Bombay HC junks Iran plea against order on USD 35 lakh payout to Indian firm

The Bombay High Court has dismissed an appeal filed by the government of Iran challenging an exparte order directing the West Asian nation to pay more than USD 35 lakh to an Indian company in a dispute over sale of railway wagons an episode that dates back to 1970A division bench of Justices K R Shriram and Rajesh Patil in a ruling earlier this week also imposed a cost of Rs 10 lakh after dismissing the Iran governments plea and the fine amount would be payable to the Indian company KT Steels within four weeksThe Islamic Republic of Iran IRI through the Iranian Islamic Republic Railways RAI had floated a global tender for purchase of railway wagons The Indian government at that point was exporting wagons through the State Trading Corporation STCKT Steels submitted its bid through STC and the Indian public sector company entered into a purchase contract with the Iranian government on March 16 1970 The STC assigned the benefit of the contract to KT Steels through a separate contract in November 1970In 1972 due to a spike in international oil prices there was an increase in freight charges for shipment of wagons and in August 1976 the contract was amended With this modification the export continued until 1977Also Read Bombay High Court irked with Maharashtra govts persistent stand over no quota benefits for abandoned kidsHowever KT Steels claimed that the Islamic Republic of Iran failed to pay the freight charges as agreed for 306 wagons in 1973 and 94 wagons shipped in 1977 The Indian firm filed a suit the HC in September 1996 but the government of Iran never appeared before the courtIn an exparte judgment passed in 2008 by the thenBombay High Court judge Justice DY Chandrachud the HC directed IRI to pay an amount of USD 1387727 for 304 wagons USD 1696722 for 94 wagons and USD 484840 towards damages all totalling USD 3569289The court also ordered an interest payment at the rate of 9 per cent per annum on the freight charges from date of instituting suit to realisationAfter 12 years RAI filed an appeal against the order in the High Court claiming the suit had been wrongfully filed against the Islamic Republic of Iran and in fact it should have been filed against RAIRAI claimed to have discovered about the proceedings only in July 2019 after it received papers from the Ministry of Foreign Affairs of Iran It thus filed an appeal on February 25 2020The foreign rail firm apprised the court that KT Steels had served the proceedings on the Iranian Consulate who had even replied stating it was not a commercial entity and enjoyed sovereign immunityThe HC accepted KT Steels arguments that the Islamic Republic of Iran did not pay heed to the courts orders till a disclosure order was passedThe court noted that the appeal and condonation of delay application had been filed by Iran through RAI and the position that both parties were separate entities seemed to be an afterthoughtWe observe that the Iranian Government has chosen not to appear before this Court and still refuses to comply with Courts orders Applicant IRI has not made any submissions before this Court but only RAI which is not even a party to the Appeal has engaged a Counsel to appear the division bench notedIt found no satisfactory explanation for this delay as well as the delay of 12 years and 10 days to file the appealIn view of these observations the HC dismissed the plea filed by the Islamic Republic of Iran and imposed a cost of Rs 10 lakh to be paid in four weeks to KT SteelsThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever