Bombay High Court sets aside orders condoning 7-year delay

Bombay High Court sets aside orders condoning 7-year delay

Narsi BenwalUpdated: Wednesday, February 19, 2020, 07:03 AM IST
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Mumbai High Court |

Mumbai: The Bombay High Court on Tuesday set aside orders passed by a single-judge bench of the HC recalling April 2011 orders by which an arbitrator was appointed by the court on behalf of the Adani Enterprises, which is involved in an arbitration dispute with a Liberia-based firm. This comes as a setback for the Adani Enterprises as the arbitrator had already settled the dispute.

The dispute arose from an agreement inked by Adani and the firm in March 2008, wherein the former was roped in to supply fuel to the latter's vessels. The agreement was, however, terminated within 12 days by the firm claiming Adani did not provide better quality and quantity of fuel for its vessels.

Accordingly, in June 2008, the firm raised a demand towards damages in the sum of $1,040,400.00 and the same was denied by Adani, who filed a counter-claim in the sum of $90,325.00 towards the adjusted cost of the fuel which was offloaded in the United Arab Emirates (UAE) where the vessel was diverted.

The parties then sought resolution of dispute as per the Arbitration and Conciliation Act, 1996 before a Tribunal comprising three Arbitrators, as agreed in the contract.

Subsequently, the firm appointed its arbitrator and after repeated follow-ups with Adani, it moved the HC, which in April 2011 appointed an arbitrator on behalf of Adani. This was because Adani did not appear before the single-judge bench of the HC, then.

Soon after the appointments of the arbitrators, the proceedings commenced and the parties made their submissions and also led evidence to substantiate their claims. However, just before the arbitrators were to pronounce the ruling, Adani moved a single-judge bench of the HC seeking to recall orders of April 2011 by which an arbitrator was appointed on its behalf. It accordingly urged the single-judge bench of HC to condone nearly seven years delay (for challenging the 2011 orders) and recall the same.

The single-judge bench, then 'reviewed' the April 2011 orders and set aside the appointment of the arbitrator on behalf of Adani. Aggrieved with this, the firm approached a division bench of Chief Justice Pradeep Nandrajog and Justice Bharati Dangre challenging the recall orders passed by the single-judge in a review. Before CJ Nandrajog's bench, Adani argued that since this dispute is an International Commercial Arbitration (IAC), the HC had no powers to appoint arbitrators and it is only the Supreme Court, which can recommend the names.

Having heard the contentions, CJ Nandrajog said, “A party cannot sleepover its rights and participate in further proceedings and one fine day approach the court to rectify the error. In the instant case, the defendant (Adani) participated in the arbitration proceedings till when after evidence was led by both parties, the review petition was filed in August 2018.”

“It needs no rocket science for anyone to infer that probably Adani got a premonition that it might lose. We, therefore, hold that Adani failed to show sufficient cause entitling it to 2680 days delay in seeking review of the order of April 2011 to be condoned,” CJ Nandrajog held.

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