Gauhati High Court
State Of Tripura vs Sabitri Salt Suppliers on 22 March, 2006
Equivalent citations: 2007(3)ARBLR519(GAU), 2007(2)GLT163
JUDGMENT A.B. Pal, J.
1. The above appeal and cross-appeal are against the judgment and order dated 21.01.2000 passed by learned District Judge, West Tripura, Agartala in Misc. (Arb.) No. 6 of 1999 whereby the award dated 28.12.1998 passed by the sole arbitrator in Arbitration Ref. No. 4/1998 has been affirmed.
2. Iodised salt being an essential commodity, the State Government collect the same from Jamnagar Zone, West Coast, Gujarat for sale at subsidized rate through fair price shops under Public Distribution System (for short PDS). On the requisition of the State Government, the Salt Commissioner allotted iodised salt for the year 1996, which was to be lifted from that zone. The State Government (appellants herein) invited tenders in two spells for six months each for lifting and carrying the allotted salt from Jamnagar to Central Stores at Agartala and the godowns at Dharmanagar within the State and the respondent herein was selected for the job, its offered rate being acceptable. For the period from January to June 1996 and for the period from July to December 1996, two agreements were signed. The first agreement was dated 26.02.1996 for carrying four B.G. rakes of salt, the rate being Rs. 145.41 per quintal, for Agartala Godowns and Rs. 116.51 per quintal for Dharmanagar Godown. The second agreement for the second spell from July to December 1996 was signed on 16.09.1996 for six B.G. rakes of iodised salt. Thus, as per the two agreements, the respondent was under obligation to lift and carry by railway and road ten B.G. rakes of salt. One of the salient features of the said agreements is that the respondent would itself buy the salt at Jamnagar against the quota allotted in favour of the State Government by the Salt Commissioner and supply the same to the respective godowns in the State bearing initially the entire cost and only after supply, it would raise bills for the quantity actually supplied at the accepted rate, which included both buying and transportation cost. It may be mentioned here that in the second tender the accepted rates were little higher, being Rs. 154.92 per quintal for Central Store at Agartala and Rs. 125.91 per quintal for godown at Dharmanagar. The respondent, however, booked at Jamnagar only seven B.G. rakes of salt out of ten. For the first spell, he booked 55,386 quintals in 73,710 bags, but received from the railway at Dharmanagar only 50,450.98 quintals in 67,290 bags. There was thus a shortfall of 4,815 quintals. During the second spell, the respondent booked 83,885 quintals in 1,12,417 bags where the railway delivered only 74,537.49 quintals in 1,00,608 bags. Thus, the shortfall in the second spell was 8,992.75 quintals. Again, during road transport from Dharmanagar Railway Station to respective godowns there was a further shortfall to the extent of 4.51% and 4.75% respectively. The State-appellant, in terms of the agreements between the parties under which the supplier is required to pay for the shortfall beyond 6%, directed that the supplier should pay Rs. 42,10,409 for the shortfall of 12,029.74 quintals of salt @ Rs. 350 per quintal, which was the prevailing rate of iodised salt in the open market. The supplier submitted bills at the accepted rate only for the actual quantity of salt supplied from which the appellants deducted Rs. 24,71,861 and asked the supplier to deposit Rs. 17,38,548 to make the total amount of Rs. 42,10,409 being the value of the total shortfall.
3. The supplier raised inter alia a dispute that it was not liable to pay for the shortfall, as the same had occurred during transportation by railway, as would be evident from the railway receipts, which would unerringly show that the supplier had no control over the circumstances leading to the shortfall. It was further contended that on earlier occasions in similar circumstances the shortfall due to railway transportation was exempted from the liability there for as per terms contained in the agreement. As regards the shortage due to road transport, it was argued that the agreement contained a clear provision that transport shortage to the extent of 6% of the total quantity would stand exempted. Admittedly, 4.51% and 4.75% of the total quantity were the shortfall, which being within the permissible limit of 6%, should be exempted by the State-appellant. Thus, the entire shortage being due to railway transportation and road transportation, the supplier is not liable to pay for the same and for that reason the deduction made from the running bills of the supplier was improper.
4. The objections of the respondent against the deduction, as aforesaid, were rejected by the appellants prompting the supplier to seek arbitration. But the same having been turned down, the supplier, respondent herein, approached this court and by an order in Arbitration Proceeding No. 4 of 1998, the dispute was referred for arbitration by Chief Secretary or an officer nominated by him. Accordingly, Mr. Lalvohliana, the Secretary to the Government of Tripura (as he then was) was appointed as sole arbitrator.
