Appellate courts cannot reappraise evidence in arbitration disputes. Ledger entries provide only corroborative value and cannot serve as the sole proof of a claim when the underlying liability is disputed and primary evidence such as invoices or cash memos is missing.

MANMEET PRITAM SINGH ARORA, J. (ORAL)

1. This appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 [the ‘Act of 1996’], read with Section 13 of the Commercial Courts Act 2015, against the judgment dated 06.03.2023 passed by the District Judge Commercial Court, Saket in, OMP(COMM) No. 101/2019 [‘impugned judgment’] dismissing the Section 34 petition.

2. Brief facts relevant for deciding the appeal are as follows: -

2.1. The Respondent had authorized the Appellant to sell seeds to the farmers in different notified districts of the state of Uttar Pradesh vide distribution agreement dated 17.02.2011 [‘distribution agreement’].

2.2. The background¹At paragraph 12 of the statement of defense of the distribution agreement is that the Uttar Pradesh Government had floated various subsidy schemes, such as a scheme for popularization of cultivation of hybrid paddy in the State of Uttar Pradesh. Under these schemes, the seeds were to be supplied to the farmer, where 50% of the ‘cost’ of seed was to come from the farmers, which [‘cost’] was to be received by the Respondent herein through the dealer [i.e., the Appellant] and the remaining 50% cost of seed, was the subsidy component, which was to be paid for by the State Government. The Respondent herein was involved in selling the seeds to the farmers through its dealer [i.e., the Appellant herein] under the said scheme.

2.3. The dealer [i.e., the Appellant herein] had to submit a verified list of beneficiary farmers for verification to the concerned office of the Department of Agriculture. Then the claim for subsidy amount [i.e., the 50% of the cost of the seeds] was to be submitted to the State Agriculture Department along with a verified beneficiary list for release of subsidy amount by the State Government to the Respondent. As per the Respondent, upon receipt of the 50% subsidy component of the seed cost from the State Agricultural Department, Uttar Pradesh, it would release the amounts due to the dealer [i.e., the Appellant herein] as per the agreement.

2.4. The Appellant contends that it agreed with the Respondent to sell the certified seeds of approved varieties with subsidies to the farmers at the retail price fixed by the Respondent, by reducing the admissible amount of subsidy, and thereafter claim the subsidy amount and the eligible trade discount [as fixed from time to time] from the Respondent.

In this regard, the Appellant was required to maintain a separate register for beneficiary farmers and to sell seeds to them after deducting the admissible subsidy amount.

It is stated that soon after the sales were completed, the Appellant had to collate all the records, cash memos, registers, subsidized sale details, etc., on the approved format and submit the same to the office of the Department of Agriculture, Uttar Pradesh, for verification.

2.5. It is stated that the dealer agreement has been extended time to time, and the Appellant has been working as a distributor to the Respondent for the last sixteen [16] years.

2.6. It is stated that in terms of the distribution agreement and pursuant to its implementation by the Appellant to the satisfaction of the Respondent, the Appellant became entitled to receive an outstanding amount of Rs. 35,73,855.01/- [Rupees Thirty-Five Lakhs Seventy-Three Thousand Eight Hundred Fifty-Five and One Paise only] as on July, 2017 against the seeds distributed during the year 2011-2015.

It is stated that out of this, a sum of Rs. 25,30,260/- [Rupees Twenty-Five Lakhs Thirty Thousand Two Hundred and Sixty only]