High Court · 2025

O.P.No.927 of 2017In the High Court of Judicature at MadrasDated : 10.9.2025Coram :The Honourable Mr.Justice N.ANAND VENKATESHOriginal Petition No.927 of 2017The Tamil Nadu Civil SuppliesCorporation rep.by itsManaging Director, No.12,Thambusamy Salai,Kilpauk, Chennai-10....PetitionerVsSree Bhuvaneswari & Co.,No.206, GovindappaNaicken Street, Chennai-1....RespondentPETITION under Section 34 of the Arbitration and Conciliation Act, 1996 praying to set aside the award made in Arbitration Case No. 4/2011/SV dated 29.9.2015 followed by the additional award in proceeding of the Arbitrator in Case No.02/2017/SV dated 28.8.2017 on the file of the Arbitrator namely Mr.S.Viswanathan, MBA, M.A., B.A.L., District Revenue Officer (Retired) in the matter between Sree Bhuvaneswari & Co., Chennai and Tamil Nadu Civil Supplies Corporation, Chennai-10. For Petitioner : Mr.M.K.Kabir, SC forMr.K.RaghuramanFor Respondent:Mr.C.D.Sugumar 1/8 https://www.mhc.tn.gov.in/judis O.P.No.927 of 2017ORDERThis petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Act) against the award dated 29.9.2015 passed by the sole Arbitrator followed by the additional award dated 28.8.2017. 2. Heard both.3. The case of the petitioner is as follows :(i) The petitioner and the respondent entered into an agreement dated 11.2.2010 for supply of 2,000 Metric Tons (MTs) of urid dhal. The respondent submitted the earnest money deposit and their offer was accepted and confirmation order dated 30.1.2010 was issued. The security deposit was also paid. As per the agreement, the stock must be supplied on or before 06.3.2010. (ii) The respondent also commenced the supply of urid dhal based on the confirmation order dated 30.1.2010. However, there was a delay in issuing the supply order and as a result, the respondent was unable to continue any further supply of urid dhal. (iii) The respondent ultimately supplied 198.46 MTs during the 2/8 https://www.mhc.tn.gov.in/judis O.P.No.927 of 2017contract period. Hence, several show cause notices were issued calling upon the respondent to commence the supply, failing which, it was made clear that penal action would be initiated against the respondent. Subsequently, the agreement was terminated. The petitioner also refused to extend the period. (iv) This led to the dispute between the parties and the respondent filed a claim petition before the sole Arbitrator praying for (a) an amount of Rs.52 lakhs paid by the respondent towards security deposit for the supply of urid dhal vide agreement dated 11.2.2010; (b) another sum of Rs.56.45 lakhs paid by the respondent towards security deposit for the supply of toor dhal vide separate agreement dated 26.2.2010; (c) a sum of Rs.1,76,13,467/- payable to the respondent for the supply of toor dhal already effected vide agreement dated 26.2.2010; (d) a sum of Rs.18 lakhs towards compensation for the loss of profit suffered by the respondent; (e) a sum of Rs.10 lakhs towards damages; and (f) costs.(v) The petitioner filed a counter claim for a sum of Rs.1,16,34,477/- and also justified (a) the termination of contract and (b) the forfeiture of the security deposit towards the supply of urid dhal. 3/8 https://www.mhc.tn.gov.in/judis O.P.No.927 of 2017(vi) The sole Arbitrator, on carefully considering the claim made by the respondent and the counter claim made by the petitioner and also the materials available on record, came to the conclusion that there was no ground to interfere with the termination of contract and also the forfeiture of the security deposit towards the supply of urid dhal and it was confirmed. However, the order dated 23.12.2010, by which, a sum of Rs.1,16,34,377/- was sought to be recovered from the respondent towards the loss sustained on account of non supply of urid dhal, was set aside. Further, a sum of Rs.1,71,59,807/- payable to the respondent for the toor dhal already supplied and another sum of Rs.56.45 lakhs paid towards security deposit were directed to be refunded. The amounts claimed towards compensation for loss of profit and damages are rejected. Further, the counter claim made by the petitioner was also rejected. Challenging the same, the petitioner is before this Court. 4. The main ground that was raised by the learned Senior Counsel appearing on behalf of the petitioner is that the sole Arbitrator, after having upheld the termination of contract and the forfeiture of security deposit towards the supply of urid dhal, ought to 4/8 https://www.mhc.tn.gov.in/judis O.P.No.927 of 2017have allowed the counter claim of the petitioner to the tune of Rs.1,17,59,807/-. According to him, the petitioner suffered a loss since the total quantity was not supplied and there was a substantial delay. 5. Per contra, the learned counsel appearing for the respondent submitted as follows :The petitioner did not prove by means of evidence the loss sustained by them and a mere oral claim made by the petitioner cannot be the basis for fixing the loss. In so far as the claims made by the respondent are concerned, nothing substantial was granted except for the payment of cost of the materials already supplied by the respondent and for the release of the security deposit in respect of toor dhal already supplied. There are absolutely no grounds to interfere with the award passed by the sole Arbitrator. 6. This Court has carefully considered the submissions of the learned counsel on either side and perused the materials available on record and more particularly the impugned award. 5/8 https://www.mhc.tn.gov.in/judis O.P.No.927 of 20177. The sole Arbitrator framed the following issues for consideration : (a) Whether the delay in issuing the purchase order is the reason for failure to supply the urid dhal by the respondent ? (b) Whether the petitioner was justified in forfeiting the security deposit and terminating the contract for the supply of urid dhal ? and(c) Whether the petitioner was correct in withholding the amount for the materials that were already supplied by the respondent ?8. The sole Arbitrator came to the conclusion that the petitioner was insisting for the supply of urid dhal even prior to issuance of the purchase order to the respondent. Further, since the respondent supplied 198 MTs of urid dhal even prior to the date of supply order based on the fax issued on 30.1.2010, the stand taken by the respondent that they did not supply the materials on time as there was a delay in issuing the supply order was found to be unsustainable. The sole Arbitrator also found that there was no ground to interfere with the forfeiture of the security deposit for the supply of urid dhal and that the same was in line with the terms of the contract. The sole Arbitrator ultimately allowed the claim petition to the extent of 6/8 https://www.mhc.tn.gov.in/judis O.P.No.927 of 2017payment of cost of the materials that were actually supplied by the respondent. 9. In so far as the counter claim is concerned, the sole Arbitrator rightly found that the loss sustained by the petitioner was not established and hence, the counter claim was rejected. 10. In the light of the above, this Court does not find the award dated 29.9.2015 passed by the sole Arbitrator falling foul of any of the 8 pigeon holes under Section 34 of the Act. 11. The additional award dated 28.8.2017 is more in the nature of a corrigendum wherein certain corrections were carried out. 12. Accordingly, this original petition is dismissed confirming the award dated 29.9.2015 and the additional award dated 28.8.2017. 10.9.20257/8 https://www.mhc.tn.gov.in/judis O.P.No.927 of 2017N.ANAND VENKATESH,JRSO.P.No.927 of 201710.9.20258/8