5. The learned arbitrator accepted the argument of the supplier that the shortage due to railway transportation was for the reason not attributable to the supplier and that for such short supply no direction for payment was legally sustainable. In support of this decision, he has shown three reasons, namely:
(i) The government did not incur any loss for the shortage;
(ii) The Public Distribution System did not suffer any set back in 1996 because sufficient left over of the stock from the previous year was available.
(iii) In the past such losses, though not gigantic in nature as in the present case, were waived and the losses were written off by the government officially.
As regards the circumstances for railway shortage, which according to the arbitrator were beyond control of the supplier, the following observation was made by the learned arbitrator:
The shortage invariably happened during the trans-shipment in the railway. The goods were booked in the B.G. rakes of Broad-Gauge Railway line and were transferred to the Metre-Gauge Train at Lumding. During this unloading and loading some bags get torn up obviously which ultimately resulted in the shortage. Hence, this is beyond the control of the claimant and, therefore, the Clause 3 of the agreement has been naturally frustrated.
He quoted the relevant part from the written argument submitted on 24.09.1998 by learned Counselfor the appellants herein, which reads:
The claimant failed to book and lift the entire quantity of 18,000 MT, i.e. 10 B.G. rakes during the year 1996, rather he booked only 7 B.G. rakes equivalent to the stock of 13,900 MT approximately out of which he could not deliver 2,000 MT for which the State Government felt hardship in maintaining PDS. However, they could maintain the PDS with the stock carried over from the year 1995.
Because of this written submission, the learned arbitrator came to hold that the public did not suffer for the short delivery of the consignment during the material period.
6. An argument was placed before the learned arbitrator on behalf of the appellants herein that in view of the specific provision in Clause 3 of the agreement, it would not be open to the learned arbitrator to enter into any question with regard to validity of the same as raised by the respondent herein, which, however, did not find favour in the findings of the learned arbitrator. Clause 3 of the agreement, which is the central point of controversy provides as follows:
3. That the "iodised salt importer" shall purchase new H.D.P.E. bags at his expenses and shall have to arrange packing of salt in these H.D.P.E. bags for dispatch and stocking to different destination godown in Tripura. The bags shall have to be inscribed with his trade mark at his expenses. He shall be under obligation to effect delivery of salt 75 (seventy five) Kgs. net weight in each new H.D.P.E. bags.
The salt importer shall deliver the entire quantity of salt booked by him from Jamnagar Zone, Gujarat, West Coast. He will, however, be allowed a rail-cum-road transport shortage of 6% (six per cent) of the despatched quantity. If the quantity delivered is found to be short beyond this limit of 6% (six per cent) the cost of aforesaid short quantity of iodised salt shall be recovered at the prevailing market rate from the bills of the salt importer claimed towards the cost of salt supply.
(emphasis ours) It would thus appear that the agreement allowed only rail-cum-road transport shortage of 6% of the despatched quantity and for any shortage beyond 6% the supplier would be liable to pay at the prevailing market rate of the iodised salt. While there is no dispute that the amount the supplier was required to pay for buying the short supply from the open market is only for the quantity of shortage in excess of 6%, the point that was vigorously adumbrated before the learned arbitrator was that the component of shortage relating to railway transportation being beyond control of the supplier, the same should be exonerated as was done in previous years not only in respect of the respondent-supplier herein but also other suppliers. Reference was also made to the order dated 27.02.1996 passed by the Commissioner to the Government of Tripura in Food & Civil Supplies Department Order No. F.2(35)-FSD/92, which dealt with a situation when M/s. Sabitri Salt Suppliers, the respondent herein, in connection with another supply of iodised salt failed to deliver certain quantity of iodised salt and the short supply was exonerated by that order for the circumstances mentioned therein. By that order the short deliveries due to railway transport was not taken into account and the balance shortage was quantified to 1.67% of the total quantity booked, which being within 6% permissible under the agreement came to be exonerated. The observation made therein about shortage due to railway transportation was that "unless the railways deliver the goods at the destination station, the respondent would not be in a position to effect the delivery to the government". Similar orders were passed by the said authority on 16.03.1996, 17.03.1996 and 15.01.1996, which have been cited to derive strong support for the argument that whatever may be the quantity of short supply during railway transportation, the same cannot be attributable to the supplier as the circumstances leading to short supply cannot be said to be within the control of the supplier. Clause 3 of the agreement was, therefore, assailed by the respondent-supplier before the learned arbitrator on the ground that such Clause was bad in law, as it did not specify any proviso in case of unforeseen incident and in case of the incident beyond the control of the supplier. Though, the question has been discussed by the learned arbitrator in detail, but without giving any decision thereon directly the learned arbitrator accepted the argument that the short supply due to railway transportation was beyond the control of the respondent-supplier and, therefore, considering the earlier exoneration the same deserved to be exonerated. The other argument per contra advanced on behalf of the appellants herein was that in view of the provision of Section 91 of the Indian Evidence Act, it was not open to any authority to accept any excuse against the specific provision relating to short supply and thus the learned arbitrator is estopped from travelling beyond Clause 3 of the said agreement. By pressing the said argument and affirming that Clause 3 of the agreement specifically provides for payment by the supplier for the short supply it was held by the learned arbitrator that the said Clause did not stop him from looking into the matter from different angle. The observation of the learned arbitrator reads as follows:
I have examined the matter from the point of view of the law and agreement and also from the point of view of an ordinary citizen on the reasonableness in the application of the agreement. I affirm that Clause 3 of the agreement is specific and clear-cut but this does not stop me to look into the matter from different angles.
