JUDGMENT
Mukul Mudgal, J.
1. This application filed under Section 14 and 17 of
the Indian Arbitration Act, 1940 seeks to make the award
dated 30th August, 1996 given by Shri R.L. Meena,
Additional Secretary, Law, Govt. of India as a Rule of
the Court. Simultaneously, the petitioner have also
sought the dismissal of the objections filed by the
respondent UOI under Sections 30 and 33 of the Indian
Arbitration Act, 1940 to the said award.
2. The claimant/plaintiff averred as under:-
(a) The dispute involved in the present petition
arises from supply of 13 Crash Fire Tenders (CFTs) which
were offered by the claimant to the respondent by its
letter dated 5th March, 1990 @ Rs. 34,05,000/- per unit for
the supply for 13 units or supply of 6 units @
Rs. 35,01,000/- each. The letter of the claimant as per
Clause 9 sought an Essentiality Certificate to enable the
claimant to import fire power, accessories etc.
Thereafter pursuant to the negotiations between the
parties on 4th April, 1990, letter dated 5th March, 1990
issued by the claimant was modified and further letter
dated 6th April, 1990 containing the modified conditions
was issued and price was amended to Rs. 33,35,000/- for 13
CFTs. A general Clause was also inserted which provided
that all other terms and conditions of letters dated 5th
March, 1990 and 21st March, 1990 will remain unchanged and
the Essentiality Certificate was also referred to. The
relevant portions of letters dated 5th March, 1990 and 6th
April, 1990 read as under:-
“ED: VRP-SUKG
05 March 90
Dear Sir,
Sub: Your enquiry for 13 Crash Fire
Tenders and our offer to Indian Navy ref: SAL:
SGPS:39 dated 1/11/89.
…..
2) Prices: For 13 Units For 6 Units
EACH EACH
Price for complete
crash fire tender as
per enclosed spec. Rs. 34,05,000/- Rs. 35,01,000/-
.....
.....
3) Delivery
Sep'90 : 6 vehicles
Oct'90 : 7 vehicles
subject to receipt of order before 31.03.1990.
…..
9) Essentiality Certificate:
We will need an essentiality certificate to favor
our Super structure manufacturers to enable them
import fire pump, monitor & accs thereof.”
“RON:SAL:RPV:A:507
6th April, 1990
Dear Sir,
Sub: Supply of 13 Fully Built Crash Fire Tenders
Ref: Our offer letters No. ED/VRP/SUKG dt. 5.3.90
and SAL/SKG dated 21.3.90.
…..
The price of complete Fire Crash Tender as per
specifications is revised as under:-
Rs. 33,35,000/- (Rupees thirty three lakhs thirty
five thousand only) each unit. This price is valid
for orders placed within validity period for a
total quantum of up to 13 Nos. only…..
…..
Para (3) Delivery
13. Units progressively by Sept/Nov’90 subject to
receipt of letter of intent by 16.4.90 and formal
order by 23.4.90. (We are planning 6 units by
Sept’90)
…..
Para (11) validity
Our offer is valid for acceptance up to 16.4.90 with
formal order to follow by 23.4.90 along with the
essentially certificate requested in para 9 of our
letter dt. 5.3.90.
General
All other terms & conditions of our letters dated
5.3.90 and 21.3.90 will remain unchanged.”
(b) On 3rd August, 1990, the respondent forwarded an
advance supply order by accepting the offer made by the
claimant. The said letter referred to the claimant’s
quotations dated 5th March, 1990, 6th April, 1990 and 26th
July, 1990. The said letter of the respondent dated 3rd
August, 1990 placed an order for supply of six CFTs. On
7th September, 1990, a formal supply order was placed by
the respondent referring both to the quotations dated 5th
March, 1990 and the revised quotation dated 26th July,
1990.
(c) The claim is based upon non-supply of
essentiality certificate or similar documents i.e. Import
recommendation certificate in terms of the contract. The
failure of the provision of the Essentiality Certificate
compelled the claimant to purchase each chassis at a price
which was Rs. 2,89,965/- higher. The failure of the
respondent to furnish the Essentiality Certificate/letter
also compelled the claimant to purchase the imported
components under the new policy through the exim scrip
route. Thus the claimant was required to pay much higher
prices as deposed in paragraph 4 of the affidavit of Mr.
Khaitan dated 28th December, 1995. The claimant was
forced to spend higher amounts to purchase the imported
super structure and this difference has resulted in the
claim due to the difference in the imported contents of
CFTs as per the original quotation as contrasted with the
goods in the final products.
3. The respondent/UOI’s case before the Arbitrator
was as under:-
(a) The total number of 11 CFTs were supplied in
pursuant to the supply order dated 7th September, 1990. 6
CFTs were supplied against supply order dated 7th
September, 1990 and the remaining CFTs were supplied
against supply order dated 1st November, 1991.
(b) The respondents have contended that the prices as
per the supply order placed, were firm and fixed and there
was no scope or warrant for enhancement sought to be
claimed by the claimant.
4. The arbitrator inter alia recorded the following
findings:
“…..From the above provisions of
the offer dated 5.3.1990 and the
offer dated 6.4.1990 which are
mentioned in he advance supply order
as well as in the formal supply
order, there was a clear cut
provision for issue of an
Essentiality Certificate along with
the supply order. Since no such
certificate was issued in this case
along with the supply order, the
supply order cannot be said to be in
conformity with the offers of the
Claimant dated 5.3.1990 and 6.4.1990.
…..
In view of the above, it is quite
clear that the supply order dated
7.9.1990 read with advance supply
order dated 3.8.1990 can be treated
only as counter offer and not an
‘acceptance’. This gives rise to a
vital question as to whether the
counter offer of the Respondent
contained in the supply order/advance
supply order was accepted by the
Claimant.
…..
From the above, it is quite clear
that the Claimant had agreed to
supply the stores as per the terms
and conditions contained in the
supply order dated 7.9.90 subject to
receipt of amendments sought by them
vide the aforementioned letter dated
26.9.1990. Thus, the Claimant had
not accepted the advance supply order
or the formal supply order. The
various amendments sought by the
Claimant vide their first letter
dated 26.9.1990 read with the other
letter of the same date amounted only
to a counter offer/counter proposal
and not an absolute and unqualified
acceptance. Therefore, the next
question would arise whether the
Respondent had accepted the various
amendments sought by the Claimant in
the terms and conditions of the
supply order.
…..
In the circumstances, the supply
order dated 7.9.1990 cannot be
regarded as the ‘sole repository of
the transaction’. Therefore, the
claim for price escalation has to be
now examined with reference to the
other correspondence/letters
exchanged between the parties.
…..
A perusal of the aforesaid letter
dated 8.2.1991 would clearly reveal
that the Claimant had made a proposal
for price escalation on account of
increase in customs duty and
variations in the exchange rate.
Since the Claimant’s offers dated
5.3.90 and 6.4.90 were not accepted
by the Respondent for the reasons
discussed hereinabove, there was
nothing which could bar the Claimant
from making fresh proposal for
price escalation.
