Pardes Dehydration Co. vs Union Of India
2009 Latest Caselaw 5244 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI


+                         O.M.P. No.517A/2000 and 638A/2000

                                                              December 16, 2009

1.O.M.P. No. 517A/2000



PARDES DEHYDRATION CO.                                           ...Petitioner

                                Through:        Mr. Shiv Khorana, Advocate.

                                VERSUS

UNION OF INDIA                                                    ....Respondent

                                Through:        Ms. Geeta Sharma, Advocate.

2.O.M.P. No.638A/2000

UNION OF INDIA                                                    ....Petitioner

                          Through:     Ms. Geeta Sharma, Advocate.

                                VERSUS

PARDES DEHYDRATION CO.                                           ...Respondent

                          Through:     Mr. Shiv Khorana, 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?

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


OMP No.517A/2000 & 638A/2000                                                  Page 1
  %                       JUDGMENT(ORAL)

VALMIKI J. MEHTA, J.

1. Suit No. 638A/2000 was filed for summoning of the Award. The

Award has been requisitioned from the Arbitrator. No objections were filed in

this Suit No.638A/2000 and objections were in fact filed by the

respondent/Union of India against the Award dated 11.2.2000 in Suit

No.517A/2000 which was a petition filed by the contractor under Sections 14

and 17 of the Arbitration Act, 1940. I note that these objections ought to have

been numbered as an I.A. but the same have not been numbered. Accordingly,

let the Registry give a number to these objections filed by the Union of India

under Sections 30 and 33 of the Arbitration Act, 1940.

2. The facts of the case are that the contract was awarded by the

objector/Union of India to the contractor/Pardes Dehydration Company

whereby the latter was to supply dehydrated potatoes. The contract in question

is dated 23.3.1990 (date of letter of acceptance) and under which a total of 43

metric tonnes(MT) of potatoes were to be supplied in four months viz 10 MT up

to 30.4.1990, 10 MT up to 31.5.1990, 13 MT up to 30.6.1990 and the balance

10 MT up to 31.7.1990.

OMP No.517A/2000 & 638A/2000 Page 2

3. It is an undisputed fact that the contractor could not supply the

goods in question. The contractor asked for and got three extensions, the last of

which is dated 31.1.1991 for supply up to 28.2.1991. Even up to 28.2.1991 the

contractor failed to supply the dehydrated potatoes.

4. The objector, therefore, filed its claim before the Arbitrator on

account of having procured the dehydrated potatoes at the risk and cost of the

contractor. Before I advert to the merits of the case and the Award I do find it

surprising that in a case where the contract in question in fact provides for

liquidated damages, the Union of India did not seek liquidated damages but in

fact asked for general damages on the basis of a risk purchase tender. Not only

this, the Union of India which could have asked for liquidated damages as an

alternative relief to the relief of general damages yet it did not pray for this

alternative relief of liquidated damages. By the Award, the Arbitrator has

dismissed the claim of Union of India on two main grounds that firstly the time

of performance was not the essence of the contract and secondly that the Union

of India has failed to prove the rates of dehydrated potatoes in and around the

date of breach.

5. A reading of the Award and the facts of the case show that under

the contract, there was a clause for liquidated damages. This clause of

liquidated damages is provided under clause 14(7)(i) of the General Conditions

OMP No.517A/2000 & 638A/2000 Page 3 of Contract (Form DGS &D-68-Revised). Once there is a clause for entitlement

of liquidated damages, then in view of the judgment of Supreme Court reported

as Hind Construction Contractors Vs. State of Maharashtra AIR 1979SC

720, time of performance is not the essence of the contract and so accordingly

held by the Arbitrator. The judgment in Hind Construction Contractors

(supra) case has been followed by a Learned Single Judge of this Court in the

case reported as Union of India Vs. Panipat Foods Ltd. 60(1995)DLT 258 and

which has been relied upon by the Arbitrator . Once time of performance is not

the essence of the contract, it was incumbent upon the Union of India to issue a

notice making time of performance the essence of the contract and which

admittedly was not done. In view of the aforesaid facts, the Arbitrator has

given, inter alia, two findings as under:

" v) The respondent had sought extension on 28.2.91 that they have commenced the production and placed order for procurement of ISI confirming tins, therefore, delivery be given upto 30.4.91 but the claimant had cancelled the same as late as on 30.5.91 instead of granting the period and placed the order of R/P on 19.9.91. In "UOI Vs. Panipat Foods Ltd. and others", it is held that the time in this type of contract is not essence of the contract and the claimant should have given the opportunity to the respondent by granting the period as was requested for and making the time essence of the contract upto 30.4.91.

vi) In respect of claim of general damages, the claimant has failed to file any document which establishes the market rate on date of breach as per the Judgment of Supreme Court in AIR-1962, SC-366 and followed by High Court of Delhi, Universal Woollen Mills Vs. UOI, reported in 1995(1) Arbitration Law Reporter 59, the date and place of the breach or near about has to be produced but the same has not been established by UOI."

OMP No.517A/2000 & 638A/2000 Page 4 The aforesaid finding of the Arbitrator is justified and I do not find that

the same can in any manner be faulted with. Even if two views are possible,

this Court will not interfere merely because another view is possible than the

view as taken by the Arbitrator. The Arbitrator, therefore, has rightly rejected

the claim of the Union of India for general damages.

6. Before parting with the case, I must express my anguish that in a

case of this nature where ex-facie the contractor is at fault and has committed

default in performance of his obligations yet he is being allowed to go scott free

because the Union of India did not take the correct remedy of seeking liquidated

damages in alternative to general damages. If I was sitting as a Civil Court

hearing first appeal under Order 41 of Civil Procedure Code, 1908, it could

have been possible for me to have taken a different view because under the

various provisions of Order 41, including Order 41 Rule 33, of Civil Procedure

Code, I could have in fact made any such orders in the interest of justice as

found just an appropriate in the facts and circumstances of the case, however, I

am handicapped because I am hearing objections to an Award under Section 34

and my jurisdiction as such is indeed limited. I can only hope that the Union of

India would be well advised in future for at least filing proper claim petitions so

that when huge losses are caused to it, it can recover the same and not be

frustrated as per the situation which has been emerged in the present case.

OMP No.517A/2000 & 638A/2000 Page 5

7. In view of the above, the objection petition is dismissed leaving the

parties to bear their own costs. The Award is made a rule of the Court. This

order shall dispose of Suit No. 517A/2000 and the unnumbered I.A. under

Sections 30 and 33 of the Arbitration Act, 1940 and the Suit No.638A/2000.

                                                      VALMIKI J.MEHTA, J


December 16, 2009
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OMP No.517A/2000 & 638A/2000                                               Page 6