The acknowledgment of liability, interpretation of contract clauses, reasonableness of interest awards, and substantiation of counter-claims are crucial legal principles established in the judgment.

ORDER

Vibhu Bakhru, J (Oral). - National Seeds Corporation Limited (hereafter 'NSCL') has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter 'the A&C Act') impugning an arbitral award dated 13.06.2019 (hereafter 'the impugned award') rendered by an Arbitral Tribunal constituted by a Sole Arbitrator (hereafter 'the Arbitral Tribunal').

2. The impugned award was rendered in the context of disputes that had arisen between the parties in connection with a Distributorship Agreement dated 24.10.2009, which was renewed by an Agreement dated 01.04.2010 and subsequently on an annual basis (hereafter 'the Agreement').

3. The State Government of Uttar Pradesh had floated various subsidy schemes for providing seeds to farmers at subsidised rates. NSCL states that under the said schemes, seeds were required to be supplied to the farmers at a discounted rate of approximately 50% of the price and NSCL would receive the subsidy amount directly from the State Government. NSCL had accordingly entered into Agreements with various dealers including the respondent for implementation of the subsidy schemes.

4. In terms of the Agreement, the respondent had agreed to sell certified seeds of approved varieties with subsidies at the retail price fixed by NSCL after reducing the admissible amount of subsidy. In consideration for the same, NSCL had agreed to provide a trade discount to the respondent. The respondent further agreed that it would sell 25% of the oilseed and pulses and 30% of the wheat certified seeds to farmers from the SC/ST category. The respondent agreed to maintain a separate register for the beneficiary farmers and had agreed that it would sell seeds in the notified districts as per the guidelines issued by the Appropriate Authority.

5. In terms of Clause 11 of the Agreement, the respondent was obliged to collect all records, cash, memos, registers and subsidized sale details in the approved format and submit the same to the regional office of NSCL after verification from the Appropriate Authority of the Agriculture Department.

6. The respondent claims that it had complied with its obligations under the Agreement and had sold the seeds obtained from NSCL at discounted prices. Accordingly, it claimed that it was entitled to the trade discount. It quantified the outstanding commission/trade discount against the seeds distributed as on the date of the filing of the Statement of Claims at ? 1,46,40,005.02/-. It also claimed interest on the said amount.

7. NSCL disputed the claims on, essentially, two fronts. First, it claimed that the trade discount related to seeds distributed during several years commencing from the financial year 2011-12 and the amounts due for the period prior to 31.03.2015 (three years prior to filing of the Statement of Claims) were barred by limitation. Second, it claimed that the respondent's claim was not in terms of the Agreement. According to NSCL, the respondent would be entitled for disbursal of trade discount only on receipt of the subsidy from the State Government. NSCL claimed that since the State Government had not released the subsidy, the respondent was not entitled to the outstanding trade discount.

8. NSCL also raised a counter-claim for an amount of ? 7,68,96,959/-. NSCL claimed that it had suffered losses in respect of the seeds supplied by the respondent under the subsidy scheme of the State Government of Uttar Pradesh. It stated that in terms of Clause 8 of the Agreement, the respondent was bound to make good the loss suffered by NSCL.

Submissions

9. Mr Nayar, learned senior counsel appearing for NSCL assailed the impugned award on four grounds. First, he submits that the decision of the Arbitral Tribunal to reject NSCL's contention that the claims were barred by limitation, is ex facie erroneous. He submitted that admittedly the respondent's claim included claims for arrears of trade discount in respect of seeds that were sold three years prior to the filin