Union Of India vs New Swadeshi Sugar Mills & Anr.
2009 Latest Caselaw 2068 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI


                                                      Date of Reserve : 12.5.2009
                                                        Date of Order: May 15, 2009

+ CS(OS) No. 415A/1980
%                                                                        15.05.2009

        Union of India                                         ...Petitioner
                                      Through : Mr. Rajeev Saxena, Advocates

        Versus

        New Swadeshi Sugar Mills & Anr.             ...Respondents
                              Through: Mr. Sandeep Sharma, Advocate


        JUSTICE SHIV NARAYAN DHINGRA

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

2.      To be referred to the reporter or not?

3.      Whether judgment should be reported in Digest?


        JUDGMENT

1. The subject matter of objections raised by the defendant/respondent in

this case is an award passed by the Learned Arbitrator on 6 th August, 1980

whereby he awarded a sum of Rs.5,06,918/- to the plaintiff/petitioner. The

award of the Learned Arbitrator is a short award and the relevant portion is

reproduced below:

"And whereas, I heard and examined and considered the statements of the parties and their evidence.

I do hereby make my award as follows:

1. I award Rs.5,06,918/- (Rupees Five Lakhs six thousand nine hundred and eighteen only) in favour of the Union of India and direct the Contractor to pay the said amount to the Union of India.

CS(OS) No. 415A/1980 UOI v.New Swadeshi Sugar Mills & Anr. Page 1 Of 4

2. The parties shall bear their respective costs of the proceedings before me"

The contention of the respondent who raised objections against the award is

that the learned Arbitrator had passed a totally non-speaking award and had not

given any reason or basis of awarding a sum of Rs.5,06,918/-. The Respondent

argued that the contract between the parties was for the supply of potatoes.

The respondent could not supply the full quantity of potatoes. In such a

contract, no damages could be awarded by the learned Arbitrator unless it is

proved that the petitioner had done Risk purchase and it actually spent more

amounts at risk purchase.

2. It is also argued that the Arbitrator had not taken into account the

fact that even during risk purchase the petitioner had procured only 100 metric

tonnes of potatoes against the short supply of around 500 metric tonnes and the

Arbitrator could have awarded only the difference in the cost of 100 metric

tonnes.

3. The contract would show that the respondent had contracted for

supply of 850 metric tonnes of potatoes (700 metric tonnes tinned potatoes and

150 metric tonnes other potatoes). The respondent failed to supply 445 metric

tonnes of tinned potatoes with the result that the petitioner had to cancel the

order at the risk and cost of the respondent. The price quoted by the

respondent for tinned potatoes was Rs.3.43 per kg. The petitioner had

retendered for procuring the balance quantity. After cancelling of the contract by

the petitioner and the price quoted in retender was higher than what was the

earlier price and even the respondent had also participated in retender and

quoted Rs.1 per kg. more than the earlier price.

CS(OS) No. 415A/1980 UOI v.New Swadeshi Sugar Mills & Anr. Page 2 Of 4

4. It only shows that the respondent deliberately did not fulfill the

earlier contract because of which petitioner had to de novo start the process of

procuring potatoes at considerable cost.

5. Whenever a person gives quotations against a tender and his

quotations are accepted, the person is supposed to complete the contract. If the

person does not complete the contract he has to suffer the consequences. If a

person does not complete the contract then the party had to again issue

advertisement and call tenders. The entire process of the re-

advertising/recalling the tenders is an expensive and time consuming process,

as advertisement is to be published in national newspapers then the employer

has to procure the things at prices quoted in retender. The earlier contractor is

liable to pay the difference between the two prices and the other administrative

costs and loss suffered by the employer.

6. There is no dispute in this case that the respondent had failed to

supply the material and retendering was done. The petitioners had invoked the

Arbitration clause and the learned Arbitrator considered all the documents and

the evidence and then passed the award. An award cannot be set aside merely

because the Arbitrator had not taken the item-wise award and has chosen to

give a lump sum award. The lump sum award cannot be considered an invalid

award. It is also well settled that it is not necessary for the Arbitrator to give a

speaking award (refer to M/s. M.K.Shah Engineers & Contractors Vs. State of

Madhya Pradesh (1999)2SCC594).

7. The present award was passed by the Learned Arbitrator under

Arbitration Act, 1940. The Court cannot interfere in the award unless there is

error apparent on the face of the record. There is no doubt that the award is a

CS(OS) No. 415A/1980 UOI v.New Swadeshi Sugar Mills & Anr. Page 3 Of 4 non-speaking award but the agreement between the parties did not provide that

the Arbitrator had necessarily to make a speaking award. In absence of such an

Arbitration agreement, the Court cannot set aside the non-speaking award on

the grounds that there was an error apparent on the face of the award. The

award of the Arbitrator in the present case being under old Act was justified as

there was no requirement of giving a speaking award. Even otherwise, the

scope of interference by the Court is extremely limited in a non-speaking award.

The Court cannot probe into the mental process of the Arbitrator. The Court

should support the non-speaking award provided it was not invalidated due to

Arbitrator's misconduct (refer to Markfed Vanaspati and Allied Industries Vs.

Union of India (UOI) 2007(11)SCALE 138).

8. I find no ground to interfere with the award.

9. However, it is observed that the correspondence between the party

shows that petitioner had already encashed bank guarantee. The amount of

bank guarantee encashed by the petitioner is liable to be adjusted against the

amount awarded. The award is made rule of the Court. The decree-sheet be

prepared in terms of the award. The Petition is hereby allowed in above terms.

May , 2009                                     SHIV NARAYAN DHINGRA J.
rd




CS(OS) No. 415A/1980       UOI v.New Swadeshi Sugar Mills & Anr.   Page 4 Of 4