Army loses ‘rajma’ supply dispute to Kendriya Bhandar | India News

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NEW DELHI: The ministry of defence on Thursday lost to Kendriya Bhandar a decade old legal battle on deficient supply of kidney beans or rajma, to Army Purchase Organisation, which was directed by the arbitrator to return the cashed bank guarantee amount of Rs 44.5 lakh to KB with 7.5% interest since 2012.
A three-judge bench of the Supreme Court led by CJI D Y Chandrachud told attorney general R Venkataramani, who was appearing for the ministry of defence, that there was no ground to upset the concurrent findings of the trial court and the Delhi HC, which had upheld the arbitral award.
In May 2011, the Army Purchase Organisation (APO) had invited a tender for supply of 1,200 tonne of rajma for defence services at an estimated cost of Rs 4.44 crore. KB was awarded the contract, and it submitted a bank guarantee of Rs 44.5 lakh towards a security deposit for performance of the contract.
There was a dispute over the quality of rajma supplied by KB. The APO rescinded the contract in January 2012 after KB had supplied 310 tonne of rajma and cashed the bank guarantee. When KB filed a claim petition seeking refund of the cashed bank guarantee amount, the APO contested it saying it had to purchase the required amount of rajma from open market.
The CJI-led bench told the AG – “Though there is a breach of contract, the APO must prove that it suffered losses because of procurement of rajma from open market. Once the bank guarantee was cashed in, the money came to you. You must prove how much financial loss suffered by you. It is a concurrent finding of the trial court and the HC, both upholding the arbitral award. Why should we interfere?”
The arbitrator had concluded that there was no evidence to show that APO made alternative puchases at a price higher than the price contracted with the KB.
The central government employee’s consumer cooperative society is popularly known as Kendriya Bhandar. It was set up in 1963 as a welfare project for the benefit of central government employees and the public at large. It is functioning under the aegis of Union ministry of personnel, public grievances & pensions. In September 2000, it was registered as a multi-state cooperative society with the central registrar of cooperative societies.



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