9911796707
TMI Blog2024 (4) TMI 1007X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 MATRIX LABS to bear the total Costs of the Arbitration of USD 60,000 by way of reimbursement to AARK PHARMACEUTICALS of the sum of USD 60,000 d MATRIX LABS and RARE METABOLICS LIFE SCINENCES PVT LTD are to bear their own costs and disbursements; and All other requests and claims are rejected. 2. Relevant Portion of the Arbitral Award reads as under:- "183. Having carefully considered all the evidence and submissions placed before it and for the reasons set out above, the Tribunal hereby Determines and Orders that: a) MATRIX LABS to make payment of INR 6,29,46,000 (Rupees Sixty-Two Million Four Hundred and Ninety Six Thousand Only) to AARK PHARMACEUTICALS toward repayment of the advance paid by AARK PHARMACEUTICALS for the Rejected Test Kits (that is 148,800 test kits) along with compound interest at the rate of 16% per annum for the period from 29 June 2020 until repayment in full; b) MATRIX LABS to pay AARK PHARMACEUTICALS compound interest at the rate of 16% per annum on the sum of INR 95,80,000 FOR THE PERIOD FROM 3 April 2020 to 3 February 2021; c) MATRIX LABS pay AARK PHARMACEUTICALS' total legal costs and disbursements of INR 18,83,750 and to bear the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handling, and was desirous of appointing a "Distributor" for distribution of Specified Products on an exclusive basis. 7. Ex.C2 Tripartite Agreement dated 23.03.2020 further records that the respondent herein had the requisite infrastructure, expertise and experience to organize the movement of the Specified Products and had obtained all the necessary approvals, licenses and clearances from the relevant authorities under the Applicable Laws including the Drugs and Cosmetics Act, 1940 and the rules made thereunder. 8. The respondent had thus expressed its desire to be appointed as the "Distributor" of the said M/s.Rare Metabolics Life Sciences Private Limited for the Specified Products, and the said M/s.Rare Metabolics Life Sciences Private Limited as the Promoter consented to appoint the respondent as the Distributor upon the terms and conditions in the Tripartite Agreement dated 23.03.2020. 9. The said M/s.Rare Metabolics Life Sciences Private Limited thus acted as the "Promoter" under the Ex.C2 Tripartite Agreement dated 23.03.2020. The respondent-claimant inturn was appointed as the "Distributor" of M/s.Rare Metabolics Life Sciences Private Limited. 10. Thus, under Ex.C2 Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice of the supplies by the respondent (Claimant-Distributor) to the Director General of Medical Research was Rs. 739.20 per testing kit. 17. Out of 3,00,000 testing kits imported earlier by the petitioner on 16.04.2020 after the outbreak of Covid 19 pandemic, the petitioner appears to have supplied 2,76,000 testing kits to ICMR through the respondent herein. Balance 24,000 testing kits are stated to have been supplied to the Government of Tamil Nadu. 18. A dispute is said to have in arise between the petitioner and the respondent and the promoter namely M/s.Rare Metabolics Life Scienes Private Limited. Under these circumstances, the promoter namely M/s.Rare Metabolics Life Sciences Private Limited along with the respondent, AARK Pharmaceuticals had filed O.M.P.(I)(COMM) 93 of 2020 against the petitioner/(importer) before the Delhi High Court for a direction for release of 7.24 Lakhs Covid 19 Rapid Test Kit and other Covid-19 related materials which were imported and/or are being imported from the People's Republic of China. 19. By an order dated 24.04.2020 in O.M.P.(I)(COMM) 93 of 2020, the Delhi High Court had passed the following order:- 7. Be that as it may, since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mr. Jayant Mehta, the learned counsel for the petitioners, states upon instructions, that in the interest of the country he would not pursue the matter any further and would give up all further claims, in the case if the importer undertakes to sell the product at not more than Rs. 400/- each, inclusive of GST. Indeed, both parties agree to the principle public interest should be paramount and the tests should be made available to the general public at the lowest cost possible Mr Nagrath, the learned counsel for the respondent submits, that the respondent is ready to and undertakes to supply the kits/tests at Rs. 400/- each, plus GST i.e. at 40% lesser than the ICMR approved rate, directly to any Government or its agency or private entity duly approved to carry out these tests. 