Arbitration and Conciliation Act, 1996: s.34 – Appellant contractor entered into an agreement with respondent corporation for carrying out work of Handling and Transportation at Inland Clearance Depot – Respondent corporation terminated the contract due to appellant’s non-performance of contractual obligations and forfeited the security deposit and also fork lift and hand trolleys – Arbitration award in favour of respondent corporation – Held: Failure to transport the container to the Port at Navi Mumbai resulted in missing of the export schedule – Taking into consideration the failure of the appellant to deliver the container at the Port at Navi Mumbai and the time taken in recovery of the container and the expenditure incurred by the respondent-Corporation in particular, furnishing of bank guarantee of Rs.10 lakhs, the detention of the equipments cannot be said to be arbitrary or beyond the terms of the agreement – Arbitrator and courts below recorded the concurrent findings that the appellant Contractor failed in carrying out the work as per the terms and conditions of the contract – Arbitrator rightly allowed the detention and forfeiture of the equipments of the contractor – Similarly, counter claim for the damages for the alleged detention and use of hand trolleys was rightly rejected – No reason warranting interference with the award passed by the Arbitrator – Contract – Termination of – ExportImport. Dismissing the appeal, the Court
HELD: 1. The Export loaded Container was handed over by the Manager, ICD, Varanasi to the appellant on 06.11.2001 for delivery of the container at JNP, Navi Mumbai; but the appellant failed to transport the container to the destination port and only with the intervention of the Court, the container was located and recovered at Ghaziabad and received back at ICD, Varanasi on 23.05.2003. But by then, the said container already missed the export schedule. When the said Export loaded Container was entrusted to the appellant, the appellant ought to have transported the container to the port of destination with due diligence. The respondent-Corporation was justified the forfeiture of the security deposit on two counts:- firstly, in view of the heavy claim raised by the Exporter for which they have filed a claim of Rs.40 lakhs before the Consumer Forum and secondly, on account of bank guarantee in the sum of Rs.10 lakhs furnished by the respondent-Corporation for release of the container. The Arbitrator and courts below recorded the concurrent findings by holding the termination of the contract legal and levy of forfeiture of the security amount and the levy of fork lift is justified. [Para 11][1168-C-F]
2. The container handed over to the appellant was detained by the third party who filed a Civil Suit against the appellant stating that his dues had not been cleared by the appellant. The respondent-Corporation had filed an application in the said suit for release of the container which was rejected by the Civil Court, Ghaziabad on 28.11.2002 and the respondent had to file a Civil Revision Petition before the High Court in which a direction was issued to the trial court to dispose of the application afresh. It was thereafter, the trial court released the container on furnishing a bank guarantee of Rs.10 lakhs by the respondentCorporation. The trial court released the container only on furnishing of bank guarantee of Rs.10 lakhs. It is stated that the said civil suit is still pending in the Ghaziabad Court and is at the stage of recording evidence. As held by the Arbitrator, the appellant was given a contract to assist in smooth running of international business of import and export and to have the time management on top priority. Failure to transport the container to the Port at Navi Mumbai resulted in missing of the export schedule. Taking into consideration the failure of the appellant to deliver the container at the Port at Navi Mumbai and the time taken in recovery of the container and the expenditure incurred by the respondent-Corporation in particular, furnishing of bank guarantee of Rs. 10 lakhs, the detention of the equipments cannot be said to be arbitrary or beyond the terms of the agreement. [Paras 12, 13][1168-G-H; 1169-A, D-E]
3. Even before filing of the objection petition under Section
34 of the Act, the appellant received the full payment due and payable to him as per the arbitral award. According to the respondent-Corporation, the appellant has not disclosed the receipt of the money at the time of filing the petition under Section
34 of the Act. The Arbitrator and the Courts below have recorded the concurrent findings that the appellant Contractor has failed in carrying out the work as per the terms and conditions of the contract and the Arbitrator has rightly allowed the detention and forfeiture of the equipments of the contractor and disallowed the counter claim No.4 of the appellant. Similarly, counter claim No.5 which was for the damages for the alleged detention and use of hand trolleys was rejected and thus, the counter claim Nos.4 and
5 were rightly disallowed by the Arbitrator. [Paras 14, 15][1169F-H; 1170-A-B]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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