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2006 DIGILAW 1434 (DEL)

NATIONAL TEXTILE CORPN. LTD. v. UNIVERSAL PAPER EXPORT CO. LTD.

2006-08-24

PRADEEP NANDRAJOG

body2006
PRADEEP NANDRAJOG, J. ( 1 ) AFORESAID three applications challenge the award dated 9th June, 1984 published by Justice S. N. Shanker (Retd.), a former Judge of this Court, disposing of three references made to him as per disputes between the objector and M/s National Textiles Corporation Ltd. ( 2 ) AT the outset, learned counsel for the objector states that he presses objections to the award limited to the claims allowed by the learned Arbitrator against the objector and in favour of M/s National Textiles Corporation Ltd. ( 3 ) I would thus be dealing with the award in so far it concerns itself with the claims of the non-objector, M/s National Textiles Corporation Ltd. The subject matter of the award was three contracts, all dated 21st september,1978, between the objector and the non-objector. (Learned counsel for the objector states that in para 1 of the award reference to the contracts dated 21st September, 1979 is a typographical error. The year is 1978. ( 4 ) PERUSAL of the record of arbitration shows that save and except quantities and date of delivery, all other terms of the contract are identical. Shorn of the plethora of facts which have been laid out for consideration, since scope of objections to an award are limited, only relevant facts as are necessary for decision on the objections filed to the award would be considered. ( 5 ) THE three references have been disposed by a common award for the reason issues of law and fact which were raised were common. Under the three contracts, objector had to effect supplies to M/s national Textiles Corporation Ltd. at Bangalore, M/s National textiles Corporation Ltd. at Ahmedabad and M/s National Textiles Corporation ltd. at Bombay. Material to be supplied was viscose staple fiber manufactured at AVTEX Fibers Inc. , New York. 600 M. T. fabric had to be supplied under the first contract. 200 M. T. fabric under the second and 100 m. T. under the third. ( 6 ) SPECIFICATIONS of the viscose fiber was stipulated under the three contracts. Pertaining to 'donior', specifications were common under the three contracts. Pertaining to length, specifications were different. Whereas 'donior' connotes the unit of weight by which the silk or rayan fabric is weighed. Length is that of the individual fibers which are cut and compressed together in bundles or lamps for future use. Pertaining to 'donior', specifications were common under the three contracts. Pertaining to length, specifications were different. Whereas 'donior' connotes the unit of weight by which the silk or rayan fabric is weighed. Length is that of the individual fibers which are cut and compressed together in bundles or lamps for future use. ( 7 ) THE three contracts contained a clause being clause 3 (a) which attracted the attention of the learned Arbitrator for the reason dispute centered around the said clause. 13. Clause 3 (a) reads as under:"if there are defects in marking of goods by the supplier and any other defects of the nature mentioned in the contract and annexure thereto and any extra expenditure is caused to the buyer and or its consignee as a result of such defects, the seller shall be liable to reimburse all such expenses, losses or damages on actuals to the buyer against documentary evidence produced by the buyer. If, however, no such claim is preferred by the buyer within 90 days from the date of arrival of the vessel, the seller shall not be liable to reimburse any amount in respect of claims that may be made thereafter. " ( 8 ) WHEREAS objector contended that the span of the clause is wide and would include within its sweep all defects in the material supplied, non-objector urged to the contrary, stating that the sweep of the clause was limited inasmuch as the words 'any other defects' had to be read 'ejusdem generis' with the preceding words i. e. 'defects in marking'. ( 9 ) LEARNED Arbitrator has taken a view which supports the stand urged by the non-objector. It is settled law that a contract has to be construed as a whole and each and every part of the contract has to be given a meaning. Rule against redundancy requires not to adopt a construction which renders redundant a part of the contract. ( 10 ) THE concomitant rule of construction is that words and meanings in a particular clause of a contract, if capable of two meanings, have to be construed in light of other provisions of the contract i. e. in a harmonious manner. As urged by counsel for the objector, Arbitrator has ignored material parts of the contract being clause (c) of part 1 of the contract, part 5 of the contract and Annexure 1 to the contract. As urged by counsel for the objector, Arbitrator has ignored material parts of the contract being clause (c) of part 1 of the contract, part 5 of the contract and Annexure 1 to the contract. Page 5 of 8 ( 11 ) SAID clauses refer to specifications, meaning thereby anything contrary to the specifications would be a defect. As per clause (c) of part 1 of the contract, it was clearly specified that fiber should be free from any other defect such as stringing lumps, extraneous matters etc. Para 5 of contract stipulated that Annexure 1 to contract would form an integral part of the contract. ( 12 ) IT is thus obvious that the words 'any other defects of the nature mentioned in the contract' were not limited to the defects in marking of goods but would encompass and enwomb within their sweep all defects as per the contract. ( 13 ) AS held by the Supreme Court in the report published as Grasim industries Ltd. Vs. Collector of Customs, Bombay (2002) 4 SCC 297 , to invoke the application of the ejusdem generis rule, there must be a distinct genus or category. The specific words must apply not to different objects of a widely differing character but to something which can be called a class of objects. Where this is lacking, the rule cannot apply. ( 14 ) IT is apparent that the learned Arbitrator has misconducted the proceedings by ignoring other relevant material terms of the contract while interpreting clause 3 (a) of the contract. ( 15 ) BUT, there is yet another more fundamental aspect to the matter. Ignoring applicability of clause 3 (a) and going by the interpretation placed by the learned Arbitrator, non-objector had to overcome the embargo of section 42 of The Sale of Goods Act, 1930. The same reads as under:"42. Acceptance " The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them. " ( 16 ) A bare perusal of Section 42 shows that where the buyer does not reject the goods within a reasonable time, he shall be deemed to have accepted the goods. In the instant case, deliveries were effected under the three contracts in the months of October and November, 1978. Defects notified were in the month of May, 1979. ( 17 ) WHAT would be a reasonable period within which goods have to be rejected" No hard and fast rule can be laid down, but a working thumb rule would be such time which a party is reasonably expected to take, to inspect and test the consignment received. ( 18 ) IF not else, clause 3 (a) of the contract gives a guidance. By specifying 90 days within which defects in making of goods has to be notified, it could safely be assumed that parties treated 90 days as a reasonable period for the purchaser to inspect and test the goods. ( 19 ) LEARNED Arbitrator has ignored the mandate of Section 42 of The Sale of Goods Act, 1930. The applications are allowed. Award dated 9th June, 1984 published by justice S. N. Shanker (Retd.), a former Judge of this Court, is set aside. Decree shall follow. No costs.