O.M.P. (COMM) 260/2023 Page 1 of 43

* IN THEHIGH COURTOF DELHIAT NEW DELHI

% Judgment reserved on: 01.09.2026

Judgment pronounced on: 22.09.2026

# CNR No. DLHC010277772023

+ O.M.P. (COMM) 260/2023, I.A. 13360/2023 & I.A.13361/2023

STEEL AUTHORITY OF INDIA .....Petitioner

Through: Mr. Siddharth Yadav, Sr. Adv.

with Mr. Ashish Rana, Mr.

Gaurav Raj, Mr. Amitabh Yash

Singh & Mr. Narendra, Advs.

versus

NORVIC SHIPPING NORTH AMERICA INC .....Respondent

Through: Mr. Amitava Majumdar, Ms.

Tripti Sharma, Mr. Abhiesumat

Gupta & Mr. Ishan Parashar,

Advs.

CORAM:

HON'BLE MR. JUSTICE AVNEESH JHINGAN

J U D G M E N T

1. This petition is filed under Section 34 of the Arbitration and

Conciliation Act, 1996 (for short ‘the Act’) against the arbitral award

dated 19.10.2022 passed by a three-member arbitral tribunal (for short

‘the tribunal’) and rectified vide order dated 21.02.2023 (for brevity

‘the impugned award’).

BRIEF FACTS

2. M/s Norvic Shipping North America Inc. (for short ‘the

respondent’) is a company incorporated under the laws of Canada and

O.M.P. (COMM) 260/2023 Page 2 of 43

engaged in the transportation of dry bulk cargoes including limestone.

Steel Authority of India Limited (for short ‘the petitioner’) is a listed

public sector undertaking engaged in the manufacture of steel. The

parties to the lis on 05.04.2019 executed a Contract of Affreightment

(for short ‘CoA’) for shipping 16,00,000 metric tons of limestone

(hereinafter referred to as ‘the cargo’) over multiple voyages. The

cargo was to be shipped from the United Arab Emirates to India. The

CoA required the respondent to nominate vessels.

2.1 During the execution of the CoA, disputes arose between the

parties inter alia in relation to the calculation of laytime at different

discharge ports and demurrage. The respondent invoked arbitration on

11.06.2020 by issuing a notice under Section 21 of the Act.

2.2 The dispute before the tribunal pertained to eight Motor Vessels

(for short ‘MV’). The claim in respect of MV ‘River Globe’ was

rejected by the tribunal. The present petition pertains to the remaining

seven vessels, namely, MV ‘Pegasus’, MV ‘Esperia’, MV ‘Cas

Avanca’, MV ‘Vishva Ekta’, MV ‘Jay’, MV ‘Blue Ripple’ and MV

‘Sparrow’ (hereinafter collectively referred to as ‘seven vessels’).

2.3 The vessel-wise details are set out hereunder:

i. MV ‘Pegasus’ – Loaded the cargo at Mina Saqr Port on

19.04.2019 and proceed to Paradip Port for the first discharge and

thereafter to Haldia Port. On 29.04.2019, a Notice of Readiness (for

short ‘NOR’) was issued at Paradip Port. The operation was

suspended by the port authorities on account of the incoming Cyclone

O.M.P. (COMM) 260/2023 Page 3 of 43

‘Fani’ and the vessel was instructed on 03.05.2019 to discharge the

cargo at Vizag Port. The vessel arrived at Vizag Port on 05.05.2019

and the NOR was issued on the same date. After discharging the

cargo, the vessel proceeded to Haldia Port. Upon arrival at Sandheads

Anchorage, the NOR was issued on 10.05.2019. The vessel was called

for berthing on 17.05.2019 but could not berth on account of generator

problem. Without prejudice to the earlier NOR another NOR was

issued on 17.05.2019. The berth was given on 18.05.2019 but the

vessel actually berthed on 19.05.2019. The cargo was discharged on

20.05.2019. Demurrage at the rate of USD 12,100 per day was

claimed in terms of Clause 28 of the CoA and Box 15.

ii. MV ‘Esperia’ – The first port of discharge was changed from

Visakhapatnam Port to Paradip Port where the NOR was issued upon

arrival on 10.07.2019. The total time available for discharge was five

days and six hours. The berthing instructions at Paradip Port were

received on 27.07.2019 but the cargo could not be discharged owing

to a misunderstanding between the owner of the vessel and the

respondent. Consequently, the vessel re-anchored on 27.07.2019.

Ultimately the vessel re-berthed on 31.07.2019 and NOR issued on

10.07.2019 was accepted by the petitioner on 31.07.2019. After

discharging the cargo, the vessel reached Haldia Port on 03.08.2019

and issued the NOR on the same day. Discharge was completed on

07.08.2019. Demurrage was claimed for eleven days, eighteen hours

and fourteen minutes.

iii. MV ‘Cas Avanca’ – Arrived at Vizag Port and tendered the

O.M.P. (COMM) 260/2023 Page 4 of 43

NOR on 19.03.2020 outside office hours. The laytime commenced on

21.03.2020 but discharge had began on 20.03.2020 and was

completed on 25.03.2020. The vessel proceeded to Haldia Port where

the NOR was issued on 27.03.2020. However, it could not get a berth

until 01.04.2020. Discharge commenced on 01.04.2020 and was

completed on 07.04.2020. Demurrage was claimed for three days,

eleven hours and thirteen minutes.

iv. MV ‘Vishva Ekta’ – The vessel arrived at Paradip Port on

10.04.2020 and tendered the NOR on the same day but berthed on

14.04.2020. The discharge of cargo commenced on 14.04.2020 and

was completed on 16.04.2020. Thereafter, the vessel reached

Sandheads Anchorage, Haldia Port and tendered the NOR on

16.04.2020. It berthed on 21.04.2020 and completed discharge on

22.04.2020. Demurrage was claimed for one hour and thirty-five

minutes.

v. MV ‘Jay’ – The loading was completed at Mina Saqr Port on

09.04.2020. The vessel reached Paradip Port on 20.04.2020 and

tendered the NOR on the same day. It berthed on 25.04.2020 and

discharge was completed on 27.04.2020. Thereafter, the vessel

reached Haldia Port and tendered the NOR on 28.04.2020 but berthed

on 29.04.2020. The discharge of cargo commenced on the same day

and was completed on 01.05.2020. Demurrage was claimed for one

day, ten hours and thirteen minutes.

vi. MV ‘Blue Ripple’ – The vessel arrived at Paradip Port and

O.M.P. (COMM) 260/2023 Page 5 of 43

tendered the NOR on 05.05.2020. After completing the discharge of

cargo on 08.05.2020, the vessel arrived at Sandheads Anchorage on

08.05.2020 and thereafter at Haldia Port on 12.05.2020. It was pleaded

that no berth was available from 08.05.2020 to 11.05.2020 and

consequently the discharge was completed on 13.05.2020. No

demurrage was claimed and only the balance freight was claimed.

vii. MV ‘Sparrow’ – The vessel arrived at Vizag Port on 07.05.2020

and tendered the NOR. The discharge of cargo was completed on

12.05.2020. Thereafter, the vessel arrived at Sandheads Anchorage on

13.05.2020 and tendered the NOR outside office hours, consequently

the laytime commenced on 15.05.2020. The Haldia Port authorities on

18.05.2020 issued an advisory to the vessel for anchorage in view of

the approaching cyclone, the Master could decide to heave up anchor

and proceed to sea. The vessel proceeded to sea on 19.05.2020 and

returned on 21.05.2020. It is pleaded that as no berth was available,

the vessel berthed on 24.05.2020 and completed discharge on

26.05.2020. Demurrage was claimed for 3 days, 22 hours and 52

minutes.

