The Court emphasized the limited scope of interference with an arbitral award and the requirement to establish actual losses or damages before claiming 'general damages' or forfeiture of Bank Guarantee.

JUDGMENT

Manoj Jain, J. The present appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "said Act") impugns order dated 28.11.2020 passed by Sh. Sanjiv Jain, learned District Judge (Commercial Court-03) Patiala House Courts, New Delhi whereby, the objection petition filed by the appellant herein under Section 34 of said Act has been dismissed.

2. Let us refer to the facts germane for the disposal of the present appeal.

3. A tender was floated by the appellant for procurement of 700 Metric Tons (MT) of `Gram Whole..

4. Respondent M/s Indian Agro Marketing Co-operative Limited participated in such tender process and was awarded work contract to supply 700 MT of gram whole at the rate of Rs.3483/- per quintal.

5. The appellant issued acceptance letter on 09.02.2012. The total value of the work was Rs.2,43,81,000/- and the delivery was to be made between 01.04.2012 to 30.04.2012.

6. The respondent submitted unconditional Bank Guarantee of Rs.24,38,100/- as per the stipulated terms and conditions of the contract.

7. The appellant issued `performance notice' dated 08.05.2012 directing respondent to perform its contractual obligation to make supply on or before 08.06.2012, supplementing that if such supply was not made, the contract would be cancelled.

8. Thus, the delivery period was extended upto 08.06.2012.

9. Respondent could not supply `Gram Whole' by 08.06.2012.

10. Since no supply was made, the contract was cancelled on 14.08.2012 and the appellant, in terms of the clause 18 (d) (viii) of Appendix to Tender Enquiry and clause 7(4) of DGS&D-68 (Revised), forfeited the Bank Guarantee.

11. The appellant retained Rs.18,28,575/- as `general damages' and the balance was refunded to the respondent.

12. Since there was an `arbitration clause' in the contract, respondent approached the Court for appointment of Arbitrator and this Court, vide order dated 26.02.2015, was pleased to appoint Shri A.K Garg, Additional District Judge (retired) as Sole Arbitrator to adjudicate the disputes between the parties.

13. The stand of the respondent before the Arbitral Tribunal was that the delivery period mentioned in the contract was superfluous, impossible and impractical as the commodity in question i.e. `Gram Whole' was not available in the market during the relevant period. The encashment of Bank Guarantee was also challenged on various grounds. It was averred that the contract in question was with restrictive clause that respondent had to arrange `Gram whole' from wholesale Mandies only and from no other place which made the execution impossible since it was a natural crop and not a man-made one. The unilateral extension was meaningless as the crop could not have reached whole-sale Mandies till middle of November. The prime and foremost contention from the side of the respondent was that once the special mode of `risk-purchase' had been agreed to between the parties, no amount by way of `general damages' could have been claimed by the appellant. It was also contended that, even otherwise, there was nothing to suggest that the appellant had suffered any losses and that compensation, if any, could only be given for actual damages or loss suffered. If damage or loss is not suffered, the law does not provide for a windfall. Thus, proof of actual damage or loss caused was sine qua non and since, it was not even the case of the appellant that they had suffered any losses due to alleged breach of contract, the forfeiture was illegal and without any authority.

14. The appellant refuted all such contentions before the Arbitral Tribunal. It was argued that the terms and conditions of the contract were accepted by the respondent, knowingly and consciously and if the respondent was of the view that it was difficult to fulfil the terms and conditions of the contract and that its performance was impossible, it should not have even entered into any contract. It was claimed that the Bank Guarante