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1991 DIGILAW 822 (RAJ)

Balbir Singh Baynath v. Food Corporation of India

1991-10-22

K.C.AGRAWAL

body1991
AGRAWAL, C.J.— This is a revision against the judgment and order of the Additional District Judge No.l, Hanumangarh dated July 17, 1990 in Civil Misc. Case No. 12/84. (2). The facts briefly stated are; the petitioner was a registered firm at Hanumangarh. Balbir Singh s/o Hukam Singh r/o Hanumangarh Junction was its partner. The firm was carrying on the business of handling/transporting Agent for the Food Corporation of India for their Central Warehouse Corporation, Hanumangarh Branch for transporting and other ancillary works relating to , urea manure. (3). On a notice, inviting tender (for short NIT) for the works of handling, transporting of the goods, including urea from Hanumangarh godown to other points, the petitioner submitted its tender on 8.4.80. Negotiations were held on 29.4.80 and the petitioner received a telegram on 25.4.90, requiring the petitioner to attend the office of the non-petitioner and to produce the security amount along with other papers. However, the petitioner did not go to the office of the respondent No. 1 nor deposited the security amount. The petitioner was already working as handling/transporting Agent since 17.11.79 under an ad-hoc arrangement. He was permitted to work even after the second notice in pursuance of which he has submitted tender on 8.4.80. Ultimately, the agreement came to an end. It was, thereafter, that the petitioner received a letter from the Senior Regional Manager on 15.12.80 that a sum of Rs. 4,91,578.14 was due to the Food Corporation from the petitioner. He is the authority named in the contract under which the petitioner was working. The relevant clause is reproduced below:— "Clause XI (g): the decision of Senior Regional Manager in respect of such damages, losses, charges, costs or expenses shall be final and binding on the contractors." (4). Again the petitioner was issued a letter by the Senior Regional Manager for making payments of the same amountwhich has been mentioned above. In the meantime; the Food Corporation of India appoint an arbitrator for adjudicating upon the disputes pending in between the petitioner and the respondents. In this dispute, the demand of Rs. 4,99,643.94 was made by the Corporation. Again the petitioner was issued a letter by the Senior Regional Manager for making payments of the same amountwhich has been mentioned above. In the meantime; the Food Corporation of India appoint an arbitrator for adjudicating upon the disputes pending in between the petitioner and the respondents. In this dispute, the demand of Rs. 4,99,643.94 was made by the Corporation. Against the arbitration proceedings initiated by the Corporation, the petitioner raised an objection that as no contract had been arrived at with regard to the tender invited on 8.4.80, the dispute could not be referred for adjudication to the arbitrator and that the remedy of the Corporation lie in filing a civil suit. In the meantime, the petitioner filed an application u/s 5 read with ss. 12 (2) (b) and 33 of the Arbitration Act before the District Judge, Sriganganagar, for revoking the arbitration clause on the ground inter-alia that there was no contract in between the parties. The Arbitrator, to whom reference was made, was restrained by the District Judge from giving an award. (5). On 17.7.90, the District Judge, decided the case by the impugned judgment. His decision can be divided into two parts. The first was for the period upto May 23,1980 and the second thereafter. The District Judge upheld the contention of the petitioner partly and finding that the dispute for the period upto May 23,1980 was not referable, decided the application in favour of the petitioner but for the period subsequent to the aforesaid date i.e. May 23, 1980, the view taken was that arbitration was competent. Against the aforesaid judgment, the present revision has been filed. (6). The learned counsel for the petitioner urged that there could be an adjudication proceedings, provided that there was a contract in between the petitioner and the Food Corporation of India. But as no contract had been arrived at, there was no question of an arbitrator being appointed for adjudicating the dispute after May 23, 1980. The learned counsel urged that the petitioner had been called, after submission of the tender, by the office of the Food Controller, to come with certain papers and security. The petitioner did visit the Office but no security was either furnished by him nor were papers submitted. Consequently, no contract was arrived at. The learned counsel urged that the petitioner had been called, after submission of the tender, by the office of the Food Controller, to come with certain papers and security. The petitioner did visit the Office but no security was either furnished by him nor were papers submitted. Consequently, no contract was arrived at. As no contract was arrived at, the clauses relating to making of reference to arbitrator for deciding the claim of the Food Controller, respondent No.l did not arise. (7). Counsel for the respondents, Mr. Gupta urged that the petitioner himself has asserted, in grounds, that the Senior Regional Manager had the power to decide the dispute, and if arbitration did not apply, the Corporation could go to him for adjudication of its claim. His contention was that even if no formal agreement came into existence, the relationship in between the petitioner and the respondents was under the contract which was intended to be executed in between the parties. It was not, counsel urged, that the petitioner worked as a visiting contractor on no terms and conditions and that he was a free launcher on whom no liability was imposed, irrespective of the fact that the accounts of the respondent No. 1 had been misappropriated or that there had been other breaches committed by him. The emphasis of the learned counsel was that if the dispute could not be taken to the arbitrator the agreement would apply. This clause had been reproduced by me above. (8). It is true that a formal contract had not been executed. But the conduct of the parties becomes relevant for finding the relationship in between those two. Under the clause quoted above, the Senior Regional Manager has right in respect of such damages, losses, charges, costs or expenses, to decide, as may be claimed before him. Respondent No. 1 did make a claim and for this purpose the dispute had to be resolved to the Senior Regional Manager. From a perusal of the grounds of revision, it appears that the petitioner was agreeable to a resolution of the dispute either by the Senior Regional Manager or by the Civil Court. In my view, therefore, the petitioner was right in contending that the arbitrator did not have the jurisdiction to adjudicate the dispute in between the parties. From a perusal of the grounds of revision, it appears that the petitioner was agreeable to a resolution of the dispute either by the Senior Regional Manager or by the Civil Court. In my view, therefore, the petitioner was right in contending that the arbitrator did not have the jurisdiction to adjudicate the dispute in between the parties. Arbitrators are normally appointed by the parties, in whatever way they think fit, subject only to certain provisions which are implied by the Act where the parties do not specifically agree. It is true that the appointment of an arbitrator is not to be in any particular form. (Unless formalities are provided by the Arbitration Agreement). (9). In the instant case, from a reading of the document filed by the parties, it appears that the arbitrator had to be appointed by the parties and no appointment had been made. But apart from the right on the respondent No. 1 to institute a civil suit for recovery of money, whether it could go to the Senior Regional Manager for resolution of the dispute, has to be gone into the proper proceedings whenever such question arise. (10). Mr. Gupta urged that as no period of limitation is prescribed for going to the Senior Regional Manager, he could still prefer a claim before him. Be that as it may, if there is no legal bar, he may, if advised do so. Whenever the respondent No. 1 goes to the Senior Regional Manager, the petitioner will have all legal pleas open to him. (11). In the result, the revision succeeds and is allowed. The order of the learned Additional District Judge No.l, Hanumangarh, holding that the settlement between the parties with regard to the period after May 23 to June 11, 1980, was referable to an arbitrator is quashed. It will, however, be open to the F.C.I. to avail any other remedy which may be available to it under the contract or any law applicable.