2.4 The amounts claimed and awarded for seven vessels towards

freight, demurrage and interest till filling of the statements of claims

are tabulated below:

Ship

ment

No.

Vessel 120 days

from last

date of

Discharge

Freight

(in USD)

Demurrage

(in USD)

Amount

due and

payable (in

USD [A]

Interest

claimed

under

each Part

above [B]

O.M.P. (COMM) 260/2023 Page 6 of 43

1

st

M.V.

Pegasus

17

th

Sep.

2019

454.87 63,306.3 65,761.26 16,863.19

10

th

M.V.

Esperia

5

th

Dec.

2019

14,704.86 139,981.88 154,686.74 23,720.69

31

st

M. V.

Cas

Avanca

5

th

Aug.

2020

49,905.68 3,798.06 53,703.74 3,478.24

32

nd

M. V.

Vishva

Ekta

20 Aug.

2020

42,556.50 798.26 43,354.76 2,594.16

34

th

M.V.

Jay

29 Aug.

2020

50,038-97 17,250.90 67,289. 87 3,827.23

36

th

MV

Blue

Ripple

10 Sep.

2020

39,373.73 0.00 39,373.73 2,084.11

38

th

M.V.

Sparrow

23 Sep.

2020

43,515.04 47,828 .61 91,343. 64 4.444.56

2.5 Interest at the rate of 12% on the amounts claimed from the date

of filing of the claims till the date of the award and further interest at

the rate of 12% from the date of the award till realisation was also

claimed besides legal costs.

2.6 The respondent was granted interest as per LIBOR + 3

percentage points or 12% per annum whichever is less, from the date

mentioned in the claim petition till realisation. Costs of ₹10 lakhs

were awarded to the claimant. Hence, the present petition.

SUBMISSIONS OF THE PETITIONER

3. Learned senior counsel for the petitioner in respect of MV

‘Pegasus’ contends that the NOR issued at Haldia Port on 10.05.2019

was premature as the vessel when called to berth on 17.05.2019 was

O.M.P. (COMM) 260/2023 Page 7 of 43

unable to do so owing to a generator problem. A revised NOR was

issued on 17.05.2019 and thereafter the vessel berthed on 19.05.2019.

Reliance is on the literature “Notices of readiness in a nutshell”

(hereinafter ‘literature’) provided by West of England P&I Club (for

short ‘the club’) to contend that laytime would not commence from

the issuance of an invalid NOR and that an invalid NOR shall not be

validated by subsequent events. Relevant part of the literature is

reproduced below:

“1) The general requirements for a valid NOR:

There are three requirements to be met in order to tender a

valid NOR:

a) The vessel must have reached the agreed place (being an

“arrived ship”);

b) The vessel must be “physically ready”; and

c) The vessel must be “legally ready”.

b) The vessel must be physically ready: In order to be

ready the ship must be prepared in such a way that it is able

to commence cargo operations without delay and to comply

with charterers’ orders whenever they are given. The vessel

must therefore be “physically ready” and “legally ready”.

The requirement for the vessel to be physically ready will

include that the holds are suitable to receive cargo in

accordance with the charter.

The vessel generally needs to be ready in all respects to load

or to discharge the whole cargo. This extends to all

equipment required for the cargo operations (such as,

hatches, cargo gear and equipment etc.). …. It does mean

that the vessel has to be ready and able to commence the

charter service required of the vessel without delay when

charterers give orders to load or discharge.

5) Does an invalid NOR become valid once the

requirements are met?

O.M.P. (COMM) 260/2023 Page 8 of 43

No. If the NOR is tendered before the ship arrives at the

contractual destination or is not “ready”, the NOR is invalid.

An invalid NOR will never become valid. The owners,

therefore, have to serve a new NOR when the conditions are

met in order not to have the charter cancelled or run the risk

that time does not count. If there is any doubt, it is

recommended to serve fresh NORs without prejudice to the

previous NOR/s.

6) What is the effect of tendering an invalid NOR?

b) NOR tendered during the charter -commencement of

laytime and hire

With regard to the running of laytime or hire, if the NOR is

invalid, time will not start to count. If however charterers

start using the ship (loading or discharging), there is an

argument that time will start to count from that moment.”

3.1 The submission is that the literature was issued by the Club

which was writing on behalf of the respondent. The grievance is that

the calculation of the laytime for MV ‘Pegasus’ should have

commenced from 20.05.2019 and not from 10.05.2019. The tribunal

without recording reasons or detailing the evidence relied upon erred

in accepting that the valid NOR was issued on 10.05.2019.

3.2 For MV ‘Esperia’, it is argued that albeit the NOR was issued

on 10.07.2019 but due to the conflict between the respondent and the

owner of the vessel the Master of the vessel on 27.07.2019 refused to

allow discharge. The port authorities shifted the vessel to anchorage

and it ultimately re-berthed on 31.07.2019 and the NOR was accepted

by the petitioner. The contention is that the NOR dated 10.07.2019

was false and that the tribunal failed to note that the vessel was not

ready on 10.07.2019. The submission is that calculation of the laytime

O.M.P. (COMM) 260/2023 Page 9 of 43

should have commenced from 31.07.2019.

3.3 For MVs ‘Cas Avanca’, ‘Vishva Ekta’, ‘Jay’, ‘Blue Ripple’ and

‘Sparrow’ the common contention is that at the time of arrival of the

vessels COVID-19 was declared a pandemic by the World Health

Organization (WHO). In terms of Clauses 55 and 56 of the CoA force

majeure had been invoked and laytime was to be calculated

accordingly but this was not considered by the tribunal. The emphasis

is that the tribunal relied upon the Office Order dated 23.03.2020

issued by the Government of India (for short ‘office order dated

23.03.2020’) but failed to consider the Letter dated 31.03.2020 issued

by the VIZAG Chamber of Commerce & Industry (for short ‘Vizag

letter dated 31.03.2020’), the Ministry of Shipping Circular No. PD-

14300/4/2020-PD VII dated 31.03.2020 (for short ‘Ministry circular

dated 31.03.2020’), the Trade Circular dated 05.04.2020 issued by the

Kolkata Port Trust, Haldia Dock Complex (for short ‘Haldia circular

dated 05.04.2020’), the Ministry of Shipping Circular No. PD-

14033/4/2020-PD VII dated 21.04.2020 (for short ‘Ministry circular

dated 21.04.2020’) and Section 53 of the Major Port Trust Act, 1963

(for short ‘Port Act’).

3.4 The contention is that the tribunal failed to consider the

combined effect of the Ministry circulars dated 31.03.2020,

21.04.2020 and Section 53 of the Ports Act pursuant to which no

demurrage would be levied on any vessel consequent to force majeure.

3.5 It is further contended that the petitioner being a ‘State’ within

O.M.P. (COMM) 260/2023 Page 10 of 43

the meaning of Article 12 of the Constitution of India was entitled to

invoke the benefit of force majeure. The submission is that the

evidence produced by the petitioner was discarded and no reason was

assigned for not considering the force majeure. It is submitted that the

judgments relied upon by the respondent before the tribunal were

wrongly relied upon and were distinguishable on facts.

3.6 With regard to MV ‘Sparrow’ the further challenge to the

awarded amount is that the tribunal failed to consider the aspect that

apart from the COVID-19 situation the vessel was also affected by the

cyclone and the period affected by the cyclone was not excluded.

