M/S Oswal Woollen Mills vs Union Of India
2019 Latest Caselaw 992 Del

$~27
*      IN THE HIGH COURT OF DELHI AT NEW DELHI
                                       Date of Decision: 14th February, 2019
+                                CS (OS) 1377/2008
       M/S OSWAL WOOLLEN MILLS                      ..... Plaintiff
                   Through: Mr. Murari Tiwari, Mr. Rahul Kumar
                            and Mr. Asees Arora, Advocates.
                            (M:9891478847)
                   versus

       UNION OF INDIA                                         ..... Defendant
                     Through:           Mr. Jaswinder      Singh, Advocate.
                                        (M:9811232066)
       CORAM:
       JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)

I.A. 4123/2017 (restoration of objections)

1. The present suit has been filed by the Petitioner/Claimant under the Arbitration Act, 1940 seeking to place on record the award dated 5th July, 2006 passed by the Ld. Sole Arbitrator and for making it rule of court. Objections under Sections 30 & 33 of the Arbitration and Conciliation Act, 1940 have been filed for setting aside the said.

2. The only objection pressed on behalf of the Union of India („UOI') is that while dealing with the claims and the counter claim, the Ld. Arbitrator has given credit to the Claimant of a sum of Rs.3,12,741/-, which related to a completely different contract, being A/T No. T-8/306. The submission is that the reference to arbitration in the present case was in respect of contract No.225/0680/13-2-89/T-8/0530/COAD dated 29th November, 1989 and that the said amount given credit for, related to a completely unconnected

contract and could not have been added while awarding claims in the present case.

3. The matter was heard on 4th February, 2019 and again today. The record of CS (OS) No.2059-A/1995, where the initial reference was made, was also called for. A perusal of CS (OS) No.2059-A/1995 shows that in the said suit, the plea of the petitioner was as under:

"3. The petitioner is a well-known company of Northern India and was awarded with the contract for the supply of cloth serge battle dress (hereinafter for the brevity referred as the Stores) and the respondent had issued the A/T No.225/0680/13-2-89/T- 8/0530/COAD DT 29-11-89 (Hereinafter for brevity refered to as the contract).

.................

11. The petitioner therefore respectfully submits that the following disputes in short have arisen which are referable to the arbitrator as per arbitration clause applicable to the contract.

(A) Whether the petitioner is entitled for sum of RS 7,61,237-72 paisa towards principal sum with interest at 23% per annum from 1-8-95 till actual realisation. (B) Whether the petitioner is entitled for the sum of RS 12,00,000/ towards damages with Interest on it (C) Whether the petitioner is entitled for the sum of RS 6,00,000/ towards Interest on it."

4. In the said case, the Ld. Single Judge had appointed the Ld. Sole Arbitrator vide order dated 15th November, 1996. The said order also records as under:

" This is a petition under 20 of the Arbitration Act filed by the petitioner.

Briefly, the facts are that the petitioner was awarded a contract for the supply of goods vide AT No.225/0680/13-2-89/T-8/0530/COAD, dated

29.11.1989. The case of the petitioner is that he had supplied goods in accordance with the contract but so far the price of the goods has not been paid to him besides this he also claims damages and interest. The disputes have been formulated in Para 11 of the petition. It is also alleged that the contract provided an arbitration clause contained in clause 24 of the DGS&D-68 (Revised) and the disputes are covered by the arbitration clause and are to ben adjudicated through arbitrator to be appointed by respondent, i.e., Director General, Supplies and Disposals, Government of India, in accordance with the arbitration clause. Notice of this petition was duly served on the respondent and at one time one Mr. Ranbir Singh had appeared for counsel for respondent but thereafter no one appeared nor reply to the petition has been filed and the respondent was proceeded ex-parte on July 12, 1996.

The petitioner has filed affidavit by way of evidence in support of this case.

From the affidavit filed by the petition it is proved that the parties had entered into a contract for supply of cloth serge battle dress vide contract AT No.225/0680/13-2-89/T-8/0530/COAD, dated 29.11.1989 whereby the petitioner was to supply 50,000 mtrs. of dress cloth as specified in the contract. A copy of the contract has been proved as Annexure P-

2. From the affidavit it is also proved that there are disputes between the parties about the payments claimed by the petitioner from the respondent. These disputes are apparently the disputes which are covered under the arbitration clause No.24. These disputes are to be resolved by arbitrator to be appointed by the Director General of Supplies and Disposal. I accordingly allow this petition and order the respondent to file the arbitration agreement in Court and direct the Director General of Supplies and

Disposals, Government of India to appoint an Arbitration agreement within one month in so far as the disputes are covered by the Agreement.

