Punjab Agro Industries ... vs Shriram Industrial Enterprises ...
2001 Latest Caselaw 1651 Del

JUDGMENT

J.D. Kapoor, J.

1 The award dated 7.12.1994 through which claim of the respondent was rejected is sought to be made rule of the Court. it has been challenged by the applicant/respondent corporation by way of IA 9762/96.

2. The applicant is a governing undertaking situated in the State of Punjab and is engaged in the procurement and arrangement of fertilizers within the State of Punjab. Respondent 1 was engaged in the business of manufacture of fertilisers. As per contract the deliveries were to be effected by respondent No. 1 all over the State of Punjab through its local dealers. The goods were to be transported at the cost of respondent 1. Various supplies were effected by respondent No. 1 from time to time any payments were made to it by letter of credit on presentation of advice and goods receipt. These transactions took place between 1983 and 1985. Since supplies were made all over the State and in far flung areas the applicant took time to effect deliveries.

3. It was discovered that large amounts of deliveries to be effected from various dealers of the applicant were not effected at site. For some of the invoices proof of deliveries was not furnished by the respondent No. 1. The disputes between the parties were referred to the Arbitrator. The applicant preferred the claim before the Arbitrator. However, it did not find favor with the Arbitrator and was rejected.

4. As is apparent from the aforesaid facts, the applicant placed orders on the respondent for supply of fertilizers through transporters which were the agents of the respondents. As regards the payments, the respondents picked up the payments from the applicant on proof of dispatch of the goods. Payments to the transporters had to be made by the respondents against number of actual deliveries. For certain transactions and in particular 21 transactions detailed in para 31 of the plaint, no proof of deliveries was given.

5. The issue before the Arbitrator was whether the actual deliveries had been effected at site or not. The stand taken by the respondent before the Arbitrator was that orders placed before the claimant were duly carried out and goods had been delivered at the places as per the terms of the contract. It was further urged that the respondents stood absolved from the responsibilities and liabilities once delivery of material was made and accepted by the transporter for the claimant who was an agent of the claimant.

6. Admittedly, it was common ground between the parties that the respondent No. 1 used to pay the freight to the transporters and charge the same from the claimant along with the price of the goods invoice issued by them. However, the learned Arbitrator came to the conclusion that there was nothing to suggest that any of the transporters or carriers was a nominee of the claimant/applicant or that the claimant had introduced any of the carriers to respondent No. 1 or issued any such direction to respondent No. 1 to deliver the goods to any particular carrier.

7. It is contended by the counsel for the applicant that the Arbitrator has come to the conclusion that the transporters are the agents of the respondents whereas the onus of proving that actual deliveries had been effected or not rested with the respondents.

8. Admittedly, the Arbitrator returned the finding that even after the goods were entrusted to the carriers/transporters by respondent No. 1 for delivery at the places of destination, the nominee of the claimant could not wash their hands from the responsibility to ensure delivery of the same to the right person. What is questioned by the learned counsel for the applicant is that after having returned such a finding the learned Arbitrator fell into error by saying that initial onus to prove non-delivery of the goods was upon the applicant/claimant. In other words, the learned Arbitrator shifted the onus to the respondent for non-delivery of the goods to the claimant. According to the learned counsel both these observations are self-contradictory as on the one hand the Arbitrator has given the finding that the respondents cannot wash their hands from their responsibilities to ensure deliveries of the goods to the right persons while on the other hand the Arbitrator has rejected the claim of the claimant/applicant on the premise that the applicant/claimant has failed to discharge the initial onus to prove non-delivery of the goods. Observations of the Arbitrator in this regard are as under:-

"Since, however, it was for the Claimant to discharge the initial onus of proof with regard to non-delivery of the goods to various nominees mentioned in 21 GRs and it has miserably failed to do so the verdict has to be against him."

9. Learned counsel contends that the award is liable to be set aside as the onus of the applicant/claimant was not to prove facts in negative that they have delivered the goods.

10. The second limb of the argument of the learned counsel is that the Arbitral Tribunal fell in error by holding that Article 113 of the Limitation Act is attracted to the present claim as Article 13 of the Limitation Act is attracted only in those cases where certain payment of delivery of goods have been made and part payment is to be made for the transaction. Article 13 of the Limitation Act reads as under:

"13. Exclusion of time in cases where leave to sue or appeal as a pauper is applied for - In computing the period of limitation prescribed for any suit or appeal in any case where an application for leave to sue or appeal as a pauper has been made and rejected, the time during which the applicant has been prosecuting in good faith his application for such leave shall be excluded, and the court may, on payment of the court fees prescribed for such suit or appeal, treat the suit or appeal as having the same force and effect as if the court fees had been paid in the first instance."

11. The nature of transactions in question was distinct as specific orders were placed rom time to time and deliveries were to be effected in that respect. It is not a case of a transaction where party payment was made and deliveries were effected. Thus according to the learned counsel since neither the Article 13 of the Limitation Act nor any other specific article of the Limitation Act is applicable the case has to be governed by item 113 of the Schedule which is to the following effect;

Description of suit Period of Time from Limitation which period begins to run.

