M/S VIJAY TRADING AND TRANSPORT COMPANY versus CENTRAL WAREHOUSING CORPORATION

Citation: [2019] 13 S.C.R. 1162 · Decided: 07-11-2019 · Supreme Court of India · Bench: R. BANUMATHI · Disposal: Dismissed

Judgment (excerpt)

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M/S VIJAY TRADING AND TRANSPORT COMPANY
v.
CENTRAL WAREHOUSING CORPORATION
(Civil Appeal No.655 of 2016)
NOVEMBER 07, 2019
[R. BANUMATHI, A.S. BOPANNA AND
HRISHIKESH ROY, JJ.]
Arbitration and Conciliation Act, 1996: s.34 – Appellant
contractor entered into an agreement with respondent corporation
for carrying out work of Handling and Transportation at Inland
Clearance Depot – Respondent corporation terminated the contract
due to appellant’s non-performance of contractual obligations and
forfeited the security deposit and also fork lift and hand trolleys –
Arbitration award in favour of respondent corporation – Held:
Failure to transport the container to the Port at Navi Mumbai
resulted in missing of the export schedule – Taking into consideration
the failure of the appellant to deliver the container at the Port at
Navi Mumbai and the time taken in recovery of the container and
the expenditure incurred by the respondent-Corporation in
particular, furnishing of bank guarantee of Rs.10 lakhs, the
detention of the equipments cannot be said to be arbitrary or beyond
the terms of the agreement –  Arbitrator and courts below recorded
the concurrent findings that the appellant Contractor failed in
carrying out the work as per the terms and conditions of the contract
– Arbitrator rightly allowed the detention and forfeiture of the
equipments of the contractor –  Similarly, counter claim for the
damages for the alleged detention and use of hand trolleys was
rightly rejected – No reason warranting interference with the award
passed by the Arbitrator – Contract – Termination of – Export-
Import.
Dismissing the appeal, the Court
HELD: 1. The Export loaded Container was handed over
by the Manager, ICD, Varanasi to the appellant on 06.11.2001
for delivery of the container at JNP, Navi Mumbai; but the
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appellant failed to transport the container to the destination port
and only with the intervention of the Court, the container was
located and recovered at Ghaziabad and received back at ICD,
Varanasi on 23.05.2003. But by then, the said container already
missed the export schedule. When the said Export loaded
Container was entrusted to the appellant, the appellant ought to
have transported the container to the port of destination with
due diligence. The respondent-Corporation was justified the
forfeiture of the security deposit on two counts:- firstly, in view
of the heavy claim raised by the Exporter for which they have
filed a claim of Rs.40 lakhs before the Consumer Forum and
secondly, on account of bank guarantee in the sum of Rs.10 lakhs
furnished by the respondent-Corporation for release of the
container. The Arbitrator and courts below recorded the
concurrent findings by holding the termination of the contract
legal and levy of forfeiture of the security amount and the levy of
fork lift is justified. [Para 11][1168-C-F]
2.  The container handed over to the appellant was detained
by the third party who filed a Civil Suit against the appellant stating
that his dues had not been cleared by the appellant. The
respondent-Corporation had filed an application in the said suit
for release of the container which was rejected by the Civil Court,
Ghaziabad on 28.11.2002 and the respondent had to file a Civil
Revision Petition  before the High Court in which a direction
was issued to the trial court to dispose of the application afresh.
It was thereafter, the trial court released the container on
furnishing a bank guarantee of Rs.10 lakhs by the respondent-
Corporation. The trial court released the container only on
furnishing of bank guarantee of Rs.10 lakhs. It is stated that the
said civil suit is still pending in the Ghaziabad Court and is at the
stage of recording evidence.  As held by the Arbitrator, the
appellant was given a contract to assist in smooth running of
international business of import and export and to have the time
management on top priority.  Failure to transport the container
to the Port at Navi Mumbai resulted in missing of the export
schedule. Taking into consideration the failure of the appellant
to deliver the container at the Port at Navi Mumbai and the time
M/S VIJAY TRADING AND TRANSPORT COMPANY v.
CENTRAL WAREHOUSING CORPORATION
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taken in recovery of the container and the expenditure incurred
by the respondent-Corporation in particular, furnishi

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