Shri Balmukund Sharma vs Cement Corporation Of India & Anr.
2015 Latest Caselaw 5934 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         O.M.P. No. 400/2007
%                                                  14th August, 2015

SHRI BALMUKUND SHARMA                                     ..... Petitioner
                 Through:                None.


                          Versus

CEMENT CORPORATION OF INDIA & ANR.         ..... Respondents

Through: Mr. Arvind Kumar Gupta, Advocate with Mr. Abhishek Goyal, Advocate.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

1. This petition under Section 34 of the Arbitration &

Conciliation Act, 1996 (hereinafter referred to as 'the Act') impugns the

Award dated 28.2.2007 by which the Arbitrator dismissed the claim

petition for recovery of moneys including damages suffered by the

petitioner on account of alleged breach of contract by the respondent.

2. The facts of the case are that the respondent in the year 2002

issued a tender of sale by it of limestone from Pathri Mines of Mandhar

Cement Factory (Chattisgarh). The Work Order was issued on

20/26.8.2002 for supply of 80,000 metric tonnes per annum. The case of

the petitioner/claimant was that he was willing to deposit the amount

claimed in the Work Order dated 20/26.8.2002 but he was informed by

the General Manager of the respondent that the mining lease in favour of

the respondent by the State Government had not been renewed i.e in the

absence of the mining lease, the respondent could not have sold the

limestone to the petitioner/claimant under the Work Order dated

20/26.8.2002. Petitioner/claimant has claimed that on account of breach

of contract by the respondent in failing to supply the limestone in terms of

the Work Order dated 20/26.8.2002, he suffered losses including of

penalty levied by South East Central Railways to which

claimant/petitioner had agreed to supply the limestone. Petitioner also

claimed amounts towards expenditure incurred by him towards labour,

hiring of the machinery etc etc for taking of limestone from the

respondent under the subject Work Order. The details of the claims made

by the petitioner/claimant before the Arbitrator read as under:-

"a) That due to unilateral breach and frustration of the contract the Claimant could not supply the limestone/ballast to the South East Central Railway, Raipur Division and therefore, the said South East Central Railway deducted a shortfall penalty which was duly confirmed by their letter dated 10.02.2005 and recovered from the

Claimant which is solely attributable to the cancellation/frustration of the contract with the respondent.

An amount of Rs.8,39,550/-

b) Amount paid to the transporter for loading and transporting the limestone from the site as an amount of Rs.4,00,000/- per month for five truck and one loader and advance of Rs.2,00,000/- was paid on that amount.

An amount of Rs.2,00,000/-

c) The amount paid on making tent for the worker near the site An amount of Rs.59,300/-

d) The amount paid for the tools purchased for extracting and mining the limestone at the site for the worker An amount of Rs.1,02,635/-

e) Advance paid to the labours An amount of Rs.84,069/-

(f) Advance paid to the labours which remained idle for three weeks An amount of Rs.26,398/-

(g) Amount paid for hiring one atlas copco compressor with two drill jackhammers for drilling and mining the limestone which was hired @ Rs.75,000/- per month An amount of Rs.75,000/-

(h) The Claimant traveled from Raipur to Delhi and had meeting with the Respondent in respect of the said contract.

An amount of Rs.1,17,000/-

(i) Estimated business profit which although is about Rs.38,40,000/-. However, the Claimant is restricting his Claim to the minimum i.e. at 10% of the contract value with the South East Central Railway to whom the Claimant was to supply the limestone. Total contract value was Rs.2,17,40,000/-

An amount of Rs.21,74,000/-

The claimant claimed for the total loss of Rs.36,77,952/- alongwith interest at the commercial rate of 18% per annum from 1 st October,

2003 uptill 31st January, 2005. The claimant also claimed interest pendente lite and future interest @ 18% per annum w.e.f. 1st February, 2005 on the above amounts until the date of payment."

3. The respondent claimed before the Arbitrator that the

contract was a conditional contract in view of Clause 7 of Part-II of the

Contract/Work Order dated 20/26.8.2002 and which specifically provided

that State Government's permission is required for sale of limestone and

once no permission is granted for sale of the limestone, contract itself

becomes void. Respondent also contended that the contract not only was

only a conditionally accepted contract but also the petitioner/claimant

himself knew as early as on 6.9.2002 i.e barely about after 10 days of the

Work Order dated 20/26.8.2002 being issued that the respondent has not

been granted licence to sell the limestone by the State Government, and

therefore, the contract itself failed.

4. In terms of the pleadings of the parties, the Arbitrator framed

the following issues:-

"1. Whether the issuance of work order by the Respondent was final or concluded contract?

