Kalyanpur Cement Ltd. vs Union Of India
2009 Latest Caselaw 2299 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                  Date of Decision : 28.05.2009

%                       O.M.P. No. 244/2000

      KALYANPUR CEMENT LTD.                          ..... Petitioner
                    Through:        Mr. Rakesh K. Khanna, Sr.
                                    Advocate with Mr. Reetesh Singh,
                                    Advocate.

                        versus

      UNION OF INDIA                                 ..... Respondent
                        Through:    Mr. A.K. Bhardwaj, Advocate.


      CORAM:
      HON'BLE MR. JUSTICE VIPIN SANGHI

      1. Whether the Reporters of local papers may          No
         be allowed to see the judgment?

      2. To be referred to Reporter or not?                 No

      3. Whether the judgment should be reported            No
         in the Digest?


VIPIN SANGHI, J. (Oral)

1. The petitioner M/s. Kalyanpur Cement Limited has filed

objections under Section 34 of the Arbitration and Conciliation Act (The

Act) to challenge the award made by the sole arbitrator Sh. B.L. Nishad

on 19.05.2000 in case no. 39-N/99. The claims of the respondent UOI

arising out of a contract dated 17.04.1995 against R/C. dated

31.03.1995 for supply of Portland Cement by the petitioner to the

respondent were referred to arbitration of Sh. B.L. Nishad on

05.05.1999.

2. The case of the respondent Union of India before the

Arbitrator was that the petitioner supplier had failed to supply the

goods despite extension of delivery period up to 25.08.1995. The

original delivery period expired on 30.06.1995. The respondent

cancelled the contract of the petitioner at the risk and cost of the

petitioner for the unsupplied quantity of cement. The respondent

claimed an amount of Rs. 84,75,196.08/- from the petitioner. The

details of the claim made by the respondent were contained in exhibit

„X‟ filed along with the statement of claim.

3. The petitioner refuted the claim on the ground that the

petitioner did not receive confirmed orders for supply of cement and,

therefore, could not effect the supply. It was also pleaded that there

was an in between agent, namely, Orbtik Overseas Private Limited,

who desired payment of commission. There was dispute between the

petitioner and the said agent and the agent had also filed a suit

against the petitioner. It was claimed by the petitioner that the orders

were never given to the petitioner directly.

4. The learned Arbitrator allowed the claim of the respondent

Union of India and the reasons given by him in his award read as

follows:

"i) The respondent‟s case is that supply orders were given to some agent M/s. Orbtik Overseas Pvt. Ltd. but I find that the contract was entered with the respondent and the respondent is governed by the terms of the contract. The responsibility due to non-supply of stores is of the respondent and the respondent failed to perform the contract and did not make supply of ordered stores.

Therefore, respondent had committed the breach of contract.

ii) The claimant filed the documents showing the difference between respondent‟s rate and market rate on or about date of breach with calculation of general damages.

iii) The respondent neither filed nor produced any evidence to show that the rate prevailing during that period was less rate than the proved by the claimant.

iv) There is no other rate made available by the respondent and the claimant has suffered loss on account of breach of the contract by the respondent."

5. The learned Arbitrator also awarded interest on the awarded

amount from the date of publishing the award till actual realization.

6. The first objection argued by learned Senior Counsel Mr.

Rakesh Khanna appearing for the petitioner is that the award is not

reasoned. He submits that not only under the provisions of the Act but

even the terms of the contract, as the claim was beyond Rs. 1 lacs,

the Arbitrator was obliged to give a reasoned award. He refers to

Clause 24 (7) of the contract in this regard. He submits that the

reasons given by the Arbitrator are cryptic. He submits that the

Arbitrator has merely relied upon the statement showing the difference

between the petitioner‟s contractual rate and the market rate for

calculation of general damages.

7. His further submission is that the proceedings were concluded

before the learned Arbitrator on 27.04.2000. Thereafter the

respondent Union of India had filed documents along with index dated

28.04.2000 before the Arbitrator in support of their claim for general

damages to establish the market rate at the relevant time. He submits

that the petitioner did not have any opportunity to deal with the

document produced after the closure of the proceedings on

27.04.2000. He thus submits that the proceedings are vitiated due to

violation of principles of natural justice, which the learned Arbitrator

was bound to follow. He also submits that the respondent did not

prove the documents filed after 27.04.2000 in accordance with law. In

support of this objection, he relies on the averment contained in

response to Para 32 of the objection petition wherein the respondent

Union of India inter alia states: "During the course of proceedings on

27.04.2000 it was mentioned by the Respondent before the Arbitrator

that the general damages were calculated on the basis of supply

orders and the calculations were available with Arbitrator. The

calculations were also explained to the Arbitrator. The documents

were, however, filed on 28.04.2000 sustaining the rates already

mentioned in the statement of claim and in other documents. The

copies of the documents filed on 28.04.2000 were given to the

petitioner also by the Respondent. The petitioner never refused any of

the documents or the contents therein before the Arbitrator or to the

Respondent/Union of India."