11. So, from the other 5 lakhs kits/tests, 50,000 shall be excluded for the State of Tamil Nadu and the remaining 450,000 would be available to the respondent to be disposed-off in terms of the above, directly to any Government or governmental agency or any private entity which has received due approval to carry out such tests. "12. In view of the above, the petitioners agree not the pursue any claim ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Impugned Award in favour of the respondent/ (the claimant). 28. It is further submitted that in Paragraph 22 of the counter, the petitioner has only mentioned about the re-export of 2,24,000 testing kits out of 7,00,000 testing kits imported later on 23.04.2020. 29. It is further case of the petitioner that the petitioner had returned a sum of Rs. 1,15,80,000/- to the respondent and to the promoter namely M/s.Rare Metabolics Life Sciences Private Limited. Despite the same, the Tribunal has awarded the amount claimed by the respondent. 30. It is further submitted that there was no scope for confusing the re-exports made during the month of May of all 7,00,000 [4,76,000+ 2,24,000] testing kits imported by the petitioner after the Delhi High Court order. 31. That apart, the timeline between the import of the consignments covering 2,76,000 testing kits supplied to ICMR and eventual return on 29.06.2020 made it impossible for the petitioner to re-export the consignment in the conditions in which they were returned. It is submitted that 1,48,800 testing kits out of 2,76,000 were returned by ICMR only on 29.06.2020 and were received by the petitioner only on 04.07.2020. 32. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Claimant and received by R1* 9,40,00,000 The cost recoverable by the R1* on disposal by exporting to HK 9,40,00,000 The cost of freight incurred for inward of 0.5 Million kits and return of 0.224 million kits 75,00,000 Supporting Documents as evidence enclosed Net FOREX Loss - the Forex loss incurred in the transaction of 0.5 Million Kits 75,00,000 Supporting Documents as evidence enclosed Profit/(loss) -1,50,00,000 SUMMARY Relating to 127200 2,87,00,000 Relating to 148800 -6,24,00,000 Relating to 224000 -1,50,00,000 Total -4,87,00,000 (*the petitioner herein) 37. In support of its plea, the petitioner has filed a written submission on the grounds of challenge to the arbitral award as follows:- 1. Breach of Contract - 100% advance was not paid which lead to an interest burden for the Petitioner. 2. Against the Law - The Arbitrator failed to invoke the proviso to Sec 16(1) of the Sale of Goods Act and failed to follow the Superior Court's ratio on identical issues. 3. Against the Public Policy of Indian Law - noncompliance judicial precedents. 4. Against the basic notion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance on the following case laws:- i. Aircon Beibars FZE vs. Heligo Charters Private Limited, MANU/MH/0495/2022; ii. Associate Builders vs. Delhi Development Authority, MANU/SC/1076/2014; iii. Eastern Mining Contractors (Private) Limited vs. The Premier Automobiles Limited, MANU/MH/0205/1962; iv. Mideast Pipeline Products vs. Fernas Construction Co.Ltd, MANU/DE/1352/2018; v. MMTC Ltd vs. Vedanta Limited, MANU/SC/0221/2019; vi. Ssangyong Engineering & Construction Co. Ltd vs. National Highways Authority of India (NHAI), MANU/SC/0705/2019 41. Mr.N.L.Rajah, the learned Senior Counsel for the petitioner has also placed reliance on the decision of this Court in the case of M.Manohara Chetty and Others vs. C.Coomaraswamy Naidu and Sons, MANU/TN/0688/1979 in so far as admission is concerned. A specific reference is made to Paragraph 10 of the aforesaid order, which reads as under:- "10. The law by no means regards admission as conclusive proof of the matters admitted. This is because to a Court of law admissions are but statements which do no more then suggest an interference as to some fact or facts in issue. (See Section 31 and 17 of the Indian Evidence Act, 1872). It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suspension. (See Sultan Sadik v. Sanjay Raj Subba). 