A rb itra tio n A ppeal N o. 2000 v. Sagarmull Agarwal
Case at a glance
Held
The High Court dismissed Arbitration Appeal No.9/2000 and allowed Arbitration Appeal No.8/2000, thereby upholding the arbitrator’s award in the latter case.
Provisions considered
Key paragraphs
- Para 44. Sri U. P. Sharma, learned Senior Government Advocate, appearing on behalf o f the State submits that the claim made by Sri Agarwal was on the ground o f the / alleged breach o f contract, since he could not lifi the articles, as…
Summary
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Facts
The dispute concerns an agreement between the State of Sikkim and Sagarmull Agarwal for the transport of silver‑fir logs. Agarwal claimed that the State failed to grant the necessary permits, causing loss of business.
Issues
- Whether the State breached its contractual obligations by not granting the required permits.
- Whether the arbitrator’s award should be upheld or modified.
Holding
The High Court dismissed Arbitration Appeal No.9/2000 and allowed Arbitration Appeal No.8/2000, thereby upholding the arbitrator’s award in the latter case.
Reasoning
The Court found that the State was not the competent authority to grant the permits and that the arbitrator’s findings were correct. Consequently, the appeal against the award was dismissed.
Practical significance
The decision confirms that the State of Sikkim cannot be held liable for failing to grant permits if it is not the competent authority, and it upholds the enforceability of arbitration awards in such contractual disputes.
Relies on paragraph(s) 1 of the judgment below.
Judgment
Coram : The Hon’ble Mr. Justice Ripusudan Dayal, Chief Justice. The Hon’ble Mr. Justice Anup Deb, Judge. Present : Mr. Udai P. Sharma, Senior Government Advocate for the State. Mr. A. Moulik, Advocate for Sagarmull Agaraal. JUDGMENT Daval C. J. Both these appeals arise from the judgment and decree o f the learned District Judge, East and North, dated 16'^ August, 1999 passed in C ivil Misc. Case N o. 7 o f 1993 (Arbitration) making the award o f the arbitrator rule o f the Court ' '■i. \ except for claim N o . 1. ) k ,
Sagarmull Agarwal entered into an agreement dated 12* July, 1982 with the State o f Sikkim through the C h ief Conservator o f Forests, whereby the Government granted
to the purchaser and his agents or employee liberty and permission to lift or transport 50,000 eft @ Rs.8.15 per eft i.e. Rs.4,07,500/- o f Silver Fir logs from in between Phuni and Yumthang to outside Sikkim through North Sikkim H ighway at all times between the date o f issue o f the removal order - 1 - to 31®* day o f March, 1983.
Case o f Sagarmull Agarwal is that he could not lift the articles, since he could not get permit to enter into the restricted area, and, as such, there was breach o f contract on the part o f the State. However, there is no dispute that Forest Department is not the competent authority to grant the requisite permit and the Forest Department wrote several letters to the concerned authorities by w ay o f assistance. The matter was referred to the arbitrator. Details o f the claims made before the arbitrator and the amounts awarded by the arbitrator are as under C laim s o f C laim an t (Issue) SI. N o. Claim N o. (a) (b )
B rie f description o f claims Awarded Amount. (c) (d ) Claim for supply o f fresh silver fir logs o f 50,000 eft. or the present market rate. (Claim partially sustained) Awarded the present market rate o f 50,000 eft. o f Silver Fir Logs at Rs. 170.00 (Rupees one hundred and seventy)only per cubic feet.
2. 2(a) Idle charge o f Supervisors and other staff. Rs.3,50,000/- (Rupees three lakhs fifty thou- Amount o f claim Rs.3,76.430.00 (claim sand) only. partially sustained) 2 (b ) Charge o f trucks which had to be kept idle. Rs. 1,50,000 (Rupees Amount o f claim Rs.2,82,000.00 (claim partially sustained) one lakh fifty thou- sand) only. 3 Forfeiture o f money paid in advance to the Rs. 1,00,000 (Rupees truck owners. Amount o f claim Rs. 1,00,000.00 (claim sustained) one lakh) only.
4 Interest already paid to Financers/Bankers. Rs.3,00,000/- (Rupees Amount o f claim Rs.6,00,000/- (Claim Partially sustained) three lakh) only. Market difference Amount o f claim Rs.6,00, 000/- (Claim not sustained) N il 2 - Loss and damages in business due to defama- Rs.5,00,000/- tion incurred in the case. Amount o f claim Rs. 10,00,000/-(Claim partially sustained). only. (Rupees five lakh) Past, present and future interest claim at 20% per annum (C laini partially sustained) Interest Awarded interest at 18% per annum as follow s . (i) awarded at 18% per annum on awarded amount except claim claim N o .l from the Dec. 1986 upto the date o f reference. (ii) Interest awar ded at 18% per annum awarded amount and all claims o f to date o f reference award. payment i f payment (iii) made within 40 days, no interest is awarded from the date o f award. I f delayed by more than 40 interest awarded on awarded all claims and total amount upto date o f decree from the date o f award at Rs. 18% per annum. days, At 18% (iv ) annum interest awarded on alt clajms and total amount from the date o f decree to the date o f payment.
