KRITHIKA AGRO FARM CHEMICAL AND ENGINEERING INDUSTRIES PVT. LTD. Vs. COUNCIL OF SCIENTIFIC AND INDUSTRIAL RESEARCH

JUDGEMENT

(1.) THIS petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenges the award dated 17.6.2008 of the sole Arbitrator HMJ R.C. Lahoti (retired Chief Justice of India). The basic disputes between the parties pertain to a contract entered into between them whereby the respondent was to supply certain technology to the petitioner for setting up a Palm Oil Mill. Facts are however not that simple because various other parties are necessarily intertwined with this contractual transaction. These parties are the Government of India through the concerned Ministry of Agriculture, the State of Orissa and the consultant appointed by the respondent for the project in question.

(2.) THE facts in brief are that on account of shortage of availability of edible oil in India, the Government of India set up a task force for increasing the production of the same. In furtherance of its objects and for their implementation, the task force required the respondent to develop the requisite technology for producing Palm Oil. The respondent did develop the necessary technology. However, the bringing of an entrepreneur at the initial stage for setting up of Palm Oil Manufacturing Mill, was not easy inter alia because there wasn't availability of sufficient raw -material in the form of Fresh Fruit Bunches, besides the high cost of the project without there being guarantee of adequate profits. Such being the disincentives for producers entering the field, therefore, the Government of India agreed to subsidize the projects of setting up of the Palm Oil Mills. Taking up partnership with the State Governments, the Central Government came forward to finance part of the project by supplying plant and machinery and so on. Pursuant to this policy, it was the State Government which was to choose a beneficiary and, therefore, send the name of the beneficiary to the Central Government for approval. The recommendation of the State Government was routinely accepted by the Central Government because after all the project was to come up in the concerned State. In this case, the objector was chosen as the beneficiary for transfer of technology by the respondent for setting up of the Palm Oil Mill. The contract in question is dated 20.12.2001 for technology transfer by licencing, engineering, consultancy and project implementation. For the purpose of implementation of the project, the respondent appointed M/s. A.L. Jacob and sons as the Project Engineering Company for the purpose of setting up of the Palm Oil Mill and through whom the technology was to be transferred by the respondent to the objector. Right from 2001 when the contract was entered into and five years or so later till 2005, the objector could not acquire and make available the necessary land for setting up of the project. Firstly, only 0.39 acres of land was acquired out of 5 acres and though later on it agreed to acquire 100 acres however the same was also not done. Civil Construction work was also not completed till 2005. Ultimately, the State Government of Orissa with the necessary information to the Central Government informed the objector that its beneficiary status was withdrawn. I may note that the Central Government agreed with the same as no contra position emerges from the record as would otherwise have been filed by the objector. Consequently, the State of Orissa issued an advertisement in the newspaper for inviting another person as a beneficiary for setting up of the project. This person, with whom a fresh contract was entered into, in fact completed the project in a short period of time. Differences arose between the parties whereby the objector accused the respondent herein for wrongful withdrawal of the beneficiary status and in fact contended that the beneficiary status cannot be said to have been withdrawn at all. It was argued that the respondent was guilty of breach of contract and specific performance of contract dated 20.12.2001 was claimed with the alternate prayer for damages to the tune of Rs. 18 crores. By the award, the learned arbitrator has dismissed all the claims of the objector. The Arbitrator framed issues, considered both the documentary evidence, as also the affidavits by way of evidence, (including the cross -examination of witnesses) and after hearing the arguments of the parties passed the impugned award.

(3.) THE arbitrators had framed the following issues.