Food Corporation of India and Others vs Swapan Kumar Dhar

Tapan Kumar Dutt, J.—We have heard the learned advocates for the respective parties and we have considered the materials on record.

It appears that the respondent worked as a transport and handling contractor for clearance of food grains from the railway wagons and transporting the same to various places as required by the appellant in terms of the agreement in between the parties and the respondent submitted his bills from time to time to the appellant for the work done by the former but the appellant failed and neglected to pay a number of such bills for which the respondent felt aggrieved. It appears that there were certain disputes and differences in between parties and such disputes/differences were referred to an arbitrator and the Learned Arbitrator by an award dated 9th August, 1980 directed that the respondent shall get from the appellant a sum of Rs.5,36,752.27 with interest at the rate of 6% per annum from 13.01.1979 upto the date of realisation. The said Learned Arbitrator also directed that the Bank guarantee for Rs.10,300.00 furnished by the respondent should be released and discharged.

The said award was sent to the learned Court below on 27.08.1980 and the respondent prayed for pronouncing the judgement and decree in terms of the said award. The suit concerned was registered as title suit No. 78 of 1980.

On receipt of a notice u/s 14(2) of the Arbitration Act the appellant filed an objection u/s 30 and section 33 of the Arbitration Act of 1940. The respondent filed a counter objection against the objection filed by the appellant under sections 30 and 33 of the said Act. The learned Court below by judgment and decree dated 25th May, 1992 decreed the said suit and ordered that the respondent do get a decree in terms of the said award submitted by the said learned Arbitrator.

Challenging such judgment and decree dated 25th May, 1992 the appellant has filed the instant appeal. It appears from the copy of the award included in the paper book that the learned Arbitrator considered the respective cases of the parties, framed several relevant issues with regard to their dispute and dealt with such dispute on merits and thereafter passed his award. It also appears that the appellant had also made a claim against the respondent for recovery of demurrage and wharfage charges and also for recovery of a certain amount of compensation for shortages in the stocks which were transported by the respondent. The learned advocate appearing on behalf of the appellant, by placing a copy of the agreement concerned before this Court, submitted that a certain part of the claim could not have been adjudicated by the arbitrator since, according to him, such part came within the clause of excepted matters as provided in clause 19 of the said agreement. Clause 19 of the said agreement is quoted below:

"19. The Agent shall be responsible for the safety of the goods from the time they are loaded on their trucks from railway stations or sidings/godowns, until they have been unloaded from their trucks at godowns or at other destinations. They shall provide tarpaulins on decks of the trucks at so as to avoid loss of grains etc. through the holes crevices in the decks of the trucks. They shall deliver the number of bags and the weight of foodgrains, fertilisers etc. received by them and loaded on their trucks and shall be liable to make good the value of any loss, shortage or damage during transit. The Regional Manager will be the sole judge for determining after taking into consideration all the relevant circumstances the quantum and value of loss and also as regards the liability of the Agents for such loss and the amount to be recovered from them. The decision of the Regional Manager in this regard shall be final and binding of the Agent."

His submission was that the Regional Manager is the sole judge for determining the quantum and value of loss suffered by the appellant and the amount to be recovered from the respondent. His further submission was that the decision of the Regional Manager in this regard would be final and binding on the respondent. Citing the said clause 19 of the said agreement, the said learned advocate submitted that such matter could not have been decided by the learned Arbitrator since it was an excepted matter. It appears from the award of the learned Arbitrator that the appellant itself invited the arbitrator to consider the question as to whether the appellant was entitled to recover compensation on the ground of shortages and also the demurrage and wharfage charges. That apart, when this Court asked the learned advocate for the appellant to show anything from the record which may indicate that such dispute was ever referred to the Regional Manager and the Regional Manager had taken any decision in this regard, the said learned advocate could not point out any such material on record. Thus, the records do not indicate that such dispute was ever referred to the Regional Manager or that the Regional Manager took any decision in this regard.

The said learned advocate referred to a decision reported at General Manager Northern Railways and Another Vs. Sarvesh Chopra, . It appears from the facts of the said reported case that certain specific provisions were made in the general conditions of contract/special conditions of contract which indicated as to which of the matters shall be deemed as excepted matters and such excepted matters shall stand excluded from the purview Arbitration Clause. In the instant case, in Clause 19 of the aforesaid agreement, no specific ground of loss has been mentioned to indicate that on such and such grounds if the loss is incurred the matter should be referred to the Regional Manager. There cannot be any dispute with regard to the proposition of law laid down by the Hon''ble Supreme Court that if the matter concerned is excepted from the arbitration agreement the Court shall be justified in withholding the reference and that the issue of the arbitrability of claim is also available while making the award a rule of the Court. In the instant case, however, it is difficult to apply the said principle of law since the facts and circumstances of the instant case do not warrant such application of the aforesaid principle of law. This is so because (1) clause 19 of the agreement is not specific with regard to the question of excepted matters, (2) the appellant itself had invited the learned Arbitrator to decide the amount of compensation on the ground of shortages and also the demurrage and wharfage charges and (3) such dispute was never referred to the Regional Manager nor the Regional Manager had the occasion to decide such dispute at any point of time. Thus, the point raised by the learned advocate for the appellant on the basis of Clause 19 of the said agreement is without any substance.

The next point urged by the learned advocate for the appellant is that the learned Arbitrator was wrong in applying section 74 of the Indian Contract Act ignoring Clause 19(a) of the said agreement. It appears from the award of the learned Arbitrator that the learned Arbitrator did take into consideration Clause 19(a) of the said agreement and considered the facts and circumstances of the case in details in this regard and found that notwithstanding such provision the appellant can, u/s 74 of the Indian Contract Act, recover only reasonable compensation not exceeding the stipulated penalty. It may be relevant to note that the learned Arbitrator in his award has come to the finding that no shortages have been provede to have actually occured in cases of transport of unweighed stock and the cases of transport of weighed stocks were few. The learned Arbitrator gave his reasons for giving his decision in this regard and this Court is of the view that such reasons are not unreasonable.

Apart from the above discussions there is another fact which needs to be dealt with. The fact is that one Prodyot Kumar Mullick had sworn an affidavit as an agent of Food Corporation of India in connection with the objection to the award filed under sections 30 and 33 of the said Act. The learned senior advocate appearing on behalf of the respondent very rightly referred to the provisions of Order 29 Rule 1 of the CPC and submitted that the said provision clearly indicates as to who shall be entitled to affirm any pleading on behalf of the appellant-Corporation. The said learned senior advocate submitted that since the said Prodyot Kumar Mullick is neither the secretary nor any director nor a Principal Officer of the appellant, he could not have affirmed the affidavit on behalf of the appellant and as such no notice should be taken of the said objection under sections 30 and 33 of the said Act and such objection is not maintainable under the law. Considering the provisions of Order 29 Rule 1 of the Civil Procedure Code, we are inclined to hold that the said Prodyot Kumar Mullick was not competent to affirm the said affidavit in support of the said objection and as such the objection which was filed on behalf of the appellant under sections 30 and 33 of the said Act cannot be treated to be a valid one.

In view of the discussions made above we find that there is no merit in the present appeal which is, accordingly, dismissed.

There will, however, be no order as to costs.

Urgent Xerox certified copy of this judgment, if applied for, be supplied to the parties upon compliance of requisite formalities.

Bhaskar Bhattacharya, J.

I agree.