Union Of India,Canteen Store ... vs Shamli Distillery And Chemical ...
2009 Latest Caselaw 4353 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI


+                        OMP No. 62/2009

                                          27th   October, 2009

UNION OF INDIA,
CANTEEN STORE DEPARTMENT                        ...Petitioner
                  Through: Mr. Dalip Mehra, Advocate

              VERSUS

SHAMLI DISTILLERY AND CHEMICAL WORKS                 ....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?

%                        JUDGMENT (ORAL)

VALMIKI J. MEHTA, J.

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

Conciliation Act, 1996 has been filed against the Award dated

OMP 62/2009 Page 1 24.9.2008 passed by a sole Arbitrator in the dispute between the

petitioner and the respondent.

2. The facts of the case are that a contract was entered into

between the parties whereby the respondent agreed to supply to the

petitioner two lakhs cases of bottled rum. The contract dated

19.4.1996 was entered into between the parties pursuant to the tender

issued by the present petitioner. Award has been passed in favour of

the respondent and against the petitioner whereby basically the claim

of the petitioner for risk purchase has been rejected and the claim of

the respondent for the value of the supply of goods has been

accepted. The crux of the dispute between the parties was whether

the period of contract in question was from 1.4.1996 to 31.3.1997 or

from 1.4.1996 to 31.12.1997.

3. The counsel for the petitioner is very strenuously canvassed that

the contract in question talks of supply of the rum cases for the years

1996 and 1997 and, therefore, the period of supply should be taken as

ending on 31.12.1997. The objector's counsel accordingly contended

that the respondent failed to supply the contracted quantity which

was ordered upon him and, therefore, the objector was entitled to the OMP 62/2009 Page 2 risk purchase cost of Rs. 12,19,064/-. The objection, in my opinion, is

misconceived. A reference to the tender pursuant to which the

contract was entered into between the parties specifically states that

the tender was in respect of the supply of rum from 1.4.1996 to

31.3.1997. Therefore, if there is any ambiguity in the contract which

specified the supply of rum for the years 1996 & 1997 help can be

taken from the tender pursuant to which the contract is entered into

between the parties. Even if we ignore the tender form, the Arbitrator

has referred to the letter dated 31.3.1997 of the objector which was

signed on 15.5.1997 and posted only on 23.5.1997 by which the

petitioner sought to extend the delivery period from 31.12.1997 to

31.3.1998. The Arbitrator has justifiably held that if the contract was

valid upto 31.12.1997 then there was no reason why a letter should be

written as early as 31.3.1997 for allegedly extending the supply from

31.12.1997 to 31.3.1998. Clearly, therefore, no reliance can be placed

on this letter dated 31.3.1997 of the objector for holding that the

contract was not till 31.3.97 but till 31.12.97. After all, if the order

was upto December 1997, why would an extension be called for in

March 1997? The Arbitrator has further held that even assuming the OMP 62/2009 Page 3 contract was extended upto 31.3.1998, the objector was found lacking

in not having given import permits along with the indent and which

permits were only for 19,800 cases which were duly supplied. Thus,

the balance indents/demands being incomplete and not capable of

performance without the import permits for the State where the rum

was to be supplied it cannot be said that a valid order was placed.

The Arbitrator has also further held that the objector failed to file the

copy of the risk purchase contract by which the claim of risk purchase

could be established. In view of the aforesaid facts, I do not find any

error whatsoever in the reasoning or the decision of the Arbitrator for

being interfered with under Section 34 of the Act.

4. The second contention of the objector was with respect to the

counter claim of Rs. 21,08,423/- being allowed in favour of the

respondent. This amount represents the value of the goods supplied

to the objector by the respondent and which has been awarded in

favour of the respondent by the Arbitrator. The Arbitrator has duly

noted that the respondent has filed complete bill-wise details of the

amount claimed and which has not been denied by the claimant. The

Arbitrator has further noted that there is only a bald denial in the OMP 62/2009 Page 4 pleadings of the objector for payment of this amount. Surely, if the

respondent has supplied the goods it is entitled to payment once it is

held that the objector is not entitled to withhold any amount on

account of alleged risk purchase cost. No fault also can, therefore, be

found with this portion of the Award.

5. The next objection which was pressed on behalf of the objector

was the allowing of the amount of Rs. 1,82,320/- by the Arbitrator on

account of the cost of labels and P.P. Caps incurred by the respondent

for execution of the agreement. The Arbitrator in this regard has held

that the labels and the P.P. Caps are such which could not be used

because of the lack of orders by the objector and since they were

specially made for the CSD Canteen of the objector they could not

also have been used elsewhere. The Arbitrator has therefore awarded

this amount in favour of the respondent and has taken into account

the Chartered Accountant's Certificate certifying these expenses. The

finding of fact in this regard cannot be said to be perverse which calls

for interference by this under Section 34 of the Act.

6. Lastly, that takes me to the issue of interest. Whereas the

respondent had claimed interest at 21% per annum the Arbitrator OMP 62/2009 Page 5 allowed interest at two figures of 12% and 9%. Though this rate of

interest is not such which calls for interference by this Court the

counsel for the respondent has conceded that instead of two rates of

interest, the respondent is agreeable to a single rate of interest of 9%

per annum simple. Taking this concession on record, the Award is

modified in that wherever the interest has been awarded at 12% in

the Award the same should be read as 9% p.a. simple.

7. With the aforesaid observations, the present petition is dismissed

with costs of Rs. 15,000/-.

                                                  VALMIKI J.MEHTA, J


October 27, 2009
dkg




OMP 62/2009                                                       Page 6