Research › Browse › Judgment

Supreme Court of India · body

1999 DIGILAW 313 (SC)

Hindustan Vegetable Oils Corporation LTD. v. A. P. Paracer

1999-03-11

S.N.PHUKAN, S.RAJENDRA BABU

body1999
(1) THIS appeal is directed against an order made in an application filed under Sections 32 and 33 of the Arbitration Act by the appellant. The appellant published an advertisement in the Indian Express on 16-10-1984 inviting pre-qualification bids to be sent within ten days from that date. The case put forth on behalf of the appellant is that they had engaged the services of an architect who has to process tenders and the architect stated that he had received ten applications within the stipulated period and out of them he found five persons eligible and the tender forms could be issued to them. Tender forms were issued to those five eligible persons. The tender to Respondent 2 was found to be in order and being the lowest bidder, the contract was awarded to him. Thereafter certain disputes arose between the parties and arbitration proceedings were initiated. Objecting to the arbitration proceedings, the said application was filed by the appellant on the ground that he had in fact received only four pre-qualification bids by 26-10-1984 and the architect had wrongly stated that he had received ten such bids by that time, that this wrong statement of the architect amounted to fraud played on the appellant, that as a result of this fraud, the appellant agreed to issue tender forms and thereafter awarded the contract. After critical examination of these contentions, the High Court came to the conclusion that the fraud, if any, was only up to the stage of pre-qualification bids and thereafter the tender offered by the respondent having been accepted the same had no significance at all. It was noticed that the tender offered by the second respondent being the lowest no prejudice was caused to the appellant and, therefore, it was wholly unnecessary to rely upon the architects fraud, if any. Further, the High Court noticed that the fraud was committed as early as 1-8-1986, but the appellant appeared before the arbitrator on 11 different occasions till the hearings concluded on 29-8-1986 without demur. In those circumstances, the High Court found that the appellant had acquiesced in the arbitration proceedings and therefore, cannot now challenge the arbitrators appointment. (2) IN this appeal, the learned counsel for the appellant contended that the fraud vitiates everything and the contract is contrary to law. In those circumstances, the High Court found that the appellant had acquiesced in the arbitration proceedings and therefore, cannot now challenge the arbitrators appointment. (2) IN this appeal, the learned counsel for the appellant contended that the fraud vitiates everything and the contract is contrary to law. When the architect had committed fraud upon the appellant and pursuant to which the contract had been awarded to 2nd respondent, there was no contract in the eye of the law and therefore, no question of arbitration proceedings arose at all under such contract. We do not think that we can accede to this contention. As rightly observed by the High Court that the fraud, if any, was only up to the stage of pre-qualification bid. The offer of tender of Respondent 2 having been accepted, the contract became concluded and therefore the allegation of fraud pales into insignificance. Further the appellant had participated in the proceedings as many as on 11 occasions after discovery of alleged fraud as noticed by the High Court in the course of the arbitration proceedings. Having done so, it is not now open to the appellant to state that though the arbitration proceedings commenced on 1-8-l986(sic) could not bring to the notice of the arbitrator or before the Court earlier. In view of this position, we have no option but to dismiss the appeal. The civil appeal is dismissed. In the circumstances the parties shall bear their own costs.