These different angles, which the learned arbitrator adopted, as already noted above, are:
(i) The appellants did not incur any loss for the shortage to PDS;
(ii) PDS did not suffer any set back; and
(iii) In the past such short supply was waived by the State Government;
It was thus decided by the learned arbitrator that for the entire short supply beyond 6% the respondent-supplier was not liable to make any payment in terms of Clause 3 of the agreement between the parties.
7. Aggrieved, the State-appellants herein preferred a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (for short 'Arbitration Act') before the learned District Judge, West Tripura, Agartala in Misc. (Arb.) No. 6 of 1999 impugning the award only on the ground that the learned arbitrator had taken a fly from the four corners of the agreement and instead of confining himself to the relevant provision of the contract chose to deal with extraneous consideration for diluting the provisions in Clause 3 of the agreement. The learned District Judge has taken the same view like the arbitrator that for the short delivery due to railway transportation the respondent-supplier was not responsible and, therefore, such shortage was not to be taken into permissible 6% shortage as per terms of the agreement. The relevant part of the observation of the learned District Judge in the judgment impugned herein reads as follows:
As such if any short delivery take places at destination railway station the claimant-opposite party cannot be held responsible in anyway for that shortage. Of course, the claimant-opposite party shall be held responsible for the shortage occurred thereafter during the road transportation.
Why there should be a separate standard to be adopted with regard to the railway transportation shortage and road transportation shortage has not been clarified either by the learned arbitrator or by the learned District Judge. We fail to understand if shortage due to railway transportation is not within the control of the supplier how the road transportation shortage can be within its control and if both the transportations are beyond the control of the supplier then the provisions in Clause 3 of the agreement is certainly rendered otiose. In para 10 of the impugned judgment, the learned District Judge has taken the same stand as has been taken by the learned arbitrator on the question of exemption of the shortage, for, similar exemption in previous years was allowed and thus the conduct of the State-appellants with regard to previous agreements came into the consideration of both the authorities below for taking a decision that similar exemption in the present case is also called for.
8. From the rival submissions and the pleadings set out thus, the question that has prominently surfaced is whether the learned arbitrator was within the parameters of the agreement in deciding the dispute between the parties. Thus, the powers and jurisdiction of the arbitrator have come into focus prominently in the arguments advanced by learned Counselfor the parties. It was argued that an arbitrator being a judge appointed by the parties the award passed by him is binding upon them and it is not open to any of the parties to bring a challenge to his award lightly. The position of the arbitrator as observed by the Supreme Court in Indu Engineering & Textiles Ltd. v. Delhi Development Authority is that an arbitrator is a judge appointed by the parties and as such the award passed by him is not to be lightly interfered with. Taking a queue from this observation, the Apex Court reiterated the same position vis-a-vis the limited powers of the court in Bhagawati Oxygen Ltd. v. Hindustan Copper Ltd. reported in (2005) 6 SCC 462 : 2005 (1) Arb. LR 608 (SC). The observation made in para 25 of the said judgment reads as follows:
25. This court has considered the provisions of Section 30 of the Act in several cases and has held that the court while exercising the power under Section 30, cannot re-appreciate the evidence or examine correctness of the conclusions arrived at by the arbitrator. The jurisdiction is not appellate in nature and an award passed by an arbitrator cannot be set aside on the ground that it was erroneous. It is not open to the court to interfere with the award merely because in the opinion of the court another view is equally possible. It is only when the court is satisfied that the arbitrator had miscomputed himself or the proceedings or the award had been improperly procured or is "otherwise" invalid that the court may set aside such award.
