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Bright Food Industries Vs. New Delhi Municipal Committee and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration;Contract
CourtDelhi High Court
Decided On
Case NumberSuit No. 1175 of 1993
Judge
Reported in1995(34)DRJ543
ActsArbitration Act, 1940 - Sections 20; Punjab Municipal Act, 1911 - Sections 47
AppellantBright Food Industries
RespondentNew Delhi Municipal Committee and anr.
Advocates: G.D. Chopra and; B.B. Gupta, Advs
Excerpt:
.....referred to arbitration.; punjab municipal act 1911 - section 47 & 238-contract on behalf of municipal committee-when the administrator is appointed superseding the municipality he is competent to enter into a contract on its behalf-signing of contract by the members of the committee is not necessary. - - bright food industries have filed the present petition under section 20 of the arbitration act to refer the dispute between the plaintiff as well as the defendant as per the agreement of arbitration between the two. thus, the plaintiff himself has not supplied good and hygienic food articles and because of his conduct the contract in question could not be continued. bright good industries, south of g. bright good industries. and documents produced by the plaintiff clearly show..........the said document reads: 'this agreement is made this .2nd day of september 1992 between new delhi municipal committee, palika kendra, parliament street, new delhi (hereinafter called the first party) and m/s.bright good industries, south of g.t. road, industrial area, ghaziabad (hereinafter called the second party).' thereafter the said document dated 2.9.1992 gives the details of the agreement between the parties and shows that the same was executed by the administrator for n.d.m.c. and m/s.bright good industries. (7) learned counsel for the defendant urged before me that in view of the provisions of section 47 of the punjab municipal act, 1911 every contract made on behalf of the municipal committee must be signed by two members, one of whom must be president or vice- president and.....
Judgment:

S.D. Pandit, J.

(1) M/S.BRIGHT Food Industries have filed the present petition under Section 20 of the Arbitration Act to refer the dispute between the plaintiff as well as the defendant as per the agreement of arbitration between the two.

(2) The Administrator of the defendant issued a notice inviting tenders for supply of food articles to be distributed amongst the primary school children. Plaintiff had submitted his tender on 5.6.92 for supply of fried soya nuts (sweetish). The tender submitted by the plaintiff was accepted and he was informed accordingly by letter dated 25.8.92 and, thereafter, an agreement was also executed between the parties. As per the terms of the Agreement he had deposited Rs.20,000.00 and then he supplied 32,000 packets. Though the said packets were tested and found proper the defendants subsequently alleged that the articles supplied by him were adulterated and they refused to accept subsequent supplies. He is also not paid for the 32,000 packets accepted from him.

(3) The plaintiff thereafter issued a notice calling upon the defendants on 29.1.1993 to fulfill their part of the contract but no steps were taken. He ultimately issued a notice for referring the disputes between the parties to the arbitrator on 3.3.1993 but as the defendants had not appointed any arbitrator the plaintiff has come before this court.

(4) The claim of the plaintiff is resisted by the defendant by filing written statement. It is contended by the defendant that there was no binding valid contract between the plaintiff and the defendant. The agreement was also not conclusive. As the alleged agreement or contract is not properly and validly executed, plaintiff is not entitled to enforce the same. It is further contended that on account of the consumption of the fried soya nuts (sweetish) children in the school felt giddiness and started vomitting and 49 children were admitted to the hospital. Thus, the plaintiff himself has not supplied good and hygienic food articles and because of his conduct the contract in question could not be continued. Thus, plaintiff himself has committed breach of contract. thereforee, he is not entitled to get any relief. thereforee, in these circumstances, the defendant contends that the plaintiffs suit be dismissed with costs.

(5) It is the main contention of the defendant that there is no valid and legal contract between the plaintiff and the defendant. Plaintiff has produced on record letter * dated 25.8.92 issued by the officer of the defendant. The said letters bears the subject :

'SUPPLY of fried Soya Nuts (sweetish) without skim to Ndmc under Mid-day Meal Scheme No.92-93.' Then the first two paragraphs of the said letter read as under:

'REFERENCE to your tender dt. 5.6.92 for the supply of Fried Soya nuts (Sweetish) without skin to Ndmc during 1992-93, it is to inform you that your tender has been accepted by the Ndmc vide Administrator's order dated 22.8.1992. The rate of Rs.0.74p. is inclusive of all taxes and transport citation charges. The supplies will be made presently at Mid Day Meal Centre, N.P. Secondary School, Havelock Square, New Delhi. Approximately 32000 packets of Fried Soya nuts (Sweetish) without skin,each packet of 25gms. in weight may be supplied to Ndmc w.e.f. 1.9.1992 at its store in printed transparent sealed poly pack per day.'

(6) Plaintiff has also produced the agreement which took place between the plaintiff and the defendnt. The said agreement is produced by the plaintiff Along with his affidavit on 13.12.1994. .The heading of the said document reads: 'This Agreement is made this .2nd day of September 1992 between New Delhi Municipal Committee, Palika Kendra, Parliament Street, New Delhi (hereinafter called the First Party) and M/s.Bright Good Industries, South of G.T. Road, Industrial Area, Ghaziabad (hereinafter called the Second Party).' Thereafter the said document dated 2.9.1992 gives the details of the agreement between the parties and shows that the same was executed by the Administrator for N.D.M.C. and M/s.Bright Good Industries.

(7) Learned counsel for the defendant urged before me that in view of the provisions of Section 47 of the Punjab Municipal Act, 1911 every contract made on behalf of the Municipal Committee must be signed by two members, one of whom must be President or Vice- President and the same must be counter signed by the Secretary. thereforee, as the contract in question is not signed by two members of the Municipal Committee the same is not valid and legal. In support of this contention he has cited before me the cases of H.S. Rikhi Vs . New Delhi Municipal Committee : [1962]3SCR604 and Hindustan Housing Factory v. N.D.M.C. [reported as Note No.97 in 1993 R.L.R. 104. But both these cases are not applicable to the facts of the case before me. From the pleadings of the plaintiff it would be quite clear that the tenders were invited by the N.D.M.C. and documents produced by the plaintiff clearly show that those tenders were invited by the Administrator for N.D.M.C. The Administrator for N.D.M.C. comes into picture when an action is taken against the Municipal Committee under Section 238 and when the Municipal Committee is not actually functioning. It is very pertinent to note that defendant has nowhere pleaded in its written statement that in August 1992 the Municipal Committee was functioning and as the Agreement between the parties is not signed by two members of the Municipal Committee the Agreement in question is not binding. When an Administrator is appointed in the absence of the Municipal Committee the Administrator is entitled to exercise all the powers of the Municipal Committee. Even if the Municipal law provides that a particular power is to be exercised by the Municipal Committee on account of resolution passed by a particular majority the Administrator, when he is appointed for a Municipal Committee, can exercise the powers of the Municipal Committee and his action would be valid and legal. (See; state of Haryana Vs . Mohan Lal : [1970]3SCR202 .

(8) thereforee, in the instant case as the Administrator was functioning at the time when the contract in question was entered into, the contract executed by the Administrator on behalf of the defendant Municipal Corporation is valid and legal and the same is binding on the defendant. I am, thereforee, unable to accept the contention of the defendant that there is no valid and legal contract between the parties.

(9) It is an admitted fact that plaintiff had supplied 32000 packets of the food article which he was to supply as per the agreement between the parties. It is also not in dispute that after the supply of the first 32000 packets the defendant Municipal committee had refused to accept the remaining food articles. It is the contention of the Municipal Committee that the 32000 packets supplied by him were not of the standard prescribed and that they were unhygienic and because of the said unhygienic supply they had not accepted further goods from him. Thus, it is an admitted fact that there is a breach of contract. The dispute between the parties is as to who is responsible foi the same.

(10) It is also not in dispute that the plaintiff has not paid for the supply of 32000 packets to the defendant. It is also an admitted fact that he had deposited Rs.20,000.00 with the defendant but the defendant has not returned the said amount. thereforee, in these circumstances, there are disputes between the parties which deserve to be decided.

(11) Clause 16 of the Agreement between the parties dated 2.9.1992 makes provision for arbitration for solving all the disputes and differences between the parties arising out of the contract. Thus, in view of this provision in the Agreement between the parties, the present petition of the petitioner will have. to be allowed and the Arbitrator will have to be appointed in this case.

(12) The Suit is allowed. Shri Munni Lal Jain, Retired District Judge and a practicing Advocate of this Court is appointed as the Arbitrator to decide the following disputes between the parties:

1. Whether the defendant has committed breach of contract entered into between the petitioner and the defendant on 2.9.92?

2.Whether the contract in question could not be fulfillled due to the acts of the plaintiff?

3.Whether on account of the said breach of contract plaintiff has suffered any damages, and if yes, to what amount he is entitled by way of damages?

4.Whether the plaintiff is entitled to get the price of 32,000 packets of soya nuts (sweetish) supplied by him to the defendant?

5.Whether the plaintiff is entitled to get refund of the amount of Rs.20,000.00 deposited by him with the defendant? and.

6.Whether the plaintiff is entitled to get interest on any amount found due to him and from what date.

(13) The Arbitrator's fee is fixed at Rs.l0,000.00 and the plaintiff is to initially pay the Arbitrator's fee. While passing the Award the Arbitrator is to decide the question of cost of arbitration, including the payment of Arbitrator's fee.


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