Global Agri System Pvt. Ltd. vs Fresh And Healthy Enterprises ...
2011 Latest Caselaw 4562 Del

*          THE HIGH COURT OF DELHI AT NEW DELHI
%                                  Judgment delivered on: 16.09.2011

                       OMP No. 556 of 2011

Global Agri System Pvt. Ltd.                      ......Petitioner
                     Through: Mr. Sansdeep Sethi, Sr. Adv. with
                              Mr. Anand Varma, and
                              Mr. Yakshay Chheda, Advs.

                       Versus

Fresh and Healthy Enterprises Ltd.               ......Respondent

Through: Mr. M.M. Kalra, Adv. with Mr. Kunal Kalra, Adv.

CORAM:-

HON'BLE MR JUSTICE MANMOHAN SINGH

1. Whether 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 Digest ?

MANMOHAN SINGH, J

1. This petition has been filed by the petitioner under section

9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to

as "the Act") seeking directions from this court to protect the legal

rights of the petitioner arising from an agreement for cold storage

entered into between the petitioner and the respondent.

2. The brief facts of the case are that in March 2011, the

petitioner and the respondent entered into an agreement for storage of

approximately 3500 MT of carrots form March to September 2011, in

the respondent's cold storage works at Rai, Haryana. According to the

petitioner, the said agreement provided that the respondent shall keep

the cold store under close supervision and maintain the temperature at

1 degree Celsius. Further, the said agreement provided that in case of

any loss suffered by the petitioner due to failure in maintaining the cold

storage or negligence of the guard, the respondent shall be accountable

and shall pay damages to the petitioner for the same to compensate the

loss suffered by it. As per the petitioner, everything contained in the

said agreement had been decided between the parties and they were at

consensus ad idem with respect to all the stipulations in the agreement,

except regarding the payment of charges and it was decided that this

issue would be finalized at a later stage after further discussion.

3. It is stated by the petitioner that by an email dated

18.02.2011, the respondent agreed to restriction of liability to maintain

the protocols which had been jointly agreed upon by the parties and

therefore, even though the agreement was not formally signed but, it

was agreed to by the respondent through the said email and also by its

conduct. On 18.03.2011, the petitioner's Chairman sent an email to the

respondent stressing upon the high standard of care that was needed to

be exercised by the respondent and the reply to the said email was sent

by the respondent to the petitioner on the same day assuring him about

the their precautions and standards of care.

4. Further, it is stated by the petitioner that the petitioner

supplied best quality carrot to the respondent's cold storage which was

checked and verified by the respondent itself. All the consignments of

carrots were accepted and the receipts were issued by the respondent

to the petitioner for the quantity and quality without any adverse

comments except only in one case where it was observed that the

carrots were soft and the same was mentioned in the email but, all the

other consignments were accepted without demur.

5. The grievance of the petitioner is that within 8 days of

loading its last consignment, the petitioner received a letter dated

27.04.2011 form the respondent wherein it was stated by the

respondent, that upon their recent check of the material, they noticed

rotting in some chambers and asked the petitioner to market those

products at the earliest. Respondent also enclosed a status report with

the said letter which indicated that carrots in 14 out of 33 chambers

had rotten over the period of storage. Thereafter, the respondent raised

a bill dated 28.04.2011 of Rs.22,14,581/- as "cooling charges' and

"labour charges" for the months of March and April 2011. As the

carrots were to be immediately disposed of, therefore, by its emails

dated 02.05.2011 and 03.05.2011, the petitioner requested the

respondent to provide labour and forklifts to withdraw the carrots

from its cold storage but the respondent failed to do so.

6. Thereafter, the petitioner's Chairman sent an email dated

05.05.2011 to the respondent inform it that the carrots in 3 chambers

had remained preserved and suggested certain steps to ensure that the

remaining carrots at the respondents cold storage were stored in

accordance with the agreement. But, as per the petitioner, despite

repeated requests, the respondent failed to comply with its obligations

under the agreement. On 07.06.2011, 49125 bags of carrots had been

withdrawn by the petitioner from the cold storage and out of these

bags 28728 bags were partially damaged thus, were sent for washing

and recovery and 20397 bags were completely destroyed and had to be

dumped.

7. On 08.06.2011 the petitioner received an email from the

respondent wherein the respondent disowned all the responsibility for

spoiling of the carrots. The relevant extract of the said email reads as

follows:

"...FHEL provide cold storage conditions as per the protocols required by the client. We do not check the quality of incoming material and hence can not be held responsible for the quality after storage.. " and that.. "the quality of carrots could have deteriorated due to number of reasons which are not in our control or jurisdiction..."

8. With effect from 08.06.2011, the petitioner came to know

that the respondent did not allow the petitioner's employees from any

access in its store premises and asked them to stop all operations.

