# ANGLO AMERICAN METALLURGICAL COAL PTY LTD v. MMTC LTD

- **Citation:** [2020] 14 S.C.R. 510
- **Court:** Supreme Court of India
- **Decided:** 2020-12-17
- **Case number:** Civil Appeal No.4083 of 2020
- **Bench:** Rohinton Fali Nariman, K. M. Joseph
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/anglo-american-metallurgical-coal-pty-ltd-v-mmtc-ltd-34220
- **Pages:** 61

## Headnote

Arbitration and Conciliation Act, 1996: International
commercial arbitration - The present case is that of an international
commercial arbitration, the Majority Award being delivered in New
Delhi on 12.05.2014 - Case was argued on the basis of the law as
it stood before the Arbitration and Conciliation (Amendment) Act,
2015 which added two explanations to s.34(1) and sub-section (2A)
to s.34 of the Arbitration Act, in which it was made clear that the
ground of "patent illegality appearing on the face of the award" is
not a ground which could be taken to challenge an international
commercial award made in India after 23.10.2015, when the
Amendment was brought into force - Given the parameters of judicial
review laid down in Associate Builders, neither the ground of
fundamental policy of Indian law, nor the ground of patent illegality,
have been made out in the facts of this case, given the fact that the
Majority Award is certainly a possible view based on the oral and
documentary evidence led in the case, which cannot be
characterized as being either perverse or being based on no
evidence - Majority Award, after reading the entire correspondence
between the parties and examining the oral evidence, has come to a
possible view, both on the Respondent being in breach, and on the
quantum of damages - Majority Award is certainly a possible view
of the case, and thus, cannot in any manner, be characterised as
perverse.
Evidence Act, 1872: s.92, proviso (6) and illustration (f); s.94
and s.95 - Interpretation of documents exchanged between the parties
in the performance of a contract - Reading together proviso (6)
and illustration (f) to s.92, s.94 and s.95 of the Evidence Act show
that when there are a number of documents exchanged between the
parties in the performance of a contract, all of them must be read
as a connected whole, relating each particular document to "existing
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[2020] 14 S.C.R. 510
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facts", which include how particular words are used in a particular
sense, given the entirety of correspondence between the parties -
Thus, after the application of proviso (6) to s.92 of the Evidence
Act, the adjudicating authority must be very careful when it applies
provisions dealing with patent ambiguity, as it must first ascertain
whether the plain language of a particular document applies
accurately to existing facts - If, however, it is ambiguous or
unmeaning in reference to existing facts, evidence may then be given
to show that the words used in a particular document were used in
a sense that would make the said words meaningful in the context
of the entirety of the correspondence between the parties - In the
instant case, the three critical emails have to be read in the
surrounding circumstances of the entirety of the LTA and the
correspondence which ensued between the parties - Once that
exercise is undertaken, as was undertaken by the Majority Award,
it was not possible to hold that the Majority Award was not a possible
view on the facts of this case - The reliance of the Majority Award
upon the correspondence between the parties buttressed by evidence
on behalf of appellant, was not therefore flawed.
Evidence Act, 1872: ss.92, 94, 95 - A "patent ambiguity"
provision, as contained in s.94 of the Evidence Act, is only applicable
when a document applies accurately to existing facts, which includes
how a particular word is used in a particular sense - Given that, in
the facts of the present case, there was no mention of the price at
which coal was to be supplied in the three "crucial" emails, these
emails must be read as part of the entirety of the correspondence
between the parties, which would then make the so-called
"admissions" in the emails apply to existing facts - Once this is
done, it is clear that there is no scope for the further application of
the "patent ambiguity" principle contained in s.94 of the Evidence
Act, to the facts of the present case - However, s.95 of the Evidence
Act, dealing with

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ANGLO AMERICAN METALLURGICAL COAL PTY LTD.
v.
MMTC LTD.
(Civil Appeal No.4083 of 2020)
DECEMBER 17, 2020
[ROHINTON FALI NARIMAN AND K. M. JOSEPH, JJ.]
Arbitration and Conciliation Act, 1996: International
commercial arbitration - The present case is that of an international
commercial arbitration, the Majority Award being delivered in New
Delhi on 12.05.2014 - Case was argued on the basis of the law as
it stood before the Arbitration and Conciliation (Amendment) Act,
2015 which added two explanations to s.34(1) and sub-section (2A)
to s.34 of the Arbitration Act, in which it was made clear that the
ground of "patent illegality appearing on the face of the award" is
not a ground which could be taken to challenge an international
commercial award made in India after 23.10.2015, when the
Amendment was brought into force - Given the parameters of judicial
review laid down in Associate Builders, neither the ground of
fundamental policy of Indian law, nor the ground of patent illegality,
have been made out in the facts of this case, given the fact that the
Majority Award is certainly a possible view based on the oral and
documentary evidence led in the case, which cannot be
characterized as being either perverse or being based on no
evidence - Majority Award, after reading the entire correspondence
between the parties and examining the oral evidence, has come to a
possible view, both on the Respondent being in breach, and on the
quantum of damages - Majority Award is certainly a possible view
of the case, and thus, cannot in any manner, be characterised as
perverse.
