Research › Browse › Judgment

Delhi High Court · body

1985 DIGILAW 341 (DEL)

RAJINDER PRASAD v. FOOD CORPORATION OF INDIA

1985-09-09

D.K.KAPUR, N.N.GOSWAMY

body1985
D. K. KAPUR ( 1 ) THE present appeal is directed against the judgment delivered on the Original Side of this Court in Suit No. 703-A/79 on 22nd October, 1981 by a learned single Judge whereby an application to make an award dated 7-6-79 a rule of the Court was rejected and the award was set aside on the ground of existence of a patent error on the face of the award. ( 2 ) AS a matter of fact, in support of this appeal, we have had the opportunity to examine the claims and counter-claims made by the parties before the Arbitrator and also the terms of the award delivered on the 7th June, 1979. We have noted that the learned counsel for the appellant has urged that there is no patent error on the face of the award. On the other hand, learned counsel for the respondent. Food Corporation of India, has urged that there is an error in the award and the matter should be referred in entirety to a new Arbitrator. ( 3 ) IN order to understand the controversy before us, it is sufficient to reproduce the terms of the award of which the operative part is as follows: "i do hereby make my Award and publish as stated below: (a) That claim of the Contractor is allowed for Rs. 1,09,000. 00 (Rs. One lakh nine thousands only) against FCI. Other claims of contractor are rejected. (b) That all other claims of FCI are rejected as the notice of termination is not signed by the Senior Regional Manager as required by Clause X of the Agreement. (c) That the parties shall bear their respective costs except that F. C. I. shall pay Rs. 30. 00each to Sh. H. L. Sharma PA and Sh. A. Dass Asst for their assistance as honorarium. . . " ( 4 ) THIS award is in a sense a non-speaking award because it gives no reason for allowance of the contractor s claim but it does give a reason for the rejection of the claim made by the Food Corporation and that is that the termination notice is not signed by the Senior Regional Manager. . . " ( 4 ) THIS award is in a sense a non-speaking award because it gives no reason for allowance of the contractor s claim but it does give a reason for the rejection of the claim made by the Food Corporation and that is that the termination notice is not signed by the Senior Regional Manager. The learned single Judge noted that actually there was no termination of the contract as such in this case but the work was got executed at the risk and cost of the contractor without terminating the contract because of Clause X (c) of the agreement. This led the learned single Judge to believe that there was an error in the award because notice of termination was required to be signed by the Senior Regional Manager. In fact, no such termination was necessary according to the learned single Judge. It was also held that the term regional Manager was wide enough to include the Senior Regional Manager and also included District Manager. The Learned single Judge therefore, concluded that the District Manager could act as the Regional Manager and also as Senior Regional Manager and he was competent to get the work executed at the risk and cost of the contractor. ( 5 ) WE have examined the contract in some detail. The terms and conditions of the contract provide for summary termination of the contract in Clause X. This term allows under Clause X (a) the Senior Regional Manager liberty to terminate the contract without prejudice to any other rights or remedies under the contract; (b) it allows the Senior Regional Manager to terminate the contract forthwith and get the work done for the unexpired period at the risk and cost of the contractor and forfeit the security deposit and (c) it allows the Senior Regional Manager to carry out at the risk and cost of the contractor any work not done by him because of the lack of supply of trucks. This last conclusion is in the following terms: " (C) The contractor shall be responsible for the supply of adequate number of trucks for carrying out the service under the contract in accordance with the instructions issued by the Sr. Regional Manager or an officer acting on his behalf. If the contractors fail to supply the requisite number of trucks, the Sr. Regional Manager or an officer acting on his behalf. If the contractors fail to supply the requisite number of trucks, the Sr. Regional Manager shall at his entire discretion without terminating the contract be at liberty to engage the services of other contractors at the risk and cost of the contractors, who shall be liable to make good to the Corporation all additional charges, expenses, costs or losses that the Corporation may incur or suffer thereby. . . . . . " ( 6 ) THIS last portion of the clause shows that a discretion is given to the Senior Regional Manager to get the work not done by the contractor done through some other agency but the work must be due to lack of supply of trucks. The very fact that the matter is left to the discretion of the Senior Regional Manager is indicative of the fact that some particular officer alone can exercise this right. As a matter of fact, the whole contract was one which was brought about by a tender issued by the Senior Regional Manager F. C. I. , Lucknow which was to be opened at the office of that Senior Regional Manager and it visualised in various part of the contract, rights and powers to be exercised by the Senior Regional Manager, the Regional Manager or the District Manager. The rights and powers given to the Senior Regional Manager are not the rights or powers given to the Regional Manager or the District Manager. We do not see how the rights and powers of the Senior Regional Manager can be exercised by a Subordinate officer unless there is a specific power delegatable to such officer under the contract. The definition of regional Manager shows that it includes Senior Regional Manager in the Food Corporation of India and the term regional Manager also includes a District Manager or any other officer authorised to execute a contract on behalf of the Food Corporation of India, However this does not mean that the power of the Senior Regional Manager can be exercised by these officials. The Regional Manager has very limited powers but the Senio r Regional Manager s powers are of such a nature that they are not exercisable by any other officer. The Regional Manager has very limited powers but the Senio r Regional Manager s powers are of such a nature that they are not exercisable by any other officer. For