Delhi High Court
Global Agri System Pvt. Ltd. vs Fresh And Healthy Enterprises Ltd. on 16 September, 2011
Author: Manmohan Singh
Bench: Manmohan Singh
* THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 16.09.2011
OMP No. 556 of 2011
Global Agri System Pvt. Ltd. ......Petitioner
Through: Mr. Sansdeep Sethi, Sr. Adv. with
Mr. Anand Varma, and
Mr. Yakshay Chheda, Advs.
Versus
Fresh and Healthy Enterprises Ltd. ......Respondent
Through: Mr. M.M. Kalra, Adv. with
Mr. Kunal Kalra, Adv.
CORAM:-
HON'BLE MR JUSTICE MANMOHAN SINGH
1. Whether Reporters of local papers may be allowed to
see the judgment ?
2. To be referred to the Reporter or not ?
3. Whether the judgment should be reported in Digest ?
MANMOHAN SINGH, J
1. This petition has been filed by the petitioner under section
9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to
as "the Act") seeking directions from this court to protect the legal
rights of the petitioner arising from an agreement for cold storage
entered into between the petitioner and the respondent.
O.M.P. No. 556/2011 Page 1 of 10
2. The brief facts of the case are that in March 2011, the
petitioner and the respondent entered into an agreement for storage of
approximately 3500 MT of carrots form March to September 2011, in
the respondent's cold storage works at Rai, Haryana. According to the
petitioner, the said agreement provided that the respondent shall keep
the cold store under close supervision and maintain the temperature at
1 degree Celsius. Further, the said agreement provided that in case of
any loss suffered by the petitioner due to failure in maintaining the cold
storage or negligence of the guard, the respondent shall be accountable
and shall pay damages to the petitioner for the same to compensate the
loss suffered by it. As per the petitioner, everything contained in the
said agreement had been decided between the parties and they were at
consensus ad idem with respect to all the stipulations in the agreement,
except regarding the payment of charges and it was decided that this
issue would be finalized at a later stage after further discussion.
3. It is stated by the petitioner that by an email dated
18.02.2011, the respondent agreed to restriction of liability to maintain
the protocols which had been jointly agreed upon by the parties and
therefore, even though the agreement was not formally signed but, it
O.M.P. No. 556/2011 Page 2 of 10
was agreed to by the respondent through the said email and also by its
conduct. On 18.03.2011, the petitioner's Chairman sent an email to the
respondent stressing upon the high standard of care that was needed to
be exercised by the respondent and the reply to the said email was sent
by the respondent to the petitioner on the same day assuring him about
the their precautions and standards of care.
4. Further, it is stated by the petitioner that the petitioner
supplied best quality carrot to the respondent's cold storage which was
checked and verified by the respondent itself. All the consignments of
carrots were accepted and the receipts were issued by the respondent
to the petitioner for the quantity and quality without any adverse
comments except only in one case where it was observed that the
carrots were soft and the same was mentioned in the email but, all the
other consignments were accepted without demur.
5. The grievance of the petitioner is that within 8 days of
loading its last consignment, the petitioner received a letter dated
27.04.2011 form the respondent wherein it was stated by the
respondent, that upon their recent check of the material, they noticed
rotting in some chambers and asked the petitioner to market those
O.M.P. No. 556/2011 Page 3 of 10
products at the earliest. Respondent also enclosed a status report with
the said letter which indicated that carrots in 14 out of 33 chambers
had rotten over the period of storage. Thereafter, the respondent raised
a bill dated 28.04.2011 of Rs.22,14,581/- as "cooling charges' and
"labour charges" for the months of March and April 2011. As the
carrots were to be immediately disposed of, therefore, by its emails
dated 02.05.2011 and 03.05.2011, the petitioner requested the
respondent to provide labour and forklifts to withdraw the carrots
from its cold storage but the respondent failed to do so.
6. Thereafter, the petitioner's Chairman sent an email dated
05.05.2011 to the respondent inform it that the carrots in 3 chambers
had remained preserved and suggested certain steps to ensure that the
remaining carrots at the respondents cold storage were stored in
accordance with the agreement. But, as per the petitioner, despite
repeated requests, the respondent failed to comply with its obligations
under the agreement. On 07.06.2011, 49125 bags of carrots had been
withdrawn by the petitioner from the cold storage and out of these
bags 28728 bags were partially damaged thus, were sent for washing
and recovery and 20397 bags were completely destroyed and had to be
O.M.P. No. 556/2011 Page 4 of 10
dumped.
7. On 08.06.2011 the petitioner received an email from the
respondent wherein the respondent disowned all the responsibility for
spoiling of the carrots. The relevant extract of the said email reads as
follows:
"...FHEL provide cold storage conditions as per the
protocols required by the client. We do not check the
quality of incoming material and hence can not be held
responsible for the quality after storage.. " and that.. "the
quality of carrots could have deteriorated due to number
of reasons which are not in our control or jurisdiction..."
8. With effect from 08.06.2011, the petitioner came to know
that the respondent did not allow the petitioner's employees from any
access in its store premises and asked them to stop all operations.