3.7 It is argued that the impugned award is liable to be set aside as

the tribunal failed to apply judicial mind, consider the voluminous

documents and to deal with the contentions raised. The grievance is

that the award is non-speaking and is in violation of principles of

natural justice. Reliance is placed on the decisions of the Supreme

Court in Dyna Technologies Pvt. Ltd. v. Crompton Greaves Limited,

(2019) 20 SCC 1, McDermott International Inc. v. Burn Standard

Co. Ltd. & Ors., 2006 11 SCC 181 and the decision of the Division

Bench of the Calcutta High Court in State of Bengal v. Bharat

Vanijya Eastern Pvt. Ltd., MANU/WB/2778/2019 to buttress the

submission that an award bereft of reasons is liable to be set aside.

3.8 Reliance is on the decisions of the Supreme Court in Vijay

Karia and Ors. v. Prysmian Cavi E Sistemi SRL and Ors., (2020) 11

SCC 1 and Ssangyong Engineering & Construction Co. Ltd. v.

O.M.P. (COMM) 260/2023 Page 11 of 43

National Highways Authority of India, (2019) 15 SCC 131 to fortify

the contention that the language of Sections 34 and 48 of the Act is on

the same footing. It is contended that ignoring the submissions of the

petitioner in totality and failure to record reasons vitiates the award for

being contrary to public policy.

3.9 Lastly, reliance is placed on Halliburton Offshore Services Inc.

v. Vedanta Limited & Anr., 2020 SCC OnLine Del 2068 to contend

that open-ended interest cannot be granted to the respondent, leaving it

uncertain as to which rate of interest would be applicable and who

would decide it.

SUBMISSIONS OF THE RESPONDENT

4. Per contra, reliance is on Clause 36 of the CoA to support the

argument that the NOR is to be tendered upon the vessel reaching the

port limits of discharge port and is not dependent on the availability of

berth. Clause 41 of the CoA is pressed into service to support the

contention that the period of inefficiency is not to be considered as

laytime and it is not that the laytime is to be calculated afresh

thereafter. The decision in Steel Authority of India Ltd. v. M/s

Dampskibsselskabet Norden A/S, MANU/DE/1055/2014 is relied

upon to contend that this view on similar clauses was upheld by the

Supreme Court.

4.1 The argument of learned senior counsel for the petitioner that

the Ministry circulars dated 31.03.2020 and 21.04.2020 were

produced by the petitioner but were not considered is refuted. The

O.M.P. (COMM) 260/2023 Page 12 of 43

submission is that these circulars were produced by the respondent to

show that the case was not one of force majeure as cargo activities

were declared to be essential services. Moreover, the word used in

Clause 56 of the CoA is ‘prevented’ and not ‘hindered’. The vessels

were not prevented from discharging the cargo in view of the Office

Order dated 23.03.2020. Further, the Haldia circular dated 05.04.2020

relied upon by the petitioner providing that no demurrage on any

vessel was related to demurrage to be levied by the port and not by a

private party.

4.2 It is contended that the objection that MV ‘Sparrow’ faced the

cyclone is an argument beyond the pleadings as no such plea was

raised in the statement of defence. In any case, the suspension of work

due to the cyclone had not affected the unloading of cargo but no berth

was available on that day and the vessel could not discharge cargo as

per schedule.

4.3 The grant of interest is defended by stating that the applicable

rate of interest is unambiguous i.e. LIBOR + 3 percentage points or

12% per annum whichever is less.

4.4 It is argued that the reliance placed by learned senior counsel

for the petitioner on the decisions in Vijay Karia (supra) and

Ssangyong Engineering (supra) does not enhance the case of the

petitioner as it is held therein that the ground of ‘patent illegality’ is

not available in international arbitration. The submission is that a non-

speaking award and the alleged non-judicial approach of the tribunal

O.M.P. (COMM) 260/2023 Page 13 of 43

constitutes patent illegality and is not a ground available in an

international arbitration.

4.5 The reliance placed on McDermott International Inc. (supra) is

refuted on the ground that the decision was rendered prior to the 2015

amendment to the Act. With regard to Dyna Technologies (supra) and

Bharat Vanijya Eastern Pvt. Ltd.(supra) it is submitted that the cases

were not of international arbitration.

4.6 The limited scope of interference under Section 34 of the Act in

an international award is emphasised stating that the tribunal had gone

into the facts, submissions of the parties, considered the evidence on

record and agreed with the interpretation advanced by the respondent.

It is contended that the Court cannot sit in appeal over these aspects.

RELEVANT CLAUSES AND STATUTES

5. Before proceeding further, it would be relevant to reproduce

Sections 2(1)(f) and 2(2) of the Act, Section 53 of the Port Act and

the relevant clauses of the CoA:

“2. Definitions. - (1) In this Part, unless the context

otherwise requires, -

*** *** ***

(f) “international commercial arbitration” means an

arbitration relating to disputes arising out of legal

relationships, whether contractual or not, considered as

commercial under the law in force in India and where at

least one of the parties is-

(i) an individual who is a national of, or habitually resident

in, any country other than India; or

O.M.P. (COMM) 260/2023 Page 14 of 43

(ii) a body corporate which is incorporated in any country

other than India; or

(iii) [* * *] [Omitted words 'a company or' by Act No. 3 of

2016 dated 31.12.2015.] an association or a body of

individuals whose central management and control is

exercised in any country other than India; or

(iv)the Government of a foreign country;

*** *** ***

Scope

(2) This part shall apply where the place of arbitration is in

India:

[Provided that subject to an agreement to the contrary, the

provisions of sections 9,27 and [clause (a)] of sub-section

(1) and sub-section (3) of section 37 shall also apply to

international commercial arbitration, even if the place of

arbitration is outside India, and an arbitral award made or

to be made in such place is enforceable and recognized

under the provisions of Part II of this Act.]”

“53. Exemption from, and remission of rates or

charges. - A Board may, in special cases and for reasons

to be recorded in writing, exempt either wholly or partially

any goods or vessels or class of goods or vessels from the

payment of any rate or of any charge leviable in respect

thereof according to any scale in force under this Act or

remit the whole or any portion of such rate or charge so

levied.”

Clause 28

At loading port, demurrage, if any, incurred by the vessel

in the event Charterers fail to maintain the loading rate

guaranteed here-in shall be at the rate of USD 12.100/-

(U.S. Dollars Twelve Thousand One Hundred only) per

day or prorate.

At discharging port, demurrage, if any, incurred by the

O.M.P. (COMM) 260/2023 Page 15 of 43

vessel in the event Charterers fail to maintain the

discharging rate guaranteed here-in shall be at the rate of

US$ 12.100/- (U.S. Dollars Twelve Thousand One

Hundred only) per day or prorate.

Despatch, if any, earned by the Charterers at the

loading/discharging port, as a result of completion of

loading/discharging the vessel earlier than here-in

provided, shall be calculated at half the demurrage rate on

the basis of working time saved.

Laytime for loading and discharing to be non-reversible.

