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2023 Supreme(Chh) 441

IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
GOUTAM BHADURI, SANJAY KUMAR JAISWAL, JJ.
AVI India International LLP, Through Its Partner Amit Kumar Rakhecha, S/o Shri Ashok Kumar Rakhecha - Appellant
Versus
Chhattisgarh State Civil Supplies Corporation Limited, Through Its Managing Director and Ors. - Respondents
ARBA No.18 of 2022
Decided On : 20-07-2023

Advocates Appeared:
For the Appellant : Ms Shailja Shukla.
For the Respondents: Mr. Anish Tiwari.

Headnote:

Adhiniyam, 1983 – Section 2(d) – Arbitration and Conciliation Act, 1996 – Section 34 – Arbitral award – Enforcement of contracts contingent on an event happening – Held, Having held contract being frustrated by act of force majeure subsequent payment for lifting/sale of rice cannot be merged with original contract and it would have distinct and separate entity having independent transaction – Stand of Corporation, therefore, being a Government undertaking, cannot be appreciated and consequent thereof court held that penalty imposed cannot be sustained and hereby set aside – Now with respect of deposit appellant has sought for return of amount or in lieu thereof to allow it to lift rice to the extent of aforesaid price – Having held agreement being frustrated by force majeure and fact that to allow that amount of deposit to be in hold of respondent, which is a Government undertaking would amount to unjust enrichment – Appeal allowed.

JUDGMENT :

(Goutam Bhaduri, J.)

1. This appeal is against the order dated 29-1-2022 passed by the Judge, Commercial Court (District Level), Naya Raipur, Chhattisgarh, in an unregistered MJC/2022 wherein the order dated 2-12-2021 passed by the Managing Director of the Chhattisgarh State Civil Supplies Corporation Limited (for brevity ‘the Corporation’) was dismissed on the ground that the appeal would not lie, as the order passed by the Managing Director is not in the capacity of an Arbitrator. So it was not an arbitral award. Thus, this appeal.

2. The facts, in brief, are that the appellant – AVI India International LLP, which is a partnership firm, was constituted with two partners. Pursuant to e-auction to purchase the rice available with the Corporation, an agreement was executed in between the parties on 1-4-2021. The agreement was entered for sale of 10,000 MT of rice which was to be lifted within 45 days. At the time agreement, an amount of Rs. 1,10,00,000/- was deposited by the appellant towards the security amount. It is stated that after execution of agreement one of the partner of the appellant’s firm was detected with and suffered COVID infection and eventually breathed his last on 8-4-2021. It is stated that by such time during the second wave of COVID Pandemic, lock down was imposed in the State of Chhattisgarh from 9-4-2021 to 31-5-2021 thereby entire commercial transport came to a standstill. According to the appellant, the rice which was to be lifted from Balod district lock down was imposed there and simultaneously lock down was also going on at Dhamtari District where from the appellant firm was operating. Subsequent to it on 3-5-2021, after specified period of contract an amount of Rs. 2,21,20,000/- was paid to the Corporation for purchase of 1000 MT rice. Consequent thereon the delivery order was issued. Thereafter, invoking force majeure clause, the Corporation extended the time on 27-5-2021, which continued and from 1-6-2021 a limited lock down was operating in the State of Chhattisgarh. Subsequently, Rs. 5,53,00,000/- was paid to the Corporation for purchase of 2500 MT of rice for which the delivery order was issued thereby 3500 MT of rice was lifted as against Rs. 7,74,20,000/-.

3. On 28-7-2021 (Annexure - A/5) the Corporation issued a show cause notice to the appellant as to why the security amount should not be confiscated and reply was sought for. Pursuant to the same, reply was submitted by the appellant on 31-7-2021 (Annexure-A/6) stating that since one of the partner had died and they suffered financial loss due to outbreak of COVID-19 Pandemic as such considering the death of partner they may be exempted to lift the entire rice as agreed and the rice be supplied equivalent to the price of earnest money. Thereafter, again a letter was issued by the Corporation on 6-9-2021 (Annexure-A/7) to deposit the penalty amount of Rs. 60,76,237/- calculated uptill 11-9-2021. It was further stated that in the event of non payment of such amount for the rest of rice, the earnest money shall be forfeited. Reply was submitted by the appellant on 20/09/2021 (Annexure A/8) and it was stated that because of lock down imposed, no transportation was allowed and in the meanwhile since one of the partners died, the remaining quantity of 6500 MT of rice was not possible to be lifted; the agreement was sought to be canceled; and requested for return of the amount deposited. It was further stated that the rice which was required to be lifted within 45 days from the date of agreement could not be lifted owing to outbreak of COVID-19 pandemic.

4. As per the appellant, since no action was taken by the Corporation on frequent representations instead a penalty was imposed, the appellant preferred a petition before this Court bearing WPC No.4013 of 2021, wherein the High Court had passed an order on 18/10/2021 (Annexure A/9) directing the appellant herein to make a representation raising dispute before the Managing Director of the C

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