H. P. HORTICULTURAL PRODUCE MARKETING AND PROCESSING CORPORATION LIMITED v. HIM FRUIT TRADERS
1998-07-14
P.K.PALLI
body1998
DigiLaw.ai
JUDGMENT P.K. PALLI, J.—This judgment shall dispose of objections filed by the respondent/objector, here-in-after referred as to the objector, under Sections 30 and 33 of the Arbitration Act, 1940 laying challenge to the award dated October 10, 1994. 2. The dispute arises out of an agreement between the parties dated April 1, 1987 whereby the petitioner who is engaged in the process of manufacturing apple juice concentrate and other allied food products, appointed the objector as its distributor within the territory of Delhi. The agreement was made for a period of five years subject to renewal every year. 3. According to the objector, as per terms and conditions laid down in the agreement, he had agreed to lift for sale 100 metric tonns of apple juice concentrate which also included direct sale by the regional office in Delhi. According to the objector, the petitioner committed series of defaults violating the terms and conditions of the agreement. It is said that the ex-factory price prevailing at the relevant time had not been paid, interest on this amount was also claimed besides various amounts being claimed under the different heads. Since differences between the parties came out on the surface, the matter was referred to Mrs. Suneeta Mukherjee, then Resident Commissioner of the Government of Himachal Pradesh at Delhi, and the impugned award has been made by her. The petitioner laid a counter-claim of Rs. 10,62,836.72 against which the objector laid a claim for Rs. 48,70,043/-. After going through the claim as well as counter-claim, the arbitrator has awarded a sum of Rs. 4,01,948/ - to the objector which has been held to be payable by the petitioner HPMC. 4. The learned Counsel appearing for the objector contends that the arbitrator entered into reference on October 9, 1992 and the award has been made after two years and as such is without jurisdiction. It is being argued that the award has been made against the stipulated time as appearing in Clause 3 of the schedule. Neither the parties agreed for the extension of time nor the time was got extended by the arbitrator from the Court. Further, reliance in support of this argument is placed on Section 28 of the Arbitration Act. 5. It is next being argued that the arbitrator has mis-conducted the proceedings by completely loosing sight of Clauses 4 to 6 of the agreement.
Further, reliance in support of this argument is placed on Section 28 of the Arbitration Act. 5. It is next being argued that the arbitrator has mis-conducted the proceedings by completely loosing sight of Clauses 4 to 6 of the agreement. It is being pressed that under Clause 6 of the agreement, the concentrate and other products were to be lifted by the objector against the goods to be delivered FOR godown of the objector provided the order is of the minimum value of Rs. 5,000/- and above. 6. It may be observed that most of the orders which were lifted, were of the value of more than Rs. 5,000/-. It is also being highlighted that the objectors were to pay the prevailing ex factory prices during the subsistence of the agreement besides Excise Duty and other taxes. 7. Learned Counsel further lays stress on the observations appearing under Issue No. 13 where the total sales have been found to be of the value of Rs. 20,18,993.85 and if 10% commission, as agreed, is to be paid to the objector, the amount arrived at is incorrect. It has been further brought to my notice that at page 32 of the award in Clause (a), the arbitrator has stated that the HPMC is liable to pay to the objector an amount of Rs. 6,29,926/- whereas in the operative part of the award at page 35, the amount is. said-to be payable to the HPMC, i.e. the petitioner. 8. Learned Counsel appearing for the petitioner, in reply, states that a reasoned award has been given by the arbitrator and while hearing the objections, this Court is not expected to re-appraise the evidence comprising arbitral proceedings. The allegations made in the objection petition are emphatically denied. The blame is being put on the objector for the defaults in following the agreement. 9. It is sought to be urged that the target was not achieved. Payments which were due to the petitioner, were unnecessarily stopped and the situation compelled the HPMC to terminate the agreement. 10. It is further being argued that there was no default made by the petitioner in respect of the alleged factory prices and in no case the objector could be allowed to have a profit of 10% of the sale proceeds of the products.
10. It is further being argued that there was no default made by the petitioner in respect of the alleged factory prices and in no case the objector could be allowed to have a profit of 10% of the sale proceeds of the products. It is next being said that the parties have been extending the time for the purposes of making the award from time to time as would be clear from the perusal of the record. It is next being said that the objector has been appearing in the proceedings and never raised an objection for that purpose and cannot now be permitted to say that the award has not been made within time. With respect to the mistake in the calculation as appearing at page 32, it is being said that it is a typographical mistake and the matter has been cleared in the other part of the award. 11. Learned Counsel Mr. O.P. Sharma contends that the objections being raised are frivolous and should be dismissed as such. 12. After hearing the learned Counsel for the parties at length and on careful perusal of the impugned order and the award, I find that the objections are liable to be accepted and the award cannot be sustained. 13. Under Clause 4 of the agreement, the objector is required to pay at the prevailing ex factory prices during the period of the agreement for the quantity to be lifted. The objector is further liable to pay for the Excise Duty and other taxes as may be leviable from time to time on the sale of the apple juice concentrate and other allied products. 14. Under Clause 6, the products are to be lifted by the objector against cash payment/bank draft/cheque. It further adds that the goods shall be delivered for godown of second party, i.e. the objector, provided the order is of the minimum value of Rs. 5,000/-. In Clause 7 the objector is further held entitled to 10% discount as distribution charges on the sale price of the products. 15. In Clause 7 between the words "the sale", word "basic" has been written in pen and no initials appear there. Since this agreement has come from the custody of the petitioner, this Court shall proceed to observe that the commission was to be given on the basic sale price of the products. 16.
