1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR ORDER S.B.CIVIL MISC. APPEAL NO.4486/2007. Rajasthan State Mines and Minerals Limited. VERSUS Taru Overseas & Another. 04.03.2008. HON'BLE MR.JUSTICE DALIP SINGH Mr.R.B.Mathur, for the appellant. Mr.S.R.Joshi, for the respondents. ***** This appeal has been preferred by the Rajasthan State Mines and Minerals Limited against the decision given by the learned District Judge, Jaipur City, Jaipur dated 18.08.2007 on the application filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 against the award passed by the Arbitrator, respondent No.2, dated 08.02.2006. The submission of learned counsel for the appellant is that the learned Arbitrator as well as the learned District Judge erred in allowing and upholding the award with regard to the return of the amount of security and interest thereon. I have perused the impugned judgment of the learned District Judge as well as the record and the award passed by the learned Arbitrator. The facts which are not in dispute are 2 that initially an agreement was entered into between the parties on 23.10.2006 appointing the respondent No.1 as the Registered Area Sales Agent (R.A.S.A.) for the Delhi Division. Under the terms of the agreement, the respondent was given the contract in respect of the purchase of minimum quantity of 2,01,000 MT of Lignite for Delhi Division area and was required to submit a security deposit of Rs.15,00,000/- which was accordingly given by the respondent No.1 at the time of the execution of the agreement. On 09.11.2003 i.e. within two weeks of the execution of agreement appointing the respondent as R.A.S.A for the sale of Lignite in Delhi Division, the respondent came to know about the decisions which have been given by the Delhi High Court as well as the Supreme Court for maintaining pollution level within the limits and cleaner environment in Delhi which would result in difficulty for the respondent to carry out the sales within the territory of Delhi area. The letter dated 09.11.2003 has been filed as Annexure-R/2 before the Arbitrator. It appears that on the request made vide letter dated 09.11.2003 by the respondent No.1, the appellant accepted the request and a new agreement was executed on 11th of November, 2003 by the appellant and the respondent No.1, appointing the respondent No.1 as R.A.S.A. for supply and sale of Lignite within the territories of Jodhpur and Bikaner Division for 3 the purchase of minimum quantity of 1,01,000 MT of lignite per annum from the appellant. Accordingly, an agreement was entered into on 11.11.2003 and the appellant was required to submit a security deposit of Rs.7,00,000/-. Para No.5 of the agreement dated 11.11.2003 reads as follows:- “5. The RASA for Jodhpur and Bikaner Division has deposited an amount of Rs.7.00 lacs (seven lacs) (which is to be adjusted from the earlier amount of Rs.15.00 lacs (fifteen lacs) deposited by them for Delhi Division in the form of DD No.035720 dated 21.10.03 for Rs.7.00 lacs in favour of RSMML payable at Udaipur, DD No.035730 dated 22.10.03 for Rs.5.00 lacs payable at Udaipur and DD No.035731 dated 22.10.03 for Rs.3,00,000/- (totaling to Rs.15.00 lacs) as Security Deposit with the company. No interest shall be payable on this security amount by the company to the RASA for Jodhpur & Bikaner Division.” After the aforesaid agreement was entered into on 11.11.2003, the respondent sent a letter to the appellant requesting for the return/refund of the security deposit amount of Rs.8,00,000/- after deducting and adjusting the amount of Rs.7,00,000/- from the security of Rs.15,00,000/- which has been submitted against the agreement dated 23.10.2003 for the Delhi Division. This letter was sent on 06.12.2003 and again the request was repeated on 24.12.2003, 08.01.2004, 20.05.2004, 31.05.2004 and 07.10.2004 but no reply was received from the appellant denying their liability to refund the amount, as is now sought to be contended by 4 the appellant that the security deposit of Rs.8,00,000/- was kept by the appellant against agreement dated 23.10.2003 in respect of the sales of lignite in Delhi Division for the reduced quantity of 1,00,000 MT. It may also be stated that the respondent never took any supplies of lignite from the appellant in pursuance of the agreement dated 23.10.2003 for sales in Delhi Division maintaining their stand that by virtue of the subsequent request made on 09.11.2003 and the agreement entered into on 11.11.2003 between the parties giving R.A.S.A. rights to the respondent for the sale of lignite in Jodhpur and Bikaner Division in respect of the quantity of 1,01,000 MT having been accepted and agreement entered into there was a nowation of contract in respect of the earlier contract and agreement dated 23.10.2003. The case of the appellant was that by the subsequent agreement the appellants had agreed giving of R.A.S.A. rights by way of the subsequent agreement dated 11.11.2003 to the respondent for the sale of lignite of 1,01,000 MT vide agreement dated 11.11.2003 for Jodhpur and Bikaner Division but so far as the agreement dated 23.10.2003 in respect of the Delhi Division is