Thereafter the respondent sent a bill of Rs.53,17,006/- vide its email

dated 09.06.2011 for the period from March to June. Some

correspondence was also exchanged between the parties but as no

solution could be arrived at between them as the cold storage

agreement between the petitioner and the respondent contains an

arbitration clause, therefore, the petitioner proposed that the disputes

be referred to the Sole Arbitrator for arbitration and vide its emails and

letter dated 18.07.2011 and 21.07.2011 respectively the respondent

agreed to arbitration. Further, it is stated that by letter dated

22.07.2011, the petitioner confirmed the acceptance of Mr. Bijay

Kumar, IAS, MD, NHB as the Sole Arbitrator to adjudicate upon the

disputes. But, by its letter dated 25.07.2011, the respondent informed

the petitioner that unless the petitioner gave it a bank guarantee for the

dues, the respondent would not agree for the sale proceeds to be kept

in a separate account. However, the, respondent came to know that in

fact the respondent tried to sell the carrots in the market through an

auction and had even published an auction notice to that effect on its

website for approximately 1600 MT English carrots.

9. Being aggrieved by such acts of the respondent, the

petitioner filed the instant petition.

10. In the reply filed on behalf of the respondent to his petition

it stated that there was no agreement between the parties for storing

the carrots as the agreement could not be signed due to difference of

opinion on various clauses in the draft agreement and regarding that

the respondent had even sent an email dated 18.02.2011 to the

petitioner. In response to said email, the petitioner had sent an email

dated 21.02.2011 informing the respondent that certain points raised

by the respondent by its email are not acceptable to them. Thus, it

cannot be said that there was any valid agreement between the parties.

11. Further, it is stated that a meeting had taken place between

the parties wherein it was agreed that an Arbitrator would be

appointed to adjudicate upon the disputes and it was also agreed that

the petitioner and the respondent would jointly sell the carrots and the

sale proceeds would be kept with the respondent. But, vide its letter

dated 16.07.2011 the petitioner backed out from the point of sale

proceeds being kept with the respondent. Further, the petitioner has

concealed the fact that the respondent has not been paid its dues

amounting to Rs.69,41,000/-(public money) despite issuing various

reminders. It is also stated by the respondent that as the goods are of

perishable nature, therefore, it is in the best interest of both the parties

that the carrots be disposed of in an auction and the money so

collected be kept with the respondent against its dues.

12. The matter was adjourned from time to time so that both

parties may jointly sell the carrots and the sale proceeds could be

deposited with the Registrar General of this Court in fixed deposit

scheme till the disposal of arbitration proceedings. However, the said

things could not be materialized. It is submitted by the petitioner that

as per expert opinion taken by the petitioner after giving the sample

of the respondent's cold storage, now the value of the goods is not

more than Rs.10 lac. On the other side, it appears that the respondent

is not inclined to take its responsibility to sell the carrot so that if any

more value be received.

13. On the last date, learned counsel for the respondent has

suggested that since the respondent is not an expert in this line,

therefore, the petitioner may be allowed to dispose of the goods at

their level but, the petitioner should deposit the entire outstanding

amount against the bill and both the parties may raise their respective

claims before the Arbitrator and till the award is passed, the amount

deposit by the petitioner be kept in the said deposit.

14. Mr. Sandeep Sethi, learned Senior Counsel, has partly

agreed with the suggestion of the respondent to the effect that the

total proceeds of selling the carrot be deposited with the Registrar

General of this Court till the time award is passed by the Arbitrator but

he says that the petitioner is not prepared to deposit the alleged

outstanding amount claimed by the respondent. On the other hand,

Mr. Sethi says, that it is the petitioner who has suffered losses which

are more than one crore of rupees due to fault of the respondent and

his clients would be raising the said claim before the arbitration

proceedings, thus the suggestion of the respondent cannot be accepted.

Even otherwise, as the respondent has not filed any petition under

Section 9 against the petitioner, no order can be passed as per the

suggestion made in the present petition.

15. After having considered the rival submissions of the parties

and the material placed on record, the petition is disposed of with the

following directions :

(a) That the respondent shall hand over the carrots lying in the cold

storage to the petitioner after issuing the reasonable advance

notice by the petitioner for the purpose of removing the said

materials. The respondent or its authorized representative is

allowed to join the petitioner at the time of sale if it feels

necessary.

(b) After the sale of carrots the entire proceeds be deposited by the

petitioner with Registrar General of this court within one week

from the date of sale. The deposited amount shall be invested

by the Registry in FDR initially for a period of one year and

the same may be renewed from time to time till the award is

passed by the sole Arbitrator. The petitioner shall file an

affidavit for the said compliance. The entire process should be

completed within 10 days from today.

(c) Both the parties are allowed to raise their respective

claims/counter claim before the Arbitrator. The request of the

respondent to deposit the entire outstanding amount as charges

for storing the carrots would be considered by the sole

Arbitrator as per its own merit on filing the requisite petition.

16. The petition stands disposed of. No cost.

MANMOHAN SINGH, J.

SEPTEMBER 16, 2011