Phulchand Exports Ltd. Vs. OOO Patriot
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Head Note
The Arbitration and Conciliation Act, 1996 - Section 48
Public Policy of India - Enforcement of award - Contract - The buyer lodged claim against the sellers for recovery of amount before arbitral tribunal - The arbitral Tribunal, therefore split the amount of losses between the parties-buyers and sellers in equal parts and passed award - Buyers filed arbitration before High Court petition for enforcement - The sellers contended that award was contrary to the principles of public policy and, therefore, the award was unenforceable - The Single Judge held that the award could be enforced as a decree of the Court - The sellers preferred appeal before the Division Bench - Appeal filed in Supreme Court - Appellant submitted that the stipulation in clause 4, "in case the goods don't arrive the customs area of Russian Federation within 180 days from the date of payment the transferred amount is to be reimbursed to the Buyers' account" amounts to penalty within the meaning of Section 74 of the Contract Act, 1872 and being unconscionable bargain is void under Section 23 of the 1872 Act and, therefore, enforcement of the subject award by the Indian Courts is contrary to 'public policy of India' - The Arbitral Tribunal has only awarded reimbursement of half the price paid by the buyers to the sellers and, therefore, the award cannot be held to be unjust, unreasonable or unconscionable or contrary to the public policy of India - No merit in appeal and it is demised.
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