Calcutta High Court Upholds Single Judge's Modification Of Arbitral Award In UltraTech-Mintech Dispute

The Calcutta High Court on 16 March dismissed cross appeals filed by Mintech Global Pvt Ltd and UltraTech Cement Ltd, upholding a Single Judge's order that partly modified an arbitral award arising from a commercial contract related to cement manufacturing.

A Division Bench of Justices Debangsu Basak and Md. Shabbar Rashidi held that the Single Judge's conclusions on the interest rate and the limited scope of jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996, warranted no interference. The judges noted:

“Learned Single Judge has therefore rightly held that the Arbitral Tribunal acted contrary to the contract in reducing the rate of interest. We have not found that the exercise of jurisdiction by the learned Single Judge under Section 34 of the Act of 1996, stands vitiated.”

The dispute arose from a contract dated 27 January 2016 under which Mintech Global agreed to set up captive manufacturing units for cement end products such as fly ash bricks, AAC blocks and ready-mix mortar for UltraTech Cement. The project investment was about Rs. 65.74 crore, of which UltraTech paid Rs. 31.98 crore as mobilisation advance, repayable in 96 monthly installments at an interest rate of 14.5%.

The manufacturing units were set up in 2016 and 2017. Disputes emerged after UltraTech, via emails dated 7 and 8 March 2017, instructed Mintech to stop procuring raw materials. Arbitration was invoked and the Arbitral Tribunal delivered an award on 20 March 2023 granting various claims, including future commitment charges.

The award was challenged under Section 34 of the Arbitration Act. On 8 November 2024, the Single Judge partly set aside the award, disallowing Rs. 127.12 crore towards future commitment charges and restoring the interest on mobilisation advance to the contractual rate of 14.5% from 9%.

In examining the appeals, the Division Bench held that the Arbitral Tribunal had adopted an implausible interpretation of the contract while awarding commitment charges and had acted contrary to the contractual terms in reducing the interest rate. The court observed:

“Arbitral Tribunal had acted beyond the express terms of the contract in reducing the rate of interests. It is not a case that no rate of interest was prescribed under the contract.”

Accordingly, the Division Bench dismissed both appeals, finding no jurisdictional error in the Single Judge's reasoning.

For Mintech Global: Senior Advocates Jishnu Saha, Rizu Ghoshal, with Advocates Sirsanya Bandyopadhyay, Soham Kr. Roy, Rahul Kr. Singh

For Ultra Tech Cement: Senior Advocate S.N. Mookherjee, Mainak Bose, with Advocates Debjyoti Saha, Shubhrojyoti Mookherjee, Anirudh Goyal