Clause 35

Notice of Readiness of the vessel to discharge cargo

(Master’s Notice of Readiness) to be served, in writing, in

business hours between 0930 hours and 1630 hours on

working days (Monday to Friday) between 0930 hours to

1200 hours on Saturday at each discharge port to port

office of charterers as per details given below:-

VISAKHAPATNAM

Steel Authority of India Limited

Branch Transport & Shipping Office,

Harbour Approach Road,

Visakhapatnam – 530001

Fax +91 891 2563698/91 891 2562308

Phone +91 891 2563041/ 91 891 2563611/ 91 891

2704074

Email:

PARADIP

Steel Authority of India Limited

Branch Transport & Shipping Office,

Ispat Bhawan, Paradip – 754142

O.M.P. (COMM) 260/2023 Page 16 of 43

Fax +91-6722-222730

Phone +91-6722-222631/ +91-6722-222526

Email:

HALDIA

Steel Authority of India Limited

The Branch Manager,

Branch Transport & Shipping Office,

Super Market Building 1

st

Floor,

Durgachak, Haldia-721602,

Fax +91 -3224-274249

Phone + 91-3224-274194/91 3224 274218

Email:

Clause 36 Time Counting Provision:

At each discharging port, even if at second discharge port

the vessel arrives on demurrage, time to count 24 hours

after Notice of Readiness is served on arrival of the vessel

within port limits at port of discharge and whether in berth

or not and in free pratique and ready in all respects to

discharge the cargo, even if used. If the turn time of 24

hours expires on Saturday afternoon, Sundays or Charter

party holidays, laytime will commence at 0600 hours on

first working days Sundays. Charter party holidays

included, even if used. If discharge operations begins

before commencement of laytime, such duration will be

deemed as free period only. Time shall not count between

noon on Saturday and 8 a.m. on Monday nor between 5

p.m. (noon if Saturday), on the last working day

proceeding a Charter party holiday and 8 a.m. on the first

working days thereafter, unless used and if used actual

time used to count, unless the vessel is already on

demurrage.

If the vessel is ordered to Haldia and is unable to give

O.M.P. (COMM) 260/2023 Page 17 of 43

Notice of Readiness by reasons of congestion at Haldia,

time shall commence to count 24 hrs after Notice of

vessel’s arrival off Sandheads has been given by radio to

Charterers or their agents and received by them during

ordinary office hours. Whilst waiting off Sandheads

Sundays C/P Holidays and Saturdays after 12 noon until 8

a.m. Monday not to count unless vessel is on demurrage.

Time used in proceedings from Sandheads to Haldia not to

count.

Laytime to be reversible between discharge port (s).

Clause 41

In the event of breakdown of Gears/ Cranes and other

equipment of the vessel by reason of disablement or

insufficient power, etc. the period of such inefficiency

shall not count as laytime, on a prorata basis to the number

of cranes affected by such cause.

Clause 50 Arbitration Clause

The disputes or differences of any kind arising out of or in

connection with or concerning the contract shall be settled

under the rules of Delhi International Arbitration Centre.

The number of the Arbitrators shall be three from amongst

the members of the DAC Panel of arbitrators. The

language of arbitration proceedings shall be English. The

place of arbitration shall be Delhi (International

Arbitration Centre at Delhi). The provisions of Arbitration

and Conciliation Act, 1996 shall apply to the arbitration

proceedings. The Court at Delhi shall have the exclusive

jurisdiction upon any matter arising out of this contract.

Clause 55

At the discharge port, time lost by reason of all or any of

the following causes shall not be counted as discharge time

unless vessel is already on demurrage.

a) War, Rebellion, Tumult, Political Disturbances,

Insurrectioins

O.M.P. (COMM) 260/2023 Page 18 of 43

b) Lockouts, Strike, Riots, Civil Commotions.

c) Epidemic, Quarantines, Landslips, Floods, Frost or

Snow, Bore Tides, Bad Weather;

d) Stoppage of work whether partial or general by

workmen….. men or other hands essential to the

working of the vessel or discharge of cargo from the

vessel;

e) Accidents at the ……

f) Intervention of Sanitary customs and/or other

constituted authorities.

g) Any other causes beyond the control of the Charterers.

Clause 56 Force Majeure Clause

If either Shippers/charterers be prevented from discharging

their or its obligations under this agreement by reasons of

arrests or restraints by Government or people, War

Blockade, Revolution, Insurrections, Mobilization, Strikes,

Civil commotions, Acts of God, Plague or other epidemic

breakdowns of mining, Rail, Road or Port equipment,

destruction of materials by fire or flood or other natural

calamity interfering with production, loading or

discharging, the obligations under this agreement shall be

deferred to a date be agreed considering the length of time

required to resume natural operations.

However, if any one occurrence of force majeure continues

uninterrupted for 30 days or more if the total of such

occurrence within the agreed shipment period adds to 90

days or more. Owners/charterers may opt to cancel this

agreement without in any way being liable to the other

party for such cancellation. Party invoking protection

under such clause within 20 days of the occurrence of

force majeure put the other party on notice supported by

Certificate of Chamber of Commerce or concerned

Government authority and shall likewise intimate the

cessation of such causes. The delivery shall be resumed by

O.M.P. (COMM) 260/2023 Page 19 of 43

the party/parties fifteen (15) days from cessation of force

majeure causes.”

ANALYSIS

6. Section 2(1)(f) of the Act defines ‘international commercial

arbitration’ and covers legal relationships, whether contractual or not,

considered commercial under the law in force in India, where at least

one of the parties satisfies the requirements specified therein,

including where a body corporate is incorporated in any country other

than India. In the case in hand, the respondent is a company

incorporated under the laws of Canada and fulfils the condition laid in

Section 2(1)(f) of the Act and the arbitration is an international

commercial arbitration. In the definition under Section 2(1)(f) pivotal

is party for determining the nature of the arbitration. For determining

the applicability of Part I of the Act, Section 2(2) adopts a place-focal

approach and provides that Part I applies where the place of arbitration

is in India. In the present case, Clause 50 of the CoA stipulates Delhi

as the seat of arbitration. Reference in this regard may be made to the

following judgments of the Supreme Court:

6.1 In Balaji Steel Trade v. Fludor Benin S.A., (2026) 5 SCC 802

it was held:

“25.Section 2(1)(f) of the 1996 Act defines ‘international

commercial arbitration’ as arbitration relating to disputes

arising out of legal relationships, whether contractual or

not, considered as commercial under the law in force in

India and where at least one of the parties is a foreign

national, whether that party is an individual, a body

corporate, an association or body of individuals or a

O.M.P. (COMM) 260/2023 Page 20 of 43

foreign Government. Respondent 1 being a company

incorporated under the laws of Benin, the present dispute

squarely falls within the ambit of international commercial

arbitration. Once this characterisation is made, Section

2(2) of the Act becomes immediately relevant, for it

stipulates that Part I shall apply only where the place of

arbitration is in India, thereby mandating that Part I stands

excluded where the parties have chosen a foreign seat.

26.This Court has consistently held, beginning with Bharat

Aluminium Co. v. Kaiser Aluminium Technical Services

Inc. [Bharat Aluminium Co. v. Kaiser Aluminium

Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC

(Civ) 810 : (2013) 180 Comp Cas 311] (BALCO), that Part

I of the 1996 Act has no application to arbitrations seated

outside India. The seat has a juridical significance in

arbitration law: it determines the courts that exercise

supervisory jurisdiction over the arbitral proceedings.”

6.2 In Pasl Wind Solutions (P) Ltd. v. GE Power Conversion

(India) (P) Ltd., (2021) 7 SCC 1 it was held:

“38. As a matter of fact, the reason for the insertion of the

proviso to Section 2(2) by the Arbitration and Conciliation

(Amendment) Act, 2015 was because the judgment

in Bhatia International v. Bulk Trading S.A. [Bhatia

International v. Bulk Trading S.A., (2002) 4 SCC 105]

[“Bhatia”] had muddied the waters by holding that Section

9 would apply to arbitrations which take place outside

India without any express provision to that effect. The

judgment in Bhatia [Bhatia International v. Bulk Trading

S.A., (2002) 4 SCC 105] has been expressly overruled by a

five-Judge Bench in Balco [Balco v. Kaiser Aluminium

Technical Services Inc., (2012) 9 SCC 552 : (2012) 4 SCC

(Civ) 810] . Pursuant thereto, a proviso has now been

inserted to Section 2(2) which only makes it clear that

where, in an arbitration which takes place outside India,

assets of one of the parties are situated in India and interim

O.M.P. (COMM) 260/2023 Page 21 of 43

orders are required qua such assets, including preservation

thereof, the courts in India may pass such orders. It is

important to note that the expression “international

commercial arbitration” is specifically spoken of in the

context of a place of arbitration being outside India, the

consequence of which is an arbitral award to be made in

such place, but which is enforced and recognised under the

provisions of Part II of the Arbitration Act. The context of

this expression is, therefore, different from the context of

the definition of “international commercial arbitration”

contained in Section 2(1)(f), which is in the context of

such arbitration taking place in India, which only applies

“unless the context otherwise requires”. The four sub-

clauses contained in Section 2(1)(f) would make it clear

that the definition of the expression “international

commercial arbitration” contained therein is party-centric

in the sense that at least one of the parties to the arbitration

agreement should, inter alia, be a person who is a national

of or habitually resident in any country other than India.

