O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 1 of 33

$~J

* IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgment reserved on:03.11.2025

Judgment pronounced on: 11.02.2026

+ O.M.P. (COMM) 174/2016

FRESH AND HEALTHY ENTERPRISE LTD ………Petitioner

Through: Mr. M.M. Kalra, Ms. Savita

Rustogi, Advs.

versus

GLOBAL AGRISYSTEM PVT LTD ………Respondent

Through: Mr. Anand Varma, Ms. Apoorva

Pandey, Advs.

O.M.P. (COMM) 181/2016

GLOBAL AGRISYSTEM PVT LTD ………Petitioner

Through: Mr. Anand Varma, Ms. Apoorva

Pandey, Advs.

versus

FRESH AND HEALTHY ENTERPRISE LTD ………Respondent

Through: Mr. M.M. Kalra, Ms. Savita

Rustogi, Advs.

CORAM:

HON'BLE MR. JUSTICE JASMEET SINGH

J U D G M E N T

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 2 of 33

1. These are cross petitions filed under Section 34 of the Arbitration and

Conciliation Act, 1996 (“1996 Act”) seeking to set aside the Arbitral

Award dated 02.08.2013 passed in the matter of “Global Agri Systems

Private Limited, New Delhi vs. Fresh & Healthy Enterprises Limited

New Delhi”. Both the parties have filed their respective petition to

challenge the aforesaid Award.

2. M/s Global AgriSystem Pvt. Ltd. (“GAPL”) was the claimant in the

arbitration proceedings and M/s Fresh and Healthy Enterprise Ltd.

(“FHEL”) was the respondent and counter-claimant.

FACTUAL BACKGROUND (for the sake of convenience factual

matrix has been taken from O.M.P. (COMM) 174/2016)

3. FHEL, a wholly owned subsidiary of M/s Container Corporation of

India Ltd. (a Government of India Undertaking under the Ministry of

Railways), provides cold storage services at FHEL CA Store, HSIIDC

Industrial Estate, Rai, Sonepat-131029.

4. GAPL carries the business of fruit and vegetable and has its registered

office at K-13A Hauz Khas Enclave, New Delhi-110016.

5. In 2010, GAPL approached FHEL for storing carrots in the cold

storage and started storing them in the cold storage facility of the

FHEL.

6. In 2011, GAPL again approached FHEL for storing carrots in the cold

storage and supplied a written draft agreement to FHEL vide email

dated 03.02.2011. Thereafter, emails were exchanged between the

parties, which contained the terms and conditions of the work agreed

between the parties. In the e-mail dated 18.02.2011, FHEL mentioned

as following:-

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 3 of 33

“1) We can offer Storage for 2500 MT of Carrots.

2) Storage can be extended maximum till 15th Sept. 2011

only. Beyond that date FHEL will have to take necessary

action as the chambers will be need by it for its own use.

3) Space required for washing, sorting and grading etc

needs to be jointly discussed.

4) Charges for power, water, waste disposal, manpower for

waste disposal will be extra and can be jointly decided.

5) Rental Payment has to be on advance and on monthly

basis.

6) One month rental to be given as security money.

7) Labour arrangement and charges can be mutually

decided among you, FHEL and the labour contractor.

8) We envisage 3 fork lifts will need to be deployed for your

work the charges for the same shall be @ Rs 3000/- per day.

9)Our liability stands restricted till maintaining of Protocols

jointly agreed only. 10% reading can be above the agreed

protocols.

10) For any other services the charges will be extra and can

be mutually agreed.

11)For any movement other then loading and unloading the

charges will be extra.

12) Operations need to be discussed in detail before hand

with our operations team, like how the carrots will be

received? How it will be transfeered in to big bins? when

washing etc will take place? what will be final packing? etc.

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 4 of 33

13) For any shifting during storage period the handling cost

will be extra.

the above points need to be discussed for finalisation of the

agreement, hence you may visit Rai for final discussions.”

7. In response to the said e-mail, GAPL sent an e-mail dated 21.02.2011

and mentioned that point Nos. 5, 6 and 8 were not acceptable and that

the parties can continue with the year 2010 agreement for the year

2011. The said email reads as under:-

“Dear Mr. Deepak,

• Point No. 5, 6 and 8 of the issues enlisted are

unacceptable.

• We can continue with our last year's agreement ,for this

year also.

xxxxxxxx”

8. Pursuant to the email dated 21.02.2011, FHEL vide another e-mail

dated 31.03.2011 stated that the handling charges for loading and

unloading is fixed @ 11.96/- per kg and the rental @ 0.56/- per kg per

month and that payment of rental within two week of taking out of the

material from the cold storage vide email dated 23.03.2011.

9. Thereafter, GAPL’s representative vide e-mail dated 18.03.2011

further reminded FHEL about importance of maintaining Relative

Humidity between 90-95% temperature during the storage period.

FHEL replied to the same assuring that the same is maintained.

10. One of the contested issues is with the emails exchanged between the

parties whether a concluded contract came into being or not. However,

GAPL started storing carrots in FHEL’s storage facility.

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 5 of 33

11. As per FHEL, it received 85,608 bags amounting to a total of about

3,570 MT of carrots from the GAPL. As per GAPL, it delivered

85,598 bags amounting to a total of about 3,588.88 MT of carrots.

FHEL had informed GAPL that as on 08.06.2011 an amount of Rs.