Copy of this order may be sent to the Respondent-Director General of Supplies and Disposals, Jeevan Tara Building, 5, Parliament Street, New Delhi-1 for compliance."

5. A perusal of the reference order, clearly, shows that the contract, under which reference to arbitration was directed by the Court was AT No.225/0680/13-2-89/T-8/0530/COAD, dated 29th November, 1989 and not contract being A/T No. T-8/306.

6. A perusal of the claim petition shows that while the claimant claimed a sum of Rs.7,61,237/- as outstanding amount from bills raised under the contract in question, the claim petition does not have a breakup of the said amount. In reply to the claim petition, the UOI took a stand that the entire payment has been made. In reply/counter claim, the UOI claimed a sum of Rs.2,80,207/- by way of counter claim. Ld. Arbitrator, after perusing the pleadings on record, allowed the counter claim to the tune of Rs.2,80,207/-. However, while deducting the said amount from Rs.7,61,237/-, the Ld. Arbitrator awarded a sum of Rs. 4,81,031/- which included the sum of Rs.3,12,741/-.

7. The Ld. Arbitrator while setting out the facts relating to the award of Rs. 3,12,741/- under contract no. A/T No. T-8/306 in paragraph 6(c) records as under:

"6. I have carefully gone through the record available before me and after observing the fundamental principles of natural justice and hearing the arguments of the learned counsel for the parties, I discuss and analyses the facts of case as follows:

a).......b)...........

c). It is stated at page 2 of the application dated 16.5.2006 filed by Union of India that in one A/T no.T8/0306(88) amount Rs.3,12,741/- of firm is withheld and which is sub-judice meaning thereby that disputed amount have not released due to the pending case but it is not clear why this fact has not been disclosed in the counter reply dated nil filed on 9.2.98 while plea of 100% payment has been stated therein. This contradictory statement of Union of India cannot be accepted."

8. After recording the observations, in paragraph 7(c) the Ld. Arbitrator recorded her conclusion as under:

"7. In view of the above discussions and analyses, I come to the following conclusions:

a)............b).........

c) The firm is also entitled for the payment of withheld amount of Rs.3,12,74,100/- made in A/T No. T-8/306 dated 4.1.88 as a Risk Purchase loss. The Union of India cannot keep the amount withheld for an indefinite period. There is no proof on the record regarding the pendency of A/T no.T-8/306 dated 4.1.88 in the Court. The firm has not separately claimed for releasing this withheld amount Rs.3,12,741.00. It appears that he has included this amount in Para 13(a) of his claim statement. It is reproduced as under:

"13(a) 100% payment for the bills of the claimant as submitted but not paid - Rs.7,61,237.72""

9. It is clear from a perusal of paragraph 7(c) that the withheld amount of Rs.3,12,741/- was the amount, which was not subject matter of the contract in the present petition, but was amount withheld towards risk and cost purchase made by the UOI and loss incurred therein in contract being A/T No. T-8/306. This is clear from a perusal of the entire award. The

amount of Rs.3,12,741/- was, clearly, recorded as being sub-judice in some other petition and the said amount could not have been awarded in favour of the claimant in the present contract, when admittedly the two contracts were completely distinct and different. The objection of the UOI, to the effect that the withheld amount was wrongly awarded to the claimant, is valid and tenable. The award of Rs.3,12,741/- is, accordingly, set aside. The remaining award is upheld. Accounts be adjusted and the payments be made accordingly.

10. Insofar as the allegedly withheld amount of Rs.3,12,741/- under A/T No.T-8/306 is concerned, if the claimant has any remedy, it is permitted to avail of the same, in accordance with law.

11. Objections are disposed of in the above terms and Award is made rule of Court, by setting aside the award of Rs.3,12,741/- in favour of the Claimant. Rest of the award is not interfered with. No order as to costs.

PRATHIBA M. SINGH JUDGE FEBRUARY 14, 2019/dk