Banwari Lal v. Punjab State Coop. Supply Mktd.,

S. RAVINDRA BHAT,J 'sn'

Page 1 23 & 33 * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: September 18, 2008 + ARB. P.61/2004 BANWARI LAL ..... Petitioner Through Mr.Shiv Khorana, Advocate. versus PUNJAB STATE COOP. SUPPLY MKTD. ..... Respondent Through Mr.Vineet Bhagat with Ms.Neha Jain, Mr.Ashish Gupta and Mr.Adarsh Ganesh, Advocates for MARKFED. + O.M.P. 319/2004 PUNJAB STATE COOP. SUPPLY MKTD. ..... Petitioner Through Mr.Vineet Bhagat with Ms.Neha Jain, Mr.Ashish Gupta and Mr.Adarsh Ganesh, Advocates for MARKFED. versus BANWARI LAL RADHEY MOHAN …… Respondent Through Mr.Shiv Khorana, Advocate. % 18.09.2008 CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT 1. Whether reporters of local papers may be allowed to see the judgment? YES 2. To be referred to the Reporter or not? YES 3. Whether the judgment should be reported YES in the Digest? Mr. Justice S. Ravindra Bhat (Oral) 1. In these proceedings, the correctness of an award dated 27.1.2004 by a sole Arbitrator, appointed to decide the inter se disputes Page 2 between the parties in the proceedings being suit No.1392-A/81 under Section 20 of the Arbitration Act, 1940, have been challenged. 2. The petitioner – M/s. Punjab State Co-operative Supply and Marketing Federation Ltd., have challenged the award under Section 30 and 33 of Arbitration Act, 1940. 3. The petitioner - M/s. Punjab State Co-operative Supply and Marketing Federation Ltd. (hereafter referred to as "the Federation") entered into a contract on 29.6.1981 with the State Trading Corporation of India Ltd. (STC) for supply of 4000 metric tonnes of superior Sela Basmati Rice for export to Daman in Saudi Arabia. The arrangement was a back to back contract between STC and M/s.Suleman Al-Mohd., Al Rashid of Saudi Arabia. Pursuant to the contract, the Federation entered into another contract with the respondent on 16.7.1981 by which the latter was to supply 2000 metric tonnes of the said products. 4. The respondent supplied rice to the extent of 1371.928 metric tonnes. According to the petitioner's allegations, the said rice was inspected by the foreign buyer, at Mumbai, and allegedly found to be of sub standard quality and was, therefore, rejected. The petitioners claim to have got the stocks inspected later through other agencies. The result, according to the petitioner, was that the stock of rice supplied by the respondents was not in accordance with the specifications agreed upon. 5. The petitioner withheld the sum of Rs.24,52,139.64 due, as residuary payment to the respondent. It issued notice on 19.11.1981 Page 3 demanding that the respondent should get the stocks replaced to the satisfaction of the foreign buyer. Claiming existence of disputes, the respondent filed an application under Section 20 of the Arbitration Act, i.e. Suit No.1392-A/81. It also filed a suit bearing No.1901/1984 impleading State Trading Corporation of India seeking recovery of Rs.53,19,104.66. 6. This Court, by order dated 4.8.1995, stayed the subsequent suit under Section 34 of Arbitration Act and required the parties to submit sole arbitration to Registrar, Cooperative Societies, Punjab. That order was carried in an Appeal. Ultimately, the Registrar, Cooperative Societies made an award. The petitioner filed objections which were allowed and the Court on 25.9.2001 appointed Mr.Justice S.N.Sapra (Retd.), as Sole Arbitrator to adjudicate the dispute. 7. The learned Arbitrator in the impugned award held that the respondent was entitled to the sum of Rs.29,79,139.64 with interest at 6½% per annum from 1.1.1982 till the making of the award, i.e. the sum of Rs.42,76,306.68. The award was questioned on several grounds. During the course of the proceedings in the hearing of the present objections, the petitioner has confined the challenge to the award on the ground that the Arbitrator misconducted himself in overlooking that the Certificate (issued by M/s.SGS (India) Pvt. Limited, Bombay, and supplied to it) after the dispatch of seven lots of goods, and that such cert