{"id":268949,"date":"2002-08-14T00:00:00","date_gmt":"2002-08-13T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ashok-leyland-limited-vs-union-of-india-uoi-on-14-august-2002"},"modified":"2018-10-13T18:05:28","modified_gmt":"2018-10-13T12:35:28","slug":"ashok-leyland-limited-vs-union-of-india-uoi-on-14-august-2002","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ashok-leyland-limited-vs-union-of-india-uoi-on-14-august-2002","title":{"rendered":"Ashok Leyland Limited vs Union Of India (Uoi) on 14 August, 2002"},"content":{"rendered":"
Delhi High Court<\/div>\n
Ashok Leyland Limited vs Union Of India (Uoi) on 14 August, 2002<\/div>\n
Equivalent citations: 2003 (1) ARBLR 83 Delhi, 101 (2002) DLT 65<\/div>\n
Author: M Mudgal<\/div>\n
Bench: M Mudgal<\/div>\n

JUDGMENT<\/p>\n

Mukul Mudgal, J.\n<\/p>\n

1. This application filed under Section 14<\/a> and 17<\/a> of
\nthe Indian Arbitration Act, 1940 seeks to make the award
\ndated 30th August, 1996 given by Shri R.L. Meena,
\nAdditional Secretary, Law, Govt. of India as a Rule of
\nthe Court. Simultaneously, the petitioner have also
\nsought the dismissal of the objections filed by the
\nrespondent UOI under Sections 30<\/a> and 33<\/a> of the Indian
\nArbitration Act, 1940 to the said award.\n<\/p>\n

2. The claimant\/plaintiff averred as under:-\n<\/p>\n

(a) The dispute involved in the present petition
\narises from supply of 13 Crash Fire Tenders (CFTs) which
\nwere offered by the claimant to the respondent by its
\nletter dated 5th March, 1990 @ Rs. 34,05,000\/- per unit for
\nthe supply for 13 units or supply of 6 units @
\nRs. 35,01,000\/- each. The letter of the claimant as per
\nClause 9 sought an Essentiality Certificate to enable the
\nclaimant to import fire power, accessories etc.
\nThereafter pursuant to the negotiations between the
\nparties on 4th April, 1990, letter dated 5th March, 1990
\nissued by the claimant was modified and further letter
\ndated 6th April, 1990 containing the modified conditions
\nwas issued and price was amended to Rs. 33,35,000\/- for 13
\nCFTs. A general Clause was also inserted which provided
\nthat all other terms and conditions of letters dated 5th
\nMarch, 1990 and 21st March, 1990 will remain unchanged and
\nthe Essentiality Certificate was also referred to. The
\nrelevant portions of letters dated 5th March, 1990 and 6th
\nApril, 1990 read as under:-\n<\/p>\n

“ED: VRP-SUKG <\/p>\n

05 March 90 <\/p>\n

Dear Sir, <\/p>\n

Sub: Your enquiry for 13 Crash Fire
\nTenders and our offer to Indian Navy ref: SAL:
\nSGPS:39 dated 1\/11\/89.\n<\/p>\n

…..\n<\/p>\n

2) Prices:                        For 13 Units              For 6 Units\n                                     EACH                        EACH\n\nPrice for complete\ncrash fire tender as\nper enclosed spec.                 Rs. 34,05,000\/- Rs. 35,01,000\/-\n\n.....\n.....\n\n3)  Delivery\n\n            Sep'90 : 6 vehicles\n            Oct'90 : 7 vehicles\n\n<\/pre>\n
subject to receipt of order before 31.03.1990.\n<\/p>\n
…..\n<\/p>\n
 9)   Essentiality Certificate:\n<\/p>\n
 We will need an essentiality certificate to favor
\nour Super structure manufacturers to enable them
\nimport fire pump, monitor & accs thereof.”\n<\/p>\n
 “RON:SAL:RPV:A:507  <\/p>\n
 6th April, 1990   <\/p>\n
 Dear Sir, <\/p>\n
Sub:   Supply of 13 Fully Built Crash Fire Tenders   <\/p>\n
Ref: Our offer letters No. ED\/VRP\/SUKG dt. 5.3.90
\n  and SAL\/SKG dated 21.3.90.\n<\/p>\n
 …..\n<\/p>\n
 The price of complete Fire Crash Tender as per
\nspecifications is revised as under:-\n<\/p>\n
 Rs. 33,35,000\/- (Rupees thirty three lakhs thirty
\nfive thousand only) each unit. This price is valid
\nfor orders placed within validity period for a
\ntotal quantum of up to 13 Nos. only…..\n<\/p>\n
 …..\n<\/p>\n
   Para (3) Delivery    <\/p>\n
 13. Units progressively by Sept\/Nov’90 subject to
\nreceipt of letter of intent by 16.4.90 and formal
\norder by 23.4.90. (We are planning 6 units by
\nSept’90) <\/p>\n
 …..\n<\/p>\n
   Para (11) validity   <\/p>\n
 Our offer is valid for acceptance up to 16.4.90 with
\nformal order to follow by 23.4.90 along with the
\nessentially certificate requested in para 9 of our
\nletter dt. 5.3.90.\n<\/p>\n
   General   <\/p>\n
 All other terms & conditions of our letters dated
\n5.3.90 and 21.3.90 will remain unchanged.”\n<\/p>\n
 (b) On 3rd August, 1990, the respondent forwarded an
\nadvance supply order by accepting the offer made by the
\nclaimant. The said letter referred to the claimant’s
\nquotations dated 5th March, 1990, 6th April, 1990 and 26th
\nJuly, 1990. The said letter of the respondent dated 3rd
\nAugust, 1990 placed an order for supply of six CFTs. On
\n7th September, 1990, a formal supply order was placed by
\nthe respondent referring both to the quotations dated 5th
\nMarch, 1990 and the revised quotation dated 26th July,
\n1990.\n<\/p>\n
 (c) The claim is based upon non-supply of
\nessentiality certificate or similar documents i.e. Import
\nrecommendation certificate in terms of the contract. The
\nfailure of the provision of the Essentiality Certificate
\ncompelled the claimant to purchase each chassis at a price
\nwhich was Rs. 2,89,965\/- higher. The failure of the
\nrespondent to furnish the Essentiality Certificate\/letter
\nalso compelled the claimant to purchase the imported
\ncomponents under the new policy through the exim scrip
\nroute. Thus the claimant was required to pay much higher
\nprices as deposed in paragraph 4 of the affidavit of Mr.