Evidence Act, 1872: s.92, proviso (6) and illustration (f); s.94
and s.95 - Interpretation of documents exchanged between the parties
in the performance of a contract - Reading together proviso (6)
and illustration (f) to s.92, s.94 and s.95 of the Evidence Act show
that when there are a number of documents exchanged between the
parties in the performance of a contract, all of them must be read
as a connected whole, relating each particular document to "existing
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[2020] 14 S.C.R. 510
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B
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facts", which include how particular words are used in a particular
sense, given the entirety of correspondence between the parties -
Thus, after the application of proviso (6) to s.92 of the Evidence
Act, the adjudicating authority must be very careful when it applies
provisions dealing with patent ambiguity, as it must first ascertain
whether the plain language of a particular document applies
accurately to existing facts - If, however, it is ambiguous or
unmeaning in reference to existing facts, evidence may then be given
to show that the words used in a particular document were used in
a sense that would make the said words meaningful in the context
of the entirety of the correspondence between the parties - In the
instant case, the three critical emails have to be read in the
surrounding circumstances of the entirety of the LTA and the
correspondence which ensued between the parties - Once that
exercise is undertaken, as was undertaken by the Majority Award,
it was not possible to hold that the Majority Award was not a possible
view on the facts of this case - The reliance of the Majority Award
upon the correspondence between the parties buttressed by evidence
on behalf of appellant, was not therefore flawed.
Evidence Act, 1872: ss.92, 94, 95 - A "patent ambiguity"
provision, as contained in s.94 of the Evidence Act, is only applicable
when a document applies accurately to existing facts, which includes
how a particular word is used in a particular sense - Given that, in
the facts of the present case, there was no mention of the price at
which coal was to be supplied in the three "crucial" emails, these
emails must be read as part of the entirety of the correspondence
between the parties, which would then make the so-called
"admissions" in the emails apply to existing facts - Once this is
done, it is clear that there is no scope for the further application of
the "patent ambiguity" principle contained in s.94 of the Evidence
Act, to the facts of the present case - However, s.95 of the Evidence
Act, dealing with latent ambiguity, when read with proviso (6) and
illustration (f) to s.92 of the Evidence Act, could apply to the facts
of the present case, as when the plain language of a document is
otherwise unmeaning in reference to how particular words are used
in a particular sense, given the entirety of the correspondence,
evidence may be led to show the peculiar sense of such language -
Thus, if this provision is applied, the Majority Award cannot be
faulted as it has accepted the evidence given by Mr. Wilcox, wherein
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he explained that the three emails would only be meaningful if they
were taken to refer to "mixed" supplies of coal, and not supplies of
coal at the contractual price.
Law of evidence - Latent ambiguity and patent ambiguity -
Distinction between.
Allowing the appeal, the Court
HELD: 1.1 There is a finding of fact by the Majority Award
that the Appellant was able to supply the contracted quantity of
coal for the Fifth Delivery Period, at the contractual price, and
that it was the Respondent who was unwilling to lift the coal,
owing to a slump in the market, the Respondent being conscious
of the fact that mere commercial difficulty in performing a contract
would not amount to frustration of the contract. It was for this
reason that the Respondent decided, as an afterthought, in reply
to the Appellant's legal notice dated 04.03.2010, to attack the
Appellant on the ground that it was the Appellant that was unable
to supply the contracted quantity in the Fifth Delivery Period.
Once this becomes clear, it is obvious that the Majority Award,
after reading the entire correspondence between the parties and
examining the oral evidence, has come to a possible view, both
on the Respondent being in breach, and on the quantum of
damages. [Para 17][545-A-D]
1.2 The entire approach of the Division Bench is flawed.
First and foremost, to cherry-pick three emails out of the entire
correspondence and to rest a judgment on those three emails
alone, without having regard to the context of the LTA and the
correspondence, both before and after those three emails, would
render the judgment of the Division Bench fundamentally flawed.
Further, the finding that there was "no evidence" that the
Respondent demanded stems of coal at a reduced rate vis-à-vis
the contractual rate, flies in the face of at least three different
exchanges between the parties, being the Respondent's letters
dated 20.11.2008, 27.11.2009 and 03.12.2009. Equally, the finding
of the Division Bench that no evidence had been led to show that
the Appellant had availability of the balance quantity of 454,034
metric tonnes of coal to supply to the Respondent during the
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Fifth Delivery Period, again completely fails to appreciate Mr.
Wilcox's evidence given by way of an Additional Affidavit dated
03.09.2013 and in response to questions in cross-examination
before the Arbitral Tribunal on 23.09.2013, together with two
letters exchanged between the parties on 21.09.2009 and
25.09.2009. All of these aspects were considered in the Majority
Award of the Arbitral Tribunal. The finding that there is "no
evidence" to prove market price of coal at the time of breach,
and that therefore, quantum of damages could not be fixed, again
completely ignores Mr. Wilcox's evidence in chief and cross
examination; Respondent's letters dated 25.09.2009, 27.11.2009
and 03.12.2009; as also the Appellant's re-negotiated contracts
with SAIL/RINL. All these aspects have been considered by the
Majority Award in great detail. [Paras 18, 19, 20][545-D-H;
546-A]
1.3 The crucial fact was that no price for the coal to be
lifted was stated in any of the emails or letters exchanged during
this period. This is in fact what the Majority Award adverts to
and fills up by having recourse to the evidence given by Mr.
