OMP No.63/1999 Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELH + O.M.P. No.63/1999 December 15, 2009. DELHI CONSUMER COOPERATIVE WHOLESALE STORES LIMITED ...Petitioners Through: Mr. M. Dutta, Advocate with Mr. Vinod Dhawan, Advocate. VERSUS UNION OF INDIA ....Respondent Through: Ms. Geeta Sharma, Advocate. CORAM: HON’BLE MR. JUSTICE VALMIKI J.MEHTA 1. Whether the Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes % JUDGMENT(ORAL) VALMIKI J. MEHTA, J. 1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenges the Award dated 20.11.1998 passed by the sole Arbitrator whereby the Arbitrator has awarded damages to the respondent/Union of India OMP No.63/1999 Page 2 on account of the difference of cost with respect to the Chana Dal which the petitioner had to supply to the respondent and which on account of the breach of the petitioner, in not supplying the respondent had to purchase the same from a third party. 2. The relevant portion of the Award is short and I would reproduce the entire discussion in this regard as below: “I allow the claim for the following reasons:- i) The claim is under the terms and conditions of the contract. ii) Furnishing of security deposit is a pre-requisite condition of the contract but the respondent-contractor neither furnished security deposit nor supplied goods even within the extended period. Thus, breach of contract was committed by the respondent and dates of breach are 30.4.93 for 1,000 MTs., 31.5.93 for 1,500 MTs and 30.6.93 for 875 MTs. iii) The claimant has purchased at market rates as published by the premier economic newspaper, namely, “The Economic Times”, “Business Standards” and “Financial Express” as on or near above dates of breach. The respondent has not produced any document/evidence, in rebuttal to it. iv) No proof of force majeure has been filed by the respondent-contractor. v) The total quantity of goods was purchased from the local market at higher rates than the contracted rates of the respondent due to breach of the contract by the respondent.” 3. The aforesaid findings which have been given by the Arbitrator are based on the statement of claim which shows that the contract in question OMP No.63/1999 Page 3 required the supply of the contracted goods at a price of Rs.944/- per quintal. On account of the breach of the petitioner in failing to supply the contracted goods by the stipulated dates of 30.4.1993, 31.5.1993 and 30.6.1993 and failure of the petitioner to furnish security deposit the respondent was forced to cancel the contract after granting repeated extensions. The last of the extension expired on 31.8.1993 and the contract was cancelled on 28.9.1993. 4. It is a fact on record that after the cancellation of the contract of the petitioner repeated risk purchase tenders were invited and in the first of such risk purchase tender, the petitioner herein itself was the lowest tenderer but once again he failed to deposit the security deposit and therefore was not granted the contract. In fact, the second last bidder also failed to perform the contract and consequently again a risk purchase tender had to be issued. This time the risk purchase tender was issued on one M/s A P Markfed who too again failed to supply the goods. Another risk purchase tender was then placed on M/s Super Bazar, who also failed to supply the contracted goods. Ultimately, a risk purchase tender was floated on 22.4.1994 and the contract was placed upon M/s.M P Export Corporation Ltd. to perform the contract and supply the goods within the following delivery periods and rates: “1000 MT in February, 95 @ Rs.1336/- per Qtl. 1500 MT in March 95 @ Rs.1314/- per Qtl. OMP No.63/1999 Page 4 875 MT in April 95 @ Rs.1286/- per Qtl.” 5. The counsel for the petitioner has contended that in terms of the para 10 of the statement of claim, it is clear that no loss has been caused to the respondent and therefore the Award is faulty on this count. A reference to para 10 shows that the contention of the counsel for the petitioner is not correct at all because when in the statement of claim, it is stated that no loss has been caused, that averment is in comparison with the cancelled contracts of the earlier risk purchase tenderer; M/s Super Bazar and when as compared to the rates under the original contract with the petitioner. It is not in dispute that the fresh quantity which was purchased from M/s M P Export Corporation Ltd. was at rates of Rs.1336/- per quintal, Rs.1314/- per quintal and Rs.1286/- per quintal whereas under the subject contract with the petitioner the rate was Rs.944/- per quintal. Clearly therefore there was a higher cost of purchase of the subject goods than the cost of purchase from the petitioner and this higher cost has caused loss to the respondent. 6. The only other issue which has been urged is that the Arbitrator has taken the rates of the subject goods from leading newspapers, namely, “Financial Express”, The Economic Times” and “Business Standards” as on the dates of the breaches and then has arrived at the aforesaid rates, whereas the risk purchase was done much later in 1995. The contention seems to be that the cost OMP No.63/1999 Page 5 of the risk purchase ought to have been taken for calculating and awarding the loss to the respondent. I do not find any fault whatsoever in this approach of the Arbitrator. Under Section 73 of the Contract Act, 1872 a person who is aggrieved, has to be compensated by a rate in and around the date of the breach. This is exactly what the Arbitrator has done. Merely, because the actual risk purchase tender was ultimately finalized only in late 1994/early 1995 for supplies in February, March and April 1995 cannot mean that the rates of that period have to be awarded. In fact, if such rates would not have been claimed by the Union of India, of late 1994/early 1995, then, I am sure that it would be the petitioner who would then have said that the rates so awarded have no co- relation to the actual loss suffered which necessarily has to relate to the difference of price on the date of the commission of the breach in August, 1993. 7. While hearing objections under Sections 34, this Court has to see if the Award is illegal or violative of the contractual provisions or is so perverse that it shocks the judicial conscience. Surely, this is not a case where there is any perversity or any violation of the contractual provisions. Also there is no illegality because the action of the Arbitrator is in terms of the law as applicable under Section 73 of the Contract Act. Accordingly, no fault can be OMP No.63/1999 Page 6 found with the impugned Award. The objections are therefore dismissed with costs of Rs. 15,000/-. VALMIKI J.MEHTA, J December 15, 2009 Ne