what is missed by Shri Rohatgi is the crucial fact that no price for the coal to be lifted was stated in any of the emails or letters exchanged during this period. This is in fact what the Majority Award adverts to and fills up by having recourse to the evidence given by Mr. Wilcox, stating that the ambiguity qua price was resolved by the fact that no coal was available for lifting at a price lower than the contractual price. The Majority Award found, relying upon Mr. Wilcox's evidence, that the supplies that were sought to be made in August and September, 2009 were therefore, also in the nature of mixed supplies, i.e., coal at the contractual price, as well as coal at a much lower price. This is a finding of fact that cannot be characterised as perverse, as it is clear from the evidence led, the factual matrix of the setting of there being a slump in the market, in which the performance of the contract took place, as well as the ambiguity as to whether the correspondence referred to contractual price or mixed price, and thus, is a possibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of finding out whether the words apply accurately to existing facts. But if the words are clear in the context of the surrounding circumstances, the Court cannot rely on them to attribute to the author an intention contrary to the plain meaning of the words used in the document. The other Sections in the said group of Sections deal with ambiguities, peculiarities in expression and the inconsistencies between the written words and the existing facts. In the instant case, no such ambiguity or inconsistency exists as we shall demonstrate presently. The Privy Council's case was one of ambiguity and the surrounding circumstances gave the clue to find out the real intention of the parties as expressed by them. (page 162) Having so held, the Court then found that the surety bond did not need to be qualified by adding words to it when the words used in the bond were otherwise clear. Importantly, the words in default of his doing so were held by the Court to make it absolutely clear that the surety comes into effect only if the judgment debtor makes a default when required to produce the document. Adding that the surety bond has to be strictly construed, the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Exclusion of evidence against application of document to existing facts. -- When language used in a document is plain in itself, and when it applies accurately to existing facts, evidence may not be given to show that it was not meant to apply to such facts. 95. Evidence as to document unmeaning in reference to existing facts. -- When language used in a document is plain in itself, but is unmeaning in reference to existing facts, evidence may be given to show that it was used in a peculiar sense. 27. Importantly, Section 92 of the Evidence Act refers to the terms of a contract, grant or other disposition of property or any matter required by law to be reduced to the form of a document . In all these cases, under proviso (6) read with illustration (f), any fact may be proven which shows in what manner the language of a document is related to existing facts. Illustration (f) of Section 92 of the Evidence Act indicates that facts, which may on the face of it, be ambiguous and vague, can be made certain in the contextual setting of the contract, grant or other disposition of property. Section 94 of the Evidence Act, then speaks of language being used in a document being plain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed which amongst mercantile men bear a distinct and definite meaning, although others do not comprehend them; the terms used may, on the other hand, be capable of no distinct and definite interpretation. Now, it is evident that to give effect to an instrument, the terms of which, though apparently ambiguous are capable of having a distinct and definite meaning annexed to them is no violation of the general principle, for, in such a case, effect is given, not to any loose conjecture as to the intent and meaning of the party, but to the expressed meaning and that, on the other hand, where either the terms used are incapable of any certain and definite meaning, or, being in themselves intelligible, exhibit plain and obvious uncertainty, and are equally capable of different applications, to give an effect to them by extrinsic evidence as to the intention of the party would be to make the supposed intention operate independently of any definite expression of such intention. By patent ambiguity, therefore, must be understood an inherent ambiguity, which cannot be removed, either by the ordinary Rules of legal construction or by the application of extrinsic and explanatory evidence, showi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, is a fact. 31. The picture that emerges, therefore, is that a patent ambiguity provision, as contained in Section 94 of the Evidence Act, is only applicable when a document applies accurately to existing facts, which includes how a particular word is used in a particular sense. Given that, in the facts of the present case, there was no mention of the price at which coal was to be supplied in the three crucial emails, these emails must be read as part of the entirety of the correspondence between the parties, which would then make the so-called admissions in the aforementioned emails apply to existing facts. Once this is done, it is clear that there is no scope for the further application of the patent ambiguity principle contained in Section 94 of the Evidence Act, to the facts of the present case. 32. However, Section 