2019 (11) TMI 372 - SC - Indian Laws

Appointment of an arbitrator - illegal detention of container - termination of contract - Section 34 of the Arbitration and Conciliation Act - HELD THAT - The learned Arbitrator and the Courts below have recorded the concurrent findings that the appellant Contractor has failed in carrying out the work as per the terms and conditions of the contract and the learned Arbitrator has rightly allowed the detention and forfeiture of the equipments of the contractor and disallowed the counter claim No.4 of the appellant. Similarly, the counter claim No.5 which was for the damages for the alleged detention and use of hand trolleys has been rejected and thus, the counter claim Nos.4 and 5 have been rightly disallowed by the learned Arbitrator. There are no reason warranting interference with the award passed by the Arbitrator and the impugned judgment and this appeal is liable to be dismissed. Appeal dismissed.

Summary

Issues:
1. Validity of termination of contract and forfeiture of security deposit.
2. Justification of detention and forfeiture of equipment.
3. Consideration of counter claims and objections under Section 34 of the Arbitration and Conciliation Act.

Analysis:

Issue 1: Validity of termination of contract and forfeiture of security deposit
The dispute arose from the termination of a contract due to poor performance by the appellant as a Handling and Transportation Contractor. The Arbitrator upheld the termination as valid and allowed certain claims of the respondent, including the forfeiture of the security deposit. The appellant objected under Section 34 of the Arbitration and Conciliation Act, contending that the reasons for forfeiture were not provided. The High Court found no infirmity in the Arbitrator's decision. The Supreme Court upheld the decisions, emphasizing the appellant's failure to transport a container to the designated port and the heavy claims against the respondent, justifying the forfeiture.

Issue 2: Justification of detention and forfeiture of equipment
The appellant claimed that equipment was illegally detained by a third party, leading to contract termination. The Arbitrator and lower courts upheld the detention and forfeiture of equipment, citing contractual terms and the appellant's failure to fulfill obligations promptly. The Supreme Court agreed with these findings, highlighting the appellant's negligence in recovering the detained container and the respondent's expenses in securing its release.

Issue 3: Consideration of counter claims and objections under Section 34
The appellant raised counter claims seeking refunds and damages, which were partially allowed by the Arbitrator. However, objections under Section 34 were dismissed by the courts, leading to the appeal. The Supreme Court reviewed the contentions of both parties and affirmed the lower court's decisions, noting that the appellant had already received the full payment as per the arbitral award. The Court found no grounds to interfere with the Arbitrator's award and upheld the dismissal of the appeal.

In conclusion, the Supreme Court affirmed the High Court's judgment, validating the termination of the contract, forfeiture of the security deposit, and detention of equipment. The Court emphasized the appellant's contractual breaches and failure to meet obligations, leading to the dismissal of the appeal without costs.