42.14 lakhs is due towards the rental and handling charges.

12. Although, the facts stated in O.M.P. (COMM) 181/2016 filed by

GAPL are almost identical, in the said petition GAPL has highlighted

the fact that GAPL was denied access to FHEL’s storage facility on

08.06.2011 and vide email dated 08.06.2011 FHEL disowned all

responsibility for the spoiling of the carrots. It is further stated that

GAPL raised the issue of denial of access vide email dated

08.06.2011, however, FHEL still did not allow GAPL and its

employees access to the cold storage and thereafter, GAPL again

reiterated the issue of denial of access vide letter dated 27.06.2011.

13. Since, disputes arose between the parties, it was agreed that the carrots

lying in the cold storage will be sold with joint efforts of the parties

and the proceeds of the sales would be kept with FHEL provided that

it agrees for the arbitration. FHEL agreed to refer the matter for

arbitration. Vide letter dated 21.07.2011, GAPL was informed that

FHEL has agreed to appoint an Arbitrator, but the condition that the

money will be kept by the GAPL was not acceptable to FHEL.

14. Thereafter, GAPL filed a petition under Section 9 of the 1996 Act

being O.M.P. No. 556/2011 seeking that FHEL be restrained from

dealing with or disposing off the carrots stored at its cold storage. A

Coordinate Bench of this Court vide order dated 16.09.2011 disposed

of the said petition and directed FHEL to hand over the carrots lying

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 6 of 33

in the cold storage to GAPL and permitted FHEL to be present at the

time of sale of carrots. It was also directed that the entire proceedings

from the sale of the carrots will be deposited by GAPL with the

Registrar General of this Court and in pursuance of the said order, an

amount of Rs. 22 lakhs was deposited by GAPL.

15. Thereafter, the parties initiated arbitration proceedings and after

completion of pleadings, the Sole Arbitrator framed the following

issues:-

“i. Whether there exists any contractual relationship or

consensus ad idem agreement between the parties?

ii. What is the storage condition agreed to by the two sides;

as per material documents comprising of communications

between the two parties made before and during the

deal/defining contractual relationship, if any ?

iii. Whether ascertaining the pre-storage physical condition

of carrots, in terms of it being with or without field soil,

grading, washing, pre-cooled or at ambient field

temperature before its loading into cold storage chamber

etc., is important in case of storage of carrots for

determining further storage protocols? If so, then whether

the same has been agreed to by the two parties?

iv. Whether the rate of pull-down of product temperature

from its ambient temperature immediately after its loading

into chamber is important for storage of carrots at any

prescribed or agreed to holding condition of temperature

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 7 of 33

and humidly ? If so, whether the same has been agreed to by

the two parties?

v. Has the claim of GAPL that the carrots tendered by GAPL

for storage at cold storage of FHEL had been of the highest

quality substantiated / proved by furnishing details

regarding pre-storage quality standards for carrots for its

storage in cold storage vis vis inspection records for pre-

storage quality parameters at time of tendering, or by any

other evidence?

vi. If the pre-storage quality conditions of each lot of carrots

had been furnished by GAPL to FHEL at the time of

tendering for storage for fine tuning storage conditions?

vii. If from the receipt for quantity received issued by FHEL

without demur it can be construed that FHEL had

ascertained quality of carrots tendered to it by GAPL for

storage?

viii. If the two sides to the dispute had agreed that FHEL

shall maintain 1° c temperature as per prescribed technical

norms for carrot storage with temperature variation of (+) /

(-) 1°C in the cold store during the storage term? Moreover,

if the parties had also agreed, though at a later stage, that

FHEL shall maintain RH between 90- 95% in the cold store

during the storage?

ix. Whether FHEL was under contractual obligation to store

agriculture produce as per Industry Standards and to that

extent whether, FHEL was under obligation to substitute /

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 8 of 33

interpolate the recommendations of Commodity Storage

Manual of the WFLO and the Agricultural Handbook of the

United States Department of Agriculture in aspects of

storage conditions not stipulated as terms & conditions in

any of the communication between the two parties?

x. If FHEL had failed in maintain agreed storage

conditions?

xi. Whether the FHEL as a warehouseman had taken due

care in agreeing to storage protocols and storage conditions

of carrots in totality, keeping in view the perishable nature

of commodity offered for storage?

xii. Whether the FHEL as a warehouseman had taken due

care to ascertain pre-storage quality of carrots tendered to

it by GAPL for storage, for deciding its storage worthiness

and adequacy of storage protocols planned to be adopted by

it?

xiii. Whether FHEL had maintained the agreed storage

conditions?

xiv. Whether the respective parties have discharged their

obligations in respect of salvaging the value of carrots when

onset of damage to it is noticed by them?

xv. Whether the cold storage services are within the purview

of any statute, if so what are the statutory obligations of the

service provider/warehouseman?

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 9 of 33

xvi. Whether GAPL is entitled to get any damages in

account of alleged loss to the carrots? Is so of what

amount?

xvii. Whether FHEL is entitled to recover rental and other

charges in respect of the facility of cold storage provided to

GAPL? If so what period and what amount?”

16. After hearing the arguments from both sides, the Sole Arbitrator

passed the impugned Award dated 02.08.2013, whereby the Sole

Arbitrator allowed the claims of GAPL to tune of Rs. 80,44,961/- as

well as the counter-claims of FHEL to the tune of Rs. 87,16,956/-.