…..
Thereafter, on 10.5.1991 the
Claimant wrote a letter to the COP
(Minister of defense) for extension
of delivery date up to 31.7.1991. In
reply to the above letter, the
Respondent extended the delivery dated
up to 31.7.1991 vide their letter
dated 17.6.1991 subject to the
conditions specified therein. One
of the conditions mentioned in that
letter was that no price increase
would be allowed. Needless to say
that since extension of delivery date
was granted by the above letter
subject to certain conditions, it was
required to be accepted by the
Claimant.
…..
In any event, after the aforesaid
correspondence, the Claimant had
again revived their proposal for
price escalation vide their letter
No. SAL: SGKG dated 15th July 1991
whereby the Respondent was requested
to refix delivery dates and to
consider and agree to the increase in
prices as mentioned therein.
…..
Therefore, one can safely infer
from the above circumstances that the
Respondent can be said to have
accepted the Claimant’s proposal for
price escalation by conduct. As
already stated, the refusal of price
escalation vide letter dated 19.12.91
after the 6 CFTs had been accepted by
the Respondent would be of no
significance. Further, the refusal
of price escalation as contained in
letter dated 19.12.91 was on the
ground that the contract was placed
with prices firm and fixed. Since
the supply order dated 7.9.90 was
only a counter offer which was not
accepted by the Claimant as already
discussed hereinabove, the basis of
refusal of price escalation as
contained in the letter dated
19.12.91 is also not sustainable.
The Claim made by the Claimant in
respect of 6 CFTs is based on price
break-up of import contents for 6
chassis and price break-up of import
contents of super-structure for 6
CFTs. After going through the
various documents on record, the
calculation of the import contents
given in the statements of price
break-up filed by the Claimant does
not seem to be unbelievable.
…..
Further, for the reasons already
discussed, the offer for 7 numbers
(beyond 6 numbers) as per the
Claimant’s letter dated 27th July 1990
was open only up to 30.9.1990. The
order for 5 numbers in issue was not
placed within 30.9.1990. In view
thereof, placement of the order for
additional number of 5 CFTs vide
letter dated 1.11.1991 can be said to
be only a fresh offer. That offer
was not accepted by the Claimant vide
their letter dated 2.12.1991. The
Claimant, while not accepting the
Respondent’s offer dated 1.11.91, had
quoted revised prices for supply of
additional number of 5 CFTs vide
their aforesaid letter dated
2.12.91.
…..
In this connection, it may be
stated that since the supply order
dated 7.9.90 was not accepted by the
Claimant and as the order for
additional quantity of 5 CFTs was not
placed by the Respondent within
30.9.1990 up to which the offer for
placement of additional quantity of
CFTs up to 7 numbers was open to be
accepted, the very basis on which the
price has been rejected vide the
letter dated 19.12.1991 cannot be
said to have backing of any
contractual term already settled by
the parties.
…..
The Respondent had extended the
delivery period up to 31.12.1992 for
additional number of 5 CFTs vide
their letter dated 7.7.1992. It is
not clear whether this extension made
by the above letter dated 7.7.1992
was accepted by the Claimant as
acceptance/acknowledgment letter of
the Claimant with reference to the
above letter dated 7.7.1992 has not
been placed on record by any of the
parties.
…..
The Claimant’s above letter dated
31.7.1992 cannot be said to be
unconditional acceptance of the
delivery period which was extended
up to 31.12.1992 as the Claimant had
made certain counter proposals
relating to delivery, payment of
terms, consignee and arbitration.
The Claimant had very clearly stated
that they would like to have the
Respondent’s confirmation for
commencement of the arbitration
proceedings. The aforesaid letter
dated 31.7.1992 is the last
correspondence which has been placed
on record. A perusal of the
aforesaid letter dated 31.7.1992
clearly indicates that the Claimant
had not dropped their proposal for
price revision as contained in their
letter 2.12.1991. The fact remains
that after the aforesaid last
correspondence placed on record which
contained counter proposals of the
Claimant, the Respondent had accepted
the delivery of 5 CFTs. In the
circumstances, one can without any
doubt draw inference that the
Respondent had accepted by conduct
the Claimant’s proposal for price
revision as contained in the
Claimant’s letter dated 2.12.1991 in
respect of 5 additional number of
CFTs.”
5. The Arbitrator awarded the following amounts to
the claimant:
(i) Claim for Rs. 23,02,066/- in respect of 6
CFTs.
(ii) Claim for Rs. 37,00,000/- in respect of
additional number of 5 CFTs.
(iii) If the aforesaid arbitral amount was not
paid to the Claimant by the Respondent
within 45 days from the date of the Award,
18% interest per annum was payable on the
arbitral amount by the Respondent from the
date of the Award.”
This award is under challenge by the respondent
before this Court.
6. By its affidavit of Contract Purchase Officer,
Mr. A.K. Aggarwal in the Ministry of defense, the
respondents have averred as follows:-
(a) That the Arbitrator wrongly treated the supply order
dated 7th September, 1990 as a counter offer and it was
not even the claimant’s case that the said supply order
was a counter offer by the Government. The claimant’s
case was that the offer dated 5th March, 1990 resulted in
the revised offer dated 6th April, 1990 and the offer
dated 5th March, 1990 was superseded by the revised offer
dated 6th April, 1990. The revised offer at the rate of
Rs. 33.35 lakhs per CFT was valid for 13 number of CFTs.
Validity of the said offer dated 6th April, 1990 was
extended by the claimant first up to 15th July, 1990, and
thereafter up to 16th August, 1990 and the said offer dated
6th April, 1990 was accepted by the respondent by an
advance supply order dated 3rd August, 1990 and the
extended validity period up to 16th August, 1990. This
supply order of the respondent dated 3rd August, 1990 was
accepted by the claimant by its letter dated 21st August,
1990 and the formal supply order was placed by the
respondent with the claimant by the covering letter dated
7th September, 1990. The relevant terms of the letter
dated 7th September, 1990 read as follows:-
“(1) Your Quotation No. ED/VRP/SUKD dated
5.3.1990.
(2) Your Revised Quotation No. RON/SAL:RPV/A-507
dated 6.4.1990.
(3) Your Letter No. RG:SAL:ROV/1-A1026 dated
26.7.1990.
(4) Our Advance Supply Order No. 1(1)/90/D(81)
dated 3.8.1990.”
Dear Sirs,
“Please refer to your quotations/letter
stated above. These have been accepted and a
formal supply order is hereby placed on you for
and on behalf of the President of India for the
supply of items mentioned in Schedule A on the
terms and conditions mentioned in Schedule A, B
and C (revised in November 1989 attached hereto).
No other terms and conditions will govern the
contract.
(2) Please acknowledge receipt within 15 days
hereof on the proforma attached as Appendix I
hereto with a copy to the consignee and the
Chairman, Technical Committee.
(3) Please quote on all the letters and
invoices the number and date of this letter for
reference.
