UNION OF INDIA Vs. PANIPAT FOODS LIMITED

JUDGEMENT

(1.) M/s. Panipat Food Ltd., the respondent herein (hereinafter referred to as the "plaintiff") filed Suit No. 1373/1983 for recovery of a sum of Rs.15,25,698.34p. against the Union of India/appellant herein (hereafter referred to as the "defendant"). This suit was filed on the ground that the plaintiff had supplied certain material to the defendant from time to time and in respect of five such supplies, for which payment bills were also issued for a total sum of Rs.9,61,763.18p., payments were not made. For overdue payment, interest in the sum of Rs.5,63,935.16p. was also claimed and in this manner total decree of Rs.15,25,698.34p. was sought. The defendant did not dispute that the aforesaid supplies were made to it by the plaintiff. However, the defence of the defendant was that it had the right to withhold the said amount as in respect of certain other supplies made by the plaintiff to the defendant, the same were found to be defective and the defendant had rejected those materials. It was also mentioned that after the rejection of those materials, the defendant had made purchases at the risk and cost of the plaintiff. Referring to and relying upon clauses 18 and 18A of the terms of General Conditions of Contract Form No. DGSandD 68 (Revised), the defendant stated that it had lien over the amounts in question as the defendant was entitled to its claims in respect of the earlier supplies rejected by it. In respect of those supplies which were rejected by the defendant, dispute arose and the matter was referred to arbitration.

(2.) The learned Single Judge, on the basis of pleadings of the parties, framed the following issues :-

(3.) It is clear from the above that it Issue No.1 which is the bone of contention, namely, whether the defendant has the right to withhold the amount in suit on the basis of clauses 18 and 18A of the General Conditions of Contract. After analyzing these two clauses, the learned Single Judge returned his findings on Issue No.1 holding in favour of the defendant. At the same time, it was found that to the extent of Rs.1,44,045/- the amount was payable immediately. As there was no dispute that otherwise supplies in question were made by the plaintiff to the defendant and the amount was payable by the defendant to the plaintiff, the learned Single Judge passed decree in the sum of Rs.15,25,698.34p. While passing this decree, the learned Single Judge, under Issue No.3 relating to Relief, directed that the decree shall be executable immediately to the tune of Rs.1,44,045/- as well as interest amount of Rs.5,63,935.16p. In respect of the remaining amount, it was directed that the decree shall be executable only after the remaining claims of the defendant are determined by means of the award(s) to be made and published by the arbitrator(s). Challenging the aforesaid judgment and decree dated 4.6.1986, the present appeal is preferred by the Union of India.