17. Later, GAPL moved an application under Section 33 of the 1996 Act

and sought interpretation of the impugned Award and changes in the

Award. The said application was dismissed by the Sole Arbitrator vide

order dated 04.10.2013.

18. Aggrieved by the impugned Award dated 02.08.2013 and order dated

04.10.2013, both parties have partially challenged the impugned

Award.

SUBMISSIONS ON BEHALF OF FHEL (Petitioner in O.M.P.

(COMM) 174/2016)

19. Mr. Kalra, learned counsel for FHEL, submits that the impugned

Award is not only contrary to the terms agreed between the parties but

also deals with the dispute not falling within the terms agreed between

the parties.

20. It is submitted that the Sole Arbitrator himself observed that no

agreement was signed between the parties and that the parties agreed

on the terms through e-mails and also held that the same terms of

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 10 of 33

storage as of the year 2010 were to be followed during year 2011.

Hence, the Sole Arbitrator erred in holding that there existed a

contractual relationship or consensus ad idem agreement between the

parties. Further, in absence of any agreement in writing, the question

of FHEL being a bailee does not come into operation.

21. Further, it is submitted that the Sole Arbitrator observed that in the

absence of any signed agreement the storage conditions agreed to by

the parties are to be inferred from the e-mails exchanged between the

between the parties. The Arbitrator also observed that GAPL in its

proposed storage conditions did not mention any requirement of

specific air velocity and required rate of cooling and therefore, the

agreed terms and conditions between the parties were: -

- Holding Temperature = 1° C with temperature variation of +/-1 C

and

- Relative Humidity = 90%-95% (10% of reading can be above the

agreed protocols).

22. After holding the above, the Sole Arbitrator went beyond the agreed

terms between the parties by holding that FHEL was responsible for

the damages due to temperature and relative humidity in cold storage

chamber.

23. It is submitted that the Sole Arbitrator after observing that there was

no agreement between the parties regarding pre-storage conditions

such as washing, sorting, rate of cooling for attaining holding

temperature etc. and also that GAPL failed to specify pre-storage

physical conditions of carrots, erred in relying upon the terms of the

draft agreement, which were never agreed. The entire reference to the

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 11 of 33

draft agreement was misplaced. Further, the Arbitrator erred by

relying upon the Commodity Storage Manual of the World Food

Logistics Organization (“WFLO”) and Agriculture Handbook NBO.

66 published by United States Department of Agriculture (“USDA”),

since the same is not applicable.

24. It is further submitted that the Sole Arbitrator wrongly held that GAPL

and FHEL took calculated business risk by adopting storage protocols

developed by them jointly based on outcome during the previous year,

when the same were in deviation with those prescribed by WFLO or

USDA. FHEL never agreed that it will keep the carrots by following

WFLO or USDA and the only thing agreed between the parties was

that the parties will follow the protocols of the previous year i.e.,

2010.

25. It is further submitted that the Sole Arbitrator first observed that the

cold storage facility of FHEL was designed for receiving apples at

initial fruit temperature of 15°C and lacked pre-cooling facility.

Further, it was an admitted fact that GAPL already used the storage

facility in the year 2010 and was fully aware of the fact that cold

storage system could not provide a rapid cooling service for carrots

coming at higher ambient temperature. After making such

observations, the Arbitrator has contradicted its own findings by

awarding compensation to GAPL for alleged breach of the agreement,

as the rate of cooling was never stipulated and the same has also been

observed by the Sole Arbitrator. Therefore, the interpretation of the

Sole Arbitrator given in the Issue No. 10 and 13 of the impugned

Award is beyond the terms of reference.

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 12 of 33

26. It is submitted that the Sole Arbitrator failed to acknowledge that the

carrots were damaged due to fungus. The same is evident from the

observation of the Sole Arbitrator in the impugned Award at page 69

and 70 and from the photographs of carrots submitted by GAPL which

showed that the carrots were packed in gunny bags with poor

ventilation. As a result of which, the temperature sensor probably

recorded a lower temperature than what was prevailing inside the

bags. Further, the soil may have promoted growth of fungus, which

was on account of wrong packing and without pre-cooling the carrots

by GAPL and, therefore, no negligence can be attributed to FHEL.

Hence, the Sole Arbitrator erred in holding that there was negligence

on the part of FHEL for damages caused to the carrots, especially after

observing that GAPL used the defective packing material and did not

give pre-cooling treatment.

27. It is submitted that the Sole Arbitrator correctly observed that GAPL’s

claim that the receipt issued by FHEL for storage was towards

quantity as well as for quality of carrots is not substantiated and that

FHEL maintained the prescribed protocols for storage and GAPL

failed to establish that FHEL was under obligation to store the carrots

as per any other Industry Standards. However, subsequently the Sole

Arbitrator wrongly and in contradiction held that FHEL was

responsible for breach of the contract and hence, the Sole Arbitrator

has gone beyond the terms of the agreement and has wrongly decided

a dispute without jurisdiction.

28. It is submitted that the Sole Arbitrator erred in holding that FHEL was

responsible for the delay, as it was FHEL who pointed out that the

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 13 of 33

carrots were damaged due to fungus and requested GAPL to remove

the carrots immediately. However, GAPL instead of sorting out the

carrots, delayed it by filing petition under Section 9 of the 1996 Act.

