The High Court · 2025

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay of all further proceedings pursuant to the order and decree dt. 02.03.2009 made in ARB.OP No.1835 of 2006 on the file of the Chief Judge, City Civil Court, Hyderabad including its execution, pending disposal of the above CMA. Counsel for the Appellant: SRI MEHERCHAND NORI Counsel for the Respondent No.2: SRI P.BALAJI VARMA Counsel for the Respondent No.1: SRI K SURESH KALAVA (SC FOR APSWC) Counsel for the Respondent No.3: --- The Court made the following: JUDGMENT THE HON'BLE SHRI JUSTICE ANIL KUMAR JUKANTI CML MISCELLANEOUS APPEAL No.4O8 oF 2014 JUDGMENT: Aggrieved by the order dated O2.03.2OO9 passed in Arbitration O.P.No.1835 of 2006 on the file of the Chief Judge, City Civil Court, Hyderabad, this Civil Miscellaneous Appeal is filed by Food Corporation of India (FCI).

2. Heard Mr. Meherchand Nori, learned counsel for appellant, and Mr. P. Balaji Varma, learned counsel for respondent No.2.

3. Arb.O.P.No.1835 of 2006 was filed seeking to set aside order dated 05.05.2006 passed by thc Arbitrator. Learned Chief Judge by order dated 02.03.2009 dismissed the Arb.O.P.No.1835 of 2006 confirmed the order dated

05.05.2006 of the Arbitrator

4. Brief facts: The Andhra Pradesh State Warehousing Corporation- respondent No.1 took up construction of godou.ns by private investor(s) under "Grameen Bhandar Yojana" Scheme with seven years guarantee. In the years 20O 1 - l JAK. J C.M.A.No.106 2011 2OO2, there was a bumper harvest in the food grains and the Government of lndia faced problem of storage. Respondent No. i sent proposals for godowns for storage of food grains ranging from lO,00O metres capacity to 50,000 metres capacity at various centers of Andhra Pradesh. The godowns wcre let out b-v State Wa-rehousing Corporation (SWC). SWC entered into agreements for payment of rent for seven -1cars (a) Rs.2/ per sq. feet per month. The handling and trarlsport lvas to be carried out by Contractors through an open tender system. Agreements r.r,ere cntered ii. 376.9yo "Above Schedule of Rates" (ASOR) lbr a pcriod of tu,o years extendable by six months lrom 19.O4.2OO2. A representation dated

29.O9.2OO4 u'as made on behalf of Warehousing Owners Association for continuance of godowns for storage of FCI food grains lor the balance period of seven years.

5. [rarned Chief Judge by order, dated O2.03.2OO9, upheld the order dated 05.05.2006 passed by the Arbitrator for various reasons discussed elaborately ln pafagraph Nos.3 to 6 _) JAK. J C.M.A.NC.408 2014

6. It is submitted by learned counsel for appellant that there is no privity of contract between the investors, FCI and SWC. That the rate lixed by High l,evel Committee cannot be considered. It is further submitted that FCI was never appraised of the proceedings initiated between the investors and SWC and as such FCI ca-nnot be mulcted with the payments. lrarned counsel submitted that it was SWC which has gone into the instructions issued bv the FCI. It is lurther submitted that SWC was under the bounden duty to follow the instructions issued by the FCI and that there is no privity of contract between the Investor and FCl. [t is also submitted that in the order dated O2.O3.2OO9 passed by the Chief Judge the said issue was not dealt with in accordance with law.

7. On the other hand, learned counsel appearing for respondent No.2 (claimant) submitted that the Chief Judge arrived at a finding that there is a relationship of Principal and Agent betu,een the appellant FCI and respondent No. I (SWC) and further held that petitioner cannot be said to be not liable for the acts of its agents (SWC]. The Chief Judge gave a hnding that "it cannot be said that there is no privity .1 JAK, J C.M.A.No.408 20l l of contract betq'een the petitioner and respondent No.2 claimant". It is obsened that learned Chief Judge, having perused/ consirlered lhat respondent No.1 (SWC) entered into an agreement handling and transportation with respondent No.2 (clarmant) at the instance of petitioner (FCI), subject to appi-oval of rates flxed by them that the payments werr: being made b1,' the petitioner to respondent No.l and which in turn were paid to the claimant and as such the relationship of Principal and Agent stood established. This Court is not inclined to disturb the finding given by the learncd Chief Judge. This Court opines with the finding of the Chir:f ..ludge.

