JUDGMENT

MANOJ JAIN, J.

1. The present appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “said Act”) impugns order dated 02.02.2022 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 1200 Metric Tons (MT) of „Rajma‟.

4. The respondent participated in such tender process and was awarded work contract to supply 1200 Metric Tons (MT) of „Rajma‟. The delivery schedule was finalized and the quantity was to be supplied in phased manner on stipulated rates.

5. The appellant issued acceptance letter on 09.06.2011. The total value of the work was Rs. 4,44,60,000/-.

6. The respondent submitted unconditional Bank Guarantee of Rs.

44,46,000/- as per the stipulated terms and conditions of the contract.

7. The appellant extended the delivery period from time to time and eventually issued „performance notice‟ dated 20.01.2012 directing respondent to perform its contractual obligation to make supply on or before 20.02.2012, supplementing that if such supply was not made, the contract would be cancelled.

8. As per appellant, the respondent supplied 310 MT of „Rajma‟ out of contracted supply of 1200 MT. However, according to respondent, it had supplied the entire quantity and the appellant had illegally rejected 890 MT of Rajma without assigning any reason.

9. According to the appellant, since the respondent failed to supply the balance quantity of 890 MT „Rajma‟ despite grant of sufficient opportunities, the contract was cancelled on 10.05.2012 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.

10. Since there was an „arbitration clause‟ in the contract, respondent approached the Court for appointment of Arbitrator. Initially, Sh. S.R. Mishra was appointed as Sole Arbitrator on 26.03.2014. Thereafter pursuant to order dated 01.08.2019, Shri Ritin Rai was appointed as Sole Arbitrator to adjudicate the disputes between the parties.

11. The stand of the respondent before the Arbitral Tribunal was that the time was never the essence of the contract and that 890 MT of Rajma was illegally rejected. The encashment of Bank Guarantee was also challenged on various grounds. 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. It will be worthwhile to mention here that besides challenging the forfeiture of Bank Guarantee and refund of amount thereunder, the respondent/claimant also sought recovery of damages on account of illegal rejection.

12. 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 Guarantee had been encashed as per the terms and conditions of the c