THE HON’BLE SRI JUSTICE P. SAM KOSHY AND THE HON’BLE SRI JUSTICE N. TUKARAMJI CIVIL MISCELLANEOUS APPEAL NOs.412 OF 2006 &1586 OF 2008 COMMON JUDGMENT: (Per Hon’ble Sri Justice N. Tukaramji)

These Civil Miscellaneous Appeals are filed under Sections

37 and 39 of the Arbitration and Conciliation Act, 1996. C.M.A.No.412 of 2006 is filed by the appellant/State Trading Corporation of India Limited, Hyderabad (STC), C.M.A.No.1586 of 2008 is filed by the appellant/M/s.Shreeji Trading Company, Mumbai, challenging the decree and judgment dated 28.10.2005 in O.P.No.2151 of 2003 on the file of the XIV Additional Chief Judge, City Civil Court, Hyderabad (FTC).

2. We have heard Ms. M.Vidyavathi, learned counsel for the appellant/State Trading Corporation of India Limited, Hyderabad in C.M.A.No.412 of 2006 and respondent No.1 in C.M.A.No.1586 of 2008; and Mr. S.Ravi, learned Senior Counsel for appellant/ M/s. Shreeji Trading Company, Mumbai in C.M.A.No. 1586 of 2008 and respondent No.1 in C.M.A.No. 412 of 2006.

3. Since both the appeals are filed assailing the selfsame decree and judgment, they were heard together and are being decided by this common judgment.

4. The appellant/State Trading Corporation of India Limited, Hyderabad in C.M.A.No. 412 of 2006 and the appellant/M/s. Shreeji Trading Company, Mumbai in C.M.A.No. 1586 of 2008 are hereinafter referred to as ‘claimant and respondent’ as per the Arbitration Award dated 12.06.2003.

5.(i) Briefly stated, the facts are thus: The respondent issued a tender notification on 02.09.2000 inviting offers for the purchase of rice stocks. The claimant's offer was accepted on 15.09.2000, and they were asked to remit Rs.1,11,70,000/- by 20.09.2000. The contract was entered into by the parties on 25.09.2000 for the sale of 100% broken rice, 25% broken rice, and parboiled rice, with a default penalty clause at Rs. 1,000/- per Metric Tonne (for short, ‘MT’). On 04.10.2000, the claimant sought part payment of Rs.5 lakhs out of the required deposit, stating that the material available for lifting was less than notified, but asserted that a demand draft for Rs. 9 lakhs is ready and would be presented upon delivery.

5(ii) Thereafter, on 13.10.2000, a delivery order for 690 MT of 100% broken white rice was issued by the respondent, and the claimant paid Rs. 7 lakhs for that quantity. As per the surveyor's report, 269.780 MT out of 690 MT was delivered to the claimant up to 03.11.2000, and no stock of 100% broken rice was available in the godown.

5(iii) On 07.11.2000, a delivery order for 635 MT of 25% broken raw rice was issued, and the surveyor's report stated that 320.300 MT out of 635 MT was delivered until 20.11.2000, with no stock available.

5(iv) Two delivery orders for 520 MT of 20% broken parboiled rice and a delivery order for 95,000 Polypropylene (PP) Bags were issued on 27.11.2000. However, on the same day, the claimant addressed a letter to the respondent stating that against a deposit of Rs. 24,79,506/-, goods worth only Rs. 12,42,508/- had been supplied and requested to carry forward the balance for subsequent orders. Meanwhile, on 27.10.2000, the respondent asked the claimant to lift the stock by 31.10.2000, failing which they would be liable to pay godown rent. However, on 01.12.2000, the respondent claimed that only part of the PP bags were received delivery and requested for clearance of the stock, otherwise godown rent would be charged.

5(v) The claimant contested that the stocks were of unacceptable standard and refused to receive and pay the godown rent. The respondent replied that as the tender and sale were on an ‘as is and where is basis’ and limited to the quantity available in the godown, they denied liability and reiterated that rent would be payable until lifting of stocks.

5(vi) The claimant issued a registered notice for breach of contract and compensation. Thereafter, the goods were referred to ICRISAT and IGSMRI to ascertain fitness of the stock. Based on the report of IGSMRI, the res