Ocean Sparkle Limited. v. Reliance Naval And Engineering Ltd.

Ashwini

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION IN ITS COMMERCIAL DIVISION COMM ARBITRATION PETITION NO. 1447 OF 2019 Ocean Sparkle Limited

...Petitioner

Versus

Reliance Naval and Engineering Ltd.

...Respondent

Mr Sunip Sen, i/b Dastur Kalambi & Associates, for the Petitioner.

Mr Kakalia, i/b Mulla & Mulla, for the Respondent. Mr Omkar Raut, Senior Manager (Legal), present.

CORAM:

G.S. PATEL, J.

DATED:

13th December 2019 PC:- 1.

The Petition is under Section 29-A and Section 39(2) of the Arbitration and Conciliation Act 1996. The application is for an extension of time to complete the arbitration and an extension of mandate at 545 days. The matter reached late last evening after Court hours and therefore I kept it today.

2.

A few facts will be necessary. The Petitioner, Ocean Sparkle Ltd, provides port operation and management services including tugboats charter. It owns and operates a feet of these tugboats and also provides other marine services. Ocean Sparkle and the Respondents, Reliance Naval and Engineering Limited (formerly known as Reliance Defence and Engineering Limited and before that

known as Pipavav Defence and Ofshore Engineering Company Limited) entered into a Charter Party Agreement dated 5th June 2012, an Addendum dated 30th June 2014, another Addendum dated 10th June 2015, a further Charter Party Agreement dated 5th June 2012 and two further addenda. All these related to the charter by Reliance Naval of two tugboats from Ocean Sparkle. The precise details of the terms of the charter agreements are not presently necessary.

3.

I am told that disputes frst began in 2012. Some of these documents were executed thereafter and related to charter hire and reimbursement. Ultimately given the ongoing disputes, Ocean Sparkle fled Arbitration Application No. 132 of 2016 in the Andhra Pradesh High Court at Hyderabad under Section 11. On 27th October 2017, Ocean Sparkle sought permission of that High Court to withdraw that Arbitration Application and to fle it before this Court. That liberty was granted. On 12th January 2018, Ocean Sparkle fled Commercial Arbitration Application No. 24 of 2018 under Section 11 before this Court. By an order of 15th March 2018, a copy of which is at Exhibit 'A' at page 20, SJ Kathawalla J appointed Mr Rahul Narichania learned senior advocate of this Court, to decide the disputes between the parties. Mr Narichania fled his statement of disclosure on 15th March 2018 and entered upon the reference to his arbitration on that date. 4.

From paragraph 10 of this petition onwards there is a narrative of the proceedings in arbitration. I am not concerned with the allegations made about delay on the part of Reliance Naval.

5.

The original mandate of the learned arbitrator was to expire on 15th March 2019. The arbitration proceedings were incomplete. The parties consented to an initial extension of six months with efect from 15th March 2019. Thereafter both sides led evidence. The learned sole arbitrator heard the arguments on each side and on 2nd August 2019 directed both parties to fle their written submissions. At this time, he also issued directions in regard to the fees due from the parties for the hearing and the amounts payable towards administrative and other expenses. A copy of that order is at page 23 and as Exhibit 'C'. The direction was that each side was to pay Rs. 3,25,000/- towards the arbitrator's fees, Rs. 6,000/- as administrative expenses and Rs. 75,000/- each for the award. 6.

The time for arbitration was thus, after the initial extension, to expire on 15th September 2019. The learned arbitrator emailed the parties' advocates on 23rd August asking them to fle their written submissions no later than by 30th August 2019 and saying he could not grant any further indulgence. On 30th August 2019, Ocean Sparkle's advocates fled their written submissions and statement of costs. They also informed the learned arbitrator that Ocean Sparkle had made payment of the fees and administrative expenses and costs. The arbitrator confrmed this. There followed an email of 3rd September 2019 by which the arbitrator told the advocates for the Reliance Naval that he was yet to receive their written submissions. By another email of 6th September 2019, the learned arbitrator told the advocates for the Respondents that he had also not received Reliance Naval's shares of his fees and expenses. There was an email from Ocean Sparkle Advocates on 7th September 2019 essentially saying that it had no notice or intimation

whether Reliance Naval had indeed fled its written submissions but expressing willingness to exchange copies had they indeed done so. By an email of 7th September 2019 to both side's advocates the learned sole arbitrator said that the Reliance Naval had indeed fled its written submissions and that the parties were free to exchange copies for completeness of their record. That email is at exhibit 'J' at page 31. The parties did exchange their written submissions. On 10th September 2019, the learned sole arbitrator sent an email to both sides that his award would be ready in a day or two. In this email, Exhibit 'K' at page no. 32, the sole arbitrator pointed out that Reliance Naval had even then not paid the balance fees and requested it to do so by 13th September 2019. I am not concerned with the further administrative directions in that email. 7.

In fact, the award was ready on 11th September 2019. On that date the arbitrator emailed both sides saying that his award was ready and would be delivered on presentation of due authority, and, importantly, on payment by Reliance Naval of the remaining arbitral fees.

8.

This, I am told, is where matters rest even today. 9.

The arbitral mandate ended on 15th September 2019. The learned sole arbitrator has done everything conceivably possible to complete the arbitration within time and brought it in ahead of time by a few days. The extension is not required or sought by the tribunal per se. It is delayed only because Reliance Naval has not paid its share of this paltry amount of the arbitrator's fees.

10. The remaining paragraphs from 25 to 30 of the petition and about which there is no controversy show that Reliance Naval did not make payment of this amount, now in the aggregate of Rs.4,81,000/-, a trivial amount by any standards, to the arbitrator. That is the only reason for this petition and, in my view it is a quite exceptional case - where the arbitration is complete, the award is ready, but it cannot be brought to a conclusion only on account of non-payment by one side of arbitral fees. The amount itself is trivial and it is towards fees for professional services rendered by an arbitrator appointed by this Court.

11. I cannot imagine what justifcation there might possibly be for a commercial entity like Reliance Naval to fail to make this payment.

12. Some of this was discussed in Court yesterday when Mr Kakalia, learned advocate for Reliance Naval, took instructions from Mr Omkar Raut a representative of that company and who was present in Court yesterday and is present in Court today. Mr Kakalia agreed in fairness and on those instructions that there could be no question of asking the arbitrator to waive these fees or of Reliance Naval not making payment. However, he had no instructions to state when the Respondent itself would actually make this payment or even whether it could make this payment. That in itself would have led to all manner of unimaginable consequences. Therefore Mr Kakalia stated yesterday that he would ensure the payment of arbitrator's fees by a cheque drawn by his frm in favour of the learned sole arbitrator.

13. This is the context to the copy of the letter that Mr Kakalia gives me today. It is dated yesterday 12th December 2019, and is addressed to Mr Narichania, forwarding a cheque from Mulla & Mulla for the entire amount of the balance fees of Rs.4,81,000/- less applicable TDS. This was received in Mr Narichania's chambers last evening. A photocopy of the cheque is also attached. I take these documents on record and marked them 'X1' for identifcation with today's date.

14. Having regard to these circumstances, I do not think that an extension of as much as 45 days is at all necessary. I would request the learned sole arbitrator to fx a meeting at his earliest convenience before the present Court term ends since there is no remaining issue about the fees and since the letters of authority are already prepared and if possible to publish and deliver by 20th December 2019, or, at any rate, by 3rd January 2020.

15. The petition is disposed in these terms with no order as to costs. All concerned to act upon the authenticated copy of this order.

(G. S. PATEL, J)