\nKhaitan dated 28th December, 1995. The claimant was
\nforced to spend higher amounts to purchase the imported
\nsuper structure and this difference has resulted in the
\nclaim due to the difference in the imported contents of
\nCFTs as per the original quotation as contrasted with the
\ngoods in the final products.\n<\/p>\n
 3. The respondent\/UOI’s case before the Arbitrator
\nwas as under:-\n<\/p>\n
 (a) The total number of 11 CFTs were supplied in
\npursuant to the supply order dated 7th September, 1990. 6
\nCFTs were supplied against supply order dated 7th
\nSeptember, 1990 and the remaining CFTs were supplied
\nagainst supply order dated 1st November, 1991.\n<\/p>\n
 (b) The respondents have contended that the prices as
\nper the supply order placed, were firm and fixed and there
\nwas no scope or warrant for enhancement sought to be
\nclaimed by the claimant.\n<\/p>\n
 4. The arbitrator inter alia recorded the following
\nfindings:\n<\/p>\n
 “…..From the above provisions of
\nthe offer dated 5.3.1990 and the
\noffer dated 6.4.1990 which are
\nmentioned in he advance supply order
\nas well as in the formal supply
\norder, there was a clear cut
\nprovision for issue of an
\nEssentiality Certificate along with
\nthe supply order. Since no such
\ncertificate was issued in this case
\nalong with the supply order, the
\nsupply order cannot be said to be in
\nconformity with the offers of the
\nClaimant dated 5.3.1990 and 6.4.1990.\n<\/p>\n
 …..\n<\/p>\n
 In view of the above, it is quite
\nclear that the supply order dated
\n7.9.1990 read with advance supply
\norder dated 3.8.1990 can be treated
\nonly as counter offer and not an
\n‘acceptance’. This gives rise to a
\nvital question as to whether the
\ncounter offer of the Respondent
\ncontained in the supply order\/advance
\nsupply order was accepted by the
\nClaimant.\n<\/p>\n
 …..\n<\/p>\n
 From the above, it is quite clear
\nthat the Claimant had agreed to
\nsupply the stores as per the terms
\nand conditions contained in the
\nsupply order dated 7.9.90 subject to
\nreceipt of amendments sought by them
\nvide the aforementioned letter dated
\n26.9.1990. Thus, the Claimant had
\nnot accepted the advance supply order
\nor the formal supply order. The
\nvarious amendments sought by the
\nClaimant vide their first letter
\ndated 26.9.1990 read with the other
\nletter of the same date amounted only
\nto a counter offer\/counter proposal
\nand not an absolute and unqualified
\nacceptance. Therefore, the next
\nquestion would arise whether the
\nRespondent had accepted the various
\namendments sought by the Claimant in
\nthe terms and conditions of the
\nsupply order.\n<\/p>\n
 …..\n<\/p>\n
 In the circumstances, the supply
\norder dated 7.9.1990 cannot be
\nregarded as the ‘sole repository of
\nthe transaction’. Therefore, the
\nclaim for price escalation has to be
\nnow examined with reference to the
\nother correspondence\/letters
\nexchanged between the parties.\n<\/p>\n
 …..\n<\/p>\n
 A perusal of the aforesaid letter
\ndated 8.2.1991 would clearly reveal
\nthat the Claimant had made a proposal
\nfor price escalation on account of
\nincrease in customs duty and
\nvariations in the exchange rate.\n<\/p>\n
Since the Claimant’s offers dated
\n5.3.90 and 6.4.90 were not accepted
\nby the Respondent for the reasons
\ndiscussed hereinabove, there was
\nnothing which could bar the Claimant
\nfrom making fresh proposal for
\nprice escalation.\n<\/p>\n
 …..\n<\/p>\n
 Thereafter, on 10.5.1991 the
\nClaimant wrote a letter to the COP
\n(Minister of defense) for extension
\nof delivery date up to 31.7.1991. In
\nreply to the above letter, the
\nRespondent extended the delivery dated
\nup to 31.7.1991 vide their letter
\ndated 17.6.1991 subject to the
\nconditions specified therein. One
\nof the conditions mentioned in that
\nletter was that no price increase
\nwould be allowed. Needless to say
\nthat since extension of delivery date
\nwas granted by the above letter
\nsubject to certain conditions, it was
\nrequired to be accepted by the
\nClaimant.\n<\/p>\n
 …..\n<\/p>\n
  In any event, after the aforesaid
\ncorrespondence, the Claimant had
\nagain revived their proposal for
\nprice escalation vide their letter
\nNo. SAL: SGKG dated 15th July 1991
\nwhereby the Respondent was requested
\nto refix delivery dates and to
\nconsider and agree to the increase in
\nprices as mentioned therein.\n<\/p>\n
 …..\n<\/p>\n
 Therefore, one can safely infer
\nfrom the above circumstances that the
\nRespondent can be said to have
\naccepted the Claimant’s proposal for
\nprice escalation by conduct. As
\nalready stated, the refusal of price
\nescalation vide letter dated 19.12.91
\nafter the 6 CFTs had been accepted by
\nthe Respondent would be of no
\nsignificance. Further, the refusal
\nof price escalation as contained in
\nletter dated 19.12.91 was on the
