Delhi High Court
Food Corporation Of India, ... vs M/S Shiv Shanker Rice Mills And ... on 22 October, 2018
SINDHU KRISHNAKUMAR
23.10.2018 19:27
$~1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 22nd October, 2018
+ O.M.P. 346/2012
FOOD CORPORATION OF INDIA, FEROZEPUR ..... Petitioner
Through: Mr. Mohan Lal Sharma, Advocate.
(M:9811537909)
versus
M/S SHIV SHANKER RICE MILLS AND PARTNERS
FEROZEPUR AND ORS. ..... Respondents
Through: Mr. Rajesh Chhetri, Mr. Rajeev
Chhetri, Mr. Pawan Upadhyay and
Ms. Meenakshi Rawat, Advocate.
(M:9891675255)
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)
1. The present petition under Section 34 of the Arbitration and
Conciliation Act, 1996 ('the Act') has been filed challenging award dated
15th November, 2011 passed by the learned Sole Arbitrator under the aegis
of the Indian Council of Arbitration.
2. The disputes arose out of agreement dated 26th April, 1995 which was
entered into between the Petitioner and the Respondents. The same relates to
milling of paddy, which was to be done by the Respondents. The Food
Corporation of India (hereinafter, 'FCI') had invoked arbitration and raised
claims against the Respondents. The impugned award was then passed.
Operative portion of the award is set out herein below:
"12. On these facts and in the circumstances of the
case and in the light of arguments of the learned
counsels the claim of Rs.80,95.449.73p., as per the
claim application, is justified which is rounded to
80,95,000. The respondents are directed to pay this
amount in one or more instalments within a period
of 6 months from the date of this order.
13. As regards the interest claimed at 18 percent
per annum, the learned counsel for the respondents
disputed it vehemently and argued that the delay in
finalization of the arbitral proceedings is mainly on
account of the dispute between the Claimant and the
ICA for which the respondents cannot be held
responsible and be asked to pay interest at such
exorbitant rate. He pointed out that the sale of
paddy took place in 1995, but arbitration
proceedings are being taken up now because of the
delays caused by aforesaid dispute between the
Claimant and the ICA, therefore, the respondents
should not be asked to pay interest. This argument
of Shri Maggo is well founded. The delay in
arbitral proceedings took place because of the said
litigation for which only the claimant was
responsible. Moreover, in response to my quarry, it
was fairly admitted by learned counsel for the
Claimant that such interest is not shown as
outstanding against the respondents in the books of
account of the Claimant. The claim of interest from
1995 till the date of realization of the amount from
the respondents is an afterthought, therefore, not
sustainable. The learned counsel for the Claimant,
however, argued that the respondents are solely
responsible for the delay in finalization of these
proceedings after the issue of the first notice in this
case by delaying the proceedings on filmsy grounds,
therefore, they should pay interest at least for this
period. I am unable to accept this argument as
well, because, the proceedings are being finalized
within 10 months, which is almost reasonable.
Earlier adjournments had been allowed for
reasonable cause. Accordingly, no interest is
payable by the respondents as asked for by the
Claimant. However, if the respondents do not pay
the amount due from them to the Claimant within
the aforesaid period of 6 months from the date of
this order, they would render themselves liable to
interest on the amount outstanding after the date of
this order at 15 percent-the prevailing market rate
of interest as of now. "
3. The objections by FCI are limited to the interest component in the
award. The claim of FCI was for interest @18%. However, the learned
Arbitrator has held that claim of interest from 1995 till the date of realisation
of the amount is an afterthought and hence is not sustainable. However,
learned Arbitrator has directed that if the amount due, as per the award, is
not paid within a period of six months from the date of the award, interest
would be payable @ 15% per annum.
4. It appears that there was an enormous delay in the invocation of the
arbitration, filing of the claim and the adjournments were also sought in the
arbitration proceedings. Learned Arbitrator has held that the Respondents
cannot be blamed for the delay in the same and hence FCI is not entitled for
the interest. This is a reasonable view and does not suffer from any patent
illegality in the facts and circumstances of the case. Accordingly, the claim
of interest is not liable to be allowed.
5. Ld. counsel for the Respondents submits that the Respondents have
filed a section 34 petition challenging the award of Rs.80,95,000/- and the
same is pending in a separate petition. If the same has been filed, dismissal
of the present OMP would not come in the way of the said petition being
heard on merits. The said Petition shall be decided in accordance with law.
6. OMP is disposed of in the above terms.
PRATHIBA M. SINGH
JUDGE
OCTOBER 22, 2018/dk
