THRI STAR SUPPLY AGENCY v. STATE OF HARYANA — 1996 DIGILAW 584 (DEL)

ANIL DEV SINGH ( 1 ) HAVING regard to the averments made in the application (I. A. 6813-A/94) which is supported by an affidavit of Mr. K. K. Parmar, Assistant Director in the Department of Supplies and Disposal, Govt. of Haryana, Chandigarh, the delay of 7 days in filing the objections to the award are condoned. This application is accordingly disposed of. ( 2 ) LA. No. 6813/94: This is a petition by the objector/respondent under section 30 of the Arbitration Act challenging the award of the Arbitrator dated November 23,1992. The facts giving rise to this petition are as under- ( 3 ) THE Assistant Controller of Stores invited tenders for supply of 820 CHV kits (Steel Trunks) of the specifications mentioned in the tender notice. Responding to the notice, the claimant M/s. Three Star Supply Agency by its letter dated February 25, 1981 offered to supply the aforesaid goods specified in the tender at the rate of Rs. 156. 65 per kit. The offer of the, claimant was accepted by the respondent by latter s telegram dated March 5, 1981. Subsequently on March 17, 1981 a contract was executed between the parties. The contract postulated that the supply was to be made on F. O. R. basis and to be completed before March 31, 1981. Pursuant to the contract, the Director Health Services, Haryana by letter dated March 19,1981 required the claimant to despatch the following under of kits to the Chief Medical Officers of the below mentioned places :- ( 4 ) THE claimant supplied 50 Kits to the Chief Medical Officer, Faridabad on March 31,1981 by personal delivery. In so far as the other places are concerned, the Kits were despatched on March 30, 1981. While C. M. Os. Sursa, Kamal and Gurgaen accepted the Kts, the other C. M. Os. refused to retire the Railway documents on the ground that the Kits were not sent in time. The claimant requested the authorities to accept the Kits but failed in its endeavour. Since the aforesaid C. M. Os. did not retire the goods, the petitioner got back the same from the Railways. After receipt of the Kits, the claimant is said to have auctioned the Kits for a sum of Rs. 26,348. 14. The claimant requested the authorities to accept the Kits but failed in its endeavour. Since the aforesaid C. M. Os. did not retire the goods, the petitioner got back the same from the Railways. After receipt of the Kits, the claimant is said to have auctioned the Kits for a sum of Rs. 26,348. 14. By notice dated March 25, 1982 the claimant asked the Controller of Stores to pay the following sums:- ( 5 ) THE notice ofthe petitioner also required the State of Haryana to appoint an Arbitrator in terms of clause 18 of the Contract in the event of latter s refusal to make the payment demanded by the former. Finding no response from the respondent, the petitioner claimant filed a petition before this Court under section 20 of the Arbitration Act, 194c. On November 30,1988, Court directed the State of Haryana to file the arbitration agreement and to refer the disputes specified in the petition to Arbitration, within 8 weeks. The objector, however, failed to earn out the direction, with the result that on being moved by the claimant, the court appointed Justice G. C. Jain (Retd.) as the Arbitrator on February 9,1990. The Arbitrator entered upon reference and made and pub ished the award on November 23,1992. The Arbitrator held the claimant to be entitled to Rs. 74,021,54 - Rs. 69,318. 00 towards damages, Rs. 1203,54 towards balance price of goods which were delivered and accept ed by some of the C. M. Os and Rs. 3500. 00 towards security deposited with the respondent. The. Arbitrator also allowed interest @ Rs. 15% P. A. from May 1,1981 till the passing of the decree in respect of the aforesaid sum of Rs. 4703. 54 (Rs. 1203. 54 being the balance price and Rs. 3500 being the security deposit ). The Arbitrator also rejected the counter claim of the objector. The respondent not being satisfied with the award of the Arbitrator, filed the instant application under section 30 of the Arbitration Act. ( 6 ) I have heard the leanrned counsel for the parties The main contention of the objector/respondent is that the time was the essence of the contract and since the claimant failed to supply the goods before March 31, 1981, it was not entitled to claim damages and the Arbitrator, was not legally justified in awarding the same. ( 6 ) I have heard the leanrned counsel for the parties The main contention of the objector/respondent is that the time was the essence of the contract and since the claimant failed to supply the goods before March 31, 1981, it was not entitled to claim damages and the Arbitrator, was not legally justified in awarding the same. I have considered the submission of the learned counsel. The Arbitrator while allowing the claim of the claimant has noticed that the claimant despatched the goods by train on March 30, 1981 to the various C. M. Os. He also found that the goods reached Rohtak, Jind and Kurukshetra on April 4. 1981, April 1, 1981 and April 6,1981 respectively. With regard to Hissar, he came to the conclusion that the goods must have reached on or about April 6, 1981. Relying on Section 39 (1) of the Sale of Goods Act, the Arbitrator came to the conclusion that according to the letter of offer of the claimants, the goods were to be supplied F. O. R. destination basis and the delivery of the goods to the Railway would be deemed to be delivery to the respondents. Accordingly, the Arbitrator was of the view that the goods were supplied within the stipulated period having delivered the same to the Railways before March 31, 1981. The Arbitrator also noticed clause 14 of the Conditions of Contract, which states that time for and date of deliveiy stipulesed in the supply order is deemed to be the essence of the contract and in case of the failure of the contractor to deliver the consignment within the prescribed period, the delayed consignment will be subjected to 2% penalty per month recoverable on me value of the stores supplied. Relying on the decision of the Supreme Court in M/ s. Hind Construction Contractors vs. State of Maharashtra. AIR 1979 SC 720 , the Arbitrator held that where the contract provides for levy of penalty in the event of delay in carrying out the contract, time cannot be taken to be the essence of the contract. In mis view of the matter, he held that the respondent committed breach of the contract by refusing to accept the delivery of Kits supplied by the claimant and therefore, the former was liable to pay damages to the latter. In mis view of the matter, he held that the respondent committed breach of the contract by refusing to accept the delivery of Kits supplied by the claimant and therefore, the former was liable to pay damages to the latter. While upholding the contention of the claimant that the time was not the essence of the contract, he also rejected the submission of the objector that the Kits were to be purchased under a scheme of me Government of India which lapsed on March 31, 1981. The learned Arbitrator did not accept me submission of me objector on me ground that there was no mention of any such scheme in me contract and me contract contained a provision for extension of time on levy of penalty The reasons advanced by the learned Arbitrator cannot be considered to be puerile, arbitrary inadequate or insufficient. It is well settled mat reasonableness of me reasons given by the Arbitrator cannot be challenged. The learned counsel for me objector did not dispute me fact that the delivery of me goods was on F. O. R. basis and me goods were actually despatched by train on March 30, 1981 to various places except Faridabad. Since the objector had accepted the aforesaid. condition, it cannot now turn back and take up me plea mat me goods had not been actually received before March 31,1981. ( 7 ) HAVING regard to the aforesaid discussion, me objections of me objector are rejected and the award is made a rule of the Court and decree in terms thereof is hereby passed.