The Delhi High Court, comprising Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar, has dismissed an appeal by PEC Ltd., affirming an arbitral award directing the company to refund ₹5,67,864 with 10% annual interest to M/s Badri Singh Vinimay Pvt. Ltd. in a dispute over damaged Canadian-origin red lentils.
The dispute originated from a 2011 tender for the sale of 300 metric tons of red lentils on an "as is where is" basis. Respondent company won the bid at ₹25,500 per MT, depositing over ₹36 lakh, including earnest money. However, the buyer agreed to lift only cargo in "sound and good condition."
A joint third-party survey in February 2012 revealed that around 70% of the lentils were damaged or water-damaged, making them unfit for human consumption. The buyer lifted only 111.28 MT of acceptable stock, refusing the rest and seeking a refund. PEC rejected the request, citing the tender clause, and forfeited the earnest money.
The sole arbitrator ruled that the "as is where is" condition was diluted by mutual agreement during the survey and ordered a partial refund after deducting losses for 382 bags the buyer refused despite being in sound condition. Claims for consequential damages were denied.
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Both the Commercial Court and the High Court found the award reasoned and within contractual terms. Justice Harish Vaidyanathan Shankar emphasized that appellate interference under Section 37 of the Arbitration Act is limited, and the arbitrator’s factual findings could not be reappraised.
"The award is well reasoned, based on evidence and contractual interpretation, with no illegality or conflict with public policy," the court stated.
Case Title:- PEC Ltd. vs. M/s Badri Singh Vinimay Pvt. Ltd. & Anr.
