IN THE HIGH COURT AT CALCUTTA ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL SIDE BEFORE: THE HON’BLE JUSTICE SOUMEN SEN A.P. No.167 of 2005 FOOD CORPORATION OF INDIA VS. GOPAL CHANDRA MUKHERJEE For the Petitioners : Mr. S.P. Majumdar, Sr. Adv., Mr. Arunabha Sengupta Adv., For the Respondents : Mr. S.N. Mookherjee, Sr. Adv., Mr. Saunak Mitra, Adv., Ms. Shreeja Singh, Adv. Heard On :
28. 07.2016, 04.08.2016, 11.08.2016, 18.08.2016, 01.09.2016, 08.09.2016. Judgment On :
14. h September, 2016 Soumen Sen, J.
:- This is an application for setting aside of an award dated 23rd February, 2005. The respondent was the claimant. The arbitration proceeding arose out of a reference made on the basis of an order dated 13th March, 2003 passed in AP No.177 of 2001 in an application filed by the respondent under Section 11(6) of the Arbitration and Conciliation Act, 1996. The arbitrator entered reference on 31st May, 2003. In the arbitration proceeding, the petitioner has made a claim for a sum of Rs.1,30,63,295/- by way of damages or compensation on account of wrongful withholding of the claimant’s godown for the period from 1st June,1997 to 30th November, 2000 and a sum of Rs.2,87,960/- by way of damages or compensation on account of expenses incurred by the claimant as ex-agent for running the establishment of the godown during the said period. The respondent/claimant was appointed as agent of the petitioner under an agreement dated 2nd June, 1975 for the purpose of storing food grains of FCI up to a capacity of 12000 M.T. on the terms and conditions contained in the said agreement. The claimant in terms of the agreement had taken godowns on rent at 493/B, G.T. Road, Shibpur, Howrah in the premises of Bengal Jute Mill measuring an area of 73000 Sq.ft. with high ceiling, adequate for storage of 12000 M.T. of food grains at a time. In pursuance of the said agreement, the claimant deposited with the respondent a sum of Rs.10,000/- as security deposit. The claimant was required to handle and receive only such consignments and number of bags of food grains as were allotted by the petitioner. The claimant was not authorized to store any food grain until and unless allotment was made by the respondent in favour of the plaintiff. In pursuance of the agreement diverse quantities of bags of food grains of various sizes were allotted to the claimant from time to time and upon receipt of allotment or authorization from FCI, the claimant removed such food grains from the Railway siding and stored the same at the godown for subsequent delivery to the persons authorized and nominated by the FCI after receiving dispatch instructions issued by the FCI to the claimant. It was alleged that on 10th October, 1988, a quantity of only 1900 M.T. of food grains was lying and stored at the godown, and the major portion of the godown remained unutilized. By reason of non-allotment of food grains by the Food Corporation of India, the claimant was suffering loss and damage day after day, particularly because the petitioner did not permit the claimant to store goods of other parties, so long food grains belonging to FCI were still in the godown. Pursuant to the aforesaid, the claimant by a letter dated 2nd November, 1991 terminated the said agreement after giving two months prior notice to the respondent. In terms of the said notice, the agreement would stand terminated on 2nd January, 1992. The claimant in the meantime invoked the arbitration clause of the agreement, that is, Clause 41 of the Agreement before the learned Assistant District Judge, 3rd Court, Howrah. In such proceeding an order was passed on 19th February, 1990 appointing an arbitrator to adjudicate the disputes and differences between the parties. The claims of the claimant in the said arbitration proceedings against the respondent was for the period from 2nd June, 1975 to 31st May, 1997. The claimant alleged that the said godown was without any operation since 1991 but since then the respondent did not remove the stock including the damaged rice for several years and the claimant was unable to use the said godown. The claimant by a letter dated 18th May, 1998 requested the respondent for taking necessary steps for lifting the said stocks from the godown of the claimant. Despite the receipt of the said letter, the respondent neither took steps in terms thereof, nor gave any reply thereto. The said request was again repeated by a letter dated 25th September, 1999. The claimant further alleged that during the aforesaid period between 14th May, 1998 and 30th November, 2000 he forwarded various bills of diverse dates demanding compensation for wrongful withholding of his rented godown by not removing or shifting the food grains and for causing loss to the claimant by preventing him to utilize the space measuring 72776 Sq. ft. at the rate mentioned in the bills, which amounted to a sum of Rs.1,33,51,255/-. The claimant by a letter dated 15th December, 2000, requested the respondent to pay the aforesaid sum together with interest accrued thereon within 15 days from the receipt thereof. Since the respondent had failed, neglected and refused to pay the aforesaid sum, the claimant on 2nd February, 2001 invoked Clause 41 of the Agreement dated 2nd June, 1975 and requested the Managing Director, Food Corporation of India, to appoint an arbitrator in terms of the arbitration clause contained in the said agreement within a period of 30 days from the date of receipt of the said request. The appointing authority refused, failed and neglected to appoint an arbitrator. This has resulted in the filing of the application under Section 11(6) of the Arbitration and Conciliation Act,1996 in which an order was passed on 13th March, 2003 appointing an arbitrator to adjudicate the dispute. The petitioner filed a counter statement-cum-written objection. The petitioner contended that the claimant was required, at his own cost and expenses, to provide and maintain suitable godowns for storage of Corporation stock and not for any other purpose and not for any other party except that of FCI. It was