95 of the Evidence Act, dealing with latent ambiguity, when read with proviso (6) and illustration (f) to Section 92 of the Evidence Act, could apply to the facts of the present case, as when the plain language of a document is otherwise unmeaning in reference to how particular words are used in a particular sense, given the entirety of the correspo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply accurately to existing facts. If, however, the words are clear in the context of the surrounding circumstances, the court cannot rely on them to attribute to the author an intention contrary to the plain meanings of the words used in the document. (emphasis supplied) 108. It is evident from the Court of Appeal's reasoning in Sandar Aung [2007] 2 SLR 89 that in Singapore, the parol evidence Rule (as statutorily embedded in Section 94 of the Evidence Act) still operates as a restriction on the use of extrinsic material to affect a contract. However, extrinsic material is admissible for the purpose of interpreting the language of the contract. In this respect, Sandar Aung acknowledges that extrinsic material is admissible even if no ambiguity is present in the plain language of the contract. However, ambiguity still plays an important role, in that the court can only place on the relevant contractual word, phrase or term an interpretation which is different from that to be ascribed by its plain language if a consideration of the context of the contract leads to the conclusion that the word, phrase or term in question may take on two or more possible meanings, i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cognisance of extrinsic evidence or the surrounding circumstances of the contract. 113. Assuming that the contract is one to which the parol evidence Rule applies, no extrinsic evidence is admissible to contradict, vary, add to or subtract from its terms (see Section 94 of the Evidence Act). (emphasis supplied) Finally, in a synopsis at the end, the Court of Appeal held: 132 To summarise, the approach adopted in Singapore to the admissibility of extrinsic evidence to affect written contracts is a pragmatic and principled one. The main features of this approach are as follows: (a) A court should take into account the essence and attributes of the document being examined. The court's treatment of extrinsic evidence at various stages of the analytical process may differ depending on the nature of the document. In general, the court ought to be more reluctant to allow extrinsic evidence to affect standard form contracts and commercial documents. (b) If the court is satisfied that the parties intended to embody their entire agreement in a written contract, no extrinsic evidence is admissible to contradict, vary, add to, or subtract from its terms (see Sections 93-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng at the ultimate interpretation of the words to be construed, the court may take into account subjective declarations of intent. Furthermore, the normal canons of interpretation apply in conjunction with the relevant provisions of the Evidence Act, i.e., Sections 95-100. (f) A court should always be careful to ensure that extrinsic evidence is used to explain and illuminate the written words, and not to contradict or vary them. Where the court concludes that the parties have used the wrong words, rectification may be a more appropriate remedy. (emphasis supplied) 34. The approach of the Singapore Court of Appeal has our broad approval, being in line with the modern contextual approach to the interpretation of contracts. When proviso (6) and illustration (f) to Section 92, Section 94 and Section 95 of the Evidence Act are read together, the picture that emerges is that when there are a number of documents exchanged between the parties in the performance of a contract, all of them must be read as a connected whole, relating each particular document to existing facts , which include how particular words are used in a particular sense, given the entirety of correspondence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on them to attribute to the author an intention contrary to the plain meaning of the words used in the document... (page 162) 37. So read, the judgment in Smt. Kamala Devi (supra) accords with what has been held hereinabove. It is clear that the three critical emails have to be read in the surrounding circumstances of the entirety of the LTA and the correspondence which ensued between the parties. Once that exercise is undertaken, as was undertaken by the Majority Award, it is impossible to hold that the Majority Award is not a possible view on the facts of this case. The reliance of the Majority Award upon the correspondence between the parties pre-July and in September to December 2009, buttressed by Mr. Wilcox's evidence, cannot therefore be said to be flawed. 