IMPORTANT POINT
Unilateral deductions of demurrage charges from a contractor's bills are impermissible without proper determination of liability as per contractual obligations.

JUDGMENT :

N. UNNI KRISHNAN NAIR, J.

1. Heard Mr. K.N. Choudhury, learned senior counsel, assisted by Mr. B.K. Singh, learned counsel for the appellant-Food Corporation of India. Also heard Mr. A.C. Borbora, learned senior counsel, assisted by Ms. N. Dey, learned counsel, appearing on behalf of respondent No. 1 and Mr. R.K.D. Choudhury, learned Dy. SGI, appearing on behalf of respondents No. 2 & 3.

2. The present intra-Court appeal has been so instituted by the appellant-Food Corporation of India, presenting a challenge to an order, dated 08.11.2023, passed by the learned single Judge in WP (C) No. 6317/2022.

3. As projected in the writ appeal; the respondent No. 1 was appointed by the appellant-Food Corporation of India, vide communication, dated 08.11.2021, as a Transport Contractor, Ex-Railway Siding Salchapara Rail Head to FSD, Badarpurghat via Weighbridge including Handling works at FSD Badarpurghat w.e.f. 21.11.2021, for a period of 2(two) years.

4. During the course of the execution of the contract as assigned to the respondent No. 1; the appellant-Food Corporation of India had deducted amounts towards the demurrage charges from the running bills of the respondent No. 1, herein. Being aggrieved by such deduction of amounts towards the demurrage charges, the respondent No. 1 had instituted WP (C) No. 6317/2022 before this Court. On consideration of the issues arising in the matter; the learned Single Judge vide the judgment & order, dated 08.11.2023, had proceeded to dispose of the said writ petition by interfering with the deduction made towards demurrage charges from the running bills of the respondent No. 1 with further direction to refund the amounts so deducted. It was further provided that in the event, the amounts so deducted towards the demurrage charges is not refunded within the time frame so prescribed in the said judgment & order; interest at the rate of 9% per annum on the amount, calculated from the date of the said judgment & order till the refund of the same; shall be payable to the respondent No. 1 by the appellant-Food Corporation of India.

5. Being aggrieved by the said judgment & order, dated 08.11.2023; the appellant-Food Corporation of India has instituted the present proceeding.

6. Mr. Choudhury, learned senior counsel, appearing for the appellant-Food Corporation of India, while supporting the action on the part of the Food Corporation of India in deducting amounts from the running bills of the respondent No. 1 towards the demurrage charges calculated; has contended that such deduction of amounts was so made in terms of the provisions of Clause X of the Model Tender Form for Handling and Transport Contract.

7. Mr. Choudhury, learned senior counsel, has also contended that the provisions of said Clause X provides that the contractor shall be liable to make good, any compensation/ demurrages/wharfage, etc. as may be incurred by the appellant-Food Corporation of India on account of delay in loading and unloading of trucks.

8. Mr. Choudhury, learned senior counsel, by referring to the calculation so made by the constituted Committee towards determination of the demurrage charges in respect of the respondent No. 1, herein, has submitted that such fixation in respect of the said respondent, was so made on account of the fact that the trucks were not so placed by the respondent No. 1 which had prevented the unloading of the wagons so allotted to the respondent No. 1 resulting in imposition of the demurrage charges upon the appellant-Food Corporation of India by the railway authorities.

9. Mr. Choudhury, learned senior counsel, has further submitted that the respondent No. 1 was issued with communications requiring him to place the requisite number of trucks prior to the date of the placement of the rakes at the railway siding involved. It was also contended that on the failure of the respondent No. 1 to place the trucks, in question; notices in this connection were so issued to the respondent No. 1. Accordingly, i