UNION OF INDIA Vs. HAKAM CHAND AND CO

JUDGEMENT

(1.) This petition under Section 34 of the Arbitration and Conciliation Act, 1996 ( hereinafter referred to as the "Act" only) raises objections against the Award dated 29.5.2000 and prays that the Award may be set aside. Liquidated damages in the sum of Rs. 38,80,000/- alongwith interest @ 12 per cent per annum are claimed in favour of the objector- petitioner. The respondent-claimant has filed a reply to the petition controverting the objections.

(2.) The facts leading to the filing of the objection petition, briefly stated, are that the petitioner, Delhi Milk Scheme, had issued a tender inquiry for the supply of milk vide tender document dated 15.12.1993. The respondent/ supplier made its offer which was accepted by the petitioner vide its letter dated 31.12.1993. In terms of the agreement between the parties, the respondent was to supply agreed quantity of milk to the petitioner from 1.1.1994 to 31.12.1994 on specified rates. It was also stipulated that the contract could be extended by the petitioner for a period of 90 days. A penalty @ Rs.2 per kg.was also envisaged for short supply of the milk. According to the objector/petitioner there were short supplies of milk during subsistence of agreement and as such liquidated damages in the sum of Rs. 18,72,738/- were deducted from the respondent's payments. It was also averred by the petitioner that in terms of the contract between the parties the General Manager of the petitioner extended the contract for 90 days but the respondent failed to supply milk and as such liquidated damages in the sum of Rs. 30,00,000/ were due to the petitioner from the respondent on account of non supply of milk during the extended period.

(3.) The petitioner-objector pleads that the arbitrator did not uphold the petitioner's claim in regard to the damages on the basis of aforesaid penalties and did not appreciate that the counter claim of the petitioner in the sum of Rs. 38,80,000/- was to be determined by the General Manager of the petitioner only and as such could not be questioned before the Arbitrator. It was also stated that as per the contract between the parties the dispute regarding the extension of contract could not be referred to Arbitrator and the Arbitrator, therefore, had travelled beyond the scope of reference. The respondent-claimant filed a reply to the objection petition contending that the objections raised by the petitioner were beyond the scope and ambit of Section 34 of the Act and as such the same were liable to be rejected.It was submitted that the learned Arbitrator had given a reasoned Award after considering the facts and circumstances of the case and as such this Court should not interfere with the Award. It was pointed out that the plea of the extension of the contract was rightly considered by the Arbitrator as the counter claim filed by the petitioner could not be decided without going into this question.