25. A learned Single Judge of this Court (Justice BALASUBRAMANIAN) in the discussion Manohara Chetty and Others vs. Coomaraswamy Naidu and Sons (supra) has held as under in Paragraph 10: "10. The law by no means regards admission as conclusive proof of the matters admitted. This is because to a Court of law admissions are but statements which do not more then suggest an inference as to some facts or facts in issue. (See Sections 31 and 17 of the Indian Evidence Act, 1872). It is therefore, important that the Court should examine any given admission inside out to see if it suggests any clear inference on the fact in issue against the party making it. For a Court to draw an adverse inference against a party on the basis of what he is stated to have admitted, the admission must be unequivocal. It must also be comprehensive. It must go the whole-hog, as it were, on the point at issue. If a party's admission falls short of the totality of the requisite evidence needed for legal proof of a fact in issue, such an admission would be only a truncated admission. It follows that in such a case it cannot support a valid judicial dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble law, the Sole Arbitrator passed a reasoned award upon full consideration of facts, evidences presented by the parties, and has allowed the Respondent's claim. 49. The learned counsel for the respondents submitted that the petitioner failed to satisfy any of the grounds for setting aside an award under Section 34 of the Arbitration and Conciliation Act, 1996. It is further submitted that the Petitioner also urges re-appreciation of evidence and merits that were already considered in the arbitration proceeding by the Arbitral Tribunal and by doing so the Petitioner attempts to seek a retrial of the dispute which it is therefore submitted that the present Petition does not meet the requisites of a challenge under Section 34 of the Act and ought to be dismissed "in limine". 50. It is further submitted that the petitioners contention that the terms of the Agreement were breached due to non-payment of advance amounts and that the Petitioner's most important defence has not been considered by the Sole Arbitrator is untenable and submitted that nonpayment of advance has no bearing on this Respondent's claims in the arbitration, which were inter alia for repayment of advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the limited bracket for setting aside an arbitral award as per the amended Section 34 of the Act and has placed reliance on the following decisions:- i. MMTC LId v. Vedanta Ltd., (2019) 4 SCC 163; ii. Ssangyong Engineering & Construction Co. Ltd vs. National Highways Authority of India (NHAI), (2019) 15 SCC 131 iii. PatelEngineering Ltd. v. NEEPCO, (2020) 7 SCC 167; iv. The Project Director. NHAI V. M Hakim (2021) 9 SCC 1 57. The learned counsel for the respondent has also placed reliance on the following decisions:- i. McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181; ii. Sutlej Construction Ltd. v. UT of Chandigarh, (2018) 1 SCC 718 iii. Sheladia Associates Inc. V. TN Road Sector Project II, Represented by its Project Director 2019 SCC OnLine Mad 17883 58. I have considered the arguments advanced by the learned Senior Counsel for the petitioner and the learned Counsel for the respondent. 59. Scope of interference under Section 34 of the Arbitration and Conciliation Act, 1996 is very limited. 60. This Court can neither sit as a Court of appeal or re-appreciate the evidence placed before the Arbitral Tribunal or substitute the findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat while interpreting the terms of a contract, the conduct of parties and correspondences exchanged would also be relevant factors and it is well within the arbitrator's jurisdiction to consider the same. 65. The Honourable Supreme Court in Sutlej Construction Ltd. v. UT of Chandigarh (2018) 1 SCC 718, held that when the award is a reasoned one and the view taken is plausible, re-appreciation of evidence is not allowed while dealing with the challenge to an award under Section 34 of the Arbitration And Conciliation Act, 1996 for setting aside an award. It further held that the proceedings challenging the award cannot be treated as a first appellate court against a decree passed by a trial court. 