8. Learned Senior Counsel for the petitioner also submits that

though the alleged breach of the contract had occurred in the year

1995, the arbitration agreement was invoked only in the year 1999,

that is, beyond the period of three years. He submits that therefore,

the claim itself was barred by limitation.

9. Learned counsel for the respondent Union of India on the

other hand supports the award. He submits that there are sufficient

reasons given in the award. The Arbitrator has come to a finding of

fact that the petitioner had breached the contract by not making

supply of the ordered stores. He submits that since the contract had

been awarded to the petitioner, the petitioner alone was responsible

for its performance and the liability for non supply of the stores was

also that of the respondent and not of some so called agent M/s. Orbtik

Overseas Private Limited as claimed by the petitioner. He submits that

the respondent Union of India had filed detailed computation of its

claim of general damages. So far as the filing of the documents on

28.04.2000 is concerned, he submits that the rates claimed by the

Union of India were founded upon actual rates established in contract

for supply of stores at the relevant time. However, the document to

substantiate that claim was filed immediately after the closure of the

hearing on 27.04.2000 along with the index dated 28.04.2000 with an

advance copy to the petitioner. The petitioner never objected to the

said filing or to the document being taken on record. Even with regard

to the contents of the documents, neither any objection nor any

comment was raised by the petitioner to claim that the rate contained

therein is not relevant for purposes of computing the general damages

as claimed by the respondent. He submits that the award was made

only on 19.05.2000 that is nearly twenty days after the submission of

the documents. The fact that the petitioner did not raise any objection

before the Arbitrator clearly shows that the petitioner really had no

objection to the filing of the said document or to its contents. He

submits that the petitioner cannot, therefore, raise any grievance in

this regard in these proceedings. So far as the objection with regard to

the limitation is concerned, he submits that no such objection was

raised before the Arbitrator. It was permissible for the petitioner to

raise an objection on limitation before the Arbitrator, and since no such

objection was raised, the petitioner is not entitled to raise any

objection in these proceedings.

10. I have heard learned counsels for the parties and perused the

award and the relevant record. I am of the view that there is no error

in the award and no ground for setting aside the award under Section

34 or under any other provision of the Act is made out in this case.

The finding of the arbitrator that the petitioner had failed to perform

the contract and did not make supply of the stores is a finding of fact.

His conclusion that the petitioner herein had committed breach of the

contract, therefore, cannot be questioned. The document showing the

difference between the contractual rate with the petitioner herein, and

the market rate on or about the date of breach with calculation of

general damages shows that it is a detailed computation dealing with

each of the instances of failure to supply on the part of the petitioner

against the specific orders. The complete computation of the claim for

general damages was placed on record before the Arbitrator. From the

award it is seen that the petitioner did not produced any evidence to

controvert either the defaulted quantity, or the rate claimed to be

prevailing in the market at the relevant time by the respondent.

11. So far as the objection to the filing of documents with index

dated 28.04.2000, that is, after the conclusion of the hearing is

concerned, I find merit in the submission of the learned counsel for the

respondent Union of India that no objection to the same was raised by

the petitioner before the Arbitrator even though the award was made

about twenty days later. If the petitioner was so minded the petitioner

could have raised objection to the filing of the said document by the

respondent and could have made its submission with regard to the

said filing, as well as to the contents of the said documents. Neither of

this was done. The Arbitral proceedings terminated upon making of

the final award. Therefore, the petitioner could have moved an

application before the Arbitrator itself for making further submission on

the document filed by the respondent along with the index dated

28.04.2000. Therefore, the grievance raised by the petitioner that he

did not have sufficient opportunity to deal with the said document does

not appear to be justified.

12. The objection with regard to limitation was not raised by the

petitioner before the Arbitrator. For this reason there is no finding

given by him on this aspect. When the petitioner did not raise any

objection before the learned Arbitrator on the aspect of the claim being

barred by limitation, none can be raised at this stage. Though the

reasons given in the award are not very elaborately stated, they are

crisp and clear. There is a clear nexus between the reasons given and

conclusions reached by the learned Arbitrator. I, therefore, reject the

objections to the award on Claim No. 1.

13. So far as the aspect of grant of interest at the rate of 18 per

cent from the date of the award till realization is concerned, in my

view, the same appears to be excessive considering the prevalent

rates of interest. Accordingly, the rate of interest is modified and is

reduced to 9 per cent per annum. With the aforesaid modification, the

objections are dismissed leaving the parties to bear their respective

costs.

VIPIN SANGHI, J.

MAY 28, 2009 dp