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M/s Vijay Trading and Transport Company v. Central Warehousing Corporation

Civil Appeal · 2019 INSC 1215Decided 7 Nov 2019
Civil Appeal No. 655 of 2016
Justice R. Banumathi · Justice A.S. Bopanna · Justice Hrishikesh Roy

Background

The appellant had a two-year contract with the Central Warehousing Corporation for handling and transportation work at an Inland Clearance Depot in Varanasi. The Corporation terminated the contract midway, citing poor performance, notably the appellant's failure to timely transport an export container to Navi Mumbai, which caused the container to be detained by a third party and to miss its export schedule, and forfeited the appellant's security deposit and detained its fork lift and hand trolleys. An arbitrator upheld the termination and forfeiture while rejecting the appellant's counter-claims for refund of the security deposit and compensation for the detained equipment; the High Court (Single Judge and Division Bench) affirmed this award.

Decision Breakdown

The Supreme Court found concurrent findings by the Arbitrator and both levels of the High Court that the appellant had failed to perform its contractual obligations with due diligence, justifying both the termination of the contract and the forfeiture of the security deposit and equipment under the contract's terms. It also noted that the appellant had already received the compensation awarded to it by the arbitrator without disclosing this when filing its objections. Finding no error warranting interference with concurrent findings of fact and law by the arbitrator and the High Court, the Supreme Court dismissed the appeal and affirmed the High Court's judgment, with no order as to costs.

Lesson Learnt

Courts are reluctant to interfere with an arbitral award, especially where it has already been upheld by two layers of court review on concurrent findings of fact; a contracting party's own failure to perform diligently (here, timely delivering goods) can justify forfeiture of security and equipment under the contract's own terms.

Official source (sci.gov.in)View Judgment (PDF)

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