29. It is submitted that the Sole Arbitrator wrongly awarded damages to

GAPL. GAPL has failed to lead any evidence to prove breach by

FHEL. FHEL’s only responsibility was to keep the protocol of the

temperature, and it was so maintained. Hence, since there was no

breach, the damages cannot be awarded. It is further submitted that the

Arbitrator himself observed that the carrots packed in gunny bags had

poor ventilation, as a result of which the temperature sensors probably

recorded a lower temperature than actually prevailing inside bags and

that FHEL indicated to GAPL that there is fungus growing in carrots

and it was not possible to check every bag. After making such

observations, the Sole Arbitrator erred in awarding damages to GAPL.

Further, the Sole Arbitrator has also wrongly calculated the net

amount payable and failed to appreciate that GAPL has not led any

evidence to show the cost at which it purchased the carrots and what

amount was spent on the carrots.

30. It is further submitted that the carrots were spoilt at the instance of

GAPL and it alone was responsible for the damage. GAPL mixed the

carrots from other cold storage and sold them together, hence, it was

not possible to ascertain the loss caused to carrots during the period it

was stored in cold storage of FHEL. Hence, the circumstances

established that it was GAPL who breached its obligations by not

paying the rental charges due and payable to FHEL.

31. Further, GAPL was not entitled to claim any damages, as it failed to

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 14 of 33

prove that it took reasonable care of carrots or that FHEL committed

any breach. GAPL even failed to prove as to what loss was suffered

by it. FHEL is not liable to reimburse the profit which GAPL could

have made and hence, FHEL is not liable to pay the damages at all.

The Sole Arbitrator has erred by first holding that there is no breach

attributable to FHEL and then awarding damages to GAPL.

32. Lastly, it is submitted that the Sole Arbitrator after holding that FHEL

was entitled to rental charges not paid by GAPL, should have granted

interest on the said amount also. Reliance is placed on Executive

Engineer, Dhankanal Minor Irrigation Division vs. N.C. Budharaj,

(2001) 2 SCC 721, to argue that when a person is deprived of the use

of money he was legitimately entitled to should be compensated for

the deprivation by interest.

SUBMISSIONS ON BEHALF OF GAPL (Petitioner in O.M.P.

(COMM) 181/2016)

33. Mr. Varma, learned counsel for GAPL, partially challenges the

impugned Award to the extent of Rs. 87,16,956/- awarded to FHEL

towards rental and handling charges and the order dated 04.10.2013,

as the same are in contravention of the public policy of India as

understood under Section 34(2)(b)(ii) of the 1996 Act and is patently

illegal.

34. It is submitted that the impugned Award is in violation of Sections

148, 151, 152, 158, 160, 161 and 170 of the Indian Contract Act,

1872, as the amount awarded towards rental and handling charges to

FHEL is in ignorance of the principles of bailment. FHEL as a bailee

had a duty to take care of the goods, and in the absence of any proof

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 15 of 33

towards discharge of such duty by FHEL, no charges in lieu of

bailment were payable by GAPL.

35. It is submitted that rental and handling charges for the period of

March to November, 2011 for all chambers have been awarded to

FHEL, despite the fact that GAPL’s representatives access to the cold

storage facility was prohibited from 08.06.2011. GAPL to withdraw

the rotting carrots, wrote letter dated 08.06.2011 raising issues of

denial of access vide emails dated 08.06.2021 and 27.06.2011. The

Sole Arbitrator failed to acknowledge that GAPL’s representatives

were allowed entry to cold storage facility only after judgment dated

16.09.2011 passed in O.M.P. No. 556/2011. Hence, award of rental

charges for the period of 08.06.2011 to 16.09.2011 was not payable as

the same is contrary to Section 108(c) of the Transfer of Property Act,

1882, which contemplates that a lessor should have unhindered and

uninterrupted right to enjoy the leased property. It is contended that,

without prejudice to the argument that the agreement between the

parties was one of bailment, even if the agreement is assumed to be

one of lease, no rental charges was payable by GAPL for the period

when it was denied access to the storage chambers.

36. It is submitted that the Sole Arbitrator observed that FHEL was not

able to maintain the storage conditions for 16 out of 36 storage

chambers and despite the said finding, the Sole Arbitrator awarded

rental charges to FHEL. As per agreement between the parties, as per

the draft written agreement and emails, FHEL was obligated to

maintain the storage conditions and awarding rental and handling

charges to FHEL after finding FHEL negligent in maintaining storage

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 16 of 33

conditions is contrary to the agreed terms, particularly when the

agreement contemplated payments for the storage facility upon the

release of carrots from the facility in September-October 2011.

37. It is submitted that the contention of FHEL that there was no

agreement between the parties, and therefore, the award of damages to

GAPL is wrong and misconceived. It is settled law that an agreement

can be arrived at even by exchange of emails, which may or may not

be signed, reliance is placed on Aloka Bose v. Parmatma Devi, AIR

2009 SC 1527 and Tarsem Singh v. Sukhminder Singh, (1998) 3

SCC 471. Further, all the essential requirements of Section 10 of

Indian Contract Act, 1872 were satisfied and FHEL has raised no

contention denying satisfaction of Section 10 of Indian Contract Act,

1872. It is argued that the contract has been arrived at between the

parties by exchange of emails and contentions of FHEL that there is

no contractual understanding between the parties merely because the

contract has not been signed is wrong.

