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 31.01.2023 passed by Sh. Gurvinder Pal Singh, learned District Judge (Commercial Court-02), 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 450 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 450 MT of Arhar @ Rs. 5184/- per quintal.

5. The appellant issued acceptance letter on 03.04.2012. The total value of the work was Rs. 2,33,28,000/- and the delivery was to be made between 01.07.2012 and 15.07.2012. The delivery period was, however, extended upto 21.08.2012.

6. The respondent submitted unconditional Bank Guarantee of Rs.

23,32,800/- as per the stipulated terms and conditions of the contract.

7. Since no supply was made, the contract was cancelled on 28.09.2012 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.

8. The appellant retained Rs. 16,32,960/- as „general damages‟ and the balance was refunded to the respondent.

9. Since there was an „arbitration clause‟ in the contract, respondent approached the Court for appointment of Arbitrator by filing ARB.P. No. 468/2014 and this Court, vide order dated 23.02.2015, was pleased to appoint Sh. 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 as the commodity in question i.e. „Arhar‟ was not available in the market during the relevant period. The encashment of Bank Guarantee was also challenged on various grounds. It was averred that the contract in question was having restrictive clause that respondent had to arrange „Arhar from wholesale Mandies only and from no other place which also made the execution impossible since it was a natural crop and not a man-made one. The unilateral extension was meaningless as the crop could not have reached whole-sale Mandies till middle of November. 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 the forfeiture of the part of Bank Guarantee as „general damages‟ was not justified as recovery of the „general damages‟ could only be on