This appeal challenged the dismissal of an application to set aside an arbitral award under the Arbitration Act, 1996. The High Court upheld the lower court's finding that the appellant was liable for losses due to the retendering of wheat mandated by the agreement.
The appeal was dismissed with no costs to any party.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
FAO No. 848 of 2008 (O&M)
1
In the Punjab and Haryana High Court at Chandigarh.
Decided on May 19,2009
M/S.Jagat Roller Flour Mills, through Jagat Mohan Aggarwal, partner
--Appellant
vs
Punjab State Civil Supplies Corporation Ltd. and another
-Respondents
CORAM: HON'BLE MR.JUSTICE RAKESH KUMAR JAIN
Present: Mr.D.K.Singal, Advocate,for the appellant
Mr.Aman Chaudhary,Advocate,for respondent No.1.
Rakesh Kumar Jain,J :
This appeal arises out of an order dated 14.9.2007 passed
by learned District Judge, Gurdaspur, dismissing the application filed
by the appellant under Section 34 of the Arbitration & Conciliation Act,1996 (for short,'the Act) for setting aside the award dated 26.11.2002, passed by respondent No.2.
Brief facts culled out from the available record are that in response to the advertisement offering purchase of wheat for the crop year 1995-96, the appellant agreed to lift 196 Metric Tons of
FAO No. 848 of 2008 (O&M) 2
wheat @ Rs.571/- per quintal lying at Kotkapura Centre in District Faridkot. In lieu of this acceptance, the appellant deposited Rs.56,000/-as security with respondent No.1. The appellant was required to lift the stock of wheat by 5.9.1998 without late delivery charges and up to 20.9.1998 with late delivery charges. As the appellant failed to lift the wheat, security amount of Rs.78,341.20 was forfeited in terms of the agreement and the wheat was put to retender on 2.2.1999 at the risk and cost of the appellant. The said wheat was purchased by M/S Bhagwant Rai Garg & Company-15, New Grain Market, Barnala @ Rs.492/- per quintal which caused a loss of Rs.79/- per quintal to the Corporation. As a result of which the appellant was directed to pay Rs.1,46,782/-. This led to a dispute between the parties and as per clause 14 of the tender, it was referred to the Arbitrator by the Managing Director, PUNSUP, Chandigarh. Representative of the appellant appeared before the Arbitrator (respondent No.2) on 24.7.2002 and thereafter, did not appear despite notice.
After recording the ex-parte evidence, the Arbitrator (respondent No.2) passed an award holding the respondent entitled to Rs.1,46,782/- from the appellant on account of loss due to re-tender of the wheat at lower rate. The respondent was also held entitled to recover interest @ 21% per annum from 20.9. 1998 till the date of
FAO No. 848 of 2008 (O&M) 3 award and thereafter, the appellant was held liable to pay interest @ 18 per annum till realization besides costs of the arbitration proceedings quantified at Rs.10,000/-.
Award of respondent No.2 was challenged by the appellant
before the Civil Court at Gurdaspur, by filing an application under Section 34 of the Act. The contention raised by the learned counsel
for the appellant was noticed by the Court below and it was observed that the award has been challenged on the ground that there was no valid arbitration agreement between the parties nor any agreement was ever communicated to the appellant. It was found in clause 14 of the terms and conditions of tender Ex.R-5 that in case any dispute arises out of this contract, the matter shall be referred to
the Managing Director, PUNSUP, Chandigarh, who may himself arbitrate or appoint any body to arbitrate in the matter. The place of arbitration will be at Chandigarh. It was also found that tender was signed by Ravi Mittal, representative of the appellant. Therefore, in the presence of an arbitration clause in the agreement, the contention of the appellant that there was no arbitration clause, was found meritless.
The second contention raised by the learned counsel for the appellant was also noticed and discussed by the learned Court below that same matter was pending before the Civil Court at
FAO No. 848 of 2008 (O&M)
4
Pathankot where the Corporation had already appeared. Learned counsel has referred to Section 8 (1) of the Act and argued that the arbitrator has also been appointed when the appellant filed a civil suit in the Court of Addl. Civil Judge (Senior Division), Pathankot, which was later on dismissed as withdrawn. Ultimately, the Court below found that the appellant has miserably failed to bring his case within the ambit of grounds mentioned in Section 34 of the Act.
In the present appeal, the only argument raised by the learned counsel for the appellant is in respect of clause 11 of the agreement, which is reproduced below:-
“ In case of non-lifting of stocks by the party within stipulated period, PUNSUP will get automatic right to forfeit the EMD and Security without any notice to the purchaser besides taking legal measures including resorting Risk Sale of the left over stocks to recover the losses if any suffered by Corporation”.
It is contended that after forfeiture of the security, the loss suffered due to resort to risk sale could not have been recovered.
I have heard learned counsel for the parties and have
perused the record with their assistance.
There is no dispute that the appellant did not lift the
FAO No. 848 of 2008 (O&M)
5
wheat in terms of the agreement and the same had to be sold by the
Corporation to some other buyer after suffering loss of Rs. 79/- per quintal. Thus, in view of clause 11 of the agreement, the appellant was liable not only with regard to forfeiture of security without notice
in case of non-lifting of stock within the stipulated period but also to
make good the loss, if any, suffered by the Corporation.
Thus, in view of the above discussion, I do not find any error in the order of the Court below and as such, the present appeal
is found to be without any merit and the same is hereby dismissed.
No costs.
May 19,2009 RR
(Rakesh Kumar Jain) Judge
Refer to Reporter: Yes.
2 issues framed by the court
Whether the High Court found merit in the appeal against the order dismissing the application to set aside the arbitral award.
Whether the forfeiture of security and liability to make good loss were enforceable under the agreement.
2 provisions across 1 enactments
M/S. Jagat Roller Flour Mills
Punjab State Civil Supplies Corporation Ltd.
Respondent No.2
Rakesh Kumar Jain
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