8. It is observed that FCI appointed a Committee for fixation of rates and the committee fixed rates at 513.18% payment was made to respondent No.2 (investor/ claimant) and subsequently advised to respondent No.l (SWC) to accept the rate at 452.21o/o and payment was made to the investor as advised at 45O.2lo/o towards handling and transportation charges. These findings (of the learned Chief Judge) have not been rebutted, in the absence of rebuttal, 5 JAK J C.M.A.No.408 2014 this Court is not inciined to disturb the Iinding a-rrived at as no infirmity is seen.

9. It is lastly contended that finding of the Arbitrator with regard to the nomination basis was also not properly dealt with. An agreement was entered with respondent No.2 (claimant) for handling and transportation work @ 565% ASOR for a period of two yea-rs and the fact that petitioner (FCI) addressed a letter to respondent No. (SWC) on

03.02.2005 intimating respondent No. 1 that he agreed to accept the rate ol 513.8O% ASOR and that FCl-petitioner admitted the bills and made payment at 513.80% ASOR w'.e.f. 30.09.2004 to the claimant, but subsequently reduced to 450.21% ASOR, (opposed by respondent No.2) demonstrate the fact that it was (reduction) unilaterally made. The rclevant portion of the order passed by the learned Chiel Judge is as follows: Thercfore, the contention of the petitioner's counsel that the agreement entered into by the Claimant/Respondent No.2 with respondcnt No. 1 is subiect to the approval of the ratc by thc petitioncr, as the claimant has agreed the rates fixed by the petitioner at 513.80% ASOR, even though, the rate entered into and agreed at the time of agreement is at 565% ASOR. There is no clause in the agreement to agree further changes made by the petitioner with regard to the 6 JAK, J C.M.A.No 108 2011 H & T charges. The learned arbitrator has rightly observed that is it not a case of open tender, but if the works were entrusted on nomination basis in arriving at the rate 513.80o/o ASOR and the said rate was mutually agreed between the parties, and as such, the alterations il any has to be made by mutual agreement, but not unilaterally, but the petitioner has altered the rate to 450.21% ASOR without any agrcement between the parties and the claimant has to be paid at 513.80% ASOR with efl'ect lrom 30.09.2OO4."

10. [t is trite to take rlote of the fact that though it was not a case of open tender, works were entrusted on nomination basis and the rate of 513.80% ASOR was arrived at on a mutuall,r' agreed basis betrveen the pa-rties, (but not unilaterally). But petitioner, altered the rate to 45O.2l%o ASOR unilaterall-y, without agreement between the parties. The claimant has to be paid at 513.80% ASOR w.e.f. 30.09.2004. It is a case rvhere FCI u'ithout consent of respondent No.l who entered into an agreement much prior to the revising of the rates has been kept in dark with regard to revision and with regard to reduction. Payment of 565% which was agreed for a period of two years. Such unilateral variations of the rates from 513.80oh to 45O.21%o ASOR cannot be held to be valid in spite of the agreement and in spite of the findings arrived at that there is a privity of contract between the parties and that respondent No. I \ L 7 J/K, J C.M.A.No.108 2014 SWC was acting as an Agent, FCI is bound to pay the rates as agreed after a committee was appointed and fixed the rates. On considering the entire factual matrix of the case, this Court is of the opinion that there is no perversity or illegally in the order passed by learned Chief Judge in his order dated 02.O3.2OOq

11. The Civil Miscellaneous Appeal is devoid of merits and no interference is necessitated in the order, dated

05.05.2006, passed by the Arbitrator in Arb.O.P.No.l835 of

2006. Accordingly, the civii Miscellaleous Appeal 1S dismissed. There shall be no order as to costs. Miscellaneous applications pending, if any, shall stand closed //TRUE COPY// SD/- N.SRI DEPUTY R R SECTION OFFICER To,

1. The Chief Judge, City Civil Court. Hyderabad 2. One CC to SRI MEHERCHAND NoRi, Advoca te [OPUC] 3. One CC to SRI P.BALAJt VARMA, Advocate [OPUC] 4. One CC to SRI K SURESH KALAVA(SC FOR APSWC) Advocate [OPUC] 5. Two CD Copies NVB/PSL \r HIGH COURT DATED:1010312025 I t * 'fHE S 6 ? I JA|l ZO25 , r'; JUDGMENT CMA.No.408 of 2014 DISMISSING THE CIVIL MISCELLANEOUS APPEAL @ le,b