\nground that the contract was placed
\nwith prices firm and fixed. Since
\nthe supply order dated 7.9.90 was
\nonly a counter offer which was not
\naccepted by the Claimant as already
\ndiscussed hereinabove, the basis of
\nrefusal of price escalation as
\ncontained in the letter dated
\n19.12.91 is also not sustainable.\n<\/p>\n
 The Claim made by the Claimant in
\nrespect of 6 CFTs is based on price
\nbreak-up of import contents for 6
\nchassis and price break-up of import
\ncontents of super-structure for 6
\nCFTs. After going through the
\nvarious documents on record, the
\ncalculation of the import contents
\ngiven in the statements of price
\nbreak-up filed by the Claimant does
\nnot seem to be unbelievable.\n<\/p>\n
 …..\n<\/p>\n
 Further, for the reasons already
\ndiscussed, the offer for 7 numbers
\n(beyond 6 numbers) as per the
\nClaimant’s letter dated 27th July 1990
\nwas open only up to 30.9.1990. The
\norder for 5 numbers in issue was not
\nplaced within 30.9.1990. In view
\nthereof, placement of the order for
\nadditional number of 5 CFTs vide
\nletter dated 1.11.1991 can be said to
\nbe only a fresh offer. That offer
\nwas not accepted by the Claimant vide
\ntheir letter dated 2.12.1991. The
\nClaimant, while not accepting the
\nRespondent’s offer dated 1.11.91, had
\nquoted revised prices for supply of
\nadditional number of 5 CFTs vide
\ntheir aforesaid letter dated
\n2.12.91.\n<\/p>\n
 …..\n<\/p>\n
 In this connection, it may be
\nstated that since the supply order
\ndated 7.9.90 was not accepted by the
\nClaimant and as the order for
\nadditional quantity of 5 CFTs was not
\nplaced by the Respondent within
\n30.9.1990 up to which the offer for
\nplacement of additional quantity of
\nCFTs up to 7 numbers was open to be
\naccepted, the very basis on which the
\nprice has been rejected vide the
\nletter dated 19.12.1991 cannot be
\nsaid to have backing of any
\ncontractual term already settled by
\nthe parties.\n<\/p>\n
 …..\n<\/p>\n
 The Respondent had extended the
\ndelivery period up to 31.12.1992 for
\nadditional number of 5 CFTs vide
\ntheir letter dated 7.7.1992. It is
\nnot clear whether this extension made
\nby the above letter dated 7.7.1992
\nwas accepted by the Claimant as
\nacceptance\/acknowledgment letter of
\nthe Claimant with reference to the
\nabove letter dated 7.7.1992 has not
\nbeen placed on record by any of the
\nparties.\n<\/p>\n
 …..\n<\/p>\n
 The Claimant’s above letter dated
\n31.7.1992 cannot be said to be
\nunconditional acceptance of the
\ndelivery period which was extended
\nup to 31.12.1992 as the Claimant had
\nmade certain counter proposals
\nrelating to delivery, payment of
\nterms, consignee and arbitration.
\nThe Claimant had very clearly stated
\nthat they would like to have the
\nRespondent’s confirmation for
\ncommencement of the arbitration
\nproceedings. The aforesaid letter
\ndated 31.7.1992 is the last
\ncorrespondence which has been placed
\non record. A perusal of the
\naforesaid letter dated 31.7.1992
\nclearly indicates that the Claimant
\nhad not dropped their proposal for
\nprice revision as contained in their
\nletter 2.12.1991. The fact remains
\nthat after the aforesaid last
\ncorrespondence placed on record which
\ncontained counter proposals of the
\nClaimant, the Respondent had accepted
\nthe delivery of 5 CFTs. In the
\ncircumstances, one can without any
\ndoubt draw inference that the
\nRespondent had accepted by conduct
\nthe Claimant’s proposal for price
\nrevision as contained in the
\nClaimant’s letter dated 2.12.1991 in
\nrespect of 5 additional number of
\nCFTs.”\n<\/p>\n
 5. The Arbitrator awarded the following amounts to
\nthe claimant:\n<\/p>\n
 (i) Claim for Rs. 23,02,066\/- in respect of 6
\nCFTs.\n<\/p>\n
 (ii) Claim for Rs. 37,00,000\/- in respect of
\nadditional number of 5 CFTs.\n<\/p>\n
 (iii) If the aforesaid arbitral amount was not
\npaid to the Claimant by the Respondent
\nwithin 45 days from the date of the Award,
\n18% interest per annum was payable on the
\narbitral amount by the Respondent from the
\ndate of the Award.”\n<\/p>\n
 This award is under challenge by the respondent
\nbefore this Court.\n<\/p>\n
 6. By its affidavit of Contract Purchase Officer,
\nMr. A.K. Aggarwal in the Ministry of defense, the
\nrespondents have averred as follows:-\n<\/p>\n
 (a) That the Arbitrator wrongly treated the supply order
\ndated 7th September, 1990 as a counter offer and it was
\nnot even the claimant’s case that the said supply order
\nwas a counter offer by the Government. The claimant’s
\ncase was that the offer dated 5th March, 1990 resulted in
\nthe revised offer dated 6th April, 1990 and the offer
\ndated 5th March, 1990 was superseded by the revised offer
\ndated 6th April, 1990. The revised offer at the rate of
\nRs. 33.35 lakhs per CFT was valid for 13 number of CFTs.