(4) Your quotation mentioned in Clause 4 of
Schedule A of this order and the schedules,
appendix annexed hereto together with your letter
of acknowledgement thereto shall be the sole
repository of this transaction “.
(b) The relevant portion of the letter sent by the
claimant accepting the supply order dated 7th September,
1990 along with terms therein, reads as follows:-
“(1) Your Quotation No. ED/VRP/SUKD dated
5.3.1990.
(2) Your Revised Quotation No. RON/SAL:RPV/A-507
dated 6.4.1990.
(3) Your Letter No. RG:SAL:RPV/1-A1026 dated
26.7.1990.
(4) Our Advance Supply Order No. 1(1)/90/D(81)
dated 3.8.1990.”
Dear Sirs,
“Please refer to your quotations/letter
stated above. These have been accepted and a
formal supply order is hereby placed on you for
and on behalf of the President of India for the
supply of items mentioned in Schedule A on the
terms and conditions mentioned in Schedule A, B
and C (revised in November 1989 attached hereto).
No other terms and conditions will govern the
contract.
(2) Please acknowledge receipt within 15 days
hereof on the proforma attached as Appendix I
hereto with a copy to the consignee and the
Chairman, Technical Committee.
(3) Please quote on all the letters and
invoices the number and date of this letter for
reference.
(4) Your quotation mentioned in Clause 4 of
Schedule A of this order and the schedules,
appendix annexed hereto together with your letter
of acknowledgement thereto shall be the sole
repository of this transaction “.
(b) The relevant portion of the letter sent by the
claimant accepting the supply order dated 7th September,
1990 along with terms therein, reads as follows:-
“Receipt is acknowledged of your Contract No.
1(1)/90/D(S1)/CPO/VGE-1636 dated 7.9.90 together
with annexures.
2. We hereby agree to supply the said order as
per the terms and conditions contained therein
subject to receipt of all amendments sought in our
letter dated 26th September, 1990.”
The relevant portion of the said letter dated
26.9.90 reads as follows:-
Dear Sir,:
Sub: Supply Order No. 1(1)/90/D(S.I.)/CPO(VGE)-1636
dt. 7/9/90 for supply of 6 Nos. fully
built Crash Fire Tenders.
We thank you very much for your formal Supply
Order referred above for supply of 6 nos fully
built Crash Fire Tender vehicles.
We are enclosed Appendix I duly completed
confirming our acceptance to supply the said
stores, subject to the following amendments which
are required by us immediately.
Schedule :
Clause 9 – Price per unit
The Sales tax applicable in TNGST 4% and Surcharge
on Sales Tax @ 8%.
Clause 13 (g) – Literature
All the literatures listed in the order will be
provided by us. In addition we will also be
providing an operator’s guide which will provide
basic date of the vehicle and instructions on
operation.
The illustrated parts list will be provided in our
own format. The format as required by you in the
defense format is being complied and can be
supplied only if it is ready by the time the order
is completed since it requires an enormous
preparation.
We would request you to please confirm the above.
Annexure “B” to Schedule “A”
Sl. No. 1 Clause 13.1: To read as : “ZF 6HP 600”
fully automatic gearbox instead of “2 F 6HP 600”
Schedule “B”
Clause 15 – dispatch instructions
Clause 15(a) and (b) are not applicable as the
chasis are to be dispatched by road through our
authorised transport contractors.
Clause 16 Inspection Procedure
The chassis will be offered complete for
inspection of the concerned authorities at our
Hosur, works.
The fully built vehicle with super structure will
be offered for inspect at the premises of the
following super structure manufacturers:
1. Kooverji Devshi & Co P Ltd. Bombay 2 Nos.
2. Brijbasi Udyog, Agre 2 Nos.
Depending on the progress of the vehicles we would
like to change the mix of orders on super
structure manufacturers to enable us to be within
the delivery schedule prescribed by you.
Since bulk production clearance has already been
given and regular manufacturer of vehicles has
commenced, we are not acceptable for any further
user’s trial.
Clause 22 – System of Payment for Stores
Since the vehicle will be delivered by road the
Clause 22 (E) will be applicable.
Clause 23 Special conditions
Please note that no pilot sample will be offered
since the bulk production clearance has already
been given. Therefore the Clause 23 (iii), (iv)
and (vii) will not be applicable.
Schedule C
Clause 23 – Security Deposit
Would request you to kindly send us a format to
enable us to furnish a Bank Guarantee for Rs. 2
lakhs towards security deposit.
FORCE MAJEURE
Our standard force majeur clause will be
applicable for this contract.
We request you to kindly issue the above
amendments at an early date to enable us to go
ahead with manufacture of vehicles.”
(c) The respondent have therefore contended that the
Arbitrator has not even referred to the aforesaid
unconditional acceptance of the supply by the claimant
even though the said letter was filed at page 97 of the
documents filed by the respondent before the Arbitrator
who consequently committed legal misconduct ignoring the
material letter and has not even referred to it in the
award. For this purpose the respondent has relied upon
the judgment , KP Poulose v.
State of Kerala.
(d) It is, therefore, contended that the above
unconditional acceptance contained in the letter dated
26th September, 1990 of the claimant along with other
letter No. SAL/SGKS dated 26th September, 1990 clearly
stipulated that the claimant will not claim any escalation
in the prices and the Arbitrator has failed to consider
the effect of the said letter.
(e) Reliance has also been placed on Clause 9
providing for fixed and firm price and the said Clause 9
reads as follows:-
“9. Price per unit, basic price Rs. 33,35,000/-,
excise duty @ 21% will be paid extra on the
chassis cost of Rs. 23.15 lakhs against of
payment. C.S.T. @ 4% will be paid extra.
FOR Hosur price is otherwise Firm and
Fixed.”
7. It is also contended by the respondent that the
affidavit of Shri A.K. Aggarwal dated 23rd February, 1996
filed before the Arbitrator has been totally ignored and
reliance upon tenders of International Airport Authority
of India is not justified as that related to
super-structure. It is further submitted that the order
for 6 CFTs was placed during August, 1990 and the order
for the additional 5 CFTs was placed during November,
1991. The claimant has only now sought to give the
details of the escalation even though none was given even
in the claimant’s letter dated 2nd December, 1991. It is
also contended that the quantity of 5 CFTs was governed in
terms of the optional clause of the supply order and the
prices under terms and conditions of the contract were
Firm and Fixed.