On the other hand, when “international commercial

arbitration” is spoken of in the context of taking place

outside India, it is place-centric as is provided by Section

44 of the Arbitration Act. This expression, therefore, only

means that it is an arbitration which takes place between

two parties in a territory outside India, the New York

Convention applying to such territory, thus making it an

“international” commercial arbitration.”

6.3 The Supreme Court in Amway (India) Enterprises (P) Ltd. v.

Ravindranath Rao Sindhia, (2021) 8 SCC 465 held:

“In this view of the matter, the argument that there is no

international flavour to the transaction between the parties

has no legs to stand on. Indeed, an analysis of Section

2(1)(f) would show that whatever be the transaction

between the parties, if it happens to be entered into

between persons, at least one of whom is either a foreign

national, or habitually resident in, any country other than

O.M.P. (COMM) 260/2023 Page 22 of 43

India; or by a body corporate which is incorporated in any

country other than India; or by the Government of a

foreign country, the arbitration becomes an international

commercial arbitration notwithstanding the fact that the

individual, body corporate, or government of a foreign

country referred to in Section 2(1)(f) carry on business in

India through a business office in India. This being the

case, it is clear that the Delhi High Court had no

jurisdiction to appoint an arbitrator in the facts of this

case.”

(Emphasis supplied)

7. The scope of interference in an international commercial

arbitration is limited. After the 2015 amendment to Section 34 of the

Act, the grounds available under Section 34(2A) for challenging a

domestic award are not applicable to an international commercial

arbitration. Reference in this regard be made to the following

decisions of the Supreme Court:

7.1 In Patel Engg. Ltd. v. North Eastern Electric Power Corpn.

Ltd., (2020) 7 SCC 167it was held:

“18. The Law Commission in its 246th

Reportrecommended the insertion of the ground of

“patent illegality” for setting aside a domestic award by

the insertion of sub-section (2-A) in Section 34 of the

Act. The relevant extract from the Report of the Law

Commission is extracted hereinbelow:

“35. It is for this reason that the Commission has

recommended the addition of Section 34(2-A) to

deal with purely domestic awards, which may also

be set aside by the court if the court finds that such

award is vitiated by “patent illegality appearing on

the face of the award”. In order to provide a

O.M.P. (COMM) 260/2023 Page 23 of 43

balance and to avoid excessive intervention, it is

clarified in the proposed proviso to the proposed

Section 34(2-A) that such “an award shall not be set

aside merely on the ground of an erroneous

application of the law or by reappreciating

evidence”. The Commission believes that this will

go a long way to assuage the fears of the judiciary

as well as the other users of arbitration law who

expect, and given the circumstances prevalent in our

country, legitimately so, greater redress against

purely domestic awards. This would also do away

with the unintended consequences of the decision of

the Supreme Court inONGC v. Saw Pipes Ltd.

[ONGC v. Saw Pipes Ltd., (2003) 5 SCC 705] ,

which, although in the context of a purely domestic

award, had the unfortunate effect of being extended

to apply equally to both awards arising out of

international commercial arbitrations as well as

foreign awards, given the statutory language of the

Act.”

(emphasis supplied)

To give effect to the said recommendation, it was

suggested that:

“18. … (iii) After the Explanation in sub-section (2),

insert sub-section “(2-A) An arbitral award arising

out of arbitrations other than international

commercial arbitrations, may also be set aside by

the court if the court finds that the award is vitiated

by patent illegality appearing on the face of the

award:

Provided that an award shall not be set aside merely

on the ground of an erroneous application of the law

or by reappreciating evidence”.

[Note.—The proposed Section 34(2-A) provides an

additional, albeit carefully limited, ground for

setting aside an award arising out of a domestic

O.M.P. (COMM) 260/2023 Page 24 of 43

arbitration (and not an international commercial

arbitration). The scope of review is based on the

patent illegality standard set out by the Supreme

Court inONGC v. Saw Pipes Ltd. [ONGC v. Saw

Pipes Ltd., (2003) 5 SCC 705] The proviso creates

exceptions for erroneous application of the law and

reappreciation of evidence, which cannot be the

basis for setting aside awards.]”

(emphasis supplied)

19. Pursuant to the recommendations of the Law

Commission, the 1996 Act was amended by Act 3 of

2016, which came into force w.e.f. 23-10-2015. The

ground of “patent illegality” for setting aside a domestic

award has been given statutory force in Section 34(2-A)

of the 1996 Act. The ground of “patent illegality” cannot

be invoked in international commercial arbitrations

seated in India. Even in the case of a foreign award under

the New York Convention, the ground of “patent

illegality” cannot be raised as a ground to resist

enforcement, since this ground is absent in Section 48 of

the 1996 Act. The newly inserted sub-section (2-A) in

Section 34, reads as follows:

“34. (2-A) An arbitral award arising out of

arbitrations other than international commercial

arbitrations, may also be set aside by the Court, if the

Court finds that the award is vitiated by patent

illegality appearing on the face of the award:

Provided that an award shall not be set aside merely

on the ground of an erroneous application of the law

or by reappreciation of evidence.”

7.2 In Ssangyong Engineering (supra) it was held:

“42. Given the fact that the amended Act will now apply,

and that the “patent illegality” ground for setting aside

arbitral awards in international commercial arbitrations

will not apply, it is necessary to advert to the grounds

O.M.P. (COMM) 260/2023 Page 25 of 43

contained in Sections 34(2)(a)(iii) and (iv) as applicable

to the facts of the present case.”

(Emphasis supplied)

8. Section 53 of the Port Act empowers the Board in special cases

to consider the scale in force under the Act and for reasons to be

recorded in writing, to wholly or partially exempt goods, vessels or

class of goods from payment of any rate/charges leviable. The Board

may remit the charges so levied in whole or in part.

9. Clause 28 of the CoA provides the demurrage at the rate of

USD 12,100 per day or pro-rate.

9.1 Under clause 35 of the CoA, for discharging the cargo NOR in

writing is to be served at the discharge port, at the office of the

charterers specified therein. The NOR is to be served between 0930

hours and 1630 hours from Monday to Friday and between 0930 hours

to 1200 hours on Saturday.

9.2 Clause 36 of the CoA provides the procedure for calculating the

time on arrival of the vessel on demurrage either at the first or second

discharge port. The NOR is to be served upon the arrival of the vessel

within the port limits of the discharge port, irrespective whether in

berth or not, provided the vessel is in free pratique and ready in all

respects to discharge the cargo. The 24 hour time is to be counted after

issuance of NOR. In case of expiry of 24 hours on Saturday afternoon,

Sundays or charter party holiday, laytime commences at 6:00 hours on

the first working day. In the eventuality of the discharge operation

beginning before the commencement of laytime, the duration shall be

O.M.P. (COMM) 260/2023 Page 26 of 43

deemed to be a free period. The time is neither to be counted from

noon of Saturday until 8:00 AM on Monday nor between 5:00 PM on

the last working day preceding a charter party holiday and 8:00 AM

on the first working day thereafter. Further that the inability to give

NOR by vessel arriving at Haldia for the reason of congestion, the 24

hours period is to be counted after notice of vessel arrival at off

Sandheads and NOR is to be given by radio to charterers or their

agents. The time used in proceeding from Sandheads to Haldia shall

not count.

