JUDGMENT :

Sanjay Dhar, J.

1. The Petitioner has challenged the impugned interim Award dated 04.01.2020 passed by the sole Arbitrator, the operative part of which is as under:

“From the documents submitted during Arbitral Proceedings, it is prima facie proved that the respondent placed order after proper inspection of BAMI which were supplied to him by the claimant. The dispute between the parties arose later on. What will be the fate of the Arbitral proceedings, cannot be said at this stage but it is prima facie established by the claimant that he is entitled to interim award at this stage amounting to Rs.5,50,000/- (five crores and fifty lakhs only) under the provisions of Section 31 (6) of the Act which comes to approximately 8% of the total claims of the claimant. The respondent is directed to pay the said amount of interim award within a period of two weeks from today. In default of payment, the respondent shall be liable to pay the said amount along with interest @ 90% per annum from the date of interim award till payment is made. No further proceedings are required in this application and it shall form part of the main file.”

2. Briefly stated the case of the respondent-firm before the learned Arbitrator was that being a supplier of defence equipments to the Indian Army and Para Military Forces, it was given a contract for supply of 6250 pairs of Boot Anti Mine Infantry (hereinafter referred to as ‘BAMI’) in terms of Order No. 21023/Supply order/110 (C/ACSFO/45) dated 01.03.2018. As per clause Part IV i.e. Special conditions of supply order of the Tender Agreement, the appellant herein had to make the payment to the respondent-firm instantly. For facility of reference, the said clause is reproduced hereunder:

“100% payment will be made on delivery and acceptance by the use and on production of the requisite documents.”

3. It was further alleged by the respondent-firm that in the instant case, no payment has been made to the said firm till date. The respondent-firm had taken credit limit from the Axis Bank for the aforesaid supply and because of the delay in the payment, it has suffered a grave financial hardship. That apart, the Bank aforesaid was ready to initiate action for declaring the respondent-firm as NPA under the Securitization Act. The respondent-firm is stated to be paying huge interest to the Bank for non payment of loan amount and has paid a total amount of Rs.1,94,00,000/- as interest from July 2018 to September, 2019. The claimant has also pledged his property with the Bank.

4. Before the Arbitrator, it was contended by the respondent-firm that it was in urgent need of Rs.5,50,00,000/- against the outstanding payment of Rs.,16,80,00,000/- as interim relief so that the Bank would not declare it as NPA. It was prayed that the interim award of Rs.5,50,00,000/- be passed in favour of the respondent-claimant.

5. The claim of respondent-firm was contested by the petitioner and in its objections, it pleaded that the interim relief sought by the respondent-firm cannot be granted as in terms of the third amendment which was issued to the supply order, the respondent-firm was required to submit certain additional documents along with the bill. The said condition was primarily imposed after the special procurement committee’s meeting held on 23rd May 2018 in the presence of representatives of the respondent-firm. In the said meeting, certain violations committed by the respondent-firm came to light which were also admitted by the representatives of the respondent-firm, who were present during the meeting. The said violations were as under:

(i) For 2015-16 procurement of 1800 BAMI Shoes they procured the shoes at a CIF value of approximately Rs.15,000/- per pair and they supplied the same at CIF value of Rs.21000/- thereby causing wrongful gain and wrongful loss to the Government exchequer to the tune of Rs.1.08 crores.

(ii) Evasion of the mandatory Toll Tax for entering inside J&K at Lakhanpur, thereby smuggling the goods ins