8. The respondent has further relied on the
inconsistencies in the award of the Arbitrator. It was
also contended that while the total escalation claimed by
the claimant before the Arbitrator were also follows:-
(1) 6 Nos. of Crash Fire Tenders
Difference in original price and
cost escalation up to the time of
extended delivery period 23,02,066.00
(2) 5 Nos. of Crash Fire Tenders 37,00,000.00
(3) Interest 3,45,310.00
Total 63,47,376.00
9. The schedule was attached to the claim, details
were given and claim was made for six vehicles @
Rs. 2,89,965/- amounting to Rs. 17,39,790/-, plus overhead
of Rs. 3,45,310/-. In the price break up attached to the
Schedule the total difference was Rs. 5,62,274/- and
Rs. 2,88,965/-. The learned Arbitrator in awarding
Rs. 23,00,266/- in respect of these CFTs has gone beyond
the details given in the Schedule attached to the claim
statement. Similarly, the claim of the claimant of
Rs. 37,00,000/- for 5 CFTs is beyond the details given in
Schedule I to the claim statement. The learned Arbitrator
had no jurisdiction to go beyond the claim statement and
the details given in Schedule I. He has acted without
jurisdiction in awarding a claim which was not supported
by any details and much less any evidence.
10. It was also submitted that the finding of the
Arbitrator that the Option clause of the contract became
Inoperative because the advance supply order dated 3rd
August, 1990 and formal supply order dated 7th September,
1990 were also counter offers is uncalled for and the
Arbitrator has erred in treating the supply orders as
counter offers. The respondent accepted the revised offer
of the claimant and not the original offer dated 5th
March, 1990 which was superseded by the offer dated 6th
April, 1990.
11. The other inconsistencies by the Arbitrator are
that it treated the offers as counter offers and at same
places supply orders has been referred to. The
Arbitrator’s finding that there was no phased supply is
sought to be contradicted by the following clauses:-
” Optional Clause
Purchaser reserves the right to place order for
additional 7 Nos. at the same rate, terms and
conditions during the currency of the contract.”
“3. Delivery
13 Units were progressively by submitting in
November, 1990 subject to receipt of letter of
Intent by 16.4.1990 and formal order by 23.4.1990.
We are planning these units by September, 1990”.
It is therefore contended that the Arbitrator’s
Finding that the supply was not to be in a phased manner
is perverse. It is contended the first order was placed
for 6 CFTs which accepted by the claimant and the
second order was placed for the 5 CFTs which was also
accepted by the claimant. The option clause provided
supply of 6 CFTs at the same rate. There was no
escalation clause.
12. Finally it has been contended that the amendments
were claimed to be made by the claimant by the letters
dated 26th September, 1990. It is submitted that these
letters do not say so and in any case these letters were
not received by the respondent. Even if the same are
assumed to be received, the said letters could not have
the effect of modifying a formal contract. The letter
dated 26th September, 1990 of the claimant accepting the
formal supply letters did not raise any objection to the
option clause and the subsequent letters dated 15th July,
1991, 8th August, 1991, 11th November, 1991, 29th
November, 1991 and 2nd December, 1991 for price increase
were rejected by the respondent by letter dated 19th
December, 1991. The claimant continued to supply the CFTs
without protest and therefore, accepted by conduct the
supply at the Firm and Fixed price.
13. Thus the finding of the Arbitrator that the
letters dated 15th July, 1991 and 8th August, 1991
containing the request for price increase was not rejected
is obviously unsustainable in view of the respondent’s
letter dated 19th December, 1991 which rejected the claim
raised in said letters. This clearly shows
non-application of mind.
14. It is also submitted by the respondent that the
Arbitrator held that the main cause of delay was the
non-issuance of Essentiality Certificate by the
respondent. There was no clause in the contract providing
for issuance of Essentiality Certificate by the
respondent. Clause 4(4) of the Schedule B provided as
follows:-
“(4) Assistance of Contractor :
The Contractor shall not except to the
extent specifically agreed to by the purchaser in
the contract be entitled to any sort of assistance
either in the procurement of raw material required
for the fulfillment of the contract or in securing
of transport facility. Any assurance or
assistance given or attempted to be given to the
Contractor in regard to these and not covered by
the terms of the contract shall not be construed
as a representation that the purchaser is willing
to waive its right under this or any other
condition of the contract.”
15. In the revised offer dated 6th April, 1990 Clause
9 relating to the Essentiality Certificate mentioned in
the original offer dated 5th March, 1990 was amended.
Even in the original offer in Clause 9, it was merely
stated that the contractor will need the essentiality
certificate to favor its super structure manufacturers to
enable them to import fire pumps and accessories thereof.
The Controller of Imports and Exports by its letter dated
29th April, 1991 rejected the claim of the manufacturer as
the applications were received after the last date
prescribed in paragraph 60 of the Hand Book i.e. 31st
March, 1991. The claimant thereafter requested the
respondent to give assistance. By its letter dated 10th
July, 1991, the respondent requested the Chief Controller
of Imports and Exports to issue the necessary license.
Thus as and when the assistance was sought from the
claimant it was given and the delay was caused by
manufacturer in submitting the application after the last
date prescribed as 31st March, 1991. Inspite of latches
the respondent had given timely assistance and thus the
Arbitrator’s conclusion on the essentiality certificate
demonstrate non-application of mind and non-consideration
of these crucial documents. The Arbitrator ignored the
terms and conditions of letter 14th May, 1992 and
7th February, 1992 extending the delivery period up to 31st
December, 1992 and by these letters it was clearly
stipulated that time shall continue to be the essence of
the contract and the supply shall be made on the terms and
conditions and no increase in the prices will be allowed.
This also discloses non-application of mind on behalf of
the Arbitrator. On the aforesaid pleas the impugned award
was sought to be set aside.
16. For the purpose of the determination of the
Respondent’s challenge to the Award it is necessary to
consider the impact and effect of Clause 9 which
stipulated that save excise at 21% and Central Sales Tax
at 4% the price was otherwise firm and fixed. The letter
dated 7.9.90 by which the formal supply order was placed
on the petitioner, noted the quotations of the petitioner
dated 5.3.90, 6.4.90 and the petitioner’s letter dated
26.7.90 and the advance supply order of the respondent
dated 3rd August, 1990. This letter clearly accepted the
petitioner’s offer on the terms and conditions mentioned
in Schedules A, B & C and further stipulated that no other
terms and conditions would govern the contract.
17. Clause 9 of the letter dated 5.3.90 strongly relied
upon by the claimant which stipulated firm and fixed price
read with the aforesaid correspondence exchanged between
the parties on 5th March, 1990, 6th April, 1990, 26th
July, 1990 and 3rd August, 1990 makes it evident that the
petitioner’s offer was accepted in the terms and
conditions mentioned in Schedules A, B & C of the letter
dated 7th September, 1990. It is clearly stipulated
therein that no other condition would govern the contract.
The impugned award has not properly appreciated the impact
of this vital clause having a critical bearing on the
present claim of the petitioner which is based on the
enhancement of the price owing to the non-supply of
essentiality certificate and other similar document i.e.
import recommendation certificate by the respondent. The
petitioner itself had agreed to supply the order as per
the terms and conditions contained in the letter dated 7th
September, 1990 sent by the respondent. Since the letter
dated 7th September, 1990 clearly stipulated that no other
terms except those mentioned in Schedules A, B and C would
govern the contract and further mentioned that the
quotation mentioned in Clause 4 of Schedule A along with
letter of acknowledgement shall be the sole repository of
this transaction, the petitioner was bound to bring its
claim within the Clause 4 of Schedule A and the perusal of
the award shows that the petitioner has not been able to
do so. Even the amendments sought by the petitioner as
detailed in the letter dated 26th September, 1990 only
refer to Sales Tax and surcharge on Sales Tax, literature,
change in the specification of gear box, dispatch
instructions, inspection procedure, system of payment and
special condition, security deposit and force majeure.
