Karnataka High Court

Karnataka Food And Civil Supplies ... vs Malnad Traders on 16 February, 2024

Author: R Devdas

Bench: R Devdas

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                                                    RP No. 479 of 2023




                IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                  DATED THIS THE 16TH DAY OF FEBRUARY, 2024

                                    PRESENT
                       THE HON'BLE MR JUSTICE R DEVDAS
                                       AND
                THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
                         REVIEW PETITION NO. 479 OF 2023
                                       IN
                            MFA NO.7649 OF 2016 (AA)
              BETWEEN:
              KARNATAKA FOOD AND CIVIL SUPPLIES
              CORPORATION LTD.,
              NO.16(1), MILLER TANK BED AREA,
              VASANTHANAGAR,
              BENGALURU-560052,
              REP BY ITS MANAGING DIRECTOR,
              SRINIVASULU.
                                                         ...PETITIONER
              (BY SRI MURALIDHAR H M, ADVOCATE)
              AND:

Digitally     MALNAD TRADERS,
signed by     K R PURAM, SHIMOGA CITY,
PRAMILA G V   A PARTNERSHIP FIRM,
Location:     REP BY ITS PARTNERS,
HIGH COURT    WHO ARE REP BY ITS GENERAL POWER OF
OF
KARNATAKA     ATTORNEY HOLDER,
              SRI N H CHANNAVEERAPPA,
              AGED ABOUT 90 YEARS,
              R/AT NO.242, RAILWAY PARALLEL ROAD,
              VINOBA NAGAR, SHIMOGA-577204
                                                        ...RESPONDENT
              (BY SRI R GOPAL, ADVOCATE)

                  THIS REVIEW PETITION IS FILED UNDER SECTION 14
              READ WITH ORDER XLVII RULE 1 OF THE CPC, PRAYING TO
              ALLOW THE PETITION, REVIEW THE JUDGMENT DATED
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                                          NC: 2024:KHC:6811-DB
                                            RP No. 479 of 2023




23RDJUNE 2023 PASSED IN MFA NO. 7649/2016 (AA), AND
REVIEW THE SAME, OR IN THE ALTERNATIVE, PASS SUCH
OTHER ORDER/S AS THIS HON'BLE COURT BE DEEMED FIT TO
PASS ON THE FACTS AND IN THE CIRCUMSTANCES OF THE
CASE, IN THE INTEREST OF JUSTICE AND EQUITY.

    THIS PETITION COMING ON FOR ORDERS THIS DAY,
R DEVDAS J., MADE THE FOLLOWING:


                            ORDER

Sri R Gopal, learned counsel is directed to take notice for

respondent.

2. This review petition is preferred by Karnataka Food &

Civil Supplies Corporation Limited which was the respondent in

the Miscellaneous First Appeal filed at the hands of M/s Malnad

Traders.

3. The contention of the learned counsel for the review

petitioner is that although this Court held that the Corporation

is not entitled to seek 1½ times the value of the amount

quantified, nevertheless in the operative portion of the order

there is no clarity as to what is the entitlement of the

Corporation regarding the payment of interest.

4. Learned counsel, while taking this Court through the

operative portion submits that though this Court has held that

the Corporation is not entitled to claim 1½ times the value of

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the amount quantified as there is no clarity as to the

entitlement of the Corporation, same has to be specified and

the interest is to be awarded in favour of the petitioner.

5. Learned counsel for the respondent however submits

that since, the contract does not have a clause regarding the

payment of interest, the Corporation should not be permitted to

claim interest as has been awarded.

6. At this juncture, learned counsel for the

petitioner/Corporation submits that he had placed reliance on a

decision of the Hon'ble Supreme Court in the case of

SECRETARY, IRRIGATION DEPARTMENT, GOVT OF

ORISSA AND OTHERS vs G C ROI (1992) 1 SCC 508 and this

Court has accepted the contention raised by the Corporation

that although there is no clause contained in the contract

regarding the payment of interest, nevertheless having regard

to the relevant provisions contained in the Arbitration and

Conciliation Act, 1940, the claimant should be awarded interest

and therefore, the award containing a direction for payment of

interest should also be sustained.

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7. Learned counsel for the respondent would however

point out that from the very same judgment of the Hon'ble

Supreme Court that the review petitioner/Corporation will be

entitled to interest only from the date of reference i.e.

06.03.1984 till the date of award i.e. 03.07.1984. Learned

counsel would hasten to add that the Arbitral Tribunal has

allowed payment of interest @ 18% p.a. on the amount due

from the date on which they fell due for payment till the date of

passing the award i.e. 03.07.1984. It is submitted that the

Corporation has accepted the said award and has not raised a

challenge wherein the interest is limited only for a particular

period.

8. Having regard to the submissions of the learned

counsel on both sides, this Court is of the considered opinion

that the operative portion of the order dated 23.06.2023 is

required to be clarified while stating that:

(i) Although the Corporation is not entitled for award of 1½

times the value of the stock shortfall, nevertheless, the

Corporation is entitled for the actual shortage which has been

quantified @ Rs.27,76,482.16;

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(ii) Insofar as the payment of interest is concerned, having

regard to the judgment of the Hon'ble Supreme Court which

had received the attention of this Court, the Corporation is

entitled for payment of interest @ 18% p.a. from 6.3.1984 to

3.7.1984.

9. During the course of the proceedings, learned

counsels have brought to the notice of this Court a

typographical error that has occurred in paragraph 26 of the

order dated 23.06.2023. Both the learned counsel would

submit that although this Court intended to cull out Section 30

of the Act, 1940, nevertheless, what has been extracted is

Section 30 of the Act of 1996.

10. It is therefore clarified and directed to correct

paragraph 26 of the judgment in MFA 7649/2016 by extracting

Section 30 of the Act of 1940 and thereafter issue a certified

copy to the parties.

11. Office is directed to accordingly extract the relevant

portion of Section 30 of the Act of 1940 in paragraph 26.

I.A.1/2023 filed at the hands of the appellant in MFA

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7649/2016 is accordingly disposed of having regard to the fact

that the very same prayer is made in the application for

correction of paragraph 26.

12. Paragraph No.26 in MFA 7649/2016 be read as under:

"26. The challenge to the award under the Act

of 1940 is governed by Section 30 of the Act. Section

30 of the Act reads as under:

30. Grounds for setting aside award.- An award shall not be set aside except on one or more of the following grounds, namely -

(a) that an arbitrator or umpire has misconducted himself or the proceedings;

(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35;

13. Consequently, the review petition is partly allowed

while clarifying paragraphs (i) and (ii) of the operative portion

of the order which shall be read as follows:

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ORDER

(i) The judgment dated 22.07.2016 in AROS.No.11/1990 on

the file of the Principal Senior Civil Judge & CJM, Shivamogga is

modified.

(ii) The award dated 03.07.1984 in Arbitration Case

No.18/1984 is modified while directing that the

respondent/Corporation shall be entitled to Rs.27,76,482.16

along with interest @ 18% p.a. from 06.03.1984 to

03.07.1984.

(iii) The original appellant M/s Malnad Traders is entitled to

Rs.7905.49 along with interest as awarded by the Arbitral

Tribunal in terms of the award. Therefore, while making the

payment to the Corporation, the appellant is entitled to deduct

the said amount and thereafter pay the balance due to the

petitioner/Corporation.

(iii) The respondent in the review petition shall pay the

amount of Rs. 27,76,482.16 along with interest @ 18% p.a.

from 06.03.1984 to 03.07.1984 within a period of four weeks

from the date of receipt of copy of this order, failing which the

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Corporation shall be entitled for interest @ 18% per annum