Wilcox, stating that the ambiguity qua price was resolved by the
fact that no coal was available for lifting at a price lower than the
contractual price. The Majority Award found, relying upon Mr.
Wilcox's evidence, that the supplies that were sought to be made
in August and September, 2009 were therefore, also in the nature
of "mixed" supplies, i.e., coal at the contractual price, as well as
coal at a much lower price. This is a finding of fact that cannot be
characterised as perverse, as it is clear from the evidence led,
the factual matrix of the setting of there being a slump in the
market, in which the performance of the contract took place, as
well as the ambiguity as to whether the correspondence referred
to contractual price or "mixed" price, and thus, is a possible view
to take. [Para 21][546-C-E]
2. Section 92 of the Evidence Act refers to the terms of a
"contract, grant or other disposition of property or any matter
required by law to be reduced to the form of a document".
Illustration (f) of section 92 of the Evidence Act indicates that
facts, which may on the face of it, be ambiguous and vague, can
be made certain in the contextual setting of the contract, grant
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or other disposition of property. Section 94 of the Evidence Act,
then speaks of language being used in a document being "plain
in itself". It is only when such document "applies accurately to
existing facts", that evidence may not be given to show that it
was not meant to apply to such facts. Likewise, the obverse
situation is contained in section 95 of the Evidence Act, which
then states that when the language used in a document is plain in
itself, but is "unmeaning in reference to existing facts", only then
may evidence be given to show that it was used in a peculiar
sense. When sections 92, 94 and 95 of the Evidence Act are
applied to a string of correspondence between parties, it is
important to remember that each document must be taken to be
part of a coherent whole, which happens only when the "plain"
language of the document is first applied accurately to existing
facts. [Paras 27, 28][549-F-H; 550-A-B]
3.1 A "patent ambiguity" provision, as contained in section
94 of the Evidence Act, is only applicable when a document applies
accurately to existing facts, which includes how a particular word
is used in a particular sense. Given that, in the facts of the present
case, there was no mention of the price at which coal was to be
supplied in the three "crucial" emails, these emails must be read
as part of the entirety of the correspondence between the parties,
which would then make the so-called "admissions" in the
aforementioned emails apply to existing facts. Once this is done,
it is clear that there is no scope for the further application of the
"patent ambiguity" principle contained in section 94 of the
Evidence Act, to the facts of the present case. However, section
95 of the Evidence Act, dealing with latent ambiguity, when read
with proviso (6) and illustration (f) to section 92 of the Evidence
Act, could apply to the facts of the present case, as when the
plain language of a document is otherwise unmeaning in reference
to how particular words are used in a particular sense, given the
entirety of the correspondence, evidence may be led to show the
peculiar sense of such language. Thus, if this provision is applied,
the Majority Award cannot be faulted as it has accepted the
evidence given by Mr. Wilcox, wherein he explained that the
three emails would only be meaningful if they were taken to refer
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to "mixed" supplies of coal, and not supplies of coal at the
contractual price. [Paras 31, 32][552-E-H; 553-A-B]
3.2 When proviso (6) and illustration (f) to section 92,
section 94 and section 95 of the Evidence Act are read together,
the picture that emerges is that when there are a number of
documents exchanged between the parties in the performance
of a contract, all of them must be read as a connected whole,
relating each particular document to "existing facts", which include
how particular words are used in a particular sense, given the
entirety of correspondence between the parties. Thus, after the
application of proviso (6) to section 92 of the Evidence Act, the
adjudicating authority must be very careful when it applies
provisions dealing with patent ambiguity, as it must first ascertain
whether the plain language of a particular document applies
accurately to existing facts. If, however, it is ambiguous or
unmeaning in reference to existing facts, evidence may then be
given to show that the words used in a particular document were
used in a sense that would make the aforesaid words meaningful
in the context of the entirety of the correspondence between the
parties. [Para 34][57-D-G]
4. It is clear that the three critical emails have to be read in
the surrounding circumstances of the entirety of the LTA and the
correspondence which ensued between the parties. Once that
exercise is undertaken, as was undertaken by the Majority Award,
it is impossible to hold that the Majority Award is not a possible
view on the facts of this case. Respondent's argument in support
of the impugned judgment that there is no evidence to
demonstrate proof of damage suffered as on the date of breach,
is also factually incorrect. It is well established that the arbitral
tribunal is the final judge of the quality, as well as the quantity of
evidence before it. The Majority Award took into account Mr.