Consequently, the essentiality certificate has not been
mentioned as an ingredient of the contract between the
parties, if the letter dated 26th September, 1990 sent by
the petitioner is taken into account. In my view the
consideration of the impact of these Clauses is vital and
affect the jurisdiction of the Arbitrator and if the
contract between the parties is to the effect that the
requirement of the essentiality certificate was not a part
of the contract between the parties, then the petitioner’s
claim must fail without reference to the other pleas
raised. The arbitrator has not properly construed the
effect of the categorical phrase in Clause 9 that the
prices were firm and fixed. Consequently, I am not
dealing at this stage with the other challenges to the
Arbitration award, raised by the respondent in so far as
it relates to 6 CFT’s supplied as per the supply order
dated 7.9.90. The respondent’s plea is buttressed by the
fact that apart from the fact that the letter dated 26th
September, 1990, even if assumed to have been sent, did
not claim any objection to the option clause and the
subsequent letters dated 15th July, 1991, 8th August,
1991, 11th November, 1991, 29th November, 1991 and 2nd
December, 1991 claiming increase in the prices were
rejected by the respondent by letter dated 19th December,
1991, even then the respondent has continued to supply the
CFTs without demur which also points to the conclusion
that the supply of CFTs ordered on 7th September, 1990 was
to be at the firm and fixed prices. In this respect the
finding of the Arbitrator that the letters dated 15th
July, 1991 and 8th August, 1991 which contained the
request for enhancement in prices were not rejected by the
respondent, cannot stand in view of the following terms in
the letter dated 19th December, 1991 sent by the
respondent rejecting the claim raised by the petitioner
vide letter dated 15th July, 1991 and 8th August, 1991.
The relevant portion of letter dated 19th December, 1991
read as follows:-
“Kindly refer to the letters quoted
above. The same have been considered. Your
request for price increase cannot be acceded to
as the contract was placed with prices firm and
fixed.
2. As regard coverage of five numbers under
option clause the same has been exercised in
terms of the contract. Advance supply order was
acknowledged vide your letter SAL:SGKG dt.
21.8.90 and formal supply order was acknowledged
vide your letter dated 26.9.90. There was no
mentioned/objection in the above letters
regarding indicating of option clause.
3. In view of the position explained above,
additional quantity has been covered in terms of
the contact and your request for increase in
price for additional quantity cannot be acceded
to. This is however without prejudice to the
terms and condition of the contract.”
In fact the Arbitrator’s award is based
essentially on the delay caused in the issuance of the
essentiality certificate by the respondent. I have also
found that issuance of essentiality certificate by the
respondent did not form part of the contract between the
parties.
The only relevant provision which might be of some
assistance to the petitioner is Clause (4) of Schedule 4
which provides that the contractor except to the extent
specifically agreed to by the purchaser/respondent, is
not entitled to any sort of assistance. Even if the
original Clause 9 contained in the offer dated 5th March,
1990 is considered to be the operative clause, it is
clear that the essentiality certificate was merely
required by the contractor to enable him to import the
fire pump and accessories. The said Clause 9 which has
been extracted above does not make the issue of
essentiality certificate as a mandatory component of the
contract and respondent is justified in terming it as a
courtesy.
18. Pursuant to the rejection by the Controller of
Imports & Exports on 19th April, 1991, assistance was
sought from the respondent by the claimant and such
assistance was given on 10th July, 1991 by the respondent
by requesting the Chief Controller of Imports and Exports
to issue the license. Thus the respondents have given
assistance when sought and the application made before
the Chief Controller of Imports & Exports has been
dismissed by it owing to the reason that it was filed
after the last date prescribed i.e. 31st March, 1991.
If the petitioner was aggrieved by the wrongful refusal
by the Chief Controller of Imports & Exports to issue the
necessary license it would and should have adopted legal
remedies against the order passed by the Chief Controller
of Imports & Exports on 29th April, 1991. It has been
submitted by the petitioner that the appeal against the
order of JCCIE refusing to issue import license to
claimants’ super structure manufacture was rejected. It
is not stated whether the appellate order had been
assailed. Not having challenged the appellate order, it
is not now open to the claimant/petitioner to raise this
issue.
19. The Arbitrator recorded a finding that the
claimant’s offers dated 5.3.90 and 6.4.90 were not
accepted by the respondent to arrive at a conclusion that
the claimant was therefore not barred from making a fresh
proposal for price escalation. The above finding that
the claimants offers dated 5.3.90 and 6.4.90 were not
accepted by the respondent UOI, contradicts another
finding of the Arbitrator that Clause 9 contained in the
letter dated 5.3.90 applied. Consequently on its own
findings that the claimant’s offers dated 5.3.90 and
6.4.90 were not accepted, the arbitrator’s finding
regarding the conclusion regarding applicability of
Clause 9 cannot survive.
20. Furthermore, the Arbitrator finds that by letter
dated 15.7.91 the claimant had revived its proposal for
price escalation and consequently requested the
respondent to refix delivery dates and to consider and
agree to increase the prices. The relevant portions of
letter dated 15.7.91 read as under:-
“Dear Sir:
Sub: Supply of Order No. CPO(VGE)-1636 dt.
7.9.90 for supply of 6 Nos. CFTs.
Ref: Amendment letter No. 1(1)90/D(S.I.)CPO(VGE) –
1636/AL-96 dt. 17.6.91.
We thank you for the above letter and for
amending the delivery dated up to 31.7.91.
The events that have taken place since the
receipt of this contract by us are enumerated
below for your ready reference and for
favorable consideration.
1. Advance supply order No. 1(1)/90D(S.I.) dt.
3.8.90 was received on 9.8.90.
2. Order No. 1(1)/90D(S.I.)-CPO(VGE)-1636 dt.
14.9.90 with full contractual terms and
conditions was received on 14.9.90.
3. We had requested for amendments to the
order vide our letters:
A) SAL:SKG: dt 26.9.90
B) SAL:SKG: dt. 27.9.90 requesting deletion
of “during currency of the contract”
against the option clause for increase in
the quantity by another 7 Nos.
…..
(Copies of the above 3 enclosed for immediate
reference)
4. While we have received confirmation on A &
C, we have not yet so far received your
confirmation for our letter dt. 27.9.90.
…..
12. In spite of close follow up, due to very
severe foreign exchange crouch the
application were not processed and in fact
were rejected by JCCI&E vide letter dt
29.4.91 received by Kooverji Devshi on
7.5.91.
13. We had sought your intervention to
recommend to DGTD for import of these pumps
vide our letter SAL: SGKG dt 10.5.91 and
16.5.91 and we had also requested for
refixing delivery date up to 37.7.91.
