Union Of India (Uoi) vs Alfa Laval (India) Ltd.
2006 Latest Caselaw 926 Del

JUDGMENT

S.N. Aggarwal, J.

1. This appeal under Section 39 of the Indian Arbitration Act, 1940 has been filed by the Union of India against the judgment of the learned Single Judge dated 16.11.1999. Vide impugned judgment, the learned Single Judge has dismissed the objections under Section 30 and 33 of the Arbitration Act filed by the appellant against the arbitral award.

2. The facts of the case are that on 26.11.1977, the appellant had awarded a contract to the respondent for supply of 2856 containers Milk aluminum at Rs. 189/- per piece plus excise duty and sales tax. The supply was to be made as per specifications mentioned in the contract. It is stated that the respondent failed to supply the goods within the time stipulated in the contract. The supply was not made even though time for delivery was extended by the appellant. Because of non-supply of goods by the respondent, the appellant resorted to risk purchase of the goods in question which it had to purchase at Rs. 250/- per piece of Milk container. This risk purchase was made after about 2' years of the cancellation of the contract cancelled on 29.08.1979. Besides cancellation of the contract, the appellant also forfeited the security of the respondent amounting to Rs. 26,989/-. The appellant is alleged to had suffered damages to the tune of Rs. 2,12,446.40 being the difference between the contract price and the price at which risk purchase was made. The appellant demanded this amount from the respondent and as the respondent failed to satisfy the demand, the appellant withheld the amount of Rs. 2,12,446.40 from the payment that was due to the respondent under the earlier contract. In view of the same, disputes and differences arose between the parties which were referred for decision to Shri Ram Bahadur, Sole Arbitrator. In order to decide the disputes between the parties, the arbitrator had framed the following issues:

i) Whether contract has been illegally cancelled by the UOI?

ii) Whether R/P is in order?

iii) Whether Claimants (UOI) are entitled to any damage whatsoever?

iv) Whether respondents are entitled to the claimed amount by way of counter claim

3 After hearing the parties, the learned arbitrator returned his finding on issue No. 1 in favor of the appellant holding that the contract in question was validly terminated by the U.O.I. Finding on this issue are not in dispute in this appeal. On issues No. 2 and 3, arbitrator returned the finding that the risk purchase was made by the appellant after 2' years of cancellation of the contract and for that reason the appellant is not entitled for any damages on account of alleged risk purchase made by it. The learned arbitrator has further held that the appellant has failed to lead any evidence to substantiate its claim for damages allegedly suffered on account of risk purchase. The findings of the learned arbitrator on these two issues i.e. issues No. 2 and 3 were assailed by the appellant by filing objections under Sections 30 and 33 of the old Arbitration Act. These objections did not find favor with the learned Single Judge and aggrieved by the same the appellant has filed this appeal.

4. Learned Counsel for the appellant has argued before us that there is a manifest error in the order of the learned Single Judge as according to her the learned arbitrator as well as the learned Single Judge did not appreciate that the appellant being a government department, it took time to complete the formalities before risk purchase was made after cancellation of the contract. She has also argued that the learned arbitrator as well as the learned Single Judge did not take into account that the only evidence the appellant could produce before the arbitrator on the point of damages was to prove the rate at which contract was awarded to the respondent and the rate at which risk purchase was made. The learned Counsel has referred to document at Serial No. 16 filed by the appellant before the arbitrator on 8.12.1989 and document at Serial No. 5 filed on 04.05.1990 in order to show the difference of price at which contract was awarded and the rate at which risk purchase was made. To meet this argument advanced on behalf of the appellant, Mr. Vaidialingam, learned Counsel for the respondent has argued that at best the appellant was entitled to general damages on account of alleged risk purchase at the rate that prevailed on the date of breach of contract and not at the rate at which risk purchase was made after about 2' years of the cancellation of the contract.

5. We have considered the above rival submissions of the counsel for the parties but we could not persuade ourselves to agree with the contention on issues No. 2 and 3 made on behalf of the appellant. It is an admitted case of the appellant itself that the risk purchase was made after 2' years of the cancellation of the contract and that it did not produce before the arbitrator any evidence to show as to what was the rate per piece of the milk containers at the time of cancellation of the contract. For that reason, we are of the view that the learned arbitrator as well as the learned Single Judge were absolutely right in declining the claim of the appellant for damages on account of alleged risk purchase. We do not find any error much less manifest error in the impugned order of the learned Single Judge on the above aspect. The decision of the learned arbitrator on issue No. 4 is not in dispute and, therefore, we need not deal with the same. 6 In view of the above, we do not find any merit in this appeal. Dismissed.

6 In view of the above, we do not find any merit in this appeal.

Dismissed.