38. Shri Rohatgi's argument in support of the impugned judgment of the Division Bench that there is no evidence to demonstrate proof of damage suffered as on the date of breach, is also factually incorrect. It is well established that the arbitral tribunal is the final judge of the quality, as well as the quantity of evidence before it (see Sudarsan Trading Co. v. Govt. of Kerala, (1989) 2 SCC 38 at page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the special type to which the words which the parties knew, when they made the contract, to be likely to result from the breach of it appearing in Section 73 of the Contract Act apply. This is an ordinary case of contract between traders which is covered by the words which naturally arose in the usual course of things from such breach appearing in Section 73. As the Respondent had failed to prove the rate for similar canvas in Kanpur on the date of breach it is not entitled to any damages in the circumstances. (pages 660-661) 39. The Single Judge correctly appreciated this part of the case when he stated as follows: 86. MMTC's submission is belied by what it has itself stated in the correspondence exchanged with Anglo. In its letter dated 25th September, 2009, MMTC describes USD 128 as the '2009' rate. In its letter dated 27th November, 2009 it refers to the 2009 price level of US$ 128/125 PMT. In its letter dated 3rd December, 2009 MMTC referred to coal being purchased at current price of US$ 128.25 PMT. Further the re-negotiated contracts with SAIL and RINL acknowledge the slump in coal prices to USD 128 during the period from April, 2009 to March 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where: (i) a finding is based on no evidence, or (ii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or (iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse. 32. A good working test of perversity is contained in two judgments. In Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath Sons [1992 Supp (2) SCC 312], it was held: (SCC p. 317, para 7) 7. ... It is, no doubt, true that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then, the finding is rendered infirm in law. In Kuldeep Singh v. Commr. of Police [(1999) 2 SCC 10], it was held: (SCC p. 14, para 10) 10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal policy of Indian law (that the arbitrator must have a judicial approach and that he must not act perversely) are to be understood. (pages 75-77) 42. In the 1996 Act, this principle is substituted by the patent illegality principle which, in turn, contains three subheads: 42.1. (a) A contravention of the substantive law of India would result in the death knell of an arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. This again is really a contravention of Section 28(1)(a) of the Act, which reads as under: 28. Rules applicable to substance of dispute. --(1) Where the place of arbitration is situated in India-- (a) in an arbitration other than an international commercial arbitration, the Arbitral Tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India; 42.2. (b) A contravention of the Arbitration Act itself would be regarded as a patent illegality -- for example if an arbitrator gives no reasons for an award in contravention of Section 31(3) of the Act, such award will be liable to be set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possible view based on the oral and documentary evidence led in the case, which cannot be characterized as being either perverse or being based on no evidence. 45. However, Shri Rohatgi relied upon a number of recent judgments, which according to him, throw further light upon the elucidation of law in Associate Builders (supra). Thus, in MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163, this Court held: 11. As far as Section 34 is concerned, the position is well-settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided Under Section 34(2)(b)(ii) i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the fundamental policy of Indian law would cover compliance with statutes and judicial precedents, adopting a judicial ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain that the exercise of power by the court Under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court Under Section 34 and by the court in an appeal Under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings. 15. Having noted the above grounds for interference with an arbitral award, it must now be noted that the instant question pertains to determining whether the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration. However, this question has been addressed by the courts in terms of the construction of the contract between the parties, and as such it can be safely said that a review of such a construction cannot be made in terms of reassessment of the material on record, but only in terms of the principles governing interference with an award as discussed above. 16. It is equally important to observe at this juncture that while interpreting the terms of a contract, the conduct of parties and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reasoning provided in the award is implied unless such award portrays perversity unpardonable Under Section 34 of the Arbitration Act. 47. In Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236, after referring to the parameters of review in Associate Builders (supra) and other cases, this Court found that with respect to the first claim, relating to price adjustment/escalation, the arbitrator interpreted the relevant clauses of the contract and came to a certain finding. The High Court, in interfering with that finding, was wrong in doing so merely because some other view could have been taken, as the interpretation made by the arbitrator was a possible one. The High Court's judgment was, therefore, set aside to this extent. However, insofar as the second and third claims were concerned, on the facts of that case, the finding was said to be so perverse or irrational that no reasonable person could have arrived at the same, based on the material/evidence on record, as a result of which, the High Court's judgment was upheld. 48. In South East Asia Marine Engg. Constructions Ltd. (SEAMEC LTD.) v. Oil India Ltd., (2020) 5 SCC 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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