14. Though we are informally advised that
recommendations were given by DGTD to
JCCI&E Bombay be end June 91 for clearance
of import license, this has not been
received so far.
15. With new announcement by Commerce Ministry
on 3.7.91, this license may not be issued
at all.
We have to seek the path of obtaining a REP
license at a premium for importing these
pumps.
We are not yet clear about the Import
Policy and we may have to wait until the
presentation of Finance Bill on 24.7.91
about the Customs Duty structure etc”
…..
18. While we had agreed to execute this
contract at firm price, developments of
this magnitude have not been foreseen and
it is virtually impossible to fulfill the
contract without incurring very heavy
losses.
19. The extent of losses suffered by us for
various reasons referred to in the
foregoing, are as follows:
Difference-Per chassis
Rs.
Increase on account of variation
in exchange rate from Rs. 140 to
Rs. 207 per 100 ATS and also
increase in Customs duty from 60
to 30% (effective 6.12.90) 2,19,928
Increase expected on account of
use of EXIM scrips which has a
premium of 28% as on date
(3,06,360 x 28%) 85,781
Interest charges suffered @ 18%
p.a. on the chassis value of Rs.
26.8 lcas since March 91 up to
31.7.91 due to non-receipt of fire
pums- 5 months 2,00,000
TOTAL 5,05,709
The above increase will be suffered by us
only due to non-receipt of license in time
on account of which we are obliged to pay
Customs Duty @ 80% and also a higher
exchange rate on account of devaluation.
It may also be noted that we have not
reflected any price increase suffered by us
against escalation of indigenous materials
which is also substantial.
…..
This type of volatile changes have not been
witnessed in recent years in our memory and the
amount of cost escalation, as you will see, is
unbearable.
We would therefore request you to please issue
the following amendments to facilitate
completion of the contract.
1. To refix delivery dates beyond two months
from the date of receipt of imports,
without any penalty.
2. To consider and agree to the increase in
prices as required.
Thanking you & assuring you of our best
services at all times.
21. The Arbitrator also found the claimant’s case for
escalation was accepted by conduct by the respondent. The
Arbitrator also finds the refusal of price escalation by
the respondent’s letter dated 19.12.91 to be
unsustainable. The finding that the respondent’s refusal
by the 19.12.91 letter to escalate prices is
unsustainable, cannot be co-exist with the implied acceptance
by the respondent by conduct found by the Arbitrator.
Thus it is clear that by ignoring the mandate of Clause 9
stipulating firm and fixed prices during the pendency of
the Contract, the Arbitrator has exceeded its jurisdiction
is enhancing rates for 6 CFTs ordered on 7.9.90.
Significantly, the arbitrator had itself found that the
letter of the respondent dated 17th June 1991 which
extended the delivery date up to 31st July, 1991,
stipulated that no price increase would be allowed.
22. Accordingly it is clear that the impugned award
in so far as it relates to 6 CFT’s as per supply order
dated 7.9.90 suffers from legal errors apparent on the
face of the record and accordingly deserves to be set
aside.
23. The counsel for the respondent/UOI has relied upon
the position of law laid down in the following decisions:
(i) In New India Civil Erectors (P) Ltd v. ONGC 1997 (2)
Supreme Today 265, the Hon’ble Supreme Court held that the
arbitration being a creature of agreement cannot award any
amount ruled out or prohibited by the agreement.
(ii) In Continental Construction Co. Ltd. v. State of
Madhya Pradesh , it was held that an error
of law on the face of the award can be set aside.
(iii) In Associated Engineering Co. Ltd. v. Govt. of
Andhra Pradesh and Anr. , it was held that
where by merely looking at the contract, the excess of
jurisdiction is apparent, jurisdiction of arbitrator is
exceeded and the award deserves to be set aside.
(iv) In Rajasthan State Mines & Minerals Ltd v. Eastern
Engineering Enterprises 1993 (3) Arb. LR 350, it was held
that an arbitrator cannot cant arbitrarily ad outside the
contract.
(v) In 1988 (Supp) SCC 722, it was held that Article 299
is based on public policy and singing of contract by
Executive Engineers but not stated to be made in the name
of Governor, does not bring into effect a legal contract.
On the basis of the law laid down in the above
decisions the learned counsel for the respondent/Union of
India contended that the award disclosed an error apparent
on record and was clearly beyond jurisdiction.
The learned counsel for the claimant relied upon the
following decisions:-
(i) In State of Kerala v. Kurian P. Paul (1991) 2 Kerala
Law Times, 555, it was held that if the conclusion of the
arbitrator is based on a possible view of the matter, the
Court should not interfere with the award.
(ii) In Mathbai Ramji v. Jeram Ramji , AIR 1933 Sind 292 &
Nizamuddin, v. Ghulam Ahmad , (1909) 53 PLR: 1909 IC
353, it was held that Courts have long ceased to sitting
in appeal on award either with regard to errors of law or
errors on questions of fact.
(iii) In Mair A. & Co. v. Gordhandas Saqarmal and Dwarka Nath Sahai v.Kedar Nath ,
, it was been held that if the dispute is
within the scope of the arbitration clause it is no part
of the province of the Court to enter into the merits of
the dispute.
(iv) In Commander, Bangalore Area v. Armugam nagarthnam
AIR 1954 Mys. 46 & Rajmani Sinha v. Basant Singha , it was held that the Court cannot examine the
correctness of the findings of the arbitrator, as if it
were sitting in appeal over his findings.
(v) In Food Corporation of India v. Joqinderpal,
Mohinderpal , , it was
held that it is not misconduct on the part of an
arbitrator to come to an erroneous decision, whether his
error is one of fac turn law, and whether or not his
findings of fact are supported by evidence.
(vi) In Union of India v Unit Construction Co. (P) Ltd.
, it has been held that the Court has no
jurisdiction to look into the contract or the records of
the arbitration proceeding unless the contract or its
clause of the particular document from the records
concerned has been incorporated in the award either
expressly or impliedly and the ground taken is an error
apparent on the face of the award.
(vii) In Superintending Engineer v. R. Ramana Reddy , it was held that erroneous conclusion arrived
at by an arbitrator on a question of fact does not amount
to misconduct.
(viii) In Puri Construction Pvt. Ltd v. Union of India
, it was held that the
Court cannot sit in appeal over the view of the arbitrator
by re-examining and re-assessing the materials.
(ix) In Jawahar Lal Wadhwa v. Haripada Chakroberty , it was held that where the
arbitrator has laid down the principles of law correctly,
the award cannot be challenged on the ground of erroneous
application of those principles when no reasons for
arriving at the conclusion are given in the award.
The learned counsel for petitioner/claimant by
relying on the above decisions has submitted that the
award is fair and fully sustainable in law and on facts
and further submitted that the award in any event cannot
be looked at by the Court as if were sitting in appeal
and if the conclusion arrived at by the arbitrator is a
possible view of the matter and even if the award
discloses an error of law, it does not call for
interference.