\nValidity of the said offer dated 6th April, 1990 was
\nextended by the claimant first up to 15th July, 1990, and
\nthereafter up to 16th August, 1990 and the said offer dated
\n6th April, 1990 was accepted by the respondent by an
\nadvance supply order dated 3rd August, 1990 and the
\nextended validity period up to 16th August, 1990. This
\nsupply order of the respondent dated 3rd August, 1990 was
\naccepted by the claimant by its letter dated 21st August,
\n1990 and the formal supply order was placed by the
\nrespondent with the claimant by the covering letter dated
\n7th September, 1990. The relevant terms of the letter
\ndated 7th September, 1990 read as follows:-\n<\/p>\n
 “(1) Your Quotation No. ED\/VRP\/SUKD dated
\n5.3.1990.\n<\/p>\n
(2) Your Revised Quotation No. RON\/SAL:RPV\/A-507
\ndated 6.4.1990.\n<\/p>\n
 (3) Your Letter No. RG:SAL:ROV\/1-A1026 dated
\n26.7.1990.\n<\/p>\n
 (4) Our Advance Supply Order No. 1(1)\/90\/D(81)
\ndated 3.8.1990.”\n<\/p>\n
 Dear Sirs, <\/p>\n
  “Please refer to your quotations\/letter
\nstated above. These have been accepted and a
\nformal supply order is hereby placed on you for
\nand on behalf of the President of India for the
\nsupply of items mentioned in Schedule A on the
\nterms and conditions mentioned in Schedule A, B
\nand C (revised in November 1989 attached hereto).
\n  No other terms and conditions will govern the
\ncontract.\n<\/p>\n
 (2) Please acknowledge receipt within 15 days
\nhereof on the proforma attached as Appendix I
\nhereto with a copy to the consignee and the
\nChairman, Technical Committee.\n<\/p>\n
 (3) Please quote on all the letters and
\ninvoices the number and date of this letter for
\nreference.\n<\/p>\n
 (4) Your quotation mentioned in Clause 4 of
\nSchedule A of this order and the schedules,
\nappendix annexed hereto together with your letter
\nof acknowledgement thereto   shall be the sole
\nrepository of this transaction  “.\n<\/p>\n
 (b) The relevant portion of the letter sent by the
\nclaimant accepting the supply order dated 7th September,
\n1990 along with terms therein, reads as follows:-\n<\/p>\n
 “(1) Your Quotation No. ED\/VRP\/SUKD dated
\n5.3.1990.\n<\/p>\n
 (2) Your Revised Quotation No. RON\/SAL:RPV\/A-507
\ndated 6.4.1990.\n<\/p>\n
 (3) Your Letter No. RG:SAL:RPV\/1-A1026 dated
\n26.7.1990.\n<\/p>\n
 (4) Our Advance Supply Order No. 1(1)\/90\/D(81)
\ndated 3.8.1990.”\n<\/p>\n
 Dear Sirs, <\/p>\n
 “Please refer to your quotations\/letter
\nstated above. These have been accepted and a
\nformal supply order is hereby placed on you for
\nand on behalf of the President of India for the
\nsupply of items mentioned in Schedule A on the
\nterms and conditions mentioned in Schedule A, B
\nand C (revised in November 1989 attached hereto).
\n  No other terms and conditions will govern the
\ncontract.\n<\/p>\n
 (2) Please acknowledge receipt within 15 days
\nhereof on the proforma attached as Appendix I
\nhereto with a copy to the consignee and the
\nChairman, Technical Committee.\n<\/p>\n
 (3) Please quote on all the letters and
\ninvoices the number and date of this letter for
\nreference.\n<\/p>\n
 (4) Your quotation mentioned in Clause 4 of
\nSchedule A of this order and the schedules,
\nappendix annexed hereto together with your letter
\nof acknowledgement thereto   shall be the sole
\nrepository of this transaction   “.\n<\/p>\n
 (b) The relevant portion of the letter sent by the
\nclaimant accepting the supply order dated 7th September,
\n1990 along with terms therein, reads as follows:-\n<\/p>\n
 “Receipt is acknowledged of your Contract No.