38. It is further submitted that the contractual understanding between the

parties is evident from the conduct of the parties i.e., GAPL delivering

around 85,598 bags of carrots to FHEL’s storage facility in March-

April 2011, which were loaded into the cold storage chambers and

upon FHEL accepting delivery of the carrots. Reliance is placed upon

Bharat Petroleum Corpn. Ltd. v. Great Eastern Shipping Co. Ltd.,

(2008) 1 SCC 503 and in McDermott International Inc. v. Burn

Standard Co. Ltd., (2006) 11 SCC 181, to argue that a party’s conduct

of a positive act also bind such party and constitute an acceptance.

ANALYSIS AND FINDINGS

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 17 of 33

39. I have heard learned counsel for the parties and perused the material

available on record including the judgments cited.

40. The Court under Section 34 of the 1996 Act has a limited and narrow

scope of interference in a challenge to an Arbitral Award. The Court

does not sit in appeal over an Award or re-appreciates the evidence. It

is for the Arbitrator to interpret the terms of the contract and if the

Arbitral Tribunal has adopted a view which is plausible, the Court is

not to reassess the factual findings or substitute its own views with

those arrived at by the Arbitrator. Only under the limited grounds

expressly provided in Section 34 of the 1996 Act or when the Arbitral

Award is contrary to terms of the contract or provisions of the law, the

Court can set aside an Arbitral Award.

41. The said principles with regard to the limited scope of interference of

the Court under Section 34 of the 1996 Act have been reiterated time

and again by the Hon’ble Supreme Court. Reliance is placed on

Ramesh Kumar Jain v. Bharat Aluminium Co. Ltd., 2025 SCC

OnLine SC 2857, wherein the Hon’ble Supreme Court observed as

under:-

“28. The bare perusal of section 34 mandates a narrow lens

of supervisory jurisdiction to set aside the arbitral award

strictly on the grounds and parameters enumerated in sub-

section (2) & (3) thereof. The interference is permitted

where the award is found to be in contravention to public

policy of India; is contrary to the fundamental policy of

Indian Law; or offends the most basic notions of morality or

justice. Hence, a plain and purposive reading of the section

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 18 of 33

34 makes it abundantly clear that the scope of interference

by a judicial body is extremely narrow. It is a settled

proposition of law as has been constantly observed by this

court and we reiterate, the courts exercising jurisdiction

under section 34 do not sit in appeal over the arbitral

award hence they are not expected to examine the legality,

reasonableness or correctness of findings on facts or law

unless they come under any of grounds mandated in the said

provision. In ONGC Limited. v. Saw Pipes Limited, this

court held that an award can be set aside under Section 34

on the following grounds:“(a) contravention of fundamental

policy of Indian law; or (b) the interest of India; or (c)

justice or morality, or (d) in addition, if it is patently

illegal.”

29. …. Hence, it is very well settled that arbitral awards are

not liable to be set aside merely on the ground of erroneous

in law or alleged misappreciation of evidence and there is a

threshold that the party seeking for the award to be set

aside has to satisfy, before the judicial body could enter into

the realm of exercising its power under section(s) 34 & 37.It

is also apt and appropriate to note that re-assessment or re-

appreciation of evidence lies outside the contours of judicial

review under section(s) 34 and 37. This court in Punjab

State Civil Supplies Corporation Limited v. Sanman Rice

Mills, at Paragraph 12 observed that even when the arbitral

awards may appear to be unreasonable and non-speaking

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 19 of 33

that by itself would not warrant the courts to interfere with

the award unless that unreasonableness has harmed the

public policy or fundamental policy of Indian law. It might

be a possibility that on re-appreciation of evidence, the

courts may take another view which may be even more

plausible but that also does not leave scope for the courts to

reappraise the evidence and arrive at a different view. This

court in Batliboi Environmental Engineers

Limited v. Hindustan Petroleum Corporation Limited held

that the arbitrator is generally considered as ultimate

master of quality and quantity of evidence. Even an award

which is based on little or no evidence would not be held to

be invalid on this score. At times, the decisions are taken by

the arbitrator acting on equity and such decisions can be

just and fair therefore award should not be overridden

under section 34 and 37 of the A&C Act on the ground that

the approach of the arbitrator was arbitrary or capricious.”

(Emphasis added)

42. With said principles in mind, I shall now consider the rival

contentions of the parties.

FHEL Challenges To Impugned Award [O.M.P.(COMM.)174/2016]

43. Before delving into the merits of the matter, it is pertinent to lay down

the agreed terms of the work between the parties. The same were laid

down by the Sole Arbitrator while answering Issue No. 2 in the

impugned Award as under:-

a) Holding Temperature =1°C with temperature variation of +/-1°C

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 20 of 33

b) Relative Humidity = 90% - 95% (10% of reading can be above

the agreed protocols)

44. The said terms are not disputed by either party before this Court.

While recording the agreed terms of the work between the parties, the

Sole Arbitrator also observed that GAPL did not propose desired

storage conditions including specific air velocity and required rate of

cooling. The same is also not disputed by the GAPL in its objections

before this Court.

45. The Sole Arbitrator went further to observe that the storage facility of

FHEL was designed for storing apples at initial temperature of 15°C

and cooling the same to holding temperature of (-) 2° C and 90%

Relative Humidity in 5 days. Hence, the cold storage facility of FHEL

was not capable of providing rapid cooling service for carrots coming

at higher temperature and despite the same, GAPL failed to mentioned

any specific stipulations regarding rate of cooling.

