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 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 300 Metric Tons (MT) of „Dal Arhar‟.

4. The respondent M/s Indian Agro Marketing Co-operative Limited participated in such tender process and was awarded work contract to supply 300 MT of Dal Arhar at the rate of Rs. 6,361/- per quintal.

5. The appellant issued acceptance letter on 03.06.2013. The total value of the work was Rs. 1,87,83,000/- and the delivery was to be made between 01.05.2013 to 05.07.2013.

6. The respondent submitted unconditional Bank Guarantee of Rs.

18,78,300/- as per the stipulated terms and conditions of the contract.

7. The appellant kept on accommodating the respondent by extending the dates of delivery from time to time. Performance Notices were issued on 05.07.2013, 22.08.2013 and 26.09.2013.

Finally, the delivery period was extended upto 04.10.2013.

8. The respondent did supply the entire quantity but fact remains that part-delivery was accepted and part was rejected on the basis of its quality. Since, the respondent could not supply the entire quantity and despite repeated requests, only 180 MT of commodity in question was accepted and it failed to supply the balance 120 MT, despite extension of time, the contract was cancelled by the appellant vide letter dated 19.02.2014 in terms of the clause 18 (d) (viii) of Appendix to Tender Enquiry and clause 7(4) of DGS&D-68 (Revised) and the Bank Guarantee in question was forfeited.

9. 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.

10. The stand of the respondent before the Arbitral Tribunal was that the delivery period mentioned in the contract was superfluous, impossible and impractical and that time was never the essence of the contract. 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.

11. 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 contract and, therefore, the claim had no substance.

12. The Arbitral Tribunal returned the finding that that cancellation of contract based on Performance Notice dated 26.09.2013 was illegal and consequently, the encashment of the Bank Guarantee was also