\n1(1)\/90\/D(S1)\/CPO\/VGE-1636 dated 7.9.90 together
\nwith annexures.\n<\/p>\n
 2. We hereby agree to supply the said order as
\nper the terms and conditions contained therein
\nsubject to receipt of all amendments sought in our
\nletter dated 26th September, 1990.”\n<\/p>\n
 The relevant portion of the said letter dated
\n26.9.90 reads as follows:-\n<\/p>\n
 Dear Sir,:\n<\/p>\n
Sub: Supply Order No. 1(1)\/90\/D(S.I.)\/CPO(VGE)-1636
\ndt. 7\/9\/90 for supply of 6 Nos. fully
\nbuilt Crash Fire Tenders.\n<\/p>\n
 We thank you very much for your formal Supply
\nOrder referred above for supply of 6 nos fully
\nbuilt Crash Fire Tender vehicles.\n<\/p>\n
We are enclosed Appendix I duly completed
\nconfirming our acceptance to supply the said
\nstores, subject to the following amendments which
\nare required by us immediately.\n<\/p>\n
   Schedule   :\n<\/p>\n
    Clause 9 – Price per unit    <\/p>\n
 The Sales tax applicable in TNGST 4% and Surcharge
\non Sales Tax @ 8%.\n<\/p>\n
   Clause 13 (g) – Literature    <\/p>\n
 All the literatures listed in the order will be
\nprovided by us. In addition we will also be
\nproviding an operator’s guide which will provide
\nbasic date of the vehicle and instructions on
\noperation.\n<\/p>\n
 The illustrated parts list will be provided in our
\nown format. The format as required by you in the
\ndefense format is being complied and can be
\nsupplied only if it is ready by the time the order
\nis completed since it requires an enormous
\npreparation.\n<\/p>\n
 We would request you to please confirm the above.\n<\/p>\n
   Annexure “B” to Schedule “A”\n<\/p>\n
 Sl. No. 1 Clause 13.1: To read as : “ZF 6HP 600”
\nfully automatic gearbox instead of “2 F 6HP 600”\n<\/p>\n
   Schedule “B”\n<\/p>\n
   Clause 15 – dispatch instructions    <\/p>\n
 Clause 15(a) and (b) are not applicable as the
\nchasis are to be dispatched by road through our
\nauthorised transport contractors.\n<\/p>\n
   Clause 16 Inspection Procedure    <\/p>\n
 The chassis will be offered complete for
\ninspection of the concerned authorities at our
\nHosur, works.\n<\/p>\n
 The fully built vehicle with super structure will
\nbe offered for inspect at the premises of the
\nfollowing super structure manufacturers:\n<\/p>\n
 1. Kooverji Devshi & Co P Ltd. Bombay 2 Nos.\n<\/p>\n
 2. Brijbasi Udyog, Agre 2 Nos.\n<\/p>\n
 Depending on the progress of the vehicles we would
\nlike to change the mix of orders on super
\nstructure manufacturers to enable us to be within
\nthe delivery schedule prescribed by you.\n<\/p>\n
 Since bulk production clearance has already been
\ngiven and regular manufacturer of vehicles has
\ncommenced, we are not acceptable for any further
\nuser’s trial.\n<\/p>\n
   Clause 22 – System of Payment for Stores    <\/p>\n
 Since the vehicle will be delivered by road the
\nClause 22 (E) will be applicable.\n<\/p>\n
   Clause 23 Special conditions   <\/p>\n
 Please note that no pilot sample will be offered
\nsince the bulk production clearance has already
\nbeen given. Therefore the Clause 23 (iii), (iv)
\nand (vii) will not be applicable.\n<\/p>\n
   Schedule C   <\/p>\n
   Clause 23 – Security Deposit   <\/p>\n
 Would request you to kindly send us a format to
\nenable us to furnish a Bank Guarantee for Rs. 2
\nlakhs towards security deposit.\n<\/p>\n
   FORCE MAJEURE    <\/p>\n
 Our standard force majeur clause will be
\napplicable for this contract.\n<\/p>\n
 We request you to kindly issue the above
\namendments at an early date to enable us to go
\nahead with manufacture of vehicles.”\n<\/p>\n
 (c) The respondent have therefore contended that the
\nArbitrator has not even referred to the aforesaid
\nunconditional acceptance of the supply by the claimant
\neven though the said letter was filed at page 97 of the
\ndocuments filed by the respondent before the Arbitrator
\nwho consequently committed legal misconduct ignoring the
\nmaterial letter and has not even referred to it in the
\naward. For this purpose the respondent has relied upon
\nthe judgment , KP Poulose v.\n<\/p>\n
State of Kerala.\n<\/p>\n
 (d) It is, therefore, contended that the above
\nunconditional acceptance contained in the letter dated
\n26th September, 1990 of the claimant along with other
\nletter No. SAL\/SGKS dated 26th September, 1990 clearly
\nstipulated that the claimant will not claim any escalation
\nin the prices and the Arbitrator has failed to consider
\nthe effect of the said letter.\n<\/p>\n
 (e) Reliance has also been placed on Clause 9
\nproviding for fixed and firm price and the said Clause 9
\nreads as follows:-\n<\/p>\n
  “9. Price per unit, basic price Rs. 33,35,000\/-,
\nexcise duty @ 21% will be paid extra on the
\nchassis cost of Rs. 23.15 lakhs against of
\npayment. C.S.T. @ 4% will be paid extra.