.................... ........... .............

113. Any suit for Three When the which no period of years. right to sue limitation is accrues.

provided elsewhere in this Schedule.

.................... ............ .............

12. While attracting Schedule 113 of the Limitation Act the learned Arbitrator observed that since according to the claimant their customers did not receive goods they are entitled to refund of amount received by the respondent along with interest and since the respondents have failed to deliver the goods to their nominees as per contract or refund of the said amount. Thus, in the understanding of the learned Arbitrator the claim of the applicant pertains to the balance of payment towards the value of the goods.

13. In nutshell the view of the Arbitrator was that the present claim is not for compensation on the basis of the breach of contract to supply goods but it is specifically for the refund of the amounts paid by the claimant against the GRs in question to the respondents and consideration for the said amounts having failed they are entitled to refund of the same.

14. However, the fact remains that the present case is not a case where part payment has been made and the balance payment is made for certain transactions. The instant transaction was a booking transaction and the payments were to be made on proof of dispatch.

15. According to the learned counsel the Arbitrator has committed grave error of fact as well as of the law and therefore Award is liable to be set aside.

16. On the contrary, Mr. D.K. Malhotra, learned counsel for the petitioner defended the award forcefully as according to him the court should be reluctant to disturb the award even if there are two views possible and even if the view taken by the Arbitrator is erroneous.

17. Guidelines for accepting, rejecting or remitting the award have been laid down by the Supreme Court in case after case. Some of these are extracted below:

, U.P. State Electricity Board v. Searsole Chemicals Ltd.

When the arbitrators have applied their mind to the pleadings, the evidence adduced before them and the terms of the contract, we do not think, it is within our scope to reappraise the matter as if this were an appeal, and it is clear that where two views are possible - the view taken by the arbitrators would prevail.

, Puri Construction Pvt. Ltd. v. Union of India-

Besides, a court while examining the objections taken to an award filed by an arbitrator is not required to examine the correctness of the claim on merits. The scope is very limited and none of the points which can be entertained has been substantiated by the objector-respondent.

The court cannot sit in appeal over the vies of the arbitrator by re-examining and re-assessing the materials. The scope for setting aside an award is limited to the grounds available under the Arbitration Act, which have been well defined by a long line of decided cases, and none of them is available here. For this reason the decision of the Division Bench of the High Court has to be set aside.

, Gujarat Water Supply & Sewerage Board v. Unique Erectors (Gujarat) (P) Ltd. and Anr.-

The Court, however does not sit in appeal over the award and review the reasons. The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusion or if the award is based upon any legal proposition which is erroneous."

18. Let us examine the award on the anvil of these principles.

19. The crucial question that arises for determination is whether the learned Arbitrator has considered the disputed questions rightly or not. The finding of fact f the Arbitrator cannot be disturbed by the court as it does not sit in appeal. The case of the respondent is that they have no received the goods in relation to 21 specified GRs. and as such they are entitled for refund of the amounts paid against those deliveries. The respondent has not produced any evidence on record to prove non-delivery of the goods nor the books of accounts relating to those consignments. They have produced only accounts of the Head Office.

20. Perusal of the award shows that the Arbitrator has considered large number of documents produced by the respondent towards supply of goods, including 21 GRs in respect of claim, photo copies of various invoices and large number of letters etc. written by them to the respondent No. 1. The arbitrator has also discussed Shri A.N. Batra, the sole witness of the corporation.

21. The conclusion of the arbitrator is that the claimant has neither produced any of the nominees of the respondent No. 1 nor has produced the accounts of the regional office containing accounts of each customer nor has examined their own clerk at the local station where the claimant was a consignee. The Arbitrator has further found that the non-production of ledger has failed to prove the claim inasmuch as the amount shown to be outstanding cannot be said to be in respect of GRs in question. These are findings of facts based on the material produced by the parties. Even if initial onus is upon the claimant, still the nature of dispute was such which involved evidence of both the parties. Merely because respondents cannot wash their hands from the responsibility of entire delivery of the goods does not mean that the claim of the claimant was liable to be rejected for non-production of the evidence by the respondent as to the delivery of the goods to the consignees. It was further required to show and prove non-delivery to become entitled for refund.

22. These are such questions which even if are subject to the two possible views cannot be challenged in the court. Secondly, even if it is assumed that the learned Arbitrator has erred in attracting the provisions of Article 13 of the Limitation Act, still the fact remains that the claim of the applicant was rejected for want of evidence as to the non-delivery of the goods to the consignees and not on the ground of being barred by limitation.

23. It is not a case where non-application of mind or entirely erroneous or perverse or whimsical or capricious approach to the material or evidence produced by the parties is manifest on the face of the Award. Unless the Award suffers from the vices of these elements, it should ordinarily not be disturbed.

24. For the aforesaid reasons the objections raised through IA No. 9950/99 being devoid of merits are liable to be dismissed. In the result the award is made a rule of the Court.