Punjab-Haryana High Court
M/S Amba Poly Chrome Pvt. Limited vs The Punjab State Co-Operative Supply ... on 14 January, 2014
Author: Rajiv Narain Raina
Bench: Rajiv Narain Raina
FAO No.5979 of 2013 (O&M)
:1:
IN THE HIGH COURT OF PUNJAB & HARYANA AT
CHANDIGARH
F.A.O. No.5979 of 2013
Date of decision: 14.01.2014
M/s Amba Poly Chrome Pvt. Limited
..... Appellant(s)
Versus
The Punjab State Co-operative Supply and Marketing Federation Limited
and others.
..... Respondent(s)
CORAM: HON'BLE MR. JUSTICE RAJIV NARAIN RAINA
Present: Mr.Sumeet Goel, Advocate,
for the appellant(s).
Mr.Daman Dhir, Advocate,
for respondents No.1 and 2.
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1. To be referred to the Reporters or not?
2. Whether the judgment should be reported in the Digest?
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RAJIV NARAIN RAINA, J. (Oral)
Heard the learned counsel for the parties. By consent, the matter is taken up for final disposal.
Learned counsel for the appellant draws the attention of this Court to Clause 7 of the Contract Agreement entered between the parties. Clause 7 reads as follows : -
"7. Delivery schedule : As per purchase order. The quantity of order can be increased/decreased (+10% of the tendered quantity) at the time of placing of supply orders. Markfed reserves the right to place order to more than one supplier for any quantity. The supplies shall be made within 5 Kumar Paritosh 2014.01.17 10:39 I attest to the accuracy and integrity of this document FAO No.5979 of 2013 (O&M) :2: days from the date of issue of order. In case of non supply of goods as per specifications or as per our delivery schedule Markfed can go for risk purchase at the cost of supplier and debit the difference at suppliers account and can also forfeit the security deposit."
A reading of the above clause shows that it is only after Markfed has issued a purchase order that the supplies of polybags could have started and it was only in the event of a purchase order being disobeyed either by supply of goods not as per specifications or not as per delivery schedule notified by the Markfed could the risk purchase clause be invoked at the cost of the supplier so as to authorize Markfed to debit the difference in rates at supplier's account and to also forfeit the security deposit. The arbitrator in his award has observed as follows : -
"That since the respondent had accepted the terms and conditions but did not make any supplies. Therefore, the claimant had made purchases from other parties, as such the respondent are liable to pay the risk and cost amount of difference in rates which comes to ` 12,72,205/- (` Twelve Lacs Seventy Two Thousand Two Hundred and Five only) along with interest till the date of recovery."
Though clause 7 of the terms and conditions of the supply order have been noticed by the Arbitrator in the arbitral award, the only discussion of the same is as scant as follows : -
"That as per clause 7 of the terms and conditions for the supply of PP bags, in case of non supply of Kumar Paritosh 2014.01.17 10:39 I attest to the accuracy and integrity of this document FAO No.5979 of 2013 (O&M) :3: goods Markfed can go for risk purchase at cost of supplier and debit the difference at suppliers account and also forfeit the security deposit."
Learned counsel for the appellant argues that no purchase order was issued in writing to the appellant for him to start delivery of goods. Therefore, the risk purchase clause could not have been invoked against it.
Mr.Dhir is unable to point out from the award or the impugned order any reference to resort to the mechanism envisaged by clause 7. If there is no demand, there can be no supply.
A reading of the award discloses that it suffers from complete lack of application of mind. It contains no valid reason on which it can be supported in law or in fact. The further proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 also suffer from the same defect of non-application of mind for which reason, both the impugned award and the impugned order passed under Section 34 of the Act deserve to be set aside and the matter remanded to the Arbitrator for a fresh decision on the merits, scope and effect of Clause 7 and to return findings based on evidence led before the arbitrator and specifically with reference to the exchange of correspondence in the dealings between the parties under the contract.
Consequently, this appeal is allowed. Both the award and the impugned order are set aside and the matter is remanded to the Arbitrator for a fresh decision on merits in terms of this order.
Let the parties appear before the Arbitrator on 25.2.2014.
(RAJIV NARAIN RAINA) JUDGE January 14, 2014 Paritosh Kumar Kumar Paritosh 2014.01.17 10:39 I attest to the accuracy and integrity of this document