Delhi High Court

Food Corporation Of India vs Itc Limited on 8 February, 2019

* IN THE HIGH COURT OF DELHI AT NEW DELHI
%                             Date of decision: 08th February, 2019

+       LPA 282/2017

 FOOD CORPORATION OF INDIA                            ..... Appellant

                        Through:   Mr. Om Prakash, Mr. R.R. Pathak and
                                   Mr. Pradeep Kumar Tripathi, Advs.

               versus

 ITC LIMITED                                          ..... Respondent

                        Through:   Mr. Arvind Nigam, Sr. Adv. with
                                   Mr. L.K. Bhushan and
                                   Ms. Aditi Awasthy, Advs.
 CORAM:
 HON'BLE THE CHIEF JUSTICE
 HON'BLE MR. JUSTICE V. KAMESWAR RAO

V. KAMESWAR RAO, J. (ORAL)

1. This Intra-Court appeal has been filed by the Food

Corporation of India challenging the order dated December 22,

2016 passed by the learned Single Judge in W.P. (C) 7145/2015 and

an order dated August 16, 2017 in Review Petition No. 64/2017 in

W.P. (C) 7145/2015 as per amended memo of appeal at page 296 of

the paper book.

2. Vide the first order dated December 22, 2016, the learned

Single Judge has directed the refund of `42,56,250/- within a period

of four weeks, failing which the appellant was liable to pay simple

interest at the rate of 9% per annum. It transpired that during the

pendency of the appeal, a review petition was filed by the

respondent seeking correction of a mistake apparent on the face of

the record in the judgment dated December 22, 2016. In para 9 of

the order dated August 16, 2017 it is recorded that the figure of

`42,56,250/- relates to Earnest Money Deposit, which is one of the

components of the security deposit and not the entire security

deposit amount forfeited by the respondent which is `1,13,10,702/-.

3. Vide the order dated August 16, 2017, the learned Single

Judge has directed the refund of an amount of `1,13,10,702/- within

a period of four weeks, failing which the appellant was liable to pay

simple interest at the rate of 9% per annum till the refund is made in

full.

4. The facts as noted from the record are that the appellant had

floated a tender for sale of wheat at Food Supply Depot Mokama,

Food Supply Depot Buxar and Food Supply Depot NRPA, inviting

bids from empanelled bulk buyers to lift the entire quantity of wheat

from each of the three Centres. The respondent participated in the

tender and was successful in its bid for purchase of 2,000 metric

tonnes of wheat at Mokama and 1000 metric tonnes of wheat at

Buxar. The respondent deposited an amount of `42,56,250/-

towards Earnest Money Deposit. Letter of allotment was issued to

the respondent by the appellant on September 07, 2012 approving

the delivery of the aforesaid quantity from the respective Depots.

The respondent was allocated specified time to lift the entire

quantity of wheat. Clause (H) of the Tender stipulated that if the

entire stock could not be lifted due to Force Majeure or due to the

operational constraints of the Food Corporation of India, then the

respondent would be entitled to refund of all the amount of the

unlifted quantity of wheat.

5. It is an admitted position that the respondent could not lift

the entire quantity of wheat within the period stipulated. The case

of the respondent was that there were operational constraints on the

part of the appellant because of which the entire quantity could not

be lifted. The learned Single Judge has reproduced a chart for both

the places i.e. Buxar and Mokama and narrated the reasons for

which the total quantity of wheat could not be lifted by the

respondent. The learned Single Judge has also in para 13 noted a

communication dated May 08, 2013 of the General Manager,

Regional Officer, Patna, informing the Executive Director, Food

Corporation of India, Zonal Office, Kolkata that non-lifting of food

grains was due to Force Majeure as well as operational difficulties

of Food Corporation of India. The General Manager recommended

refund of the cost of the unlifted quantity for both the Depots. The

learned Single Judge has also noted that the entire amount for

unlifted quantity has been refunded to the respondent.

6. On noting this important aspect, the learned Single Judge

concluded that when the appellant itself has refunded the entire cost

of unlifted stock because of Force Majeure conditions and their own

operational difficulties, the same amounts to an admission on the

part of the appellant and the respondent was not at fault or in breach

of any of the condition of not lifting the entire stock.

7. He accordingly directed the refund of the security amount of

`42,56,250/- initially but subsequently by way of Review Petition

directed the amount of `1,13,10,702/- to be refunded within a

period of four weeks otherwise simple interest at the rate of 9% per

annum was to be paid.

8. The only submission made by Mr. Om Prakash, learned

counsel appearing for the appellant / Food Corporation of India was

that the learned Single Judge has erred in only taking into

consideration a communication of the General Manager dated May

08, 2013 overlooking the view of the Executive Director, Zonal

Officer on the said letter. It is respondent, who was responsible for

not lifting the entire quantity of wheat for the reasons attributable to

the respondent. His submission was that the respondent did not

engage sufficient trucks on a particular date to lift maximum

quantity of wheat. The relevant pages which he has referred to are

270 and 271 of the paper book which reads as under:

"Applying the said yard stick to the instant case, it has been found that M/s ITC Ltd. Has not made any serious effort throughout the contract period to complete the lifting of allotted stocks and ended up lifting a very small quantity. At FSD Mokama, 2000 MT was allotted to the party for which 223 trucks @ 9 MT per truck) i.e. 16 trucks per day for 14 days (including extension period) were required to be placed at the depot for loading. At the beginning itself, the party lost two days as it started the lifting two days after issuance of acceptance letter. Further, the party placed 47 trucks only for loading during the entire period of contract. The number of trucks placed on each day ranges from three to five except on two occasions when 10 trucks were placed. On two days no truck was placed.

Resultantly, M/s. ITC Ltd. could lift only 491.372 MT leaving a balance of 1508.629 MT (as per statement enclosed with RO's letter dated 28.08.2013). Except the two days of Force Majeure events as mentioned above, all the working days were available to the party for completing the lifting at FSD, Mokama.

At FSD Buxar, where 1000 MT was allotted to the party, the situation is still worse as the party placed only 11 trucks in total against the requirement of 112 trucks @ 9 MT per truck). Here also the lifting was started by the party two days after issuance of acceptance letter and the number of trucks placed on each day ranges from one to five. On most of the days not even a single truck was placed by the party. Resultantly, the party lifted only 15.3.25 (sic 153.25) MT leaving a balance of 846.75 MT. At this depot, although three-four working days seem to have been lost due to operational difficulty but still enough period was available for lifting a substantial quantity."

9. We have seen the stand of the appellant in those pages.

Suffice it to state that the total period within which the respondent

was required to lift material was 14 days. It is a conceded position

and also noted by the learned Single Judge that out of 14 days there

was impediment on ten days in the Food Storage Depot Buxar

because of which the wheat could not be lifted. Similarly, out of 14

days the wheat could not be lifted on five days at Food Storage

Depot Mokama which reasons are attributable to the appellant

herein.

10. We are not impressed with the sole submission made by the

learned counsel for the appellant that the non lifting of the complete

stock of wheat within 14 days can be attributed to the respondent