15. In Clause 7 between the words "the sale", word "basic" has been written in pen and no initials appear there. Since this agreement has come from the custody of the petitioner, this Court shall proceed to observe that the commission was to be given on the basic sale price of the products. 16. A perusal of the award further reveals that under Issue No. 13, the objector laid a claim for Rs. 8,50,000/- on account of sale of Apple Tapple to unauthorised persons by the HPMC, though it has been observed that Apple Tapple is a new product and has not been covered by the agreement but whereever distributor margin has not been paid, 10% discount would be given against the general sale of Apple Tapple. 17. Despite of the fact that no documents of further details had been given by the objector, but as per calculations made by the arbitrator from the records of the HPMC, the sale of Apple Tapple has been found to be Rs. 20,18,993.85 in the year 1990-91. Immediately thereafter the arbitrator has hastened to add that a commission of Rs. 2,453.58 is permitted on direct sale of Apple Tapple made by HPMC and to this extent the issue has been decided in favour of the respondent. 18. The observations made under Issue No. 13 at page 30 of the award do not make out any head or tail. On my persistently asking the learned Counsel for the petitioner Mr. Sharma, no satisfactory answer has been supplied as to how this amount of commission has been calculated and on what material. 19. Again, at page 32 of the award under Clause (a), it is said that the balance payable to the objector is Rs. 6,29,926/-. Later, under the discussion it is said that what is left is the claim in A & B of C-l, i.e. Rs. 6,29,926/-, as balance payment payable and penalty of Rs. 74,452.50. The award further states that in respect of balance payment none of the parties have maintained their records well. It is important to observe that in the award it has been said at page 32, "the claimant inspite of being Government Corporation initially were not able to show that payments they have to receive.
74,452.50. The award further states that in respect of balance payment none of the parties have maintained their records well. It is important to observe that in the award it has been said at page 32, "the claimant inspite of being Government Corporation initially were not able to show that payments they have to receive. It is after repeated attempts that some reconciliation of accounts was done/ On the next page, i.e. at page 33, it has been observed that the HPMC has claimed an amount of Rs. 6,29,926/-. The observations on the issue have been concluded with the words "Hence payment of Rs. 6,29,926/- has to be made." Surprisingly, at page 35 this very amount has been held to be payable to the HPMC by HFT, i.e. the objector. 20. This discrepancy is sought to be explained as a typographical mistake. Even if that be so, it is not expected that the arbitrator should have omitted to notice this mistake as it goes to create an impression that the award has been signed without carefully going through it. 21. As per the provisions contained in Section 28 of Arbitration Act, 1940, the power is left to the Court to enlarge time for making the award. Under sub-section (2), it has been laid down that any provision in the arbitration agreement whereby the arbitrator or umpire may, except with the consent of all the parties to the agreement, enlarge the time for making the award, shall be void and of no effect. 22. Assuming the parties had impliedly consented to the enlarging the time, in my opinion, the arbitrator should have applied to the Court for extension of time, if the award could not be finalised within the prescribed period of limitation. 23. I am purposely refraining myself from making any observations on the merits of the case lest it may amount to an expression of opinion on the merits by this Court as I am of the firm opinion that the award deserves to be set aside and remitted back for fresh decision. 24. Consequently, for the reasons given above, the award is set aside.
24. Consequently, for the reasons given above, the award is set aside. As per arbitration clause appearing in the agreement any dispute and difference arising out of the agreement is to be referred to the sole arbitration to be appointed by the Managing Director of the HPMC or an Officer of the Government of Himachal Pradesh not below the rank of Secretary whose decision is to be conclusive and binding. 25. Learned Counsel appearing for both the parties agree that the Law Secretary of the Government of Himachal Pradesh, Mr. S.S. Thakur be appointed as sole arbitrator to go into the differences arising between the parties out of the agreement in question. I, therefore, appoint Mr. S.S. Thakur, Law Secretary, Government of Himachal Pradesh as the sole arbitrator. His fee is fixed at Rs. 40,000/ - which would be paid by the parties in equal shares. The parties through their learned Counsel are directed to appear before the arbitrator on August 18, 1998 whereafter the arbitrator shall proceed for making the award in the light of the observations made herein-above in this judgment. 26. The objections are accepted in the above said terms. There shall, however, be no order as to costs. Records are ordered to be sent back forthwith to the arbitrator named above. Order accordingly.