9.3 Clause 41 of the CoA provides that time of inefficiency

consequent to breakdown of crane and other equipment shall not be

counted as laytime.

9.4 Clause 55 of the CoA stipulates the circumstances in which

time shall not be counted as discharge time at a discharge port unless

the vessel is already on demurrage. The circumstances includes,

epidemic, quarantine and any other causes beyond the control of the

charterers.

9.5 Clause 56 of the CoA deals with force majeure. Where the

discharge of obligation by a shipper/charterers under the agreement is

prevented for the reasons mentioned therein including plague, other

epidemics, natural calamity interfering with production, loading or

discharging the obligation shall be deferred to a date agreed upon,

having regard to the time required to resume natural operations. The

intervening period during which force majeure continues till

O.M.P. (COMM) 260/2023 Page 27 of 43

resumption of natural operations shall be excluded for compliance of

the obligations.

10. The issue raised by learned senior counsel for the petitioner is

whether an award bereft of reasons and ignoring contentions of the

petitioner in totality is violative of the principles of natural justice,

violates the public policy of India and is a ground for setting aside an

international commercial award? To support this issue, learned senior

counsel for the petitioner relied on the decisions in Vijay Karia

(supra) and Ssangyong Engineering (supra).

11. Before dealing with the issue raised and the judgments relied

upon by learned senior counsel for the petitioner in support thereof,

first it would be necessary to consider if the impugned award is bereft

of reasons and the contentions of the petitioner in totality have been

ignored.

12. For MV ‘Pegasus’, the tribunal took into consideration Clause

35 of the CoA whereunder the NOR was to be served to port office of

the petitioner at each discharge port. It was also considered that under

Clause 36 of the CoA the vessel ready in all respects shall serve NOR

upon arrival of the vessel within the limits of the port of discharge

irrespective of whether in berth or not and in free pratique. The issue

as to whether the vessel was ready on 10.05.2019 when the NOR was

tendered was framed. The contention of the petitioner that the NOR

should commence from 18.05.2019 was rejected. It was held that the

NOR issued on 10.05.2019 was not premature and the subsequent

O.M.P. (COMM) 260/2023 Page 28 of 43

event of breakdown of the generator would not invalidate the NOR

already issued. It rightly held that the time was calculated as per

Clauses 35 and 36 of the CoA, that laytime should commence after

12.05.2019 and that the vessel exceeded the laytime of 5 days, 9 hours

and 32 minutes.

13. Clause 41 of the CoA is unambiguous that the period of

breakdown of equipment rendering the vessel inefficient shall be

excluded from laytime. No clause is brought to the notice of this court

stipulating that the breakdown of equipment renders NOR issued to be

invalid and fresh NOR is to be issued. The NOR was issued on

10.05.2019, the vessel was called to berth on 17.05.2019 but could not

do so due to a generator problem. Without prejudice to the NOR

earlier given, a revised NOR was issued on the same day and the

vessel berthed on 19.05.2019. The unchallenged finding of fact

recorded by the tribunal is that the crane became operational on

17.05.2019 itself. In the absence of evidence that the vessel was not

ready to discharge cargo on 10.05.2019, the NOR issued on

10.05.2019 is rightly held to be valid.

14. The reliance on the literature of the club to lend support to the

argument that the vessel was not physically ready was rightly not

considered by the tribunal. The petitioner failed to prove the

admissibility of the literature and no expert or authorised

representative of the club issuing the instructions was examined.

Another aspect is that nothing was brought on record that on

10.05.2019 vessel was not ready for discharge of cargo. The

O.M.P. (COMM) 260/2023 Page 29 of 43

demurrage claimed was rightly allowed along with the amount due

towards freight.

15. In proceedings under Section 34 of the Act, the court cannot sit

in appeal over the conclusion arrived at by the tribunal especially in an

international commercial arbitration wherein the additional grounds

under Section 34(2A) of the Act are not available.

16. The MV ‘Esperia’ on 10.07.2019 complied with Clause 35 of

the CoA at Paradip Port. Due to misunderstanding between the

respondent and the owner of the vessel, the cargo could not be

discharged on 27.07.2019 and the port authority directed the vessel to

be re-anchored. The NOR issued on 10.07.2019 was accepted by the

petitioner on 31.07.2019. The tribunal after considering the material

on record gave the factual finding that no misunderstanding existed

between the owner of the vessel and the respondent as on 10.07.2019

when the NOR was issued and that exclusion of the entire period from

10.07.2019 to 31.07.2019 was against the spirit of the contract. The

finding recorded that the misunderstanding arose on 27.07.2019 and

was resolved on the very same day is not under challenge. The

argument of the petitioner that the laytime should be calculated from

31.07.2019 was rightly rejected. The conclusion of the tribunal is

backed by the factual findings recorded and cannot be held to be

bereft of reasons.

17. For MV ‘Cas Avanca’, MV ‘Vishva Ekta’, MV ‘Jay’, MV

‘Blue Ripple’ and MV ‘Sparrow’ there is no dispute that the vessels

O.M.P. (COMM) 260/2023 Page 30 of 43

arrived at the onset of COVID-19 and that COVID-19 was declared a

pandemic by the WHO on 11.03.2020. It would be relevant to quote

the following office order/letter/circulars relied upon by learned senior

counsel for the petitioner:

17.1 The office order dated 23.03.2020 is as under:

“No.PD-14033/4/2020-PD-VII

Government of India

Ministry of Shipping

(Ports Wing)

1, Parliament Street

Transport Shawan, New Delhi

Dated: 23.03.2020

OFFICE ORDER

1. In order to contain the spread of Corona virus, various

State Government/Union Territories have issued

prohibitory orders, imposing restrictions on non-essential

services.

2. In this regard, it is brought to the notice of all concerned

that 'transport service for carriage of goods by water and

any service connected with loading, unloading,

movement or storage of goods in any port are essential

service.

3. All Ports and IWAI are requested to take action

accordingly. While dealing with incoming vessel, Ports

should act in compliance with DGS order no. 4 of 2020

dated 20.03.2020, SoP issued by Ministry of Shipping

dated 11.03.2O2O and any other order/SoP issued by

Ministry of Shipping of DG Shipping from time to time.

O.M.P. (COMM) 260/2023 Page 31 of 43

4. Chairmen of Major Ports shall set up a control room and

intimate the details to this Ministry.”

17.2 The Vizag letter dated 31.03.2020 is as under:

“31

st

March 2020

TO WHOMSOEVER IT MAY CONCERN

This is to inform that the whole of India was on shutdown on

22

nd

March 2020 and Lockdown from 24

th

March 2020 up to

14

th

April, 2020, due to the onset of CORONA VIRUS.

The District Collector issued orders under Section 144, the

State Government ordered shutdown of normal activities and

the Central Government has ordered a Lockdown of 75

Districts (including Visakhapatnam) from 22

nd

March 2020

and the whole country from 24

th

March 2020.

In view of this extra-ordinary situation, it is impossible to

carry out any normal operations at the Port of

Visakhapatnam, in spite of GOI declaring Port Services as

essential services.

Accordingly, it is hereby declared and confirmed that Force

majeur conditions prevail at the Port of Visakhapatnam from

22

nd

March 2020 to 14

th

April 2020.