9. As back as in 1963 in Union of India v. A.L. Rallia Ram , the nature of an arbitration award and its binding effect have been more prominently pronounced in para 13, which is gainfully quoted below:
13. An award being a decision of an arbitrator whether a lawyer or a layman chosen by the parties, and entrusted with power to decide a dispute submitted to him is ordinarily not liable to be challenged on the ground that it is erroneous. The award of the arbitrator is ordinarily final and conclusive, unless a contrary intention is disclosed by the agreement. The award is the decision of a domestic tribunal chosen by the parties, and the civil courts which are entrusted with the power to facilitate arbitration and to effectuate the awards, cannot exercise appellate powers over the decision. Wrong or right the decision is binding, if it be reached fairly after giving adequate opportunity to the parties to place their grievances in the manner provided by the arbitration agreement. But it is now firmly established that an award is bad on the ground of error of law on the face of it, when in the award itself or in a document actually incorporated in it, there is found some legal proposition which is the basis of the award and which is erroneous. An error in law on the face of the award means: "you can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous. It does not mean that if in a narrative a 'reference is made to a contention of one party, that opens the door to setting first what that contention is, and then going to the contract on which the parties' rights depend to see if that contention is sound"; AIR 1923 PC 66, Ref. to. But this rule does not apply where questions of law are specifically referred to the arbitrator for his decision; the award of the arbitrator on those questions is binding upon the parties, for by referring the specific questions the parties desire to have a decision from the arbitrator on those questions rather than from the court, and the court will not, unless it is satisfied that the arbitrator had proceeded illegally interfere with the decision.
10. The respondent-supplier placed strong reliance on the decision of the Supreme Court in U.P. State Electricity Board v. Searsole Chemicals Ltd. , which is also on the same settled legal proposition that when an arbitrator has applied his mind to the pleadings and the evidence adduced, the court has no scope to reappreciate the same for arriving at a different view.
11. While it is not in dispute that if the arbitrator has appreciated the evidence and dealt with the dispute strictly in terms of the agreement between the parties from which the arbitration forum comes into being, the court has no scope to reappreciate and reweigh the evidence for taking a different view and in such cases, the decisions and views of the arbitrator shall always prevail. But the question, which has been posed here, is totally different inasmuch as the award of the arbitrator has been called in question on the ground that he has gone beyond the strict provisions of the agreement. It is submitted by Mr. T.K. Roy, learned Advocate-General appearing for the State-appellants that the arbitrator has not been given any power or jurisdiction to bypass a provision like Clause 3 by taking into consideration extraneous circumstances which cannot be said to be an act of God or force majeure. The aforesaid Clause specifically provides that the permissible shortage for both railway and road transportation together is only 6% and for any extra shortage the supplier would be liable to make payment at the prevailing price of the iodised salt in the open market. The reason is that supply of such salt at subsidized rate through PDS is a public policy and a welfare measure, which cannot be allowed to be frustrated by such shortage which may have the effect of paralyzing the entire distribution system. Because of this reason, a reasonable shortage of 6% due to transportation both by railway and roadway was provided to be the exonerable shortage in the agreement itself and, therefore, having agreed to such a Clause the parties cannot now take a stand that transportation shortage by railway, is not within the control of the supplier and, therefore, deserves to be exonerated.
12. In State of Rajasthan v. Nav Bharat Construction Co. the Apex Court has made the following important observation in para 27 (para 25 of Arb. LR):
27. There can be no dispute to the well-established principle set out in these cases. However, these cases do not detract from the law laid down in Bharat Coking Coal Ltd. case or Continental Construction Co. Ltd. case. An arbitrator cannot go beyond the terms of the contract between the parties. In the guise of doing justice he cannot award contrary to the term of the contract. If he does so he will have misconducted himself. Of course, if an interpretation of a term of the contract is involved then the interpretation of the arbitrator must be accepted unless it is one which could not be reasonably possible. However, where the term of the contract is clear and unambiguous the arbitrator cannot ignore it.