Wilcox's Affidavit dated 10.07.2013 and Additional Affidavit dated
03.09.2013 detailing the prices at which sales of coal were made
to Chinese purchasers during the Fifth Delivery Period, which
ended on 30.09.2009, being the date of breach as found by the
Majority Award. In addition, contemporaneous correspondence,
including letters dated 27.11.2009 and 03.12.2009 were also relied
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upon to show that the Respondent was itself seeking coal at
roughly the price of $128 per metric tonne, at around the same
time. Hence, the difference between the contractual price and
market price was arrived at as $173.383 per metric tonne, in
accordance with the law. It is not possible to accept respondent's
argument that the letters dated 27.11.2009 or 03.12.2009 do not
reflect the market price of coal as on the date of breach or that
the market price of coal cannot be established from the special
long-term contracts operating at around the same time as the
date of breach. This argument is therefore rejected. [Paras 37,
38, 40][558-F-H; 559-A-D; 560-H; 561-A]
Smt. Kamala Devi v. Seth Takhatmal & Anr. [1964] 2
SCR 152; Sudarsan Trading Co. v. Govt. of Kerala
(1989) 2 SCC 38:[1989] 1 SCR 665; Murlidhar
Chiranjilal v. Harishchandra Dwarkadas and Anr.
[1962] 1 SCR 653 - relied on
5. The present case is that of an international commercial
arbitration, the Majority Award being delivered in New Delhi on
12.05.2014. Resultantly, this case has been argued on the basis
of the law as it stood before the Arbitration and Conciliation
(Amendment) Act, 2015 added two explanations to section 34(1)
and subsection (2A) to section 34 of the Arbitration Act, in which
it was made clear that the ground of "patent illegality appearing
on the face of the award" is not a ground which could be taken to
challenge an international commercial award made in India after
23.10.2015, when the Amendment was brought into force. Given
the parameters of judicial review laid down in Associate Builders,
it is obvious that neither the ground of fundamental policy of
Indian law, nor the ground of patent illegality, have been made
out in the facts of this case, given the fact that the Majority Award
is certainly a possible view based on the oral and documentary
evidence led in the case, which cannot be characterized as being
either perverse or being based on no evidence. [Paras 41, 44]
[561-B-C; 565-B-D]
Associate Builders v. DDA (2015) 3 SCC 49: [2014] 13
SCR 895 - relied on
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MMTC Ltd. v. Vedanta Ltd. (2019) 4 SCC 163:[2019] 3
SCR 1023; Dyna Technologies Pvt. Ltd. v. Cromptom
Greaves Ltd. 2019 SCC Online SC 1656; Parsa Kente
Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam
Ltd. (2019) 7 SCC 236 : [2019] 8 SCR 728; South East
Asia Marine Engg. & Constructions Ltd. (SEAMEC
LTD.) v. Oil India Ltd. (2020) 5 SCC 1649; Patel Engg.
Ltd. v. North Eastern Electric Power Corpn. Ltd. (2020)
7 SCC 167 : [2019] 7 SCR 522; Sangyong Engg. &
Construction Co. Ltd. v. NHAI (2019) 15 SCC 131 :
[2019] 7 SCR 522 - held inapplicable
Raghunandan v. Kirtyanand AIR 1932 PC 131; Zurich
Insurance (Singapore) Pte Ltd v. B-Gold Interior Design
& Construction Pte Ltd. [2008] SGCA 27; Transmission
Corpn. of Andhra Pradesh Ltd. v. GMR Vemagiri Power
Generation Ltd. (2018) 3 SCC 716; Renusagar Power
Co. Ltd. v. General Electric Co. 1994 Supp (1) SCC
644: [1993] 3 Suppl. SCR 22; ONGC Ltd. v. Saw Pipes
Ltd. (2003) 5 SCC 705:[2003] 3 SCR 691; National
Highways Authority of India v. ITD Cementation India
Ltd. (2015) 14 SCC 21:[2015] 6 SCR 107; Centrotrade
Minerals &Metal Inc. v. Hindustan Copper Ltd. (2017)
2 SCC 228 : [2016] 9 SCR 83; Venture Global Engg.
LLC v. Tech Mahindra Ltd. (2018) 1 SCC 656: [2017]
12 SCR 259; Sutlej Construction Ltd. v. State (UT of
Chandigarh) (2018) 1 SCC 718 : [2017] 12 SCR 134;
Maharashtra State Electricity Distribution Co. Ltd. v.
Datar Switchgear Ltd. (2018) 3 SCC 133: [2018] 1
SCR 733; HRD Corpn. v. GAIL (India) Ltd. (2018) 12
SCC 471: [2017] 11 SCR 857; M.P. Power Generation
Co. Ltd. v. ANSALDO Energia SpA, (2018) 16 SCC 661;
Shriram EPC Ltd. v. Rioglass Solar Sa (2018) 18 SCC
313; State of Jharkhand v. HSS Integrated Sdn (2019)