concerned, the appellant maintained that only the agreement had been altered reducing the quantity from 2,01,000 MT for sale in Delhi Division to 1,01,000 MT and correspondingly reducing the security amount in respect of the agreement dated 23.10.2003 for sale of lignite in the Delhi Division on 5 account of reduction of quantity of lignite to Rs.8,00,000/- instead of Rs.l5,00,000/-, as originally agreed. The learned Arbitrator after considering the entire material on record held that there was nothing to substantial that the original agreement dated 23.10.2003 continued to remain in force. This is substantiated from the fact that appellants never sent any reply to the respondent No.1 to any of the letters, a reference to which has been made hereinabove, sent by the respondent-claiming refund of the amount in view of the subsequent agreement dated 11.11.2003 maintaining that the agreement dated 23.10.2003 in respect of the Delhi Division stood rescinded. It has been admitted by the learned counsel for the appellant that the appellant never sent any reply taking stand that the amount of Rs.8,00,000/- which remained by way of security had been kept as security in respect of the agreement dated 23.10.2003 for the supply of lignite and its sales in the Delhi Division, in view of the reduction of the quantity as originally agreed to 2,01,000 MT to 1,01,000 MT. In view of the above and having perused the decision of the Arbitrator with which, I am in agreement, in the facts and circumstances, there being nothing on record placed by the appellant to show that the agreement dated 23.10.2003 had in any way been modified or amended altering the quantity from 2,01,000 MT to 1,01,000 MT and correspondingly reducing the 6 amount of security from Rs.15,00,000/- to Rs.8,00,000/- in the light of the facts which have come on record and the view taken by the learned Arbitrator, in the facts and circumstances, I am in agreement that the parties had in fact agreed to rescind the agreement dated 23.10.2003 for the Delhi Division by entering into a subsequent agreement on the request of the respondent No.1 in view of the circumstances which have been pointed out in their letter by entering into an agreement in respect of Jodhpur and Bikaner Divisions. If it was a case of reduction of the quantity and corresponding security amount in the agreement dated 23.10.2003 for the Delhi Division there ought to have been specific mention in the agreement dated 11.11.2003 or an agenda to the agreement dated 23.10.2003 if it was to remain in force. The language of clause (5) the agreement dated 11.11.2003 and the subsequent request for refund soon thereafter on 06.12.2003 onwards by the respondents with no denial to their request and non-lifting of any quantity of lignite by the respondent/or not having acted upon the agreement dated 23.10.2003 by the respondent and no action by the appellant as a consequence thereof as provided in the agreement by way of any correspondence/notice to the respondent goes to show that in the facts and circumstances the agreement dated 23.10.2003 stood rescinded. Accordingly, I uphold the award and the 7 decision given by the learned District Judge that the respondent No.1 in the light of the subsequent agreement dated 11.11.2003 was entitled to the refund of the amount of Security of Rs.8,00,000/- after adjustment of amount of Rs.17,00,000/- out of the total amount of Rs.15,00,000/- on execution of the agreement between the parties on 11.11.2003 in respect of the area of Jodhpur and Bikaner Division appointing the respondent as R.A.S.A. for sale of lignite in the said area. The second point that has been raised by the appellant is in respect of the award of interest and it has been contended that in view of the contents of para No.5 of the agreement, no interest was liable to be paid on the security amount. The learned Arbitrator has dealt with the aforesaid question very aptly and has awarded interest holding that the respondent No.1- claimant was entitled to the refund of Rs.8,00,000/- from the appellant which was deposited on 21.10.2003. However, with the modification that the interest was liable to be paid only after the execution of the agreement dated 11.11.2003 and not from any earlier date, the learned Arbitrator has awarded the amount of interest w.e.f. 21.10.2003 which is the date of deposit of security which in the facts and circumstances cannot be allowed as the right to refund of the amount arose only on the conclusion of the agreement dated 11.11.2003 and after adjustment of the amount of 8 Rs.7,00,000/- as security out of the total amount of Rs.15,00,000/- leaving the balance amount of Rs.8,00,000/-. Thus, to that extent, the award passed by the learned Arbitrator is required to be modified and is accordingly modified and it is directed that the respondent shall be entitled to the interest not from 21.10.2003, as awarded by the learned Tribunal but w.e.f. 11.11.2003 on conclusion of the second agreement providing for adjustment of Rs.7,00,000/-. Subject to the above, this appeal is dismissed. The stay application also stands dismissed. (DALIP SINGH),J. Solanki DS, Jr.P.A.