OMP330/2002

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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OMP No.330/2002

5th February, 2010

MMTC LIMITED & ANR.

...Petitioners

Through:

Mr. Rohit Puri and Ms. Zurrat Zamal

Kaur, Advocates.

VERSUS

OIL & NATURAL GAS CORPORATION LTD.

....Respondent.

Through: Mr. Subhash Oberoi, Advocate

CORAM:

HON’BLE MR. JUSTICE VALMIKI J.MEHTA

1.Whether the Reporters of local papers may be allowed to see

the judgment?

2. To be referred to the Reporter or not?

3.Whether the judgment should be reported in the Digest?

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JUDGMENT (ORAL)

VALMIKI J.MEHTA, J

1. By these objections under Section 34 of the Arbitration and Conciliation

Act, 1996, the petitioners challenge the Award dated 28.5.2002 of the sole

Arbitrator. The Award decides the dispute of the entitlement of damages of the

respondent on account of the petitioners having failed to supply the contracted

goods viz Sodium Carboxy Methyl Cellulose CMC(LVG) within the agreed

delivery schedule. The facts of the case are that two supply orders were placed

by the respondent on the petitioner No.2 M/s Kalpana Chemicals Limited.

2010:DHC:698

OMP330/2002

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Petitioner No.2 M/s Kalpana Chemicals thereafter assigned the contract to

petitioner no.1. Reference to the petitioners in this judgment therefore includes

reference as per the context to either or both the petitioner no.1 MMTC and

petitioner no.2 M/s Kalpana Chemicals Ltd.

2. The first supply order was for 200 metric tones(MT) dated 15.01.1993 as

per which the supply was to be made by 15.11.1993 and the second supply

order for 50 metric tones was dated 3.2.1993 for supply by 1.4.1994. The

admitted facts are that the petitioner failed to supply the contracted goods to the

respondent within the delivery period under the contract and consequently, the

respondent cancelled the contract on 27.10.1994. As a result of cancellation of

the contract, the respondent, on 23.5.1995, purchased at the risk and cost of the

petitioner, contracted goods, and thereafter instituted arbitration proceedings for

recovery of the higher cost paid for purchase of the contracted goods. The

respondent after encashing the bank guarantee of Rs.2,68,662/-, claimed the

balance amount with respect to the first contract at Rs.11,92,728.35 and with

respect to the second contract at Rs.3,77,817.50. As regards the aspect of

cancellation of the contract and subsequent risk purchase, certain dates and

additional facts are relevant and have to be noted. When the respondent wrote

its letters/telexes dated 27.10.1993 and 27.11.1993 to supply the balance 220

MTs, out of the total contracted quantity of 250 MTs, MMTC asked for

extension of the delivery period upto December 1994, but respondent wanted

the supply to be completed in three months and therefore refused to extend the

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delivery period and cancelled the contract vide its letter dated 27.10.1994. The

actual risk purchase was however only made on 23.5.1995 i.e. well after

December 1994, the month/period to which the petitioners had asked for

extension of time.

3. Before the Arbitrator, the petitioner raised various disputes with regard to

the fact that it was not guilty of breach of contract because of force majeure

conditions and other issues. The Arbitrator has arrived at a finding of fact that

the petitioner was in fact guilty of breach of contract and the respondent was

entitled to terminate the contract. This part of the Award, assuming that there

could not have been extension upto December 1994, could not in any manner be

challenged by the counsel for the petitioner because such finding has not been

shown to me to be in any manner illegal or beyond the provisions of the

Contract or perverse.

4. The issue however which came up during the course of hearing of this

petition was whether there could be an Award for actual damages when the

contract in question