2. Whether the contract entered into between the claimant and respondent is void ab-initio?

3. Whether the arbitration proceedings are liable to be stayed as Respondent has been declared sick and the proceedings are pending before BIFR?

4. Whether at the time of entering into the contract, the Claimant had the knowledge of the fact that mining lease was not granted to the Respondent by the State Government? If so to what effect?

5. Whether the Respondent committed breach of the agreement?

6. Whether the Claimant have suffered any loss on account of breach committed by the Respondent? If so, what amount the Claimant is entitled to recover from the Respondent?

7. Whether the Claimant is entitled to interest, if so at what rate?

8. Relief."

5. The petitioner/claimant examined one witness being the son

and attorney of the petitioner/claimant and the respondent also examined

one witness, Sh. V.K. Arora, its employee.

6. Arbitrator in terms of the impugned Award has held that the

Contract/Work Order dated 20/26.08.2002 was a conditional contract and

this conditional contract failed on account of the respondent not being

granted license by the State Government to extract the limestone from

Pathri Mines of Mandhar Cement Factory (Chattisgarh). Arbitrator also

has held that the petitioner/claimant knew as early as on 6.9.2002 because

petitioner/claimant himself in his letter dated 6.9.2002 stated that he had

been informed by the General Manager that the mining lease was not

granted, and that otherwise the claimant/petitioner would have deposited

the price and the royalty charges for starting the work of mining.

Arbitrator also has arrived at a finding of fact that petitioner/claimant

therefore himself did not deposit any price or royalty charges because

petitioner knew that mining lease was not granted to the respondent by

the State Government.

7. So far as the issue of losses is concerned, the Arbitrator has

given a finding against the petitioner/claimant that except a self-serving

affidavit and filing certain labour registers, no proof was filed of any

actual payments having been made to the labour or for machinery or for

equipments etc and hence petitioner/claimant has/had failed to prove the

losses and which in any case could not be granted because the contract

was never capable of being enforced and had become void on account of

non-grant of license by the State Government to the respondent.

8. No one has appeared for the petitioner in spite of this case

being on the final board of this Court since 29.06.2015 and notice has

been displayed since last 1½ month that the arbitration matters in finals

will be taken up. The matter has been argued by the counsel for the

respondents for over 45 minutes but still no one appeared for the

petitioner.

9. I have gone through the record with the assistance of the

counsel for the respondents and I find that in the Award there is no error

of law or error of violation of any contractual provision or any perversity

for this Court to interfere in exercise of its jurisdiction under Section 34

of the Act. An Award can be interfered only if it is against the law

[Section 28(1)(a) of the Act], or the Award is against the contractual

terms between the parties [Section 28(3) of the Act] or the same is

perverse. This is the ratio of the two Supreme Court judgments in the

cases of Oil & Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd., (2003)

5 SCC 705 and Oil & Natural Gas Corporation Ltd. Vs. Western Geco

International Ltd., AIR 2015 SC 363. Putting it differently once two

views are possible, this Court will not interfere if the Arbitration Tribunal

arrived at one possible and plausible view.

10. In my opinion, once the petitioner/claimant himself knew as

early as on 6.9.2002 that the contract was not capable of being performed,

the contract which was a conditional contract as per Clause 7 of Part-II of

the Contract/Work Order dated 20/26.8.2002, stood frustrated and became

void. This is a possible and plausible finding arrived at by the Arbitrator.

Arbitrator also notes that once the petitioner/claimant himself knew this

fact within about 10 days of issuing of the Work Order, petitioner for that

reason did not deposit the royalty charges and the price and hence

petitioner now therefore cannot claim any alleged losses or damages on

account of alleged breach by the respondent. Arbitrator has also arrived

at a finding that since no actual proof of payments is shown, petitioner

cannot be said to have proved that he suffered any losses on incurring of

expenditure.

11. I have gone through the grounds which are urged by the

petitioner as per the grounds A to J of the petition and I find that none of

the grounds demonstrate that the Award is in any manner illegal or

violative of the conditions of the contract or perverse for this Court to

interfere. Most of the objections are only general objections of a few

lines and objections do not show that the contract did not become void to

the knowledge of the petitioner on account of petitioner's knowledge as

early as on 6.9.2002 of non-grant of mining licence to the respondent by

the State Government. The objections also do not deal with the aspect that

the petitioner failed to file any proof of having incurred expenditure for

the claim towards expenditure etc.

12. In view of the above, there is no merit in this petition and the

same is therefore dismissed. Parties are left to bear their own costs.

AUGUST 14, 2015                                 VALMIKI J. MEHTA, J.
Ne/nn