9 SCC 798; Ssangyong Engg. & Construction Co. Ltd.
v. NHAI (2019) 15 SCC 131:[2019] 7 SCR 522
- referred to
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Case Law Reference
[1964] 2 SCR 152
referred to
Para 22
AIR 1932 PC 131
referred to
Para 23
(2018) 3 SCC 716
referred to
Para 35
[1989] 1 SCR 665
relied on
Para 38
[1962] 1 SCR 653
relied on
Para 38
[1993] 3 Suppl. SCR 22
referred to
Para 42
[2003] 3 SCR 691
referred to
Para 42
[2015] 6 SCR 107
referred to
Para 43 (a)
[2016] 9 SCR 83
referred to
Para 43 (b)
[2017] 12 SCR 259
referred to
Para 43 (c)
[2017] 12 SCR 134
referred to
Para 43 (d)
[2018] 1 SCR 733
referred to
Para 43 (e)
[2017] 11 SCR 857
referred to
Para 43 (f)
(2018) 16 SCC 661
referred to
Para 43 (g)
(2018) 18 SCC 313
referred to
Para 43 (h)
(2019) 9 SCC 798
referred to
Para 43 (i)
[2014] 13 SCR 895
relied on
Para 44
[2019] 3 SCR 1023
held inapplicable
Para 45
[2019] 8 SCR 728
held inapplicable
Para 47
(2020) 5 SCC 1649
held inapplicable
Para 48
[2019] 7 SCR 522
held inapplicable
Para 49
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4083
of 2020
From the Judgment and Order dated 02.03.2020 of the High Court
of Delhi at New Delhi in FAO (OS) 532/2015.
Kapil Sibal, Neeraj Kishan Kaul, Mukul Rohatgi, Sanjiv Puri, Sr.
Advs., Aman Ahluwalia, Samar Singh Kachwaha, Ms. Ankit Khushu,
Raghavendra Mohan Bajaj, Ms. Garima Bajaj, Agnish Aditya, Aayush
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Marwah, Ms. Chanan Parwani, Ms. Shivangi Nanda, Ms. Anuradha
Dutt, Ms. Suman Yadav, Aditya Sarin, Ms. Divya Krishnan, Akhil Sachar,
Ms. B. Vijayalakshmi Menon, Advs. for the appearing parties.
The Judgment of the Court was delivered by
R. F. NARIMAN, J.
1. Leave granted.
2. This appeal is at the instance of an Australian company, Anglo
American Metallurgical Coal Pty. Ltd. ["Appellant"], which produces
and exports certain types of coal. By a Long Term Agreement dated
07.03.2007 ["LTA"], between the Appellant and MMTC Ltd.
["Respondent"], the Appellant, referred to as the "seller" in the LTA,
agreed to supply certain quantities of freshly mined and washed "German
Creek", "Isaac" (Blend of 65% Moranbah North and 35% German Creek
coking coals) and "Moranbah North" coking coal to the Respondent.
Clause 1 of this LTA is material and states as follows:
"CLAUSE 1: MATERIAL, QUANTITY, QUALITY AND
DELIVERY PERIOD:
The SELLER shall sell and the PURCHASER shall buy,
a) The base quantity during the currency of the contract shall be
466,000 (Four hundred Sixty Six thousand) metric tons (of one
thousand kilograms each) firm.
b) During the First Delivery Period (1st July, 2004 to 30th June,
2005), a quantity of 464,374 (Four Hundred Sixty Four Thousand,
Three Hundred and Seventy Four) metric tons (of one thousand
Kilograms each) firm quantity of freshly mined and washed
"Isaac", "Moranbah North" and "German Creek" coking coals.
c) During the Second Delivery Period (1st July, 2005 to 30 June,
2006) a quantity of 382,769 (Three Hundred Eighty Two Thousand,
Seven Hundred and Sixty Nine) metric tons (of one thousand
kilograms each) firm quantity of freshly mined and washed
"Isaac", "Moranbah North" and "German Creek" cooking coals.
d) During the Third Delivery Period (1st July, 2006 to 30th June,
2007) a quantity of 466,000 (Four Hundred Sixty Six Thousand)
metric tons (of one thousand Kilograms each) firm quantity of
freshly mined and washed "Isaac", "Moranbah North" and
"German Creek" coking coals.
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e) During the subsequent Delivery Periods, in case of the
PURCHASER exercising the option to extend the duration of the
Agreement by two more years, at its sole discretion, as indicated
at Para 1.3 herein below, a quantity of 466,000 (Four Hundred
Sixty Thousand) metric tons (of one thousand kilograms each) of
freshly mined and washed "Isaac", "Moranbah North" and
"German Creek" coking coals hereinafter referred to as the
MATERIALS, in conformity with the Technical Specifications
incorporated in Annexure - IIB (applicable for "Moranbah North"
coking coal) and Annexure IIC (applicable for "German Creek"
coking coal) to this Agreement and which shall constitute an
integral part of this Agreement, for use of imported coking coals
in the coke ovens in its integrated iron and steel works for
production of metallurgical coke. The quality of the prime washed
coking coals to be supplied under this Agreement shall under no
circumstances be inferior to the Technical Specifications as
contained in Annexure IIA, Annexure IIB and Annexure IIC to
this Agreement as applicable.
