UNION OF INDIA v. A. V. J. WIRES LIMITED — 1987 DIGILAW 343 (DEL)

C. L. Chaudhry ( 1 ) A tender enquiry for supply of 250 M/t of M. S. wires for general engineering purpose was issued by Director General of Supplies and Disposal due to be opened on 3. 3. 1980. In response to the tender enquiry, the respondent submitted their tender subject to the condition of tender enquiry. The offer of the respondent was accepted by the petitioner by advance Acceptance of Tender dated 3. 5. 80 and formal Acceptance of Tender vide AT No. HW- 5/201/577/5. 12. 1979/45/caoc/324 dated 12. 5. 1980. The respondents were asked to supply 250 M. Ts. of M. S. Wire for general engineering purpose at the rate of Rs. 5450. 00per M. T. The total cost of the material under the contract was Rs. 13,62,500. 00. The supply of the material under the contract stipulated the delivery to commence within eight to ten weeks from the date of the acceptance of tender and at the rate of 60/75 MTs. per month and the delivery to be completed by 31st December 1980 or earlier. The respondents acknowledged the said A/t vide letter dated 20. 5. 80 subject to certain clarification. The petitioner under Clause 19 (j) of the A/t had the option to order for additional quantity upto 25%. The petitioner vide their A/l dated 21. 6. 80 exercised their option for additional quantity of 20 M. Ts. to be supplied under the contract and the delivery date for the additional supply was stipulated as 15. 1. 81. The respondent is stated to have acknowledged A/l vide their letter dated 27. 9. 1980. The petitioner claims to have issued an essential certificate to the Steel Authority of India Ltd. for release of 283. 50 M. T. M. S. Wire Rods to the respondent for manufacture of the stores under the contract. ( 2 ) THE petitioner s case is that the respondent did not take any step for production of the store to be supplied under the contract, Notwithstanding the requests by the petitioner. By letter dated 9th January 1981 the respondent is alleged to have requested for refixation of the delivery period without liquidated damages. The petitier states that in letter dated 21. 1. 1981 the respondent intimated that about 10 M. T. S. of the material was ready for supply and request for refixation of the delivery period without imposing liquidated damage was made. The petitier states that in letter dated 21. 1. 1981 the respondent intimated that about 10 M. T. S. of the material was ready for supply and request for refixation of the delivery period without imposing liquidated damage was made. The petitioner issued a telex message to the Director of Inspection Calcutta to verify whether any store was offered by the respondent for inspection till 15. 1. 1981. The Director of Inspection informed that no store was offered for inspection. The respondent having failed to make any supply under the contract, the petitioner was constrained to cancel the said A/t vide letter dated 24. 12. 1981 at the risk and cost of the respondent in exercise of right under Clause 17 (7) (iii) of the General Conditions of Contract. A risk purchase tender was issued by the petitioner on 20. 2. 1981 and a copy of the same was sent to the respondent on 3. 5. 1981 for making their tender against the risk purchase enquiry. In response to risk purchase tender enquiry issued by the petitioner, various tenders were received including one of the respondent. The respondent s tender, being higher could not be accepted. The tender of M/s Hindustan Wires Ltd. , Calcutta was accepted @ Rs, 6890. 00 per M. T F. O. R, Calcutta accepted A/t dated 16. 6. 81 was issued to M/s Hindustan Wires Ltd. Calcutta, and the said firm supplied the stores to the petitioner. The petitioner, having purchased stores at higher price at the risk and cost of the respondent and having incurred extra expenditure in the said risk purchase, were entitled to recover Rs. 3,63,916. 90 from the respondent in terms of Clause 14 of the General conditions of Contract. The respondent repudiated the claim of the petitioner. ( 3 ) THE disputes and differences having arisen between the parties, Clause 24 of the Conditions of Contract contained form DGS and D/18 (Revised) was invoked and the matter was referred for arbitration by the Director General of Supplies and Disposal. ( 4 ) BEFORE the Arbitrator, the petitioner put up the claim for Rs. 3,63,960. 00. In the reply filed by the respondent before the Arbitrator the claim of the Union of India was denied. It was denied that the formal acceptance of tender dated 12. 5. ( 4 ) BEFORE the Arbitrator, the petitioner put up the claim for Rs. 3,63,960. 00. In the reply filed by the respondent before the Arbitrator the claim of the Union of India was denied. It was denied that the formal acceptance of tender dated 12. 5. 80 was either in accordance with the terms of the contract which stood concluded by the issuance of the advance A/t or in terms of the offer as made and accepted by the issuance of the advance acceptance. It was submitted that the petitioner sought to amend the terms unilaterally as had been agreed to and accepted by them by issuance of their advance acceptance. It was stated that while acknowledging the receipt of the formal A/t vide their letter dated 20. 5. 80, the respondents brought to the notice of the petitioner the fact that, clause 19 (1) of the A/t should be amended besides seeking a host of other amendments the need for which had arisen by issuance of formal A/t dated 12. 5. 1980. The receipt of A/l dated 21. 6. 1980 was admitted. It was further submitted that while acknowledging the said A/l by their letter dated 27. 6. 80 the respondents in unequivocal terms made it clear to the claimants-petitioners that the amendment as desired by the respondent in their letter dated 20. 5. 80 was necessary. It was further stated that the respondents were inclined to make the supplies. They, however, were prevented from supplying the goods because of the acts of omission and commission of the petitioner. It was alleged that the respondent also went to the extent of approaching the consignee of the petitioner in order to get his confirmation as to whether he was agreeable to accept the supplies by road, who gave his assent vide letter dated 25. 9. 1980 and even requested the petitioner to do the needful but the petitioner turned a deaf ear to the request of the consignee as well. A request for refixation of the delivery period by letter dated 9. 