46. Further, the Sole Arbitrator while answering Issue No. 3 in the

impugned Award held that:“To sum up, it is clear that no stipulations

had been agreed to regarding pre-storage conditions of fruit such as

fruit temperature, fruit pressure, maturity index, whether topped or

bunched, washing, sorting, grading, packaging type, rate of cooling

for attaining holding temperature etc. In other words, GAPL had not

specified the pre-storage physical conditions of carrots at any stage

such as in the draft agreement sent by it or thereafter. FHEL too has

not insisted upon getting the same specified and to that extent, it can

be inferred that the two parties had not dealt with and there was no

stipulations in the agreement between the two parties on pre-storage

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 21 of 33

physical condition of carrots to be stored.”

47. From the following, it is clear that the only agreed terms between the

parties were regarding Holding Temperature at 1°C with variation of

+/-1°C and Relative Humidity at 90% - 95% (10% of reading can be

above the agreed protocols). The Sole Arbitrator observed that other

stipulations such as air velocity, required rate of cooling, pre-storage

conditions etc. were also necessary conditions but primarily held

GAPL responsible for not specifying them to FHEL at any point in

time.

48. Additionally, in answer to Issue No. 5 of the impugned Award, the

Sole Arbitrator held that the onus to prove that the carrots stored at

FHEL’s storage facility were of highest quality was on GAPL and

GAPL failed to submit any evidence to substantiate its claim and also

failed to show that the receipt issued by FHEL acknowledged quality

of carrots. Hence, the Sole Arbitrator declined the contention of

GAPL that because FHEL found defect only in one consignment of

carrots, all other carrots were of highest quality. The onus was on

GAPL to prove the quality of carrots stored, which it failed to

discharge. Additionally, in answer to Issue No. 7 of the impugned

Award, the Arbitrator held that the receipt issued by FHEL to GAPL

does not indicate the quality of carrots as there was no stipulation even

in the draft agreement that FHEL would inspect the quality and GAPL

has failed to prove otherwise. In answer to Issue No. 6 of the

impugned Award, the Arbitrator held that even GAPL has not claimed

that it furnished pre-storage quality conditions of carrots to FHEL.

49. The above findings of the Sole Arbitrator, clearly shows that the

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 22 of 33

Arbitrator after analysing the material on record, pleadings and

evidence of the parties, came to the conclusion that GAPL failed to

prove quality of carrots at FHEL’s storage facility.

50. Moving further, the Arbitrator while dealing with Issue No. 9 of the

impugned Award, held that GAPL failed to prove that FHEL has any

independent obligation regarding choosing and deciding the storage

protocols. The Arbitrator held that GAPL failed to prove that “FHEL

was under contractual obligation to store agriculture produce as per

any other Industry Standards or under obligation to substitute /

interpolate recommendations of Commodity Storage Manual of the

WFLO and the Agricultural Handbook of the United States

Department of Agriculture in aspects of storage conditions not

stipulated as terms & conditions in any of the communication between

the two parties.”

51. After making all the above mentioned findings and in favour of

FHEL, the Arbitrator while answering Issue Nos. 10 and 13 of the

impugned Award found that 16 storage chambers did not meet the

agreed terms and conditions. He ascertained the storage conditions

maintained by FHEL from stage of loading of carrots till attaining

agreed conditions and formed time-temperature curve for each

chamber in a graphical form. The Arbitrator analysed the time-

temperature curves based on the following criteria:-

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 23 of 33

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 24 of 33

52. A perusal of the same shows, that the Arbitrator found FHEL

responsible for not providing storage and product temperatures and

Relative Humidity data for some chambers for some period and also

found that the sensors were either switched off or not working during

initial period after sealing of chamber. He held FHEL responsible for

subsequent damages to carrots, in the instances of missing temperature

record. Further, the Sole Arbitrator also recorded that one of the

reason for stored carrots gone bad could be plateau formation in time-

temperature curve for chamber temperature or sustained rise in

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 25 of 33

chamber and product temperature. However, since the same could

have been monitored and managed by FHEL, the Arbitrator held

FHEL responsible for default in monitoring and managing the

temperature in the storage chambers.

53. It is based on these factors that the Arbitrator found FHEL responsible

for damages to carrots in 16 chambers, as explained in Appendix-1 of

the impugned Award. Further, in dealing with Issue No. 11 and 12 of

the impugned Award, the Arbitrator held both GAPL and FHEL

jointly responsible for taking “calculated business risk” by adopting

storage conditions developed by them based on results of last year’s

i.e., 2010 outcomes, even though as per the Arbitrator the same were

inconsistent with those prescribed by WFLO or USDA. Hence, he

held both parties liable for not discussing and finalising required pre-

storage conditions such as washing, sorting, grading and stacking in

crates / bins followed by rapid cooling before storing the carrots.

54. It is after making all the above mentioned findings, the Arbitrator in

Issue No. 16 of the impugned Award, held that applying the principles

of bailment as per the Indian Contract Act, 1872 FHEL as a bailee was

responsible to take care of goods as any prudent man would take of his

own goods.

55. It is a matter of dispute between the parties as to whether there was a

contractual relationship between the parties thereby whether the

Indian Contract Act, 1872 will apply to the present case or not.

