Delhi Consumer Cooperative ... vs Union Of India
2009 Latest Caselaw 5212 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELH


+                          O.M.P. No.63/1999

                                                              December 15, 2009.



DELHI CONSUMER COOPERATIVE WHOLESALE STORES LIMITED
                                          ...Petitioners


                                 Through:        Mr. M. Dutta, Advocate with Mr.
                                                 Vinod Dhawan, Advocate.
                                 VERSUS

UNION OF INDIA                                                     ....Respondent

                                 Through:        Ms. Geeta Sharma, Advocate.

CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

     1. Whether the Reporters of local papers may be allowed to see
        the judgment?

     2. To be referred to the Reporter or not?              Yes

     3. Whether the judgment should be reported in the Digest?          Yes

    %                      JUDGMENT(ORAL)

VALMIKI J. MEHTA, J.

1. This petition under Section 34 of the Arbitration and Conciliation

Act, 1996 challenges the Award dated 20.11.1998 passed by the sole Arbitrator

whereby the Arbitrator has awarded damages to the respondent/Union of India

OMP No.63/1999 Page 1 on account of the difference of cost with respect to the Chana Dal which the

petitioner had to supply to the respondent and which on account of the breach of

the petitioner, in not supplying the respondent had to purchase the same from a

third party.

2. The relevant portion of the Award is short and I would reproduce

the entire discussion in this regard as below:

"I allow the claim for the following reasons:-

i) The claim is under the terms and conditions of the contract.

ii) Furnishing of security deposit is a pre-requisite condition of the contract but the respondent-contractor neither furnished security deposit nor supplied goods even within the extended period. Thus, breach of contract was committed by the respondent and dates of breach are 30.4.93 for 1,000 MTs., 31.5.93 for 1,500 MTs and 30.6.93 for 875 MTs.

iii) The claimant has purchased at market rates as published by the premier economic newspaper, namely, "The Economic Times", "Business Standards" and "Financial Express" as on or near above dates of breach. The respondent has not produced any document/evidence, in rebuttal to it.

iv) No proof of force majeure has been filed by the respondent-contractor.

v) The total quantity of goods was purchased from the local market at higher rates than the contracted rates of the respondent due to breach of the contract by the respondent."

3. The aforesaid findings which have been given by the Arbitrator are

based on the statement of claim which shows that the contract in question

OMP No.63/1999 Page 2 required the supply of the contracted goods at a price of Rs.944/- per quintal.

On account of the breach of the petitioner in failing to supply the contracted

goods by the stipulated dates of 30.4.1993, 31.5.1993 and 30.6.1993 and failure

of the petitioner to furnish security deposit the respondent was forced to cancel

the contract after granting repeated extensions. The last of the extension

expired on 31.8.1993 and the contract was cancelled on 28.9.1993.

4. It is a fact on record that after the cancellation of the contract of the

petitioner repeated risk purchase tenders were invited and in the first of such

risk purchase tender, the petitioner herein itself was the lowest tenderer but once

again he failed to deposit the security deposit and therefore was not granted the

contract. In fact, the second last bidder also failed to perform the contract and

consequently again a risk purchase tender had to be issued. This time the risk

purchase tender was issued on one M/s A P Markfed who too again failed to

supply the goods. Another risk purchase tender was then placed on M/s Super

Bazar, who also failed to supply the contracted goods. Ultimately, a risk

purchase tender was floated on 22.4.1994 and the contract was placed upon

M/s.M P Export Corporation Ltd. to perform the contract and supply the goods

within the following delivery periods and rates:

"1000 MT in February, 95 @ Rs.1336/- per Qtl.

             1500 MT in March 95           @ Rs.1314/- per Qtl.



OMP No.63/1999                                                                  Page 3
              875 MT in April 95           @ Rs.1286/- per Qtl."

5. The counsel for the petitioner has contended that in terms of the

para 10 of the statement of claim, it is clear that no loss has been caused to the

respondent and therefore the Award is faulty on this count. A reference to para

10 shows that the contention of the counsel for the petitioner is not correct at all

because when in the statement of claim, it is stated that no loss has been caused,

that averment is in comparison with the cancelled contracts of the earlier risk

purchase tenderer; M/s Super Bazar and when as compared to the rates under

the original contract with the petitioner. It is not in dispute that the fresh

quantity which was purchased from M/s M P Export Corporation Ltd. was at

rates of Rs.1336/- per quintal, Rs.1314/- per quintal and Rs.1286/- per quintal

whereas under the subject contract with the petitioner the rate was Rs.944/- per

quintal. Clearly therefore there was a higher cost of purchase of the subject

goods than the cost of purchase from the petitioner and this higher cost has

caused loss to the respondent.

6. The only other issue which has been urged is that the Arbitrator has

taken the rates of the subject goods from leading newspapers, namely,

"Financial Express", The Economic Times" and "Business Standards" as on the

dates of the breaches and then has arrived at the aforesaid rates, whereas the risk

purchase was done much later in 1995. The contention seems to be that the cost

OMP No.63/1999 Page 4 of the risk purchase ought to have been taken for calculating and awarding the

loss to the respondent.

I do not find any fault whatsoever in this approach of the

Arbitrator. Under Section 73 of the Contract Act, 1872 a person who is

aggrieved, has to be compensated by a rate in and around the date of the breach.

This is exactly what the Arbitrator has done. Merely, because the actual risk

purchase tender was ultimately finalized only in late 1994/early 1995 for

supplies in February, March and April 1995 cannot mean that the rates of that

period have to be awarded. In fact, if such rates would not have been claimed

by the Union of India, of late 1994/early 1995, then, I am sure that it would be

the petitioner who would then have said that the rates so awarded have no co-

relation to the actual loss suffered which necessarily has to relate to the

difference of price on the date of the commission of the breach in August, 1993.

7. While hearing objections under Sections 34, this Court has to

see if the Award is illegal or violative of the contractual provisions or is so

perverse that it shocks the judicial conscience. Surely, this is not a case where

there is any perversity or any violation of the contractual provisions. Also there

is no illegality because the action of the Arbitrator is in terms of the law as

applicable under Section 73 of the Contract Act. Accordingly, no fault can be

OMP No.63/1999 Page 5 found with the impugned Award. The objections are therefore dismissed with

costs of Rs. 15,000/-.

                                                  VALMIKI J.MEHTA, J


December 15, 2009
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OMP No.63/1999                                                       Page 6