24. However, in so far as the finding of the
Arbitrator qua 5 CFTs concerned, it has rightly come to
the conclusion that the erstwhile rats quoted by the
petitioner by its letter dated 27th July, 1990, were open
up to 30.9.90. The relevant extract of the letter dated
27th July, 1990 reads as under:-
“We had extended validity of our
offer for your acceptance up to 16.8.90 vide
our letter No. RON: SAL:RPV:A:1026 dt.
26.7.90. We further advise that for 7 nos.
(beyond 6 nos.) 6×6 crash fire tenders, this
validity stands further extended to 30.9.90.
We would, therefore, request you to place
your formal order positively before this
date.”
25. This letter of petitioner clearly demonstrates
that the offer of the erstwhile lesser rates was
categorically offered only if the orders were placed up to
30.9.90. It is not in dispute that the orders were in
fact placed by the respondent only on 1.11.91. By its
letter dated 2.12.91, the claimant had declined to accept
the offer dated 1.11.91, and had in fact quoted revised
prices in consonance with the terms of the letter dated
27th July 1990, for the supply of CFTs. Even the
respondent’s own letter stated that the extension of the
delivery period did not extend the contract period. The
relevant portion of the claimant’s letter dated 2.12.91 is
significant and reads as under:-
“We acknowledge with thanks your letter No. 1
(1)/90/D(S.I.)/CPO (VGE)-1636/AL-169 dt.
1.11.91 advising us that the quantity
ordered to be supplied is to be increased
from 6 to 11 units.
In this connection we wish to place the
following facts for your consideration.
While we are keen to supply additional
quantities, we regreat that we unable to
supply at the prices and terms and
conditions of the original order.
In this connection we wish to recall the
discussions held with yourselves and to the
offers for supply of 13 CFTs against your
earlier enquiry ref. letter No. 1(1)/90/D
(S.I.) dt 22.2.90.
During the discussions held with yourselves
on 4.4.90, we had requested that we should
be considered for placement of order for all
the 3 units and this was agreed to.
Accordingly we had submitted revised offers.
We had at that time offered a very special
price for these vehicles which was related
to the specified volumes as mentioned in our
letters dt 5.3.90 and 6.4.90 and for orders
placed within the validity periods
specified. WE had neither during the
discussion nor in our offers agreed to
giving option for placement of order on us
for additional quantity other than for 7
units tobe placed within the offered
validity which expired on 30.9.90.
Subsequently when your Letters of Intent was
received in August’ 90 followed by your firm
order dt 7.9.90, we had pointed out that the
‘option clause for procuring additional 7
nos. included in our order was not a part
of our offer and could not, therefore, be
accepted by us. This was pointed through
our letters SAL:SGKG of 27.9.90 and 21.1.91
wherein we had sought deletion of this
clause. It will be apparent that the option
clause that has been included was not a part
of the offer made by us.
Inspite of our abovementioned requests the
amendment to Purchase Order by MOD vide
letter No. 1(1)/90/D(S.I.)/CPO (VGE)-1636/
AL-44 dt 11.3.91 included a response to our
letter SAL:SGKG dt 26.9.90 only but
overlooked our letter SAL:SGKG dt 27.9.90
and 21.1.91 in regard to deletion of option
clause.
This anomaly was again pointed out by us
vide our letter SAL:SGKG of 9.4.91 for which
a reply is yet to be received.
During the currency of the contract,
extraordinary events affecting performance &
costs of executing the contract has taken
place viz. the August’ 90 GUlF crisis
followed by import restrictions, forging
exchange rate fluctuation.devaluation,
credit squeeze, import curbs etc. just to
mention a few. You will appreciate that
with such developments of a force majeure
nature (over which we have no control) has
both delayed execution of contract and we
Incurred losses through increase in input
costs & delays. In such an extraordinary
situation it would be reasonable to expect
that due consideration be given to here
factors & prices/deliveries be refixed if we
are to execute order now for additional
quantities.
We, therefore, propose for your
consideration and approval that following
revised prices be agreed to for supply of
additional quantities of 5 nos. now
sought:-
Basis price of AL F23 6×6
chassis ex-works Hour Rs. 28,50,000.00
(Rupees twenty eight lakhs & fifty
thousand only)
Super structure with Magirus
pump to the design of Brijbasi
Udyog. Rs. 12,25,000.00
(Rupees twelve lakhs & twenty five
thousand only
Total price Rs. 40,75,000.00
(Rupees forty lakhs & seventy five
thousand only)
Since the claimant by its letter dated 2.12.91
while not accepting the order for the additional 5 CFTs on
1.11.91 on the erstwhile rates as the order was placed
beyond 30.9.90, quoted revised prices for supply of
balance 5 CFTs. The claimant had in fact by its letter
dated 31.7.92 iterated its demand for price revision
while dealing with the extended period of delivery up to
31.12.92.
The findings of the Arbitrator on this issue
about the limited duration of the offer of lower prices
up to 30.9.90 are entirely justified and in any event
unassailable in the present proceedings which give a Court
very limited grounds for judicial review. for this
purpose it is also necessary to consider the effect of the
letter dated 6th April, 1990 sent by the petitioner which
specified that the price of Rs. 33,35,000/- is valid for
orders placed within the validity period for a total
quantum up to 13 numbers only. Thus it is clear that the
rate of Rs. 33,35,000/- was valid for the additional no.
of CFTs such an order for the balance CFTs (up to 7 more
CFTs) had to be placed by 30.9.90 in order to qualify for
the lower price of Rs. 33,35,000/- per CFT. This also
stated that the offer was valid for acceptance up to 6th
April, 1990 Along with the essentiality certificate
requested in Para 9 of the Letter dated 5th March, 1990.
Clause 8 where the purchase has reserved right to place
an additional order of 7 numbers of CFTs on the same terms
and conditions during the currency of the contract,
therefore, has to be understood, in the light of the above
letters, sent by the respondents, restricting the period
for which their offers were valid for the additional CFTs
not exceeding 13 CFTs. The amendment to the clause during
the currency of the contract was also sought by the
petitioner by its letter dated 15th July, 1991. Even the
letter dated 1st November, 1991 reads as under:
“….. 1. Clause 8 -quantity covered
in the contract
For : Existing
Read : 11 nos.
2. Clause 10- Total Price
FOR : Existing
Read :Rs. 3,66,85,000 (Rupees Three
crores sixty six lakhs,
eighthly five thousand only)
3. Clause 11- Delivery schedule
Supply for additional 5 nos to be
completed by 31.1.1992 or earlier.
