The Bombay High Court has dismissed the West Asian country’s appeal against an order to the Iranian government to pay over $3.5 million to an Indian company in a case related to the sale of railway coaches.
A division bench of Justice KR Sriram and Justice Rajesh Patil, in a judgment delivered earlier this week, dismissed the Iranian government’s plea and also ordered it to pay a fine of Rs 10 lakh to Indian company KT Steels within four weeks.
The Government of Iran had issued a global tender through the Islamic Republic Railways of Iran (RAI) for the purchase of rail coaches. At that time the Government of India was exporting cans through ‘State Trading Corporation’ (STC).
KT Steels submitted its bid through STC and the Public Sector Indian Company (STC) entered into a purchase contract with the Government of Iran on 16 March 1970. STC passed on the benefits of the contract to KT Steels through a separate contract in November 1970.
The increase in international oil prices led to an increase in freight charges for moving the coaches in 1972, and the contract was revised in August 1976. After this modification the export continued till 1977.
KT Steels alleged that Iran did not pay freight charges for 306 boxes shipped in 1973 and 94 boxes shipped in 1977. The Indian company filed a case in the High Court in September 1996, but the Iranian government did not appear before the court even once during the hearing.
Subsequently, in 2008, Bombay High Court Justice DY Chandrachud, in an ex-parte judgement, awarded the Islamic Republic of Iran (IRI) $13,87,727 for 304 coaches, $16,96,722 for 94 coaches and $4,84,840 for damages. That is, ordered to pay a total amount of $ 35,69,289.
The court also ordered interest at the rate of nine per cent per annum on the freight charges from the date of filing of the case till the payment is made.
RAI filed a petition against this order in the High Court after 12 years, claiming that the suit was wrongly filed against IRI and should have actually been filed against RAI.
“We note that the Government of Iran has chosen not to appear before this Court and continues to refuse to comply with its orders,” the court said. The petitioner (IRI) has not made any representation before this Court, but only RAI, which is not even a party to the petition, has engaged a lawyer to represent the matter.”
The court also dismissed the IRI’s plea and ordered it to pay a fine of Rs 10 lakh to KT Stees within four weeks.