1. 81 was not denied. It was further alleged that no valid risk purchase was made by the petitioner in terms of clause 19 of the General Conditions. A request for refixation of the delivery period by letter dated 9. 1. 81 was not denied. It was further alleged that no valid risk purchase was made by the petitioner in terms of clause 19 of the General Conditions. It was further claimed that the petitioners were guilty of breach of contract and the respondents were entitled to loss of profits in the said transaction which they estimated at 10% of the total value of the contract. ( 5 ) THE Arbitrator heard the parties and made his award on 17th September, 1985. The claims of the parties were dismissed. The operative portion of the award is as under. "i find that after the cancellation of the contract, Union of India unilaterally amended the contract. I also find that the contract has been kept alive after expiry of the delivery period and cancellation of the contract, while the contract was alive, is not valid. Therefore, I dismiss the claim of Union of India for Rs. 3,63,916. 00 and direct Union of India to release the amounts withheld, if any, to the contractor. All other claims of the parties are hereby dismissed. Parties shall bear their respective cost of the proceedings before me. " ( 6 ) AN application under Sections 14 and 17 of the Arbitration Act was moved on behalf of Union of India for direction to the Arbitrator to file the award and arbitration proceedings in Court. In pursuance to the direction given by this Court, the Arbitrator filed the award and the proceedings. Notice of the filing of the award was given to the parties. Union of India has assailed the award and file objections thereto which are the subject matter of I. A. 1531/86. However, the award is not being challenged on behalf of the respondent. Challenge to the award is on the following grounds. ( 7 ) THAT the Arbitrator failed to appreciate that the Union of India has suffered huge loss of Rs. 3,63,916. 00 due to the entire fault of the respondent as they failed to supply even a single one M/t out of the contracted quantity of 270 M/t. The learned Arbitrator has illegally held that the contract was kept alive after the expiry of the delivery period. 3,63,916. 00 due to the entire fault of the respondent as they failed to supply even a single one M/t out of the contracted quantity of 270 M/t. The learned Arbitrator has illegally held that the contract was kept alive after the expiry of the delivery period. The contract was cancelled much after the expiry of delivery period and as such no illegality had been committed by the Union of India. The learned arbitrator has totally misconducted herself and the proceedings by ignoring the commission of the breach of the contract as proved on record as well as incurring an extra expenditure of Rs. 3,63,916. 80 on account of risk purchase loss occasioned by the respondent firm. ( 8 ) THE respondent has contested the objections of the petitioner. In the reply filed by them, it is stated that the award is legal and valid and the Arbitrator has decided the matter after taking into consideration the entire material placed on record. ( 9 ) ON the pleadings of the parties the following issues were framed. 1. Whether the award is liable to be set aside on any of the objections of the petitioner ? 2. Relief. ( 10 ) THE parties were given time to file affidavit in support of their respective contentions which they did. I have heard the counsel for the parlies. ( 11 ) THE main contention raised on behalf of the petitioner is that the learned Arbitrator has neglected the letter date 3. 1. 1981 and she has reached a wrong conclusion. It is further stated that the finding of the learned Arbitrator are against the evidenced placed on record. I have perused the award. The objections raised on behalf of the Union of India relates to the merits of the case. The Arbitrator has not given the reasons but has recorded the conclusion. The award of the Arbitrator is final and conclusive. Right or wrong, the decision is binding if it be reached fairly and after giving adequate opportunities to the parties to place their grievances. The Court cannot re-examine and reappraise the evidence which has been considered by the Arbitrator and sit in appeal over the conclusion of the Arbitrator in proceedings to set aside the award. Right or wrong, the decision is binding if it be reached fairly and after giving adequate opportunities to the parties to place their grievances. The Court cannot re-examine and reappraise the evidence which has been considered by the Arbitrator and sit in appeal over the conclusion of the Arbitrator in proceedings to set aside the award. The Court has no jurisdiction to investigate into the merits of the case and to examine documentary and oral evidence on the award for the purpose of finding out whether or not the arbitrator has committed an error of law. It is settled as that the award cannot be challenged on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate facts properly. It was held in M/s Hindustan Tea Co. v. M/s K. Sashikant and Co. 1 as under. "the Award is reasoned one. The objections which have been raised against the Award are such that they cannot indeed be taken into consideration within the limited ambit of challenge admissible under the scheme of the Arbitrator Act. Under the law, the Arbitrator is made the final arbiter of the dispute between the parties. The award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate facts. Strong reliance was placed by the appellants learned counsel on an old Madras decision in Yogambal Boyee Ammani Ammal v. Naina pillai Markayar (1999) ILR 33 Mad 15. In our view, on the facts of this case challenge to the Award is not permissible by taking the stand that the Arbitrator acted contrary to the provisions of S. 70 of the Contract Act. In these premises the objection filed to the Award has to be rejected. We direct the Award to be made a rule of the Court. The parties shall bear their own costs throughout. " ( 12 ) THE pronouncement of the Supreme Court squarely covers this case. The objections filed by the Union of India fail and are dismissed. The Award is made a rule of the Court. Decree may be drawn in terms of the award. However, in the circumstances of the case I leave the parties to bear their own costs.