13. From the above observation, the settled legal position needs no reiteration that though the award of the arbitrator cannot be lightly interfered with, at the same time, the arbitrator also cannot go beyond the terms of the contract between the parties. In other words, an arbitrator does not have the unbridled power to do whatever he likes and award on the basis of the considerations which are not within the parameters of the agreement and he cannot do the same even in the guise of doing justice. It is, therefore, to be seen whether the arbitrator in the case on our hand has acted within the parameters of the agreement in making the award, which has found eloquent support in the judgment of the learned District Judge, impugned herein.
14. As we have seen above the arbitrator himself has observed that 'though Clause 3 of the agreement is very clear-cut that in the case of short supply beyond 6% due to railway and road transportation, the supplier is bound to make payment at the prevailing market rate, such provision does not debar him from considering the case from a different angle'. This 'different angle' took him outside the parameters of the agreement, when he observed that (i) by such short supply no loss was caused to the State-appellants; (ii) on previous occasions similar short supply, though in much smaller scale, was exonerated from the rigour of Clause 3; and (iii) the shortage due to railway transportation was beyond the control of the superior. In our view, such extraneous considerations should not have been the basis for making the award by the learned arbitrator as by doing so, he has manifestly exceeded the parameters of the agreement. Whether or not a shortage due to railway transportation is within the control of the respondent-supplier cannot be the subject matter in the said arbitration proceeding as the parties have consciously provided in the agreement a definite Clause to permit only 6% transportation shortage fixing liability upon the supplier to make good any shortfall beyond 6% at prevailing price in the open market. This was presumably done realizing the importance of the agreement, which was entered into in the wake of the public policy of distributing iodised salt at subsidized rate to the people to combat disease, which is caused due to shortage of iodine in the salt. As the said Clause has been consciously provided in the agreement, a plea cannot be taken that in every transportation by railway whatever may be the shortage should stand exonerated because it is beyond the control of the supplier. We are also unable to accept the proposition that if the supply is by road transportation then it is within the control of the supplier, but when it is by railway transportation, it is not within its control. Though the provision is for 6% permissible shortage for both railway and road transportation, the agreement nowhere provides that the iodised salt had to be imported by railway only. It was open to the supplier to bring the entire quantity of iodised salt from Jamnagar to Tripura by road, by rail or by rail and road whatever might be convenient. If the road transportation only was well within his control, not the railway transportation, it could have brought the same from Jamnagar by road only or should not have agreed to Clause 3 regarding recovery of shortage beyond 6%. By carrying the iodised salt by rail and road after agreeing to the provision in Clause 3, the supplier cannot be allowed to take a plea that transportation by railway is entirely outside his control and, therefore, whatever may be the quantity of shortfall due to railway transportation should be exonerated from said recovery clause. In our view, such a plea, if acceptable, would lead to absurdity reducing into shreds the entire agreement and rendering otiose the contractual obligations on the part of the supplier.
15. The other question that has prominently come to our mind is whether for the short supply the supplier is liable to pay the full amount required for buying the same from the open market. The appellants herein have deducted from the bills of the respondent-supplier at the rate of Rs. 350 per quintal. Thus, the total amount deducted was Rs. 24,71,861. The supplier was further directed to deposit Rs. 17,38,548. If the above short quantity could be supplied by the respondent-supplier, the appellants would have been required to pay to the supplier at the tender rate, which was Rs. 145.41 for Agartala in the first agreement and Rs. 154.92 in the second agreement. The question is why the respondent-supplier should be required to pay @ Rs. 350 per quintal as that would amount to getting the entire quantity of such supply free on the part of the appellants. This cannot be, in our view, the intention while incorporating the provision in Clause 3 of the agreement as otherwise it would amount to undue enrichment. In this regard, we have noticed the other provision in Clause 14 of the agreement, which provides as follows:
14. That in the event of "iodised salt importer" failure to import salt or in the event of breach of any terms and conditions of their agreement, the Director, Food and Civil Suppliers, Tripura, Agartala shall have the right to import salt through any other sources as may be decided by him and the extra cost involved in such arrangement shall be borne by the 'iodised salt importer' hereinbefore mentioned.