Claim for breach o f contract. Amount o f claim Rs. 10,00,000/- (Claim partially sustained) Rs.3,00,000/- (Rupees three lakh) only.
9(a) Overhead expenses in tune. Amount o f Claim Rs.3,00,000/- (Claim not sustained) N IL 3 -
9 (b ) Cost o f reference. Amount o f claim Rs. 80,000/- (Claim partially sustained) Rs.25,000/-(Rupees twenty five thousand) only.
An.application was filed before the learned District Judge, East and North, Sikkim by Sagarmull Agarw al for making the award the rule o f the Court which was registered as C ivil M isc. Case N o.7 o f 1993. The learned District Judge set aside the award in respect o f claim N o .l givin g rise to Arbitration Appeal N o .9/2000 by Sagarmull Agarwal. W ith respect to the rest o f the items awarded by the arbitrator, the award was confirmed g ivin g rise to Arbitration Appeal N o.8 o f 2000 filed by the State o f Sikkim.
Sri U. P. Sharma, learned Senior Government Advocate, appearing on behalf o f the State submits that the claim made by Sri Agarwal was on the ground o f the / alleged breach o f contract, since he could not lifi the articles, as he had failed to get the necessary permit to enter into the restricted area, but there was no agreement ' i m letween the parties that the C h ie f Conservator o f Forests shall arrange permit for him. H e further submits that there could not be implied contract for arranging the permit also since the C h ie f Conservator o f Forest-cum-Secretary Forest, Government o f Sikkim was not the competent authority to grant the requisite certificate. Sri A. M oulik has, on the other hand, submitted that it was known to both the parties that unless permit was granted, the contract could not be executed. In reply, Sri Sharma submits that permit must have been granted by the competent authority, i f Sri Agarw al had agreed to arrange local labour, but the could not secure the permit, since he wanted to bring the labour from outside.
Under Article 299 o f the Constitution, agreement has to be in writing and since there was no , agreement to the effect that the State shall grant the necessary permit in spite o f the fact whether Sri Agarwal would bring labourers from outside or would employ - 4 local labour, there is no scope for reading in the -^^eement such an implied agreement. Since there was no agreement between the parties that the respondent would grant such a permit, there was no question o f breach o f contract. The learned trial Court did not enter into this aspect o f the matter and observed that he has no jurisdiction to investigate into the correctness o f the arbitrator’ s decision. But the question as to whether claims made by the arbitrator fell within the scope o f the agreement does not concern merely the correctness o f the decision but touches the jurisdiction o f the arbitrator. The arbitrator cannot travel beyond the agreement and when the agreement does not contain a clause whereby it could be inferred that the State had agreed to provide the necessary permit, non-grant o f the permit by another department cannot be said to be breach o f agreement.
A s all the claims for which award was m ade by the arbitrator relate to the claims made on the alleged /</ '' '' 0 \ breach o f contract, the w hole award is liable to be set aside. \ In the result, Arbitration Appeal No.9/2000 is dismissed and Arbitration Appeal i W , — ^ 'r, N o .8/2000 is allowed. In the circumstances, parties shall bear their ovm costs. 30/5/2000 • y i . • o ~ } "2 e>. r. t 0 ^ ( R. Dayal) Chief Justice 30/5/2000. ;rr:? r;: / m i\ nrr^r'1CCQU (5@UBV QttS'MSKIir^ C£ 5 -
Questions this judgment answers
What did the Court decide in this case?
The High Court dismissed Arbitration Appeal No.9/2000 and allowed Arbitration Appeal No.8/2000, thereby upholding the arbitrator’s award in the latter case.
What was the main issue before the Court?
Whether the State breached its contractual obligations by not granting the required permits.
Which statutory provisions did this judgment involve?
Constitution of India.
Which court decided this case, and when?
Sikkim High Court, on 30 May 2000. The bench was RIPUSUDAN DAYAL, ANUP DEB.
Precedent status how later indexed judgments have treated this case
No known negative treatment found in the Courts & Cases corpus.
This is a result about the indexed corpus, not a finding that the judgment remains good law. Coverage may be incomplete.