\nFOR Hosur price is otherwise Firm and
\nFixed.”\n<\/p>\n
 7. It is also contended by the respondent that the
\naffidavit of Shri A.K. Aggarwal dated 23rd February, 1996
\nfiled before the Arbitrator has been totally ignored and
\nreliance upon tenders of International Airport Authority
\nof India is not justified as that related to
\nsuper-structure. It is further submitted that the order
\nfor 6 CFTs was placed during August, 1990 and the order
\nfor the additional 5 CFTs was placed during November,
\n1991. The claimant has only now sought to give the
\ndetails of the escalation even though none was given even
\nin the claimant’s letter dated 2nd December, 1991. It is
\nalso contended that the quantity of 5 CFTs was governed in
\nterms of the optional clause of the supply order and the
\nprices under terms and conditions of the contract were
\nFirm and Fixed.\n<\/p>\n
 8. The respondent has further relied on the
\ninconsistencies in the award of the Arbitrator. It was
\nalso contended that while the total escalation claimed by
\nthe claimant before the Arbitrator were also follows:-\n<\/p>\n
   (1) 6 Nos. of Crash Fire Tenders
\nDifference in original price and
\ncost escalation up to the time of
\nextended delivery period                       23,02,066.00<\/p>\n
(2) 5 Nos. of Crash Fire Tenders               37,00,000.00<\/p>\n
(3) Interest                                    3,45,310.00<\/p>\n
            Total                              63,47,376.00<\/p>\n
 9. The schedule was attached to the claim, details
\nwere given and claim was made for six vehicles @
\nRs. 2,89,965\/- amounting to Rs. 17,39,790\/-, plus overhead
\nof Rs. 3,45,310\/-. In the price break up attached to the
\nSchedule the total difference was Rs. 5,62,274\/- and
\nRs. 2,88,965\/-. The learned Arbitrator in awarding
\nRs. 23,00,266\/- in respect of these CFTs has gone beyond
\nthe details given in the Schedule attached to the claim
\nstatement. Similarly, the claim of the claimant of
\nRs. 37,00,000\/- for 5 CFTs is beyond the details given in
\nSchedule I to the claim statement. The learned Arbitrator
\nhad no jurisdiction to go beyond the claim statement and
\nthe details given in Schedule I. He has acted without
\njurisdiction in awarding a claim which was not supported
\nby any details and much less any evidence.\n<\/p>\n
 10. It was also submitted that the finding of the
\nArbitrator that the Option clause of the contract became
\nInoperative because the advance supply order dated 3rd
\nAugust, 1990 and formal supply order dated 7th September,
\n1990 were also counter offers is uncalled for and the
\nArbitrator has erred in treating the supply orders as
\ncounter offers. The respondent accepted the revised offer
\nof the claimant and not the original offer dated 5th
\nMarch, 1990 which was superseded by the offer dated 6th
\nApril, 1990.\n<\/p>\n
 11. The other inconsistencies by the Arbitrator are
\nthat it treated the offers as counter offers and at same
\nplaces supply orders has been referred to. The
\nArbitrator’s finding that there was no phased supply is
\nsought to be contradicted by the following clauses:-\n<\/p>\n
 ”  Optional Clause    <\/p>\n
 Purchaser reserves the right to place order for
\nadditional 7 Nos. at the same rate, terms and
\nconditions during the currency of the contract.”\n<\/p>\n
 “3.    Delivery    <\/p>\n
 13 Units were progressively by submitting in
\nNovember, 1990 subject to receipt of letter of
\nIntent by 16.4.1990 and formal order by 23.4.1990.
\n  We are planning these units   by September, 1990”.\n<\/p>\n
 It is therefore contended that the Arbitrator’s
\nFinding that the supply was not to be in a phased manner
\nis perverse. It is contended the first order was placed
\nfor 6 CFTs which accepted by the claimant and the
\nsecond order was placed for the 5 CFTs which was also
\naccepted by the claimant. The option clause provided
\nsupply of 6 CFTs at the same rate. There was no
\nescalation clause.\n<\/p>\n
 12. Finally it has been contended that the amendments
\nwere claimed to be made by the claimant by the letters
\ndated 26th September, 1990. It is submitted that these
\nletters do not say so and in any case these letters were
\nnot received by the respondent. Even if the same are
\nassumed to be received, the said letters could not have
\nthe effect of modifying a formal contract. The letter
\ndated 26th September, 1990 of the claimant accepting the
\nformal supply letters did not raise any objection to the
\noption clause and the subsequent letters dated 15th July,
\n1991, 8th August, 1991, 11th November, 1991, 29th
\nNovember, 1991 and 2nd December, 1991 for price increase
\nwere rejected by the respondent by letter dated 19th
\nDecember, 1991. The claimant continued to supply the CFTs
\nwithout protest and therefore, accepted by conduct the
\nsupply at the Firm and Fixed price.\n<\/p>\n
 13. Thus the finding of the Arbitrator that the
\nletters dated 15th July, 1991 and 8th August, 1991
\ncontaining the request for price increase was not rejected
\nis obviously unsustainable in view of the respondent’s
\nletter dated 19th December, 1991 which rejected the claim
\nraised in said letters. This clearly shows
\nnon-application of mind.\n<\/p>\n
 14. It is also submitted by the respondent that the
\nArbitrator held that the main cause of delay was the
\nnon-issuance of Essentiality Certificate by the
\nrespondent. There was no clause in the contract providing
\nfor issuance of Essentiality Certificate by the
\nrespondent. Clause 4(4) of the Schedule B provided as
\nfollows:-\n<\/p>\n
 “(4)   Assistance of Contractor :\n<\/p>\n
 The Contractor shall not except to the
\nextent specifically agreed to by the purchaser in
\nthe contract be entitled to any sort of assistance
\neither in the procurement of raw material required
\nfor the fulfillment of the contract or in securing
\nof transport facility. Any assurance or
\nassistance given or attempted to be given to the
\nContractor in regard to these and not covered by
\nthe terms of the contract shall not be construed
\nas a representation that the purchaser is willing
\nto waive its right under this or any other
\ncondition of the contract.”\n<\/p>\n
 15. In the revised offer dated 6th April, 1990 Clause
\n9 relating to the Essentiality Certificate mentioned in
\nthe original offer dated 5th March, 1990 was amended.\n<\/p>\n
Even in the original offer in Clause 9, it was merely
\nstated that the contractor will need the essentiality
\ncertificate to favor its super structure manufacturers to
\nenable them to import fire pumps and accessories thereof.