56. There is a concluded contract as regards the two conditions i.e., FHEL

will maintain Holding Temperature at 1°C with variation of +/-1°C

and Relative Humidity at 90% - 95% (10% of reading can be above

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 26 of 33

the agreed protocols) and the emails exchanged between the parties

show offer and acceptance of those conditions. Based on these terms

GAPL stored the carrots in FHEL’s storage facility. Hence, FHEL was

a bailee qua GAPL with regard to maintaining Holding Temperature

and Relative Humidity.

57. Based on the evidence on record, the Sole Arbitrator concluded that

FHEL failed to maintain these conditions in 16 chambers and

consequently, damages were awarded to GAPL.

58. I find no infirmity with the conclusion reached by the Sole Arbitrator

regarding award of damages to GAPL. The said findings of the Sole

Arbitrator is based on the factual findings, agreed terms between the

parties, pleadings of the parties and thereafter, detailed calculation of

damages.

59. An Arbitrator is the master of facts and evidences and unless the

findings arrived at by the Arbitrator are found to be so perverse or

unreasoned that no reasonable man would have arrived at, the Court

under Section 34 of the 1996 Act must refrain itself from interfering

with the view of the Arbitrator.

60. After analysing the above the Sole Arbitrator has awarded damages to

the tune of Rs. 80,44,961/- against FHEL, as although the Sole

Arbitrator primarily found GAPL responsible for not informing FHEL

about storage conditions other than Holding Temperature and Relative

Humidity, however, the Sole Arbitrator after thorough analysis of each

storage chambers also came to a finding that FHEL failed to provide

Holding Temperature and Relative Humidity for some chambers and

some storage chambers readings even show that sensors were either

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 27 of 33

switched off or not working during initial period after sealing of

chambers. Hence, for such chambers the Sole Arbitrator held FHEL

responsible. The Chart annexed as Annexure-1 in the impugned

Award shows the calculation sheet for gross amount of damages

payable to GAPL. Thereafter, under Issue No. 16 of the impugned

Award, the Arbitrator gave detailed calculation of the net amount of

damages awarded to GAPL, which has been calculated after offsetting

the corresponding amount of sales realization and the break up has

been given in Chart-5 in Issue No. 16 of the impugned Award.

61. Hence, I find no merit in the contentions raised by learned counsel for

FHEL to set aside the amount awarded by the Sole Arbitrator to

GAPL towards damages. The computation of the same has not been

objected by FHEL before this Court.

62. Lastly, coming to the contention raised by the learned counsel for

FHEL pertaining to grant of interest on the awarded amount, the law

in no more res integra and well settled that under Section 31(7)(b) of

the 1996 Act the grant of post-award interest is mandatory and the

only discretion with the Arbitrator is pertaining to the rate of interest.

Where the arbitrator fails to fix the rate of interest, then the statutory

rate as provided in Section 31(7)(b) of the 1996 Act applies. The said

has been clearly laid by the Hon’ble Supreme Court in Sri Lakshmi

Hotel (P) Ltd. v. Sriram City Union Finance Ltd., 2025 SCC OnLine

SC 2473, wherein it was held as under:-

“37. Clause (b) of Section 31(7) of the Act, 1996 confers

discretion upon the Arbitral Tribunal to award interest for

the post-award period but that discretion is not subject to

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 28 of 33

any contract. If such discretion is not exercised by the

Arbitral Tribunal, then the statute steps in and mandates the

payment of interest at the rate specified for the post-award

period. While clause (a) gives parties an option to contract

out of interest, no such option is available in regard to the

post-award period.

38. In R.P. Garg v. The General Manager, Telecom

Department, 2024 INSC 743, this Court had the occasion to

deal with the question as to whether the appellant was

entitled to post-award interest on the sum awarded by the

Arbitrator. …. The High Court allowed the revision against

the said order and set aside the District Court's order while

holding that the contract between the parties did not permit

the grant of post-award interest. While allowing the appeal,

this Court held that the sum directed to be paid under the

arbitral award must carry interest. While taking note of the

decision of this Court in Morgan Securities & Credits Pvt

Ltd. v. Videocon Industries Ltd., 2022 INSC 898, this Court

held as under:

“11. So far as the entitlement of the post-award Interest

is concerned, sub-Section (b) of Section 31(7) provides

that the sum directed to be paid by the Arbitral Tribunal

shall carry interest. The rate of interest can be provided

by the Arbitrator and in default the statutory prescription

will apply. Clause (b) of Section 31(7) is therefore in

contrast with clause (a) and is not subject to party

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 29 of 33

autonomy. In other words, clause (b) does not give the

parties the right to “contract out” interest for the post-

award period. The expression „unless the award

otherwise directs‟ in Section 31(7)(b) relates to rate of

interest and not entitlement of interest. The only

distinction made by Section 31(7)(b) is that the rate of

interest granted under the Award is to be given

precedence over the statutorily prescribed rate. The

assumption of the High Court that payment of the interest

for the post award period is subject to the contract is a

clear error.