instance, he is the person who entered into the contract on behalf of the Food Corporation of India, This is provided by clause (iii) (a ). Then under clause IX the period of the contract is three months from the date joining or such later date as may be decided by the Senior Regional Manager. But the Senior Regional Manager has reserved the right to extend the period of contract for a further period of on year. Then the contract can be terminated byhim without any reason at all by giving a twenty-four hours notice. This notice has to be given by the Senior Regional Manager. Similarly, the power of termination has to be exercised by the Senior Regional Manager. Then, under clause XI, the Senior Regional Manager has the right to forfeit the security deposit and it is stated that the decision of the Senior Regional Manager will be final and binding on the contractor. It is thus clear that the Senior Regional Manager s powers are not capable of being exercised by any one else. If they are being capable of being exercised by any one else, the whole contract will become uncertain because there may be many people who can take contrary decisions under the same contract. ( 7 ) IT is, therefore, plain that on a proper interpretation of clause X (c)the only person who can terminate the contract is the Senior Regional Manager. Of course. Clause X (c) states that the work can be got done at the risk and costs of the contractor without the terminating the contract but this is equivalent in law to terminating the contract because termination means that the work under the contract has to be performed by somebody else and not by the contracting parties. In other words, if there is a breach by one party, the extra cost of getting the work done becomes the liability of the defaulting party. Clause x (c) deals with a case where there is default on the part of the contractor in the matter of supply of trucks. In other words, if there is a breach by one party, the extra cost of getting the work done becomes the liability of the defaulting party. Clause x (c) deals with a case where there is default on the part of the contractor in the matter of supply of trucks. In such cases, work not done by the contractor has to be got done, by the Senior Regional Manager placing an order on another party to do the work not done. It is, therefore, equivalent to a termination of the contract and can be loosely described as such. In fact, clause X (c) is included in a paragraph which has got the heading summary Termination . When the Arbitrator said that the notice of termination is not signed by the Senior Regional Manager, he was obviously referring to the claim of the Food Corporation of India, which was to the effect that because of non-supply of trucks, the contractor had not done the work and the same had got to be done through the agency of some other contractor. The actual notice served on the contractor at that time has been shown to us. It is R-82 among the documents. It is in the form of a letter and telegram sent by the District Manager, Rudrapur to the contractor saying that under clause X (c) the work was to be got done at the risk and costs of the contractor. The objection to this notice was that it was issued by the Districts Manager ; not by the Senior Regional Manager, not even by the Regional Manager but by the District Manager who had exercised the power of the Senior Regional Manager. his the Arbitrator found was an invalid termination. The word termination has been loosely used in this context. It means this very notice. The claim of the Food Corporation is based on this very notice. Even if we are not ready to accept the arbitrator s interpretation it is certainly a possible interpretation and we cannot say that the award can be set aside when the meaning of the contract is doubtful. The contract certainly specified that the Senior Regional Manager will have the power to issue the notice by which the work can be done at the risk and cost of the contractor by another. Factually, such a notice was issued by the District Manager. The contract certainly specified that the Senior Regional Manager will have the power to issue the notice by which the work can be done at the risk and cost of the contractor by another. Factually, such a notice was issued by the District Manager. This was the ground for rejecting the claim of the Food Corporation of India. It is not a patent error. ( 8 ) THE learned counsel for the respondent urged that there were other points on which the award could be set aside. In the objections before the learned single Judge three points were urged. One of the points was that the claim of the Food Corporation of India that the District Manager was exercising the power of Senior Regional Manager. The other points were that the award was given one day before the Arbitrator resigned his post as Additional Legal Adviser and the third point was that the award was delivered on 7-6-1979, while the arguments were heard on 13-3-1979. It was claimed that the time for delivering the award had expired. We do not think much of these two points. The fact that the Arbitrator resigned his job one day after making the award, would hardly affect the validity of the award. Secondly, the delay in making the award is not one which would affect the validity of the same Even if the period to make the award had expired the Court can extend the time under Section 28 and there is no valid reason why the period should not be extended. The contract was operative from 26-6-76 and it is now- 1985. It has taken 9 years for the case to reach this stage. If we set aside the award merely on the ground that the period had expired, it would bar the contractor from getting his claims adjudicated for a very long period, which we do not think justified. We have no hesitation in extending the period for making the award under Section 28 of the Arbitration Act. ( 9 ) CONSEQUENTLY, the award had to be made a rule of the Court. In the circumstances, we accept this appeal and direct that the award be made a rule of the Court. A decree shall be drawn up in accordance with the award. The claimant will be entitled to future interest on the amount of the award calculated at 12% from today. In the circumstances, we accept this appeal and direct that the award be made a rule of the Court. A decree shall be drawn up in accordance with the award. The claimant will be entitled to future interest on the amount of the award calculated at 12% from today. The appellant will get the costs of this appeal. Counsel fee Rs. 500. 00.