For The Vizagapatam Chamber of Commerce & Industry,”

17.3 The relevant portion of Ministry circular dated 31.03.2020

is as under:

“No.PD-14300/4/2020-PD-VII

Government of India

Ministry of Shipping

O.M.P. (COMM) 260/2023 Page 32 of 43

Transport Bhawan,

1, Parliament Street

New Delhi-110001

Dated: 31

st

March, 2020

*** *** ***

Part B- Issues relating to Force Majeure

7. The aforesaid orders do not impact or dilute the fact

that each Major Port needs to remain operational during

the COVID-19 pandemic and continue cargo operations

in all respects.”

17.4 The Haldia circular dated 05.04.2020 is as under:

“KOLKATA PORT TRUST

HALDIA DOCK COMPLEX

GM(T)/51/GMT-925 Date: 05.04.2020

TRADE CIRCULAR

Sub: Waiver/remission on various Port Charges due

to the lockdown from 22nd March to 14th April 2020

to prevent the outbreak of Covid-19 pandemic.

There has been a severe disruption in normal life due to

outbreak of Covid-19 pandemic which has affected

globally as well as in India also. The Ministry of

Shipping vide no.PD-13/33/2020-PPP/e-339106 dated

24.03.2020 (copy enclosed) stated that in consideration of

difficulties being faced by stakeholders, Major Port Trusts

O.M.P. (COMM) 260/2023 Page 33 of 43

may consider COVID-19 pandemic as a valid ground for

invoking Force Majeure Clause on port activities and port

operations also. Thus, KoPT has considered the COVID-

19 pandemic as a natural calamity and invokes Force

Majeure from 06:00 Hrs on 22nd March to 06:00 Hrs on

15th April 2020.

In addition, as per the directive of the Order of Ministry

of Shipping vide no.PD-14300/4/2020-PD VII dated

31.03.2020 (copy enclosed), KoPT has considered grating

the following waivers/remissions for the period from

06:00 Hrs on 22nd March to 06:00 Hrs on 15th April

2020.

a) Exemption from levy of demurrage

charges/rent for all types of cargo &container for

the above period.

b) The contractors operating, Mobile

Harbour Cranes at Berth Nos. 1, 5, 9 & 14, Haldia

Floating Terminal, Container Terminal will not be

penalized for achieving less productivity than the

MLP as per the contract agreement.

c) Penal berth hire charges will not be levied

from the vessel’s agent for achieving less

productivity at Berth no.10, than the agreed

benchmark productivity rate as per the Berthing

Policy.

d) The above period will be exempted from

consideration of MGT period for Strategic Plans

& other similar schemes and way leave licensees

as well as for plots allotted on long term basis

against MGT commitment. However, the tonnage

handled during this period will be considered

against fulfilment of MGT commitment.”

O.M.P. (COMM) 260/2023 Page 34 of 43

17.5 The relevant portion of Ministry circular dated 21.04.2020

is as under:

“No.PD-14033/4/2020-PD-VII

Government of India

Ministry of Shipping

Transport Bhawan,

1, Parliament Street

New Delhi-110001

Dated: 21

st

April, 2020

*** *** ***

6. Force Majeure

The aforesaid orders do not impact or dilute the fact that

each Major Port needs to remain operational during the

COVID-19 pandemic and continue cargo operations in all

respects.”

18. The office order dated 23.03.2020 issued in view of the spread

of COVID-19 relied upon by the tribunal clearly records that the

transport service for carriage of goods by water and any service

connected with the loading and unloading, movement or storage of

goods in any port are essential services.

19. Ministry circulars dated 31.03.2020 and 21.04.2020 are

unambiguous that Ports are to remain operational and continue cargo

operations. On perusal of these circulars relied upon by learned senior

counsel for the petitioner, it is not forthcoming that the position

declaring the loading and unloading of the cargo to be essential

O.M.P. (COMM) 260/2023 Page 35 of 43

services was diluted. In other words, the COVID-19 restrictions had

not prevented the discharge of cargo.

20. The contention of learned senior counsel for the petitioner that

the Ministry circulars dated 31.03.2020 and 21.04.2020 produced by

the petitioner were ignored in totality by the tribunal is misconceived.

It would be apposite to note that these circulars now being relied upon

by learned senior counsel for the petitioner were documents produced

by the respondent to prove that the unloading of cargo was not

affected by restrictions imposed due to COVID-19.

21. The vizag letter dated 31.03.2020 does not dent the case of the

respondent. It would be relevant to note that none of the vessels except

MV ‘Cas Avanca’ reached Vizag Port from 22.03.2020 to 14.04.2020

when the force majeure clause was invoked at the port.

22. MV ‘Cas Avanca’ tendered the NOR at Vizag Port on

19.03.2020 and completed discharge of the cargo on 25.03.2020. It

was not the pleaded case of the petitioner before the tribunal that

demurrage should not to be charged for the period from 22.03.2020 to

25.03.2020 when the vessel remained at Vizag Port and force majeure

was in force. It is pertinent to note that the discharge of the cargo had

commenced on 20.03.2020 even before the laytime began. In the

absence of any specific plea and evidence that the discharge was

affected by COVID-19, the view taken by the tribunal cannot be held

to be perverse or unreasonable. Under Section 34 of the Act more so

in an international commercial arbitration this court cannot

O.M.P. (COMM) 260/2023 Page 36 of 43

reappreciate the evidence or substitute the plausible view taken by the

tribunal.

23. The Haldia circular dated 05.04.2020 dealing with demurrage to

be charged by the Port authorities is not relevant to the present facts

where the contract is between two parties. Even otherwise it does not

mention that force majeure will be invoked despite the Government of

India declaring port services as essential services.

24. Section 53 of the Port Act is an enabling provision empowering

the board to wholly or partially exempt the charges leviable. It is not a

provision dealing with the contractual provisions inter se the parties

and therefore need not be dilated upon.

25. The tribunal dealt with the effect of COVID-19 on the vessels

and whether COVID-19 had actually impacted the vessels so as to

invoke the force majeure clause. For failure of the petitioner to adduce

evidence to prove that discharging of cargo was hindered by COVID-

19, the tribunal was right in rejecting the invocation of Clause 55 and

56 of CoA. The witness examined by the petitioner testified only on

the basis of personal knowledge and there was no evidence to support

the invocation of force majeure. On the other hand, the respondent

produced the office order dated 23.03.2020 and the Ministry circulars

to prove that the transport service for carriage of goods by water and

activities related thereto including loading, unloading, transporting

and storage were declared essential services. The reliance of the

tribunal on the office order dated 23.03.2020 cannot be faulted with.

O.M.P. (COMM) 260/2023 Page 37 of 43

26. The submission that the petitioner is a ‘State’ within the

meaning of Article 12 of the Constitution of India and should be

covered by force majeure, lacks merit. When a State under Article 12

enters into a contract with a private party, the relationship shall be

governed by the contractual terms and no special status in a

commercial contractual matter can be granted to the limb of the State.

27. The contention raised for MV ‘Sparrow’ that it faced the

cyclone restrictions and it was not considered by the tribunal was not a

pleaded case in the statement of defence and finds mention only in the

statement of facts. Be that as it may, the contention that the tribunal

failed to exclude the period affected by the cyclone while calculating

the demurrage cannot be considered in the proceedings under Section

34 of the Act against the international commercial arbitration. Even

otherwise, the factum of instructions issued regarding the upcoming

cyclone finds mention in the award. The calculation by the respondent

stopping laytime from 19.05.2020 at 08:50 hours till 21.05.2020 at

15:30 hours, period affected by cyclone was accepted. It was

considered that due to non-availability of berth the vessel berthed on

24.05.2020 and accordingly the demurrage calculated was accepted

albeit, disputed by the petitioner.