Thereafter the respondent sent a bill of Rs.53,17,006/- vide its email
dated 09.06.2011 for the period from March to June. Some
correspondence was also exchanged between the parties but as no
solution could be arrived at between them as the cold storage
agreement between the petitioner and the respondent contains an
arbitration clause, therefore, the petitioner proposed that the disputes
be referred to the Sole Arbitrator for arbitration and vide its emails and
letter dated 18.07.2011 and 21.07.2011 respectively the respondent
O.M.P. No. 556/2011 Page 5 of 10
agreed to arbitration. Further, it is stated that by letter dated
22.07.2011, the petitioner confirmed the acceptance of Mr. Bijay
Kumar, IAS, MD, NHB as the Sole Arbitrator to adjudicate upon the
disputes. But, by its letter dated 25.07.2011, the respondent informed
the petitioner that unless the petitioner gave it a bank guarantee for the
dues, the respondent would not agree for the sale proceeds to be kept
in a separate account. However, the, respondent came to know that in
fact the respondent tried to sell the carrots in the market through an
auction and had even published an auction notice to that effect on its
website for approximately 1600 MT English carrots.
9. Being aggrieved by such acts of the respondent, the
petitioner filed the instant petition.
10. In the reply filed on behalf of the respondent to his petition
it stated that there was no agreement between the parties for storing
the carrots as the agreement could not be signed due to difference of
opinion on various clauses in the draft agreement and regarding that
the respondent had even sent an email dated 18.02.2011 to the
petitioner. In response to said email, the petitioner had sent an email
dated 21.02.2011 informing the respondent that certain points raised
O.M.P. No. 556/2011 Page 6 of 10
by the respondent by its email are not acceptable to them. Thus, it
cannot be said that there was any valid agreement between the parties.
11. Further, it is stated that a meeting had taken place between
the parties wherein it was agreed that an Arbitrator would be
appointed to adjudicate upon the disputes and it was also agreed that
the petitioner and the respondent would jointly sell the carrots and the
sale proceeds would be kept with the respondent. But, vide its letter
dated 16.07.2011 the petitioner backed out from the point of sale
proceeds being kept with the respondent. Further, the petitioner has
concealed the fact that the respondent has not been paid its dues
amounting to Rs.69,41,000/-(public money) despite issuing various
reminders. It is also stated by the respondent that as the goods are of
perishable nature, therefore, it is in the best interest of both the parties
that the carrots be disposed of in an auction and the money so
collected be kept with the respondent against its dues.
12. The matter was adjourned from time to time so that both
parties may jointly sell the carrots and the sale proceeds could be
deposited with the Registrar General of this Court in fixed deposit
scheme till the disposal of arbitration proceedings. However, the said
O.M.P. No. 556/2011 Page 7 of 10
things could not be materialized. It is submitted by the petitioner that
as per expert opinion taken by the petitioner after giving the sample
of the respondent's cold storage, now the value of the goods is not
more than Rs.10 lac. On the other side, it appears that the respondent
is not inclined to take its responsibility to sell the carrot so that if any
more value be received.
13. On the last date, learned counsel for the respondent has
suggested that since the respondent is not an expert in this line,
therefore, the petitioner may be allowed to dispose of the goods at
their level but, the petitioner should deposit the entire outstanding
amount against the bill and both the parties may raise their respective
claims before the Arbitrator and till the award is passed, the amount
deposit by the petitioner be kept in the said deposit.
14. Mr. Sandeep Sethi, learned Senior Counsel, has partly
agreed with the suggestion of the respondent to the effect that the
total proceeds of selling the carrot be deposited with the Registrar
General of this Court till the time award is passed by the Arbitrator but
he says that the petitioner is not prepared to deposit the alleged
outstanding amount claimed by the respondent. On the other hand,
O.M.P. No. 556/2011 Page 8 of 10
Mr. Sethi says, that it is the petitioner who has suffered losses which
are more than one crore of rupees due to fault of the respondent and
his clients would be raising the said claim before the arbitration
proceedings, thus the suggestion of the respondent cannot be accepted.
Even otherwise, as the respondent has not filed any petition under
Section 9 against the petitioner, no order can be passed as per the
suggestion made in the present petition.
15. After having considered the rival submissions of the parties
and the material placed on record, the petition is disposed of with the
following directions :
(a) That the respondent shall hand over the carrots lying in the cold
storage to the petitioner after issuing the reasonable advance
notice by the petitioner for the purpose of removing the said
materials. The respondent or its authorized representative is
allowed to join the petitioner at the time of sale if it feels
necessary.
(b) After the sale of carrots the entire proceeds be deposited by the
petitioner with Registrar General of this court within one week
from the date of sale. The deposited amount shall be invested
O.M.P. No. 556/2011 Page 9 of 10
by the Registry in FDR initially for a period of one year and
the same may be renewed from time to time till the award is
passed by the sole Arbitrator. The petitioner shall file an
affidavit for the said compliance. The entire process should be
completed within 10 days from today.
(c) Both the parties are allowed to raise their respective
claims/counter claim before the Arbitrator. The request of the
respondent to deposit the entire outstanding amount as charges
for storing the carrots would be considered by the sole
Arbitrator as per its own merit on filing the requisite petition.
16. The petition stands disposed of. No cost.
MANMOHAN SINGH, J.
SEPTEMBER 16, 2011 O.M.P. No. 556/2011 Page 10 of 10