\nThe Controller of Imports and Exports by its letter dated
\n29th April, 1991 rejected the claim of the manufacturer as
\nthe applications were received after the last date
\nprescribed in paragraph 60 of the Hand Book i.e. 31st
\nMarch, 1991. The claimant thereafter requested the
\nrespondent to give assistance. By its letter dated 10th
\nJuly, 1991, the respondent requested the Chief Controller
\nof Imports and Exports to issue the necessary license.
\nThus as and when the assistance was sought from the
\nclaimant it was given and the delay was caused by
\nmanufacturer in submitting the application after the last
\ndate prescribed as 31st March, 1991. Inspite of latches
\nthe respondent had given timely assistance and thus the
\nArbitrator’s conclusion on the essentiality certificate
\ndemonstrate non-application of mind and non-consideration
\nof these crucial documents. The Arbitrator ignored the
\nterms and conditions of letter 14th May, 1992 and
\n7th February, 1992 extending the delivery period up to 31st
\nDecember, 1992 and by these letters it was clearly
\nstipulated that time shall continue to be the essence of
\nthe contract and the supply shall be made on the terms and
\nconditions and no increase in the prices will be allowed.
\nThis also discloses non-application of mind on behalf of
\nthe Arbitrator. On the aforesaid pleas the impugned award
\nwas sought to be set aside.\n<\/p>\n
 16. For the purpose of the determination of the
\nRespondent’s challenge to the Award it is necessary to
\nconsider the impact and effect of Clause 9 which
\nstipulated that save excise at 21% and Central Sales Tax
\nat 4% the price was otherwise firm and fixed. The letter
\ndated 7.9.90 by which the formal supply order was placed
\non the petitioner, noted the quotations of the petitioner
\ndated 5.3.90, 6.4.90 and the petitioner’s letter dated
\n26.7.90 and the advance supply order of the respondent
\ndated 3rd August, 1990. This letter clearly accepted the
\npetitioner’s offer on the terms and conditions mentioned
\nin Schedules A, B & C and further stipulated that no other
\nterms and conditions would govern the contract.\n<\/p>\n
 17. Clause 9 of the letter dated 5.3.90 strongly relied
\nupon by the claimant which stipulated firm and fixed price
\nread with the aforesaid correspondence exchanged between
\nthe parties on 5th March, 1990, 6th April, 1990, 26th
\nJuly, 1990 and 3rd August, 1990 makes it evident that the
\npetitioner’s offer was accepted in the terms and
\nconditions mentioned in Schedules A, B & C of the letter
\ndated 7th September, 1990. It is clearly stipulated
\ntherein that no other condition would govern the contract.
\nThe impugned award has not properly appreciated the impact
\nof this vital clause having a critical bearing on the
\npresent claim of the petitioner which is based on the
\nenhancement of the price owing to the non-supply of
\nessentiality certificate and other similar document i.e.
\nimport recommendation certificate by the respondent. The
\npetitioner itself had agreed to supply the order as per
\nthe terms and conditions contained in the letter dated 7th
\nSeptember, 1990 sent by the respondent. Since the letter
\ndated 7th September, 1990 clearly stipulated that no other
\nterms except those mentioned in Schedules A, B and C would
\ngovern the contract and further mentioned that the
\nquotation mentioned in Clause 4 of Schedule A along with
\nletter of acknowledgement shall be the sole repository of
\nthis transaction, the petitioner was bound to bring its
\nclaim within the Clause 4 of Schedule A and the perusal of
\nthe award shows that the petitioner has not been able to
\ndo so. Even the amendments sought by the petitioner as
\ndetailed in the letter dated 26th September, 1990 only
\nrefer to Sales Tax and surcharge on Sales Tax, literature,
\nchange in the specification of gear box, dispatch
\ninstructions, inspection procedure, system of payment and
\nspecial condition, security deposit and force majeure.
\nConsequently, the essentiality certificate has not been
\nmentioned as an ingredient of the contract between the
\nparties, if the letter dated 26th September, 1990 sent by
\nthe petitioner is taken into account. In my view the
\nconsideration of the impact of these Clauses is vital and
\naffect the jurisdiction of the Arbitrator and if the
\ncontract between the parties is to the effect that the
\nrequirement of the essentiality certificate was not a part
\nof the contract between the parties, then the petitioner’s
\nclaim must fail without reference to the other pleas
\nraised. The arbitrator has not properly construed the
\neffect of the categorical phrase in Clause 9 that the
\nprices were firm and fixed. Consequently, I am not
\ndealing at this stage with the other challenges to the
\nArbitration award, raised by the respondent in so far as
\nit relates to 6 CFT’s supplied as per the supply order
\ndated 7.9.90. The respondent’s plea is buttressed by the
\nfact that apart from the fact that the letter dated 26th
\nSeptember, 1990, even if assumed to have been sent, did
\nnot claim any objection to the option clause and the
\nsubsequent letters dated 15th July, 1991, 8th August,
\n1991, 11th November, 1991, 29th November, 1991 and 2nd
\nDecember, 1991 claiming increase in the prices were
\nrejected by the respondent by letter dated 19th December,
\n1991, even then the respondent has continued to supply the
\nCFTs without demur which also points to the conclusion
\nthat the supply of CFTs ordered on 7th September, 1990 was
\nto be at the firm and fixed prices. In this respect the
\nfinding of the Arbitrator that the letters dated 15th
\nJuly, 1991 and 8th August, 1991 which contained the
\nrequest for enhancement in prices were not rejected by the
\nrespondent, cannot stand in view of the following terms in
\nthe letter dated 19th December, 1991 sent by the
\nrespondent rejecting the claim raised by the petitioner
\nvide letter dated 15th July, 1991 and 8th August, 1991.