1.1.1 Annual base quantity from 1st July, 2007 to 30 June, 2009,
in case Purchaser exercises its option to extend the Agreement
by 2 years, shall be 466,000 metric tonnes, subject to further
discussions at the time of contract extension and the logical contract
specification modifications to reflect the changing nature of existing
reserves at the Moranbah North and German Creek mining
operations will be mutually agreed.
1.2 For the purpose of this Agreement, the Delivery Period shall
be reckoned as follows:
First Delivery Period 1st July 2004 to 30th June 2005
Second Delivery Period 1st July 2005 to 30th June 2006
Third Delivery Period 1st July 2006 to 30th June 2007
The shipments will be evenly spread during each Delivery Period.
The PURCHASER reserves the right to prepone shipments against
any Delivery Period based on its requirement and subject to
availability with the SELLER.
The Purchaser reserved the right to postpone the deliveries to be
effected under each Delivery Period by upto 3 months i.e. the
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month of September following each Delivery Period, without any
additional financial liability to the PURCHASER.
1.3 The PURCHASER had the option to extend the duration of
the Agreement by two more years, at its sole discretion and the
Purchaser to exercise its option for extending the Agreement by
two more years or otherwise by 31st January, 2007. In case the
PURCHASER decides to exercise such option, at its sole
discretion, the Agreement shall have two more Delivery Periods
as follows:
Fourth Delivery Period: 1st July 2007 to 30th June 2008
Fifth Delivery Period: 1st July 2008 to 30th June 2009"
3. Under clause 2 of the LTA, which refers to "Price", for
subsequent Delivery Periods, including the "Fifth Delivery Period", with
which we are directly concerned, it is undisputed that when read with
Annexure I of the LTA and a letter dated 14.08.2008, setting out the
terms of the Fifth Delivery Period, the price was fixed at $300 per metric
tonne. Clause 2.2 is important and states as follows:
"CLAUSE 2: PRICE
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2.2 The Price for the Delivery of AGREEMENT quantity for
subsequent Delivery Periods shall be fixed in accordance with
Para I of Annexure-1 and shall be firm and shall not be subject to
any escalation for any reason, whatsoever, until the completion of
delivery of the AGREEMENT quantity due for delivery in the
relevant Delivery Period with such extensions as might be mutually
agreed upon between the PURCHASER and the SELLER."
4. Disputes arose between the Appellant and the Respondent as
to shipments or "stems" that were to be covered by the Fifth Delivery
Period, which ranged from 01.07.2008 to 30.06.2009, the parties mutually
extending this period to 30.09.2009. A number of emails and letters were
exchanged between the parties from August 2008 to December 2009,
which were examined in detail by a panel of arbitrators consisting of Mr.
Peter Leaver (Queen's Counsel), Justice V.K. Gupta (Retd.) and Mr.
Anthony Houghton (Senior Counsel) ["Arbitral Tribunal"] who sat at
New Delhi and delivered their international arbitral award in New Delhi
on 12.05.2014. It may be stated at the outset that the award is a majority
ANGLO AMERICAN METALLURGICAL COAL PTY LTD. v.
MMTC LTD. [R.F. NARIMAN, J.]
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award of Mr. Peter Leaver and Mr. Anthony Houghton ["Majority
Award"], in favour of the Claimant, being the Appellant before us, a
dissenting award being delivered by Justice V.K. Gupta ["Dissenting
Award"], in which the claim of the Appellant was dismissed in its entirety.
5. The Majority Award was challenged under section 34 of the
Arbitration and Conciliation Act, 1996 ["Arbitration Act"] before a
learned Single Judge of the High Court of Delhi ["Single Judge"], who
upheld the Majority Award by a judgment dated 10.07.2015. However,
by the impugned judgment dated 02.03.2020, a Division Bench of the
High Court of Delhi ["Division Bench"] set aside the judgment of the
Single Judge and allowed an appeal filed under section 37 of the
Arbitration Act by the Respondent, setting aside the Majority Award.
6. The Majority Award contains detailed reasons, and since it is
the subject matter of intense debate between the parties, it is important
to set out the facts found by the Majority Award, together with the material
findings and ultimate award.
5a. Under the heading, "I. Common Grounds and Issues in
Dispute", the Majority Award set out what it describes as the undisputed
facts, as follows:
"I. Common Ground and Issues in Dispute
34. Before setting out the List of Issues to be decided by the
Tribunal, some of the undisputed facts are summarised by way of
background. These matters, of what the Tribunal understands to
be common ground, are summarised also in the Claimant's
Opening Submission dated 16th September 2013.
35. By a Long Term Agreement dated 7th March 2007 under
which the Respondent contracted to purchase freshly mined and
washed coking coal from the Claimant on FOB (trimmed) basis
from DBCT Gladstone in Australia. The Long Term Agreement
they signed was extended by agreement and is to be read along
with Addendum No.2 dated 20th November 2008. As referred to
at paragraph 5 above, the Long Term Agreement as extended by
Addendum No. 2 is referred to herein as "the Agreement".