(emphasis supplied) The words 'extra cost' are very much significant for taking a correct view in the controversy centering round Clause 3 of the said agreement. If Clause 3 is given a meaningful construction in consonance with Clause 14, the irresistible conclusion, in our view, would be that the cost of short quantity of iodised salt appearing in Clause 3 would actually mean 'extra cost' of procuring short quantity of iodised salt. In other words, the 'extra cost' in buying the short ' quantity of iodised salt from the open market is to be worked out by deducting from Rs. 350 (being the prevailing market rate per quintal), the accepted tender rate, which was to be paid to the supplier by the appellants if the supply was actually made. As per terms of the agreement, as has been seen above, the tender rate per quintal is Rs. 145.41 in the agreement dated 26.02.1996 and Rs. 154.92 in agreement dated 22.05.1996 for Agartala Central Godown. Thus, deducting the amount of Rs. 145.41 and Rs. 154.92, as the case may be, from Rs. 350 the 'extra cost', which was required for buying the short quantity of iodised salt, should have been assessed and that amount only could be fastened upon the respondent-supplier in terms of Clause 3 read with Clause 14 of the agreement. Thus, in our view, the decision of the State-appellants requiring the respondent-supplier to pay the full cost of the short quantity of iodised salt at the rate of Rs. 350 per quintal being the prevailing rate in the open market is not sustainable in law for the reasons aforementioned.
16. Having said so, we are of the considered view that by taking a decision that any shortfall due to railway transportation has to be exonerated the arbitrator has gone beyond the parameters of the agreement and for that reason alone the award is liable to be set aside, which we hereby do.
17. As regards the other appeal in the form of cross-objection filed by the respondent-supplier claiming interest @ 18% per annum, the submission advanced is that it is not within the jurisdiction of the learned arbitrator to refuse the interest as the same is contrary to the provision of the Arbitration Act. Regarding the claim of interest, the learned arbitrator held thus:
For this or that reason I give no award for interest as claimed by the claimant.
18. The relevant provision regarding interest appearing in Clause (b) of Sub-section (7) of Section 31 of the Arbitration Act reads as follows:
(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment.
The words "unless the award otherwise directs" are significant inasmuch as the arbitrator has specifically and consciously directed that there shall be no interest on the award, which is in fact an exemption only from paying the prevailing market value of the short quantity of the iodised salt.
19. The decision, which has been referred to on the question of interest is in Secretary, Irrigation Department, Government of Orissa v. G.C. Roy . In that case, the question, which came to be decided, was in respect of interest pendente lite in which it has been held that an arbitrator can award such interest having regard to the facts and circumstances of the case. Such a question of interest pendente lite is not before us and, therefore, the said decision has no relevance in the case on hand. That apart, we have already held above that the State-appellants were entitled to recover from the respondent-supplier the 'extra cost', which was involved in procuring the short quantity of iodised salt from the open market and in that view of the matter, we find no reason to take a different view from the learned arbitrator about the payment of interest in the facts and circumstances of the case narrated above. It would further be seen that by the two agreements, the supplier was required to supply 10 B.G. rakes of iodised salt (18,000 MT), but he booked only 7 B.G. rakes (13,900 MT) and out of 7 B.G. rakes he could not supply 2000 MT iodised salt. Thus, there was 4,100 MT plus 2,000 MT = 6,100 MT, which is the total shortage for which as per provision of Clause 14 of the agreement, the State-appellants are entitled to recover 'extra cost' from the respondent-supplier if the same is to be brought or procured through other sources. Thus, it cannot be said that the entire quantity of short supply is attributable to the railway transportation only as initially there was a shortage of 4,100 MT at the booking stage. Considering the entire conduct of the respondent-supplier, we find no reason to interfere with the decision of the learned arbitrator as affirmed by the learned District Judge about refusal to award any interest.
20. For the reasons and discussions made above, the appeal filed by the State-appellants is allowed to the above extent. The impugned judgment of the learned District Judge and the award of the learned arbitrator are hereby set aside except the part relating to interest.; The cross-objection filed by the respondent-supplier is also liable to be dismissed, which we hereby do. In accordance with the decision of ours as recorded above, the State-appellants shall work out (i) actual short supply beyond 6%; (ii) the liability of the respondent-supplier deducting from the market value thereof @ Rs. 350 per quintal the amount calculated at the tender rate for supply at Agartala Central Godown (Rs. 145.41 and Rs. 154.92 of the first and the second agreement respectively) which the State-appellants would have paid to the supplier had the same been supplied; and, thereafter, make (i) adjustment of the amount already deducted from the bills of the supplier; (ii) payment to or recover from the latter, if found necessary after such adjustment. This exercise shall be completed within a period of three months from the date of passing of this judgment.