JUDGMENT

SABYASACHI MUKHARJI, J.:— Special leave granted.

2. This appeal arises from the decision of the High Court of Punjab and Haryana, dated 11th Dec. 1984 dismissing the Civil Revision filed by the appellant. It appears that there was a contract entered into by the parties on or about 15th May, 1979 which provided that the appellant would give to the respondent paddy to convert these into rice after lifting paddy from the godown of the appellant. There was an agreement between the parties for shelling of paddy into rice, after lifting the paddy from the godown of the appellant, at the rate of 70% of the paddy. The shelling charge was Rs. 2.20 per quintal. The learned Subordinate Judge, First Class, directed on or about 17th March, 1980 appointment of an arbitrator on an application by the respondent. On 22nd January, 1982, the arbitrator gave his award. The arbitrator did not allow the claims of the appellant as claimed as per the terms of the agreement The arbitrator allowed certain claims. It is necessary, in view of the contentions that have been raised, to refer to the award of the arbitrator. After setting out the history the arbitrator dealt with the various contentions. It is not necessary to refer to all the contentions and point urged before arbitrator and upon which he has made his award. It is sufficient if the relevant portions are dealt with. The arbitrator, inter alia, dealt with a claim of Rs. 55,060.29 which was claimed as penalty at Rs. 2/- per sq. for not lifting the balance of the paddy weighing 2765-3093 mts. The arbitrator noted that he had held that there was justification for the millers, millers being respondent herein, not to lift the paddy. Assuming, however, the arbitrator noted, that if it was decided that the millers were at fault in not lifting this paddy, the arbitrator expressed the opinion that the appellant could not recover the amount claimed by way of penalty. He expressed the view that in order to enable the appellant to claim the amount it had to be shown that the actual losses were suffered by the Corporation; Otherwise, it could not be claimed as pre-estimated damages. Otherwise it would only be penalty which could not be recovered. No evidence had been led for how many days the bags of the paddy remained in the godowns of the Corporation the arbitrator noted, and what losses were incurred for getting it shelled from other quarters. The arbitrator referred to the affidavit of one Mr. M.S. Rawat, Asstt. Manager, that the Corporation had to get the unlifted paddy shelled by transporting to other centre as well as getting the same shelled at heavy additional expenditure. The arbitrator noted that there was not an iota of evidence on that point. So no actual losses stated to have been suffered by the Corporation and no proof thereof was there. The arbitrator further noted that an amount by way of penalty could be permitted if some losses were proved. He accordingly, dismissed the claim of the appellant for Rs. 55,090.19.

3. The next claim dealt with by the arbitrator was the claim of Rs. 3,23,856.08 claimed by the Corporation as the cost of non-delivery of 137-39549 tonnes of rice at the rate of Rs. 165/- per qtl. of paddy. The claim of the appellant was based on the basis that the appellant had converted the undelivered rice into paddy by multiplying it with 100/70 and it came to 123,87.11 tonnes. The arbitrator dealt with this question as follows :-

"At the rate of Rs. 165/- per qtl. its price works at Rs. 3,23,856.08. According to provisions of Cl. g(i) of the Contract, in the event of failure to supply rice within prescribed specification, the millers are liable to pay to the Corporation for the quantities of rice short supplied at the penal rate of 11/2 times the economic cost of the concerned variety of the paddy equivalent to the shortages. In the contract no definition of Economic Cost is furnished nor is the expression anywhere defined in any law. However, Shri Pritam Singh in the