66. The Honourable Supreme Court in Sheladia Associates Inc. V. TN Road Sector Project II, Represented by its Project Director, 2019 SCC OnLine Mad 17883 reminded itself of the Hodgkinson principle which has been explained by the Honourable Supreme Court in the oft-quoted and celebrated Associate Builders Case being Associate Builders V. Delhi Development Authority, (2015) 3 SCC 49. It held that Hodgkinson principle in simple terms means that the Arbitral Tribunal is the best judge w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also supplied 2,24,000 test kits to ICMR. However, the entire consignment of 2,24,000 test kit was returned immediately by ICMR. According to the petitioner, in view of the return of 2,24,000 test kits by ICMR, the balance 4,76,000 (7,00,000-2,24,000) test kits were also later exported to a buyer from Hong Kong. 74. Later, ICMR, returned 1,48,000 test kits to the respondent which were in turn were returned to the petitioner on 4.7.2020. According to the petitioner, the petitioner was unable to the export 1,48,000 test kits as the package were opened. 75. The cost price of the 2,76000/- Test kits @ Rs. 420 per kit, amounts to Rs. 11,59,20,000/- (Eleven Crore Fifty-Nine Lakhs Twenty Thousand Rupces). The amount paid by the Respondent and Rare Metabolic to the Petitioner was Rs. 12,75,00,000/-. Therefore, the petitioner has repaid a sum of Rs. 95,80,000/- on 03.02.2021 to the respondent herein namely AARK Pharmaceuticals and a sum of Rs. 20,00,000/- on 30.07.2020 to M/s.Rare Metabolics Life Sciences Private Limited, (the promoter), amounting to Rs. 1,15,80,000/- being the excess paid for the cost price for 2,76,000 Test kits. Thus, the refund of the aforesaid amount of Rs. 1,15,80, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock and thus differential duty payable by the petitioner was only on the balance 542 Nos of Test Kits . Para 21 of Ex.R.1 to Ex.R8 of the Principal Commissioner of Customs ACC(Imports) of order reads as under:- 21. The importer. on the other hand, has contended that they have imported 15,000 Nos of COVID.19 Kit vide Bill of Entry no. 7460225, dated 16.04.2020, out of which 8098 kits were exported vide Shipping Bill No 5380454 and that there existed revenue neutral situation as they were eligible for refund of duty pad to the government at the time of import. Further out of the balance quantity, 6360 Nos were sold to ICMR through M/s Rare Metabolics on which duty 59% was payable under Notification No 45/201 7(CGST) dated 14/11/2017; that 525 nos were sold to Chennai Company (Clinical Automation) and only small quantity of 17 nos was held in their stock and thus differential duty was payable only on the balance 542 nos. 80. In para 18.1 of Ex.R1-8 Order dated 27.01.2021 of Principal Commissioner of Customs ACC(Imports), detail of the exports of 8098 Nos. of Test Kits vide Shipping Bill No.5380454 dated 23.09.2020 is given. Para 18.1 of Ex.R1-8 order dated 27.01.2021 of Principa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C27 e-mail dated 14.07.2020 wherein the petitioner has stated that he had communicated to the supplier for the process and are waiting for the same and that the petitioner has not denied any payment return but have to complete the process. In the said email, the petitioner has categorically stated that the petitioner had transferred to the supplier for the purchase of kits and was waiting for company formality to return the kits and there is no point in discussion about the interest charges. 86. The impugned order also records that the respondent was chasing for payment between July 2020 and January 2020 one for the payment through WhatsApp chat content of which has been extracted in the Impugned Award. In response to various WhatsApp chats, the petitioner has stated that the petitioner had not received any payment from the supplier namely Wondfo, and that only once that is completed payments will be made. The petitioner has promised to return the payments. However failed to make payments. Therefore I do not find any reasons to come to a conclusion that the impugned award either suffers from patent illegality or is in conflict with public policy of India. 87. In the result, this ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
