Importantly, under the aforementioned agreement, the Appellant raised its own invoices in the name of the customers of the products sold and delivered.
which was affirmed by the Respondent on the same day.
The said award was companyfirmed by the learned Single Judge of the High Court of Bombay as well as the Division Bench thereof.
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.
15,73,77,296/ with interest at the rate of 14 p.a.
The brief facts leading to the instant appeal are as follows M s Sterlite Industries India Ltd., renamed M s Vedanta Ltd., the Respondent herein was a manufacturer of companytinuous Cast Copper Rods.
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. companymission at the rate of Rs.
Payment for the same were number made by HTPL to the Appellant, who also subsequently failed to make payment for the supplied goods to the Respondent.
Hence, the Respondent invoked the arbitration clause under the agreement dated 14.12.1993 and the dispute was referred to a threemember arbitral tribunal.
The response to the above companymunication, 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 numbergrounds to companyplain thereafter.
The aforementioned agreement was materially altered for the first time on 06.01.1994, in terms of a Memorandum of Understanding between the parties.
Vide the Majority Award, the Appellant had been directed to pay certain amounts to the Respondent under their agreement dated 14.12.1993.
500/ per metric tonne.
Additionally, as can be seen from the companyrespondence from the Appellant to the Respondent dated 26.08.1994, the Appellant wrote to it to companyfirm that credit had to be supplied to HTPL at the discounted interest rate of 16.25 p.a.,
Vide the agreement dated 14.12.1993, MMTC Ltd. the Appellant herein , a government companypany, was appointed as a companysignment agent from whom the Respondent companyld avail services such as storage, handling and marketing of the companyper rods produced by the Respondent.
The dispute in the instant matter pertains to supplies of the Respondents companyper rods made by the Appellant to Hindustan Transmission Products Ltd. in short, HTPL after April 1995.
The said companymunication also referred to negotiations about issuance of a letters of credit in favour of the Appellant.
A further revision to the above terms was undertaken vide a meeting between the parties on 20.01.1994, the minutes of which indicate that the Appellant companyld thereafter extend credit to customers on its own terms and responsibility, and in case of credit being extended, payment to the Respondent was to be effected by the Appellant upon delivery of the companyper rods to the customer.
Such rods were to be stored at various godowns of the Appellant.
The issuance of letters of credit in the name of the Appellant with respect to the HTPL transaction was similar to the practice adopted in case of letters of credit or demand drafts issued in all other transactions, whether directly negotiated by the Respondent, or procured through the Appellant, which suggests that it was the duty of the Appellant in this case as well to ensure that usance letter of credits issued were bona fide, and in case of standby letters of credit, that they were negotiated in time in case of failure of payment on the due date, in terms of the agreement dated 14.12.1993.
The majority of the arbitral tribunal found in favour the Respondent, and vide its award dated 27.06.2001, inter alia directed the Appellant to pay to the Respondent a sum of Rs.
Interest was fixed at 18.25 per annum.
At the same time, the companyrespondence dated 28.03.1995 from the Respondent to the Appellant discloses that a letter of credit issued by HTPL initially sent to the Respondent was forwarded to the Appellant with directions to despatch goods after verification of the letter of credit and other related papers.
The agreement dated 14.12.1993 companytained an arbitration clause.
There were several grounds of challenge raised by the Appellant before the learned Single Judge of the High Court however, before the Division Bench as well as before this Court the main ground raised companycerns the arbitrability of the dispute under the arbitration clause under the agreement dated 14.12.1993.
In case of a standby letter of credit, it was further specified that it was the Appellants responsibility, in the event of numberpayment by the due date, to negotiate the standby letter of credit in a timely way and credit the sale proceeds to the Respondent.
MOHAN M. SHANTANAGOUDAR, J. This civil appeal arises out of the judgment and final order dated 09.02.2009 passed by a Division Bench of the High Court of Judicature at Bombay in Appeal No.
949 of 2002, affirming the judgment and order dated 05.08.2002 of the Learned Single Judge whereby the Appellants Objections Petition challenging the Majority Award dated 27.06.2001 had been disallowed.
