Umpire upholds ICCL stand in arbitration with Tisco
Mar 28, 2003
Business Standard

Tata Iron and Steel Co (Tisco) has suffered a major setback in its prolonged arbitration battle with Indian Charge Chrome Ltd. (ICCL) over cancellation of a chrome conversion contract with the umpire appointed for the arbitration vindicating ICCL's stand in most of the contentious issues on points of law.

While establishing that ICCL had suffered loss because of cancellation of the conversion contract by Tisco, the umpire has concluded, "ICCL is clearly entitled to damages".

However, the umpire has not quantified the damages for loss suffered by ICCL and observed that a chartered accountant or other expert be appointed to go into the records of the case and submit a report for consideration by the umpire in this matter.

Both parties had gone into arbitration honoring 10th June, 1994 order of the Calcutta High Court after they fell out over breach of the chrome conversion contract. ICCL had signed a five year agreement with Tisco in 1992 for conversion of chrome ore supplied by the latter for exchange of a fee.

But following stoppage of raw material supply for conversion purposes by Tisco in February, 1994, ICCL had gone to Calcutta High Court alleging illegal termination of the contract by the former and sought settlement of damages suffered by the company through arbitration.

The arbitration process saw disagreement between respective arbitrators of ICCL and Tisco over the award to be delivered; following which Justice R S Pathak was appointed as the umpire to take a final view on the matter. While ICCL's arbitrator has staked a claim of Rs 187 crore on Tisco as damages, the Tisco arbitrator had raised a counter claim of Rs 132 crore.

Holding the ICCL's conversion contract with Tisco as valid, the umpire said, "ICCL did not fail to perform its part of the promise and was ready to perform it in conformity with the stipulation and specification contained in the 1992 agreement and in that regard it did not commit a breach of contract in any degree".

On the other hand, he observed that Tisco was not entitled to stop the supply of chrome ore and coke to ICCL and was not relieved of its obligation to perform its part of the promise under the agreement.

Stating that by stopping the supply of raw material, Tisco has prevented operation of the agreement, umpire said, this has resulted in ICCL being denied the conversion charges to which it was entitled under the agreement.

"Further, by reason of inadequate quantity and quality of the raw material supplied by Tisco, the production of the finished product had suffered greatly and in the result ICCL was denied the full measure of conversion charges to which it was entitled".

"In my opinion, there is sufficient material on the record to show that ICCL suffered loss or damage because of the acts and conducts of Tisco", the umpire said.

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