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2023 Supreme(AP) 1320
IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
Dhiraj Singh Thakur, R.Raghunandan Rao, JJ.
Andhra Pradesh State Co-op Marketing Federation Ltd. - Appellant
Versus
Revathi Zinc Products - Respondent
W.A. No. 612 of 2023
Decided On : 13-10-2023
Y.Mahalakshmi, Advocate, Chandra Sekhar Ilapakurti, Advocate
The judgment emphasizes the importance of arbitration clauses in contracts and the limited circumstances for exercising writ jurisdiction.
Headnote:
Zinc Sulphate - Contract Dispute - A.P.C.S Act VII of 1964, Essential Commodities Act, 1955, Fertiliser (Control) Order, 1985 - The court discussed the arbitration clause in the agreement, quality checks, acquittal in criminal case, and the exercise of writ jurisdiction. The court referred to ABL International Limited vs. Export Credit Guarantee Corporation of India Ltd. and State of U.P. vs. Bridge and Roof Company (India) Ltd. to emphasize the importance of arbitration clauses in contracts and the limited circumstances for exercising writ jurisdiction.
Fact of the Case:
The petitioner, a company manufacturing Zinc Sulphate, supplied the product to the Andhra Pradesh State Co-operative Marketing Federation. Disputes arose regarding the quality of the supplied Zinc Sulphate, leading to a criminal case and a writ petition for payment of Rs.28,00,000.
Finding of the Court:
The court found that the writ court's decision to direct payment without considering the arbitration clause and the acquittal in the criminal case was unsustainable. It emphasized the importance of arbitration clauses in contracts and the limited circumstances for exercising writ jurisdiction.
Issues: Quality of supplied Zinc Sulphate, exercise of writ jurisdiction, and the applicability of the arbitration clause.
Ratio Decidendi: The court emphasized that the acquittal in a criminal case does not automatically indicate compliance with the agreement. It also highlighted the importance of arbitration clauses in contracts and the limited circumstances for exercising writ jurisdiction.
Final Decision: The judgment and order of the writ court were set aside, and the writ appeal was allowed with no costs.
JUDGMENT
DHIRAJ SINGH THAKUR, CJ. - The present writ appeal under Clause 15 of the Letters Patent has been preferred against the judgment and order dtd. 13/12/2022 passed in W.P.No.12980 of 2012. The writ Court while allowing the writ petition has directed the Andhra Pradesh State Co-operative Marketing Federation Limited/appellant herein to pay an amount of Rs.28, 00, 000.00 to the petitioner for the Zinc Sulphate it supplied to respondent Nos.3 to 15 in the writ petition.
2. Briefly stated the material facts are as under:
2.1. The petitioner/Revathi Zinc Products, is a company involved in the manufacture of Zinc Sulphate which is used for agricultural purposes. During the year 2005, the Andhra Pradesh State Co- operative Marketing Federation limited invited tenders for the supply of Zinc Sulphate. The petitioner was found to be a successful bidder and an agreement dtd. 23/7/2005, came to be executed between the two. A supply order was placed by the federation with the petitioner to supply 155 metric tonnes of Zinc Sulphate to respondent Nos.3 to 15 in the writ petition.
2.2. Needless to say that the agreement executed between the federation and the petitioner dtd. 23/7/2005, also contained an arbitration clause in the following terms:
"18. The Deputy Registrar of Co. operative Societies (Enforcement) A.P. Markfed (who is Registrar for the purposes under Sec. 61 of A.P.C.S Act VII of 1964) shall be nominated as the Arbitrator and he shall decide any such reference at the instance of either party, as if it is a dispute under Sec. 61 of the A.P.C.S Act VII of 1964."
2.3. It appears that quality checks were carried out on the material supplied by the petitioner from different locations. 13 of the samples so collected, after testing the same were found to be substandard. The Department of agriculture accordingly, brought this fact to the notice of the Andhra Pradesh State Marketing Federation Ltd./appellant herein who immediately instructed the petitioner to stop further supplies.
2.4. A case under Sec. 6A of the Essential Commodities Act, 1955 was also filed in this regard. The Joint Collector ordered the confiscation of the entire quantity and instructed the disposal of stocks in open auction based on available nutrient content. Accordingly, the concerned officers disposed the stocks and deposited the amount released from the open auction to the Government account, in regard to 30 metric tonnes of Zinc Sulphate which was supplied in West Godavari region. A complaint also came to be preferred against the petitioner under Sec. 19(1) (a)(b)(c) of Fertiliser (Control) Order, 1985 punishable under Sec. 7(1)(a)(i) of the Essential Commodities Act, 1955. However, the petitioners were acquitted primarily on the ground that the complainant did not mention the procedure which had been adopted for collection of samples in the complaint. In that backdrop, the petitioner claimed that a Mandamus must be issued to the respondent No.2/appellant herein to pay an amount of Rs.28, 00, 000.00 to the petitioner for the supply of Zinc Sulphate as per their supply orders placed with it.
2.5. The writ Court by virtue of judgment and order impugned allowed the petition primarily on the ground that non-payment of the amount on account of supplies made, despite the acquittal of the petitioner was illegal and arbitrary and therefore, directed that Rs.28, 00, 000.00 be paid to the petitioner on account of the supplies made.
3. Counsel for the appellant urged that the judgment and order impugned is not sustainable in law as no amount was due and payable on account of the supplies made, as the same was not in accordance with the supply orders which required Zinc Sulphate of a particular quality to be supplied and further that the supplies in fact were made by the petitioner of a substandard Zinc Sulphate.
4. In any case, it was urged that there was an arbitration Clause 18 which the petitioner ought to have invoked as per the terms and conditions of the agree
