FOOD CORPORATION OF INDIA versus SURENDRA, DEVENDRA & MOHENDRA TRANSPORT CO.

Citation: [1988] 2 S.C.R. 329 · Decided: 10-12-1987 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Disposed off

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Judgment (excerpt)

FOOD CORPORATION OF INDIA 
v. 
~ • 
SURENDRA, DEVENDRA & MOHENDRA TRANSPORT CO. 
DECEMBER 10, 1987 
ISABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.J 
Arbitration Act, 1940--Challenge to award of the arbitration 
under section 30, 33-0f. 
The respondent was appointed a transport and handling Con-
tractor by the appellant subject to the terms and conditions mentioned 
in three successive written agreements entered into by both the parties. 
After disputes arose between the parties, an arbitrator was appointed 
as per the arbitration clause to adjudicate upon the disputes. The 
arbitrator made and published an award which was a speaking one. He 
did not allow the appellant's claim for demurrage and wharfage 
charges paid to the Railways amounting to Rs.15,63,863.02 by reason 
of the alleged wrongful conduct of the respondent but awarded only 
25% of the claim. The arbitrator also did not allo~ the appellant's claim 
for shortage in transit but reduced the claim by 40% and allowed only 
60% of it amounting to Rs.52,971.99. The arbitrator awarded to the 
respondent Rs.12,64,175.97 and pendente lite interest at 6% per 
annum. 
The appellant filed objections in the High Court under sections 30 
A 
B 
c 
D 
E 
and 33 of the Arbitration Act, 1940 ('The Act') for setting aside the 
award. The High Court (Single Judge) set aside the award. The respon-
dent filed an appeal to the Division Bench of the High Court which 
allowed the same, setting aside the judgment of the learned single judge 
F 
and upholding the award. Being aggrieved by the dicision of the High 
Court, the appellant appealed to this Court for relief by special leave 
under Article 136 of the Constitution. 
Disposing of the appeal, this Court, 
HELD: While issuing noiice on the application under Article 136 
of the Constitution, it was indicated that only three questions would be 
adjudicated upon in this appeal, viz, Rs.13,94,982.46 being the amonnt 
allowed on account of demurrage and wharfage charges mentioned in 
the award, secondly, the sum of Rs.2,35, 769.46 and lastly, the question 
of interest. l332G I 
329 
G 
H 
330 
SUPREME COURT REPORTS 
[ 1988] 2 S.C.R. 
A 
So far as the second question was concerned, counsel for the 
appellant did not make any submission before the Court. The Court also 
could not find any substance in this aspect. Therefore, it was not neces-
sary to deal with this aspect of the matter. [332H; 333A) 
So far as the amount ofRs.13,94,982.46 on account ofdemurrage 
B and wharfage was concerned, which was allowed, it appeared that the 
total demurrage and wharfage charges paid by the Corporation to the 
Railways in respect of the wagons cleared by the claimant firm, respon-
dent herein, after obtaining such waiver as the Railways were per-
suaded to make were Rs.15,63,863.21. There was no dispute about the 
actual payment of the charges. The appellant's case was that it was 
C entitled to recover the entire amount it had to pay on account of the 
demurrage and wharfage charges from the respondent under clause 
9(a) of the agreement. [333B-C] 
Under clause 9(a) according to the appellant, the Agent was liable 
to make good any compeusatiou/demurrage/wharfage as per Railway 
D rates in force during the period of contract and other charges or ex-
penses that might be incurred hy the Corporation on account of delay in 
loading/unloading of trucks/carts and unloading/loading of wagons un· 
less the delay was for reasons beyond the Agent's control. It appeared 
lh11t the appellant had periodically served notices upon the respondent· 
firm calling upon it to pay demurrage and wharfage charges with liberty 
E to prefer objections. Such objections·as the respondent-firm preferred 
were disposed of by the District Manager. This procedure continued till 
the end of November, 1975. Then the respondent-firm went to the Civil 
Court and obtained discontinuance of all proceedings for the recovery of 
demurrage and wharfage charges. The arbitrator noted that as a result 
of the hearings by the Corporation npto November, 1975, relief to the 
F tune of Rs.1,21,884.55 was granted to the respondent-firm and the 
recovery of Rs.45,996.20 was made from the respondent-firm's bills. 
The Corporation, therefore, claimed before the arbitrator recovery of 
the remaining or the claim of Rs.13,94,982.46. Counsel for the appel-
lant drew this Court's attention to clauses 9(a) and (b) of the agreement 
and submitted that the adjudication made by the Manager was final 

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