28. The valiant attempt of learned senior counsel for the petitioner

that the award is non-speaking and there is a failure to consider the

contentions of the petitioner in totality has no merit. The conclusions

arrived at by the tribunal with regard to each vessel are backed by the

factual findings recorded, consideration of clauses of the CoA and

O.M.P. (COMM) 260/2023 Page 38 of 43

have a basis. The non-mentioning of the Vizag letter dated

31.03.2020, Ministry circular dated 31.03.2020, Haldia circular dated

05.04.2020 and Ministry circular dated 21.04.2020 does not affect the

conclusion arrived at. It has already been stated that these circulars

have not changed the effect of the office order dated 23.03.2020

wherein the cargo unloading and activities related thereto were

declared to be essential services and as discussed above the Vizag

letter dated 31.03.2020 does not support the case of the petitioner.

29. The contention that the voluminous evidence produced by the

petitioner was not considered is noted to be rejected. It is not the

volume but the quality of evidence that matters. The law is well settled

that the quality of evidence to be considered falls within the domain of

the arbitrator. Reference in this regard be made to the following

decisions:

29.1 The Supreme Court in Parsa Kente Collieries Ltd. v. Rajasthan

Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236 held:

“9.1. In Associate Builders [Associate Builders v. DDA,

(2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], this Court

had an occasion to consider in detail the jurisdiction of

the Court to interfere with the award passed by the

Arbitrator in exercise of powers under Section 34 of the

Arbitration Act. In the aforesaid decision, this Court has

considered the limits of power of the Court to interfere

with the arbitral award. It is observed and held that only

when the award is in conflict with the public policy in

India, the Court would be justified in interfering with the

arbitral award. In the aforesaid decision, this Court

considered different heads of “public policy in India”

O.M.P. (COMM) 260/2023 Page 39 of 43

which, inter alia, includes patent illegality. After referring

Section 28(3) of the Arbitration Act and after considering

the decisions of this Court in McDermott International

Inc. v. Burn Standard Co. Ltd. [McDermott International

Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181] ,

SCC paras 112-113 and Rashtriya Ispat Nigam Ltd. v.

Dewan Chand Ram Saran [Rashtriya Ispat Nigam Ltd. v.

Dewan Chand Ram Saran, (2012) 5 SCC 306] , SCC

paras 43-45, it is observed and held that an Arbitral

Tribunal must decide in accordance with the terms of the

contract, but if an Arbitrator construes a term of the

contract in a reasonable manner, it will not mean that the

award can be set aside on this ground. It is further

observed and held that construction of the terms of a

contract is primarily for an Arbitrator to decide unless the

Arbitrator construes the contract in such a way that it

could be said to be something that no fair-minded or

reasonable person could do. It is further observed by this

Court in the aforesaid decision in para 33 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. It is further observed that

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.”

29.2 The Supreme Court in Maharashtra State Electricity

Distribution Co. Ltd. v. Datar Switchgear Ltd., (2018) 3 SCC 133

held:

“51. Categorical findings are arrived at by the Arbitral

Tribunal to the effect that insofar as Respondent 2 is

O.M.P. (COMM) 260/2023 Page 40 of 43

concerned, it was always ready and willing to perform its

contractual obligations, but was prevented by the

appellant from such performance. Another specific

finding which is returned by the Arbitral Tribunal is that

the appellant had not given the list of locations and,

therefore, its submission that Respondent 2 had adequate

lists of locations available but still failed to install the

contract objects was not acceptable. In fact, on this count,

the Arbitral Tribunal has commented upon the working of

the appellant itself and expressed its dismay about lack of

control by the Head Office of the appellant over the field

offices which led to the failure of the contract. These are

findings of facts which are arrived at by the Arbitral

Tribunal after appreciating the evidence and documents

on record. From these findings it stands established that

there is a fundamental breach on the part of the appellant

in carrying out its obligations, with no fault of

Respondent 2 which had invested whopping amount of

Rs 163 crores in the project. A perusal of the award

reveals that the Tribunal investigated the conduct of the

entire transaction between the parties pertaining to the

work order, including withholding of DTC locations,

allegations and counter-allegations by the parties

concerning installed objects. The arbitrators did not focus

on a particular breach qua particular number of

objects/class of objects. Respondent 2 is right in its

submission that the fundamental breach, by its very

nature, pervades the entire contract and once committed,

the contract as a whole stands abrogated. It is on the

aforesaid basis that the Arbitral Tribunal has come to the

conclusion that the termination of contract by Respondent

2 was in order and valid. The proposition of law that the

Arbitral Tribunal is the master of evidence and the

findings of fact which are arrived at by the arbitrators on

the basis of evidence on record are not to be scrutinised

as if the Court was sitting in appeal now stands settled by

a catena of judgments pronounced by this Court without

O.M.P. (COMM) 260/2023 Page 41 of 43

any exception thereto.”

(Emphasis supplied)

30. Here, it may be hastened to add that the award passed by the

tribunal is not to be placed at the pedestal of judgments passed by

judicial courts for testing the reasons recorded. Reference in this

regard be made to the following decisions of the Supreme Court:

30.1 In Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd.

(2019) 20 SCC 1 it was held:

“34. The mandate under Section 31(3) of the Arbitration

Act is to have reasoning which is intelligible and adequate

and, which can in appropriate cases be even implied by the

courts from a fair reading of the award and documents

referred to thereunder, if the need be.The aforesaid

provision does not require an elaborate judgment to be

passed by the arbitrators having regard to the speedy

resolution of dispute.”

30.2 In Som Datt Builders Ltd. v. State of Kerala (2009) 10 SCC

259 it was held:

“25. The requirement of reasons in support of the award

under Section 31(3) is not an empty formality. It

guarantees fair and legitimate consideration of the

controversy by the Arbitral Tribunal. It is true that the

Arbitral Tribunal is not expected to write a judgment like a

court nor is it expected to give elaborate and detailed

reasons in support of its finding(s) but mere noticing the

submissions of the parties or reference to documents is no

substitute for reasons which the Arbitral Tribunal is

obliged to give......”

(emphasis supplied)

O.M.P. (COMM) 260/2023 Page 42 of 43

31. Having held that the award is not bereft of reasons and the

contentions of the petitioner were not totally ignored, the issue raised

by leaned senior counsel for the petitioner whether a non-speaking

award falls within ambit of violation of the public policy of India

needed not be propounded upon.

32. The reliance of learned senior counsel for the petitioner on the

decisions in Dyna Technologies (supra), McDermott International

Inc. (supra) and Bharat Vanijya Eastern Private Ltd. (supra) does not

advance the case of the petitioner. Suffice it to say that these cases

were not of international commercial arbitration. Moreover, the

decision in McDermott International Inc. (supra) is prior to the 2015

amendment to Section 34 of the Act.

33. The reliance on the decision in Halliburton Offshore Services

Inc. (supra) to challenge the grant of interest is of no avail. In that

case the challenge was to the uniform rate of interest granted in both

the Indian rupee and Euro components whereas in the present case the

interest awarded is as per LIBOR + 3 percentage points or 12% per

annum, whichever is less. The argument that it is an open-ended

interest rate leaving it undecided which rate is to be claimed is

factually misconceived. The language is unambiguous that out of the

two whichever is less the respondent shall be entitled to it.

34. The impugned award calls for no interference and no case is

made out under the grounds available under Section 34(2) of the Act.

35. The petition is dismissed.

O.M.P. (COMM) 260/2023 Page 43 of 43

36. All pending applications are also disposed of.

AVNEESH JHINGAN, J

SEPTEMBER 22, 2026

Ch

Reportable:-Yes