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Judgment
Valmiki J Mehta, J.—Suit No. 638A/2000 was filed for summoning of the Award. The Award has been requisitioned from the Arbitrator. No objections were filed in this Suit No. 638A/2000 and objections were in fact filed by the respondent/Union of India against the Award dated 11.2.2000 in Suit No. 517A/2000 which was a petition filed by the contractor under Sections 14 and 17 of the Arbitration Act, 1940. I note that these objections ought to have been numbered as an I.A. but the same have not been numbered. Accordingly, let the Registry give a number to these objections filed by the Union of India under Sections 30 and 33 of the Arbitration Act, 1940.
The facts of the case are that the contract was awarded by the objector/Union of India to the contractor Pardes Dehydration Company whereby the latter was to supply dehydrated potatoes. The contract in question is dated 23.3.1990 (date of letter of acceptance) and under which a total of 43 metric tonnes(MT) of potatoes were to be supplied in four months viz 10 MT up to 30.4.1990, 10 MT up to 31.5.1990, 13 MT up to 30.6.1990 and the balance 10 MT up to 31.7.1990.
It is an undisputed fact that the contractor could not supply the goods in question. The contractor asked for and got three extensions, the last of which is dated 31.1.1991 for supply up to 28.2.1991. Even up to 28.2.1991 the contractor failed to supply the dehydrated potatoes.
The objector, therefore, filed its claim before the Arbitrator on account of having procured the dehydrated potatoes at the risk and cost of the contractor. Before I advert to the merits of the case and the Award I do find it surprising that in a case where the contract in question in fact provides for liquidated damages, the Union of India did not seek liquidated damages but in fact asked for general damages on the basis of a risk purchase tender. Not only this, the Union of India which could have asked for liquidated damages as an alternative relief to the relief of general damages yet it did not pray for this alternative relief of liquidated damages. By the Award, the Arbitrator has dismissed the claim of Union of India on two main grounds that firstly the time of performance was not the essence of the contract and secondly that the Union of India has failed to prove the rates of dehydrated potatoes in and around the date of breach.
A reading of the Award and the facts of the case show that under the contract, there was a clause for liquidated damages. This clause of liquidated damages is provided under Clause 14(7)(i) of the General Conditions of Contract (Form DGS &D-68-Revised). Once there is a clause for entitlement of liquidated damages, then in view of the judgment of Supreme Court reported as Hind Construction Contractors by its Sole Proprietor Bhikamchand Mulchand Jain (Dead) by Lrs Vs. State of Maharashtra, , time of performance is not the essence of the contract and so accordingly held by the Arbitrator. The judgment in Hind Construction Contractors (supra) case has been followed by a Learned Single Judge of this Court in the case reported as Union of India Vs. Panipat Foods Ltd. and Another, and which has been relied upon by the Arbitrator . Once time of performance is not the essence of the contract, it was incumbent upon the Union of India to issue a notice making time of performance the essence of the contract and which admittedly was not done. In view of the aforesaid facts, the Arbitrator has given, inter alia, two findings as under:
v) The respondent had sought extension on 28.2.91 that they have commenced the production and placed order for procurement of ISI confirming tins, therefore, delivery be given upto 30.4.91 but the claimant had cancelled the same as late as on 30.5.91 instead of granting the period and placed the order of R/P on 19.9.91. In "UOI v. Panipat Foods Ltd. and Ors.", it is held that the time in this type of contract is not essence of the contract and the claimant should have given the opportunity to the respondent by granting the period as was requested for and making the time essence of the contract upto 30.4.91.
vi) In respect of claim of general damages, the claimant has failed to file any document which establishes the market rate on date of breach as per the Judgment of Supreme Court in Murlidhar Chiranjilal Vs. Harishchandra Dwarkadas and Another, and followed by High Court of Delhi, Universal Woollen Mills v. UOI reported in 1995(1) Arb LR 59, the date and place of the breach or near about has to be produced but the same has not been established by UOI.
The aforesaid finding of the Arbitrator is justified and I do not find that the same can in any manner be faulted with. Even if two views are possible, this Court will not interfere merely because another view is possible than the view as taken by the Arbitrator. The Arbitrator, therefore, has rightly rejected the claim of the Union of India for general damages.
Before parting with the case, I must express my anguish that in a case of this nature where ex-facie the contractor is at fault and has committed default in performance of his obligations yet he is being allowed to go scott free because the Union of India did not take the correct remedy of seeking liquidated damages in alternative to general damages. If I was sitting as a Civil Court hearing first appeal under Order 41 of Civil Procedure Code, 1908, it could have been possible for me to have taken a different view because under the various provisions of Order 41, including Order 41 Rule 33, of Civil Procedure Code, I could have in fact made any such orders in the interest of justice as found just an appropriate in the facts and circumstances of the case, however, I am handicapped because I am hearing objections to an Award u/s 34 and my jurisdiction as such is indeed limited. I can only hope that the Union of India would be well advised in future for at least filing proper claim petitions so that when huge losses are caused to it, it can recover the same and not be frustrated as per the situation which has been emerged in the present case.
In view of the above, the objection petition is dismissed leaving the parties to bear their own costs. The Award is made a rule of the Court. This order shall dispose of Suit No. 517A/2000 and the unnumbered I.A. under Sections 30 and 33 of the Arbitration Act, 1940 and the Suit No. 638A/2000.