UNION OF INDIA Vs. COL LS NO MURTHY

JUDGEMENT

(1.) This appeal is preferred under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, 'the Act') against the order dated 5-11 -2004 in O.P.No. 1457 of 2001 on the file of the Court of Ill-Addl. Chief Judge, City Civil Court, Hyderabad, whereunderthe application made by the appellant herein underSection 34 of the Act to set aside the arbitral award dated 6-6-2001 was dismissed.

(2.) The facts, in brief, may be noted as under: The second respondent herein was awarded the contract for supply of fresh fruits at supply depots at Tirumalgherry, Hakimpet and ASC Golconda for the period from 1-10-1999 to 30-9-2000 in pursuance of the tenders invited by the appellant. As per the agreement dated 6-8-1999 executed between the parties, the second respondent was required to make the supply of fresh fruits in terms of the specifications and conditions annexed to the agreement. It is not in dispute that in pursuance of the said agreement though the supply of fruits was commenced with effect from' 1-10-1999, the 2nd respondent stopped the supply from 6-6-2000 on the ground that nonlocal variety of fruits demanded by the appellant were not available. Consequently, the appellant had to resort to local purchase of fruits from 6-6-2000 to 15-8-2000 incurring a sum of Rs.4,14,582-07 ps. Thereafter, the contract in favourof the second respondent was rescinded vide notice dated 29-6-2000 and a short term agreement was executed in favour of a third party forthe supply of fresh fruitsforthe period from 16-8-2000 to 30-9-2000. For the said purpose, it was claimed that the appellant incurred a sum of Rs.1,74,548-65 ps. towards consideration under the shortterm agreement.

(3.) Aggrieved by the action of the appellant in terminating the contract and forfeiting the security deposits worth Rs.1.01 lakhs and also withholding the payment for the fruits supplied by the 2nd respondent upto 5-6-2000, the 2nd respondent invoked the arbitration clause underConditionNo.23 of the agreement and sought for reference of the dispute to a sole Arbitrator. Accordingly, a sole Arbitrator (1st respondent herein) was appointed and the 2nd respondent filed his statement of claim to which the appellant filed its statement of defence. Though the appellant did not make any independent claim before the Arbitrator, it appears that a counter-claim was made by letter dated 13-12-2000 for a sum of Rs.5,89,130-72 ps. contending that the contractor/2nd respondent herein was liable to pay the additional expenditure incurred by the Appellant in meeting the requirement of fruits during the remaining contract period.