\nThe relevant portion of letter dated 19th December, 1991
\nread as follows:-\n<\/p>\n
 “Kindly refer to the letters quoted
\nabove. The same have been considered. Your
\nrequest for price increase cannot be acceded to
\nas the contract was placed with prices firm and
\nfixed.\n<\/p>\n
 2. As regard coverage of five numbers under
\noption clause the same has been exercised in
\nterms of the contract. Advance supply order was
\nacknowledged vide your letter SAL:SGKG dt.
\n21.8.90 and formal supply order was acknowledged
\nvide your letter dated 26.9.90. There was no
\nmentioned\/objection in the above letters
\nregarding indicating of option clause.\n<\/p>\n
 3. In view of the position explained above,
\nadditional quantity has been covered in terms of
\nthe contact and your request for increase in
\nprice for additional quantity cannot be acceded
\nto. This is however without prejudice to the
\nterms and condition of the contract.”\n<\/p>\n
 In fact the Arbitrator’s award is based
\nessentially on the delay caused in the issuance of the
\nessentiality certificate by the respondent. I have also
\nfound that issuance of essentiality certificate by the
\nrespondent did not form part of the contract between the
\nparties.\n<\/p>\n
 The only relevant provision which might be of some
\nassistance to the petitioner is Clause (4) of Schedule 4
\nwhich provides that the contractor except to the extent
\nspecifically agreed to by the purchaser\/respondent, is
\nnot entitled to any sort of assistance. Even if the
\noriginal Clause 9 contained in the offer dated 5th March,
\n1990 is considered to be the operative clause, it is
\nclear that the essentiality certificate was merely
\nrequired by the contractor to enable him to import the
\nfire pump and accessories. The said Clause 9 which has
\nbeen extracted above does not make the issue of
\nessentiality certificate as a mandatory component of the
\ncontract and respondent is justified in terming it as a
\ncourtesy.\n<\/p>\n
 18. Pursuant to the rejection by the Controller of
\nImports & Exports on 19th April, 1991, assistance was
\nsought from the respondent by the claimant and such
\nassistance was given on 10th July, 1991 by the respondent
\nby requesting the Chief Controller of Imports and Exports
\nto issue the license. Thus the respondents have given
\nassistance when sought and the application made before
\nthe Chief Controller of Imports & Exports has been
\ndismissed by it owing to the reason that it was filed
\nafter the last date prescribed i.e. 31st March, 1991.
\nIf the petitioner was aggrieved by the wrongful refusal
\nby the Chief Controller of Imports & Exports to issue the
\nnecessary license it would and should have adopted legal
\nremedies against the order passed by the Chief Controller
\nof Imports & Exports on 29th April, 1991. It has been
\nsubmitted by the petitioner that the appeal against the
\norder of JCCIE refusing to issue import license to
\nclaimants’ super structure manufacture was rejected. It
\nis not stated whether the appellate order had been
\nassailed. Not having challenged the appellate order, it
\nis not now open to the claimant\/petitioner to raise this
\nissue.\n<\/p>\n
 19. The Arbitrator recorded a finding that the
\nclaimant’s offers dated 5.3.90 and 6.4.90 were not
\naccepted by the respondent to arrive at a conclusion that
\nthe claimant was therefore not barred from making a fresh
\nproposal for price escalation. The above finding that
\nthe claimants offers dated 5.3.90 and 6.4.90 were not
\naccepted by the respondent UOI, contradicts another
\nfinding of the Arbitrator that Clause 9 contained in the
\nletter dated 5.3.90 applied. Consequently on its own
\nfindings that the claimant’s offers dated 5.3.90 and
\n6.4.90 were not accepted, the arbitrator’s finding
\nregarding the conclusion regarding applicability of
\nClause 9 cannot survive.\n<\/p>\n
 20. Furthermore, the Arbitrator finds that by letter
\ndated 15.7.91 the claimant had revived its proposal for
\nprice escalation and consequently requested the
\nrespondent to refix delivery dates and to consider and
\nagree to increase the prices. The relevant portions of
\nletter dated 15.7.91 read as under:-\n<\/p>\n
 “Dear Sir:\n<\/p>\n
Sub: Supply of Order No. CPO(VGE)-1636 dt.
\n7.9.90 for supply of 6 Nos. CFTs.\n<\/p>\n
Ref: Amendment letter No. 1(1)90\/D(S.I.)CPO(VGE) –
\n1636\/AL-96 dt. 17.6.91.\n<\/p>\n
 We thank you for the above letter and for
\namending the delivery dated up to 31.7.91.\n<\/p>\n
 The events that have taken place since the
\nreceipt of this contract by us are enumerated
\nbelow for your ready reference and for
\nfavorable consideration.\n<\/p>\n
 1. Advance supply order No. 1(1)\/90D(S.I.) dt.
\n3.8.90 was received on 9.8.90.\n<\/p>\n
 2. Order No. 1(1)\/90D(S.I.)-CPO(VGE)-1636 dt.
\n14.9.90 with full contractual terms and
\nconditions was received on 14.9.90.\n<\/p>\n
 3. We had requested for amendments to the
\norder vide our letters:\n<\/p>\n
 A) SAL:SKG: dt 26.9.90   <\/p>\n
 B) SAL:SKG: dt. 27.9.90 requesting deletion
\nof “during currency of the contract”
\nagainst the option clause for increase in
\nthe quantity by another 7 Nos.\n<\/p>\n
 …..\n<\/p>\n
 (Copies of the above 3 enclosed for immediate
\nreference) <\/p>\n
 4. While we have received confirmation on A &
\