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39. In view of the aforesaid, the interpretation of clause (b)

of Section 31(7) of the Act, 1996 is no more res integra. The

grant of post-award interest under Section 31(7)(b) is

mandatory. The only discretion which the arbitral tribunal

has is to decide the rate of interest to be awarded. Where

the arbitrator does not fix any rate of interest, then the

statutory rate, as provided in Section 31(7)(b), shall

apply.…”

(Emphasis added)

63. Even in Gayatri Balasamy v. ISG Novasoft Technologies Ltd., (2025)

7 SCC 1, the Hon’ble Supreme Court observed as under:-

“75. For the post-award interest in terms of Section

31(7)(b), the courts will retain the power to modify the

interest where the facts justify such modification. This is

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 30 of 33

why the standard rate stipulated in clause (b) applies when

the award itself does not specify the applicable post-award

interest. There can be a situation where the party to be paid

money is at fault and is guilty of delay which may require a

modification in the rate of interest. In the absence of grant

of post-award interest in the award, the Court also

possesses the power to grant post-award interest. Clearly,

as per the legislative mandate, it is not the sole prerogative

of the arbitrator.

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77. Our reasoning is bolstered when considering the

practical aspects. The Arbitral Tribunals, when determining

post-award interest, cannot foresee future issues that may

arise. Post-award interest is inherently future-oriented and

depends on facts and circumstances that unfold after the

award is issued. Since the future is unpredictable and

unknown to the arbitrator at the time of the award, it would

be unreasonable to suggest that the arbitrator, as a

soothsayer, could have anticipated or predicted future

events with certainty. Therefore, it is appropriate for the

Section 34 Court to have the authority to intervene and

modify the post-award interest if the facts and

circumstances justify such a change.”

(Emphasis added)

64. Hence, the FHEL is entitled to post-award interest on the amount

awarded by the Sole Arbitrator at the rate of 2% higher than the rate of

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 31 of 33

interest prevalent on the date of the impugned Award, from the date of

impugned Award to the date of payment, in terms of Section 31(7)(b)

of the 1996 Act.

GAPL Challenges To Impugned Award [O.M.P.(COMM.) 181/2016]

65. The primary objection of GAPL is that the Sole Arbitrator erred in

awarding Rs. 87,16,956/- to FHEL towards rental/cooling and

handling charges. It is contended that GAPL was denied access to the

storage facility of FHEL since 08.06.2011 and was only allowed entry

after judgment passed in O.M.P. No. 556/2011 on 16.09.2011. Hence,

award of rental charges for the period of 08.06.2011 to 16.09.2011 is

not payable by GAPL. Further, it is contended that the Sole Arbitrator

awarded rental charges to FHEL, despite observing that FHEL failed

to maintain the storage conditions for 16 storage chambers out of 36

chambers.

66. The Sole Arbitrator has dealt with said contentions of GAPL in Issue

No. 17 of the impugned Award and held as under:-

“i. Admissibility of FHEL's Claim towards Cooling Charges

/ Rental & Handling Charges- GAPL has not been able to

cite any provision of law or case law under which FHEL's

entitlement for getting rentals and handling charges is

annulled due to damages to produce stored in cold storage.

Therefore, I determine that cooling charges and handling

charges are payable by GAPL to FHEL. FHEL has been

raising bills for cooling and handling charges and

computation on these accounts have not been challenged by

GAPL.”

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 32 of 33

67. It is an admitted fact that there is no agreed clause between the parties

which states that damages will be provided to one party on account of

breach by other party. Further, as observed Sole Arbitrator, that in the

arbitration proceedings GAPL failed to substantiate its contention

backed by law that FHEL is not entitled to rental and handling charges

due to damages to the carrots in its storage facility.

68. It is also an admitted fact that the storage facilities of FHEL were

utilised for storing of GAPL’s carrots. If GAPL was not happy with

the storage conditions and/or access was not provided, GAPL was

always free to remove its carrots. It cannot be accepted that while

using FHEL’s storage facilities, GAPL would not pay handling and

rental charges for the same. Hence, the Sole Arbitrator awarded Rs.

87,16,956/- to FHEL towards rental and handling charges.

69. I find no infirmity with the findings of the Sole Arbitrator. The said

findings show that the Sole Arbitrator after due consideration to the

facts of the matter and pleadings by the parties came to a conclusion

that due to failure of GAPL to substantiate its objection to claims of

FHEL towards rental and handling charges, the same is due and

payable. The said findings of the Sole Arbitrator are a reasonable and

plausible view and this Court under Section 34 petition is not to

reassess the findings on facts if the same are reasonable.

70. Hence, I find no merits in the contentions raised by learned counsel

for GAPL to set aside the amount awarded by the Sole Arbitrator to

FHEL towards rental and handling charges. The computation of the

same has not been objected by GAPL before this Court.

71. Additionally, as observed above, just like FHEL, GAPL is also

O.M.P. (COMM) 174/2016 & O.M.P. (COMM) 181/2016 Page 33 of 33

entitled to post-award interest on the amount awarded by the Sole

Arbitrator at the rate of 2% higher than the rate of interest prevalent on

the date of the impugned Award, from the date of impugned Award to

the date of payment, in terms of Section 31(7)(b) of the 1996 Act.

CONCLUSION

72. In view of the aforesaid discussion, I find no merit in the submissions

made by the learned counsels for either party to set aside the

impugned Award. The impugned Award is not in contravention with

the public policy of India or patently illegal.

73. However, both parties are entitled to post-award interest as indicated

above.

74. Hence, both the petitions are dismissed, with the above observations.

JASMEET SINGH, J

FEBRUARY 11, 2026/ (HG)