M/S Vijay Trading vs Central Warehousing Corporation

2. Brief facts which led to filing of this appeal are as under:- 

3. Dispute arose between the parties which led to the appointment of an arbitrator vide reference order dated 23.09.2002. The respondent-Corporation claimed a sum of Rs.98,06,000/- with interest @ 18% thereon. It was contended by the respondent- Corporation that the performance of the appellant was not found satisfactory particularly, in regard to Export loaded Container No.TRIU-4991702x40’, which was illegally detained by the appellant and the appellant failed to transport the container to the Port at Navi Mumbai. The said container was handed over to the appellant on 06.11.2001 from the Inland Clearance Depot, Varanasi and did not reach its destination, JNP, Navi Mumbai within the stipulated time period i.e. upto 16.11.2001. When the exporter, M/s Bhola Nath Industries pressed for early recovery of the container and also raised claims towards compensation for loss of the container, the 2 respondent-Corporation started inquiries and issued several notices to the appellant for recovery of the container and non-performance of contractual obligations. Only after intervention of the Courts, the container was located and recovered at Ghaziabad and received back at ICD, Varanasi on 23.05.2003. But by then, the said container missed the export schedule. The exporter initially declared that the cargo stuffed in the container was of no use to him; but subsequently, reprocessed the same to make it usable.

5. Taking into consideration the claim and grounds for termination and also the reply filed by the appellant, the Arbitrator vide award dated 18.03.2005 upheld the termination of the contract as valid and decided certain claims of the respondent in its favour. 3 Certain counter claims of the appellant were also allowed by the learned Arbitrator. Other claims including counter claim No.3 (claim of Rs.4,30,284/- towards refund of security deposit) and counter claim No.4 (claim of Rs.15,75,484/- including interest of Rs.4,64,815/- towards illegal detention of the fork lift) were decided against the appellant. It was held by the Arbitrator that the termination of the contract is legal and justified and in view thereof, the respondent had the right to forfeit the security deposit. As to the claim of the appellant towards alleged detention of the fork lift and hand trolleys, the Arbitrator held that the detention of the equipments is right and justified. The Arbitrator held that it is seen from Clause 5(g) of the tender conditions of the contract that the respondent has the right to demand the balance due when sufficient sum is not available to cover the full amount recoverable from security deposit and other dues. In view of the heavy claim amount of M/s Bhola Nath Industries and Customs/Excise Department and others, the learned Arbitrator concluded that there is no illegality in the action on the part of the claimant in detaining the equipments like fork lift and hand trolleys as security.

11. The Export loaded Container No.TRIU-4991702x40’ was handed over by the Manager, ICD, Varanasi to the appellant on 7 06.11.2001 for delivery of the container at JNP, Navi Mumbai; but the appellant had failed to transport the container to the destination port and only with the intervention of the Court, the container was located and recovered at Ghaziabad and received back at ICD, Varanasi on 23.05.2003. But by then, the said container already missed the export schedule. When the Export loaded Container No.TRIU-4991702x40’ was entrusted to the appellant, the appellant ought to have transported the container to the port of destination with due diligence. The respondent- Corporation has justified the forfeiture of the security deposit on two counts:- firstly, in view of the heavy claim raised by M/s Bhola Nath Industries Ltd. for which they have filed a claim of rupees forty lakhs before the Consumer Forum, Lucknow and secondly, on account of bank guarantee in the sum of rupees ten lakhs furnished by the respondent-Corporation for release of the container. The learned Arbitrator and the Courts below have recorded the concurrent findings by holding the termination of the contract legal and levy of forfeiture of the security amount of Rs.4,30,284/- and the levy of fork lift is justified.

13. Insofar as the allegation of detention of fork lift and hand trolleys, the respondent-Corporation has stated that after finalisation of the arbitration case between the respondent-Corporation and the appellant, all the dues as per the order of the Arbitrator has been paid to the contractor; but the appellant did not approach the respondent-Corporation for lifting their equipments and as such the same were lying at ICD, Bhadohi occupying valuable space. According to the respondent-Corporation, for the space occupied by the equipments, the total rent for the period up to 31.05.2007 works 9 out to Rs.41,746/- and Rs.89,049/- for fork lift and hand trolleys respectively. Be that as it may, according to the respondent- Corporation, the detention of the equipments were made as per the terms of the agreement at Clause 5(g) and the same was accepted by the arbitrator. As held by the learned Arbitrator, the appellant was given a contract to assist in smooth running of international business of import and export and to have the time management on top priority. Failure to transport the container to the Port at Navi Mumbai resulted in missing of the export schedule. Taking into consideration the failure of the appellant to deliver the container at the Port at Navi Mumbai and the time taken in recovery of the container and the expenditure incurred by the respondent- Corporation in particular, furnishing of bank guarantee of rupees ten lakhs, the detention of the equipments cannot be said to be arbitrary or beyond the terms of the agreement.

15. The learned Arbitrator and the Courts below have recorded the concurrent findings that the appellant Contractor has failed in carrying out the work as per the terms and conditions of the contract and the learned Arbitrator has rightly allowed the detention and forfeiture of the equipments of the contractor and disallowed the counter claim No.4 of the appellant. Similarly, the counter claim No.5 which was for the damages for the alleged detention and use of hand trolleys has been rejected and thus, the counter claim Nos.4 and 5 have been rightly disallowed by the learned Arbitrator. We do not find any reason warranting interference with the award passed by the Arbitrator and the impugned judgment and this appeal is liable to be dismissed.

16. In the result, the impugned judgment dated 19.07.2010 passed by the High Court in FAO(OS) No.435 of 2010 is affirmed and this appeal is dismissed. No costs.

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