Amendment was made and the quantity covered from
the existing was changed to number 11. Delivery schedule
for additional period was also to be completed by 31st
January, 1992. The perusal of the correspondence also
indicates that the petitioner had forsaken the validity of
the option clause as the offer of the petitioner was only
for limited period and it is not disputed that the offer
for the balance 5 CFTs was not made by the respondent
within the period stipulated by the petitioner. the
letter dated 5.3.90 specified that the offer was subject
to receipt of order prior to 31.3.90 and the letter dated
6.4.90 sent by the petitioner stated that the offer was
valid subject to acceptance by 16.4.90. Significantly
even the letter of respondent/UOI dated 3.8.90 referred to
quotations of the petitioner dated 5th December and 6th
April, 1990. The formal supply order dated 7.9.90 also
referred to the quotation dated 5.3.90. Thus right from
the inception of the contract between the parties, the
petitioner had been insisting on a time limit to its
quotations and the formal supply order itself
categorically referred to petitioner’s quotations dated
5.3.90 and 6.4.90 and stated that the said quotations had
been accepted. The term of the letter of the claimant
dated 2.12.91 are categorical and clearly decline to offer
the remaining 5 CFTs at the rate of Rs. 33,35,000/- per
CFT. Thus it is clear that while the terms of the
contract between the parties were governed by the format
referred to in the formal supply order dated 7.9.90
nevertheless the contract in so far as it provided a rate
of Rs. 33,35,000/- per CFT was limited by the period of
offer as per the respondent’s letter dated 7.9.90 which
referred to the petitioner’s letters dated 5.3.90 and
6.4.90. Even the acceptance of the formal supply order
dated 7.9.90, by the petitioner was categorically for 6
CFTs as per the letter of petitioner date 26.9.90. Thus
it is clear that the contract in so far as it stipulates
firm and fixed prices i.e. Rs. 33,35,000/- per CFT bears
the intent and meaning sought tobe given by the
respondent except for the fact that it enured for six CFTs
and could not apply to the balance 5 CFTs, the order for
which was placed later on beyond the validity of the
contract as per the petitioner’s offer and these would be
covered by the revised prices quoted by the petitioner in
its letter dated 2.12.91. The respondent’s own case set
out in the Affidavit of A.K. Aggarwal filed in this Court
is that the respondent had accepted the revised offer of
the petitioner dated 6.4.90. Even the letter dated 6.4.90
of the petitioner made the offer valid for a limited
period up to 16.4.90.
Thus the arbitrator’s finding qua 5 CFTs that
this was not covered in the order dated 7.9.90 placed by
the respondent and was ordered by the letter dated 1.11.91
beyond the validity of the offer of the petitioner is
justified and the petitioner/claimant was fully justified
in claiming higher prices for these 5 CFTs based on the
revised prices quoted by the claimant on 2.12.91. and
warrants no interference.
26. In view of the above discussion in so far as the
claim of the respondent towards the additional 5 CFT’s is
concerned it stands on a separate footing in view of the
unassailable finding of the Arbitrator supported by the
correspondence between the parties that the claimant had
not agreed to supply the balance 5 CFT’s on the same rate
for orders placed beyond 30.9.90. The arbitrator’s
findings in respect of the balance 5 CFT’s in my view is
unassailable and disclose no jurisdictional error
vitiating it. After considering the correspondence
between the parties I am unable to accept the plea of the
respondents that the exercise of the option by the Union
of India on 1.11.91 was only an exercise under the option
clause. I have in the foregoing discussion held that the
Arbitrator has failed to construe the impact of Clause 9
which stipulated firm and fixed prices so long as the
contract subsisted and further held that the
correspondence between the parties shows that the offer
made by the petitioner was accepted in the terms and
conditions mentioned in Schedule A, B & c of the Letter
dated 7th September, 1990 which stipulated that no other
condition shall govern the contract. In this view of the
matter, the award to the extent it relates to the 6 CFTs
is clearly beyond jurisdiction as per the contract between
the parties as it seeks to award an amount prohibited by
the agreement and consequently this error of the
arbitrator is an error of jurisdiction apparent on the
face of the award. Accordingly, the position of law
quoted by the learned counsel for the respondent squarely
applies in so far as the award of the arbitrator qua 6
CFTs is concerned. Consequently, the decisions relied
upon by the learned counsel for the petitioner would not
be applicable as it is not a mere error or law or fact but
an excess of jurisdiction which has been found by this
Court in so far as the award qua 6 CFTs is concerned. The
decisions relied upon by the respondent are in fact
applicable and in a particular the decision in Associated
Engineering’s case (supra) wherein it was held that
apparent excess of jurisdiction in an impugned award could
be interfered with. It is also apparent that the
non-consideration of the true effect of Clause 9 makes it
an error apparent on the face of the award as per the law
laid down in Continental Construction Co.’s case
However, in so far as the award qua the balance 5 CFTs is
concerned, I have found that since the offer was valid
only up to 16th April, 1990 or at best 30th September, 1990
and the exercise of option by the respondent was made only
on 1st November, 1991 beyond the subsistence of the
contract in so far as it related to the firm and fixed
prices of Rs. 33,35,000/- per CFT. In fact the option
under Clause 8 A reads as under:
“Purchaser reserves right to
place order additional 7 numbers
at the same terms and conditions
during the currency of the
contract.”
However, the said clause would apply during the
currency of the contract. I have already come to the
conclusion that the above clause was not applicable
beyond 30th September, 1990 because in view of the
correspondence between the parties it was evident that
the contract was current at best up to 30th September,
1990 and consequently this option under Clause 8 A could
not have been exercise qua the balance 5 CFT’s beyond
that dates. I am, therefore, satisfied that the
arbitrator has correctly found in law, that the contract
in so far as it fixed prices at Rs. 33,35,000/- per CFT
did not subsist beyond 30th September, 1990 and this
conclusion is not amenable to interference as per the
law laid down by the Hon’ble Supreme Court in Jawahar
Lal Wadhwa’s case (supra). This finding of the
arbitrator about the limited and time bound subsistence
of the contract in so far as prices of Rs. 33,35,000/- is
concerned is a pure finding of fact based on
appreciation of evidence not liable to be interfered
with as per the law laid down in Puri Construction Pvt.
Ltd. (supra). The petitioner is justified in therefore
relying upon inter alia the judgment of the Hon’ble
Supreme Court reported as FCI v. Joginderpal
Mahinderpal, that
even an erroneous finding is not amenable to challenge
in these proceedings. In the present case, I have found
that the option was sought to be exercised by the
respondent only after the contract ceased to be
operative. Accordingly the Award in so far as it
relates to 5 CFT’s as per supply order dated 1.11.91 is
concerned is unassailable and is confirmed and the Award
to the extent it relates to claim for Rs. 23,02,066/- in
respect of six CFT’s covered by the supply order dated
7th September, 1990 is set aside in view of the findings
recorded hereinbefore. However, the awarded in so far as
it relates to the 5 CFTs ordered on 1.11.91 is
unassailable and the award of a sum of Rs. 37,00,000/- in
respect of additional number of 5 CFTs is confirmed and
the objections to that portion of the award are
dismissed and the award made a rule of the Court to that
extant. The petitioners would also be entitled to
interest @ 18% from the date of award up to the date of
payment for the award of Rs. 37,00,000/-.