36. Prior to Addendum No.2, the Agreement encompassed three
Delivery Periods of one year each commencing on 1st July 2004
and concluding on 30th June 2007. The Long Term Agreement
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included a provision (at Clause 1.3) that gave the Respondent an
option to extend the Long Term Agreement for two more Delivery
Periods, and this option was exercised such that purchases and
deliveries were also to be made in a Fourth Delivery Period
(between 1st July 2007 and 30th June 2008); and a Fifth Delivery
Period (1st July 2008 to 30th June 2009).
38. In regard to these two additional Delivery Periods it was
provided that the Respondent would purchase 466,000 MT of
coking coal during each Delivery Period (Clause 1.1.1).
39. The matters which are in dispute arise out of the Fifth Delivery
Period. This was to have run to 30th June 2009, but was extended
by agreement between the parties so as to expire on 30th
September 2009 as confirmed in the Claimant's letter to the
Respondent dated 14th August 2008. The coking coal to be supplied
was of two types (Isaac Coking Coal blend and Dawson Valley
blend) and the agreed price for each for the Fifth Delivery Period
was US$300 per MT. That price was agreed by the parties in
accordance with the Agreement, and was confirmed by letter
from the Respondent to the claimant dated the 20th November
2008.
40. It is not in dispute that the Respondent lifted only two shipments
at the agreed price of US$300 per MT during the Fifth Delivery
Period. The first was on 30th October 2008, and was a quantity
of 2,366 MT, and the second on 5th August 2009, when the
Respondent lifted another 9,600 MT.
41. The first of these shipments was via the 'Furness Hartlepool'
and was part of a larger shipment under which 48,655 MT was
lifted in respect of balance quantities under the Fourth Delivery
Period (at the agreed rate for that period of US$96.40 per MT).
The Fifth Delivery Period component of this delivery was 2,366
MT and this was transacted at the agreed price of US$300 per
MT.
42. The second of these shipments was an ad hoc agreement
made in a meeting on 15th July 2009 and confirmed in writing by
the Respondent on 22nd July 2009. That ad-hoc agreement ("the
Sea Venus agreement") was for 50,000 MT of coal under which
9,600 MT was to be purchased at the contractual price of US$300
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per MT, but the balance 40,400 MT was to be sold at an ad hoc
price of US$128.25 per MT.
43. Even after these two deliveries were made there was a
considerable shortfall in deliveries against the contracted quantity
for the Fifth Delivery Period. The total quantity actually lifted in
respect of the Fifth Delivery Period was 11,966 MT (2,366 +
9,600MT) as compared to the contracted quantity of 466,000MT.
Accordingly, the quantity not lifted by MMTC amounts to 454,034
MT.
44. This quantity not lifted underpins the Claimant's claim, which
is for damages arising out of an alleged breach on the part of the
Respondent in not lifting the contracted quantity. The loss claimed
by the Claimant is the difference between what is said to have
been the market price, and the contract price.
45. For its part the Respondent denies any breach on its part in
not having lifted the contracted quantity. This is because, according
to the Respondent, the Claimant did not in fact have the goods
available for delivery to the Respondent. The Respondent's
contention is that the Claimant's marketing manager expressed
an inability to supply cargo under the Fifth Delivery Period, and
the Respondent says that this was a simple refusal to perform the
obligation to supply coal under the Agreement. Correspondingly,
the Respondent contends that it was the Claimant which was in
breach of the Agreement.
46. The detailed issues which arise, as defined in the Terms of
Reference and, as these were supplemented, are as follows:
A. Whether the Respondent committed breach of contract in
not lifting 454,034 MT of coking coal in terms of Agreement
and if so, the consequences thereof? If yes, what is the date of
such breach?
B. Whether the Claimant was in breach of contract in failing
to supply goods to the Respondent during the Fifth Delivery
Period? If yes, what is the date of such breach?
In considering this issue, and so far as relevant, was the
Claimant in a position to perform its obligations by making
available the requisite quantities in a timely manner as per the
stipulations under the Contract?
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C. Whether the Claimant's claims are barred by limitation?
Whether there was a failure on the part of any party to perform
the obligations cast upon it under the Contract, in a timely manner,
or at all and if so, the effect thereof.
D. Whether the Claimant is entitled to any damages and if so
to what amount?
E. Whether the Claimant is entitled to interest on any damages
to be awarded and if so, at what rate and for what period?
F. Whether the Claimant is entitled to interest pendente lite
and post pendente lite, and if so at what rate.
G. Costs of the arbitration, and interest, if any, on the costs
awarded."
5b. Under the heading, "M. The Correspondence Regarding
Deliveries", the Majority Award referred to the various emails and letters
exchanged between the parties, as follows:
"M. The Correspondence Regarding Deliveries
56. The correspondence directly concerning deliveries in mid 2009
comprises only a few documents. Firstly, on 11th March 2009 the
Claimant wrote to the Respondent:
"We refer to discussions in New Delhi on 24th February
2009 between Mr Suresh Babu and our Mr John Wilcox at
your office. Anglo remains very concerned that deliveries
for the Fifth Delivery Period of the Agreement remain
unperformed by MMTC, and that to date MMTC has not
intimated arrangements for performance of obligations
arising under the Agreement.
Accordingly, kindly send MMTC's proposed Delivery
Schedule for the Fifth Delivery Period, as referred to in
Clause 4 of Annexure IV of the Agreement, for our
consideration. Under the circumstances, we seek your
response by close of business Brisbane time on Friday 20th
March 2009."
57. On 2nd July 2009 the Respondent wrote to the Claimant,
requesting, the Respondent submits, the Claimant to indicate stem
availability for two deliveries, one each in August and September
2009. The Respondent said:
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"Transchart has already entered the market on behalf of
MMTC for the vessel against July 09 stem.
Keeping the huge backlogs in mind we would like to avail
two stems in August 09 and one in September 09. Please
confirm availability and convey the laycans."
58. On 3rd July 2009 the Claimant wrote to Mr. Babu of the
Respondent seeking time to respond to the request. However there
was no follow up from the Claimant. On 21st July 2009 the
Respondent again requested confirmation of stem availability:
"We are awaiting stem confirmation from Anglo for August
2009. Please note we have given our Indent well in
advance. The flexibility of laycan vested with you
completely. We look forward to hear from you..."
59. On 22nd July 2009 the Claimant responded, stating:
"Unfortunately, at this stage we are unable to confirm a
stem in Aug/Sep for MMTC due to cargo availability.
We are continuing to review our position and will advise
our preferred schedule for Oct-Dec 2009 as soon as
possible"
60. The Respondent submits that this means what it literally says;
the Claimant refused to confirm stem availability for August and
September 2009 due to a lack of availability. Correspondingly, the
Claimant failed to supply the contracted material within the Fifth
Delivery Period.
61. On 4th September 2009, the Respondent wrote to the Claimant
stating that:
"Our cokery has increased the pushing's with the result,
requirements of coking coal has gone upto 90,000t/month.
After Anglo has not given any stem to MMTC. Seavenus
[sic] Please give US' one stem of 50,000MT each in
October and November 09."
62. Once again the Claimant (through Mr Wilcox) expressed itself
to be unable to supply the coal under the Fifth Delivery Period
because of non availability for the remainder of the year 2009 (email of 7th September, 2009). Mr. Wilcox stated:
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"Dear Suresh,
....Unfortunately at this stage we do not have any coal
availability for the remainder of the year.
We will continue to monitor the situation and let you know
if the position changes. "
63. On 21st September 2009 the Claimant wrote as follows:
"We refer to our letter of 11 March 2009 to which we have
not yet received a response.
The Fifth Delivery Period of the Agreement has now
finished bringing the terms of the Agreement to an end.
However, to date, MMTC has only taken delivery of 11,966
tonnes of coal out of a total contracted tonnage of 466,000
tonnes for the Fifth Delivery Period.
Despite our repeated requests MMTC has not provided
Anglo with a schedule for taking delivery of the remaining
454,034 tonnes of coal from the Fifth Delivery Period
('Carryover'), other than to say that it will agree to the
same arrangements made between Anglo and SAIL and
RINL with regards delivery of 2008 carryover tonnes."
64. The author of the letter (Mr. Elliott, the General Manager,
Marketing and Transportation of the Claimant) then set out the
terms which had been agreed with SAIL/RINL and set out a
proposal for delivery of the "carryover" quantity and for renewal
of the agreement with the Respondent.
65. On 25th September 2009 the Respondent (Mr. Babu) responded
to that letter. The response stated that the proposal was "near to
impossible" in that it envisaged the Respondent lifting a very
substantial quantity of the carryover quantity by end March 2010.
The letter then stated:
"In this connection, It may please be appreciated that RINL
is basically a producer of LAM coke and pig Iron where
the value addition is negligible or negative sometimes. The
industry is yet to come out of the shock of recession. Lifting
even 18.7% carry over tonnage implies a loss of USD 25/
1 coke produced. Keeping these Issues in mind, we had
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approached Anglo Coal for a reduction in price via our
letter dated 20.11.2008. Lifting another 38% implies a
further increase in loss by another USD 80/1. For the sake
of negotiation, we hope you will not ignore the economic
realities completely, Steel Melting Shop of NNL is under
implementation and the commissioning is expected sometime
in end 2010. Economy will also come out of recession
gradually.
In short we are not denying our obligation. The request is
only for staggering the time frame for lifting as explained
in para. 1 & 2 above. Please review and reconsider our
request for allotting at least one shipment of 50,000MT
each from October 09 onwards instead of zero stem till
end of 2009." "
5c. After setting out summaries of the Claimant's case and the
Respondent's case, under the sub-heading, "Availability of Coal", the
Majority Award accepted the evidence of Mr. John B. Wilcox, Marketing
Manager, on behalf of the Appellant, reading the same with the
Respondent's letter dated 20.11.2008, as follows:
"Availability of Coal
118. The first element to be considered is the assertion advanced
on behalf of the Respondent that the Claimant did not have the
contracted goods to deliver. This depends entirely upon two emails, one dated 22nd July 2009 and the other dated 7th September,
2009. The first of these stated that the Claimant was unable to
confirm the stem in August/September "due to cargo
availability" and was reviewing the position in regard to October
December2009.