the duty and obligation of the claimant to secure and procure godowns irrespective of its dimensions for the purpose of the opposite party in terms of Clause 3 of the Agreement. In terms of the said Clause, there was no provision as regards the full utilization of the godown. The petitioner denied that there was any failure to take any steps for removal of the balance stock lying in the godown. It was alleged that it would be evident from the letter No.F/10(115)/90-Stg(C)/965 dated 6th September, 1993 issued on behalf of FCI to the claimant that in spite of express acceptance of termination of storing Agency with effect from 2nd January, 1992 and engagement of a Transport Contractor for shifting the stock of FSD Brooklyn Depot, the claimant obstructed the shifting of stock on the alleged ground of nonpayment of bills. The petitioner in the said letter also alleged that a sum of Rs.17,64,898/- only is due and payable by the claimant to the petitioner on account of demurrage and wharfage charges pending recovery from the claimant. The said letter also stated that in the event of the claimant still not allowing the FCI to lift the stocks, the petitioner would be entitled to recover the costs of food grains at penal rate by taking appropriate steps as deemed fit and failure to comply within 14 days from the date of the said letter would render the claimant with entire liability of the stock. The genuinity and veracity of the bills raised were also denied. The petitioner relied upon Clause 17 of the Agreement which envisaged that the Storing Agent appointed under the Agreement would be responsible for the godown rent and all other establishment and incidental charges and the claimant would have no claim whatsoever against the FCI in respect of such charges. The petitioner has also raised the point of limitation. It was pleaded that by reason of Clause 41 of the Agreement time for referring any dispute to arbitration is one year from the date of termination of the contract and on this ground alone, the reference made on 2nd February, 2001 is not sustainable in the eye of law. On the basis of the pleadings, the Arbitral Tribunal has framed the following issues for the purpose of determination:1. Is the claimant entitled to any compensation on account of rent and establishment charges for withholding godown of the claimant from the opposite party – FCI on account of failure of removing or lifting stock therefrom?.
2. Is the arbitration maintainable?.
3. Is the claim barred by limitation?.
4. Was the opposite party – Food Corporation of India obliged to utilize the godown in full capacity?.
5. Did the opposite party – Food Corporation of India failed to remove the stock of food grains after the termination of the Agreement?.
6. Was the claimant guilty of putting obstruction in the matter of removal of Stock?.
7. Is the claimant entitled to recover the claim amount of Rs.1,33,51,255/- only from the opposite party- Food Corporation of India?.
8. Is the claimant entitled to any interest on the Award amount?.
9. To what relief, if any, is the claimant entitled?. The claim in the arbitration proceeding is on account of compensation for wrongful withholding of the rented godown between 1st June, 1997 and 30th November, 2000 for a sum of Rs.1,30,63,295/-. The respondent has also claimed reimbursement and establishment costs for the aforesaid period for a sum of Rs.2,87,960/-. The arbitrator has held that in the arbitration proceeding, the respondent has failed to prove and/or substantiate that the petitioner was obstructed in removing the food grains from the godown. The arbitrator has recorded that Shri Satindra Nath Mondal, District Manager, FCI, Howrah during his evidence has stated that he did not face any obstruction during his visit and he was not aware of any information being lodged with the concerned Police Station alleging obstruction. On the aforesaid basis, the arbitrator held that the plea of obstruction held by the petitioner is untenable and cannot be entertained. The arbitrator in this regard has also relied upon the letters dated 18th May, 1998, 20th June, 1998, 16th April, 1999, 10th July, 1999, 25th September, 1999, 3rd June, 2000, 22nd/30th September, 2000 and 24th August, 2002. The arbitrator has proceeded on the basis that since these letters were not replied and the petitioner has failed to take any steps for removal of the stocks from the godown until 13th June, 2001. Accordingly the petitioner would be required to compensate the respondent for wrongful withholding of the godown for the aforesaid period. The arbitrator further held that since the food grains were stored in the godown, the respondent could not have thrown away the said food grains and was compelled to store the food grains in the godown and thereby was prevented from utilizing the godown for other purposes as he was prevented from doing so under the terms of the agreement. The arbitrator has relied upon Clause 3 of the agreement which prohibits the agent from using the said godown for storing either his own goods or the goods of any other party or parties. The arbitrator proceeded notwithstanding the termination of the agreement and its acceptance by the letter dated 6th September, 1993 that the respondent would be obliged not to use the said godown for any other purpose once the petitioner had refused to take back the stock. The issue of obstruction was decided on the basis of few letters exchanged by and between the parties and the evidence of the District Manager of the petitioner. In the letter dated 6th September, 1993, the Regional Manager of FCI while accepting the termination has referred to the letter dated 8th April, 1993 by which the representative of FCI was obstructed in removing the materials from the godown on the ground of non-payment of bills since 1992. The fact that the respondent, in fact, had prevented the petitioner from removing the materials would be evident from the letter dated 8th April, 1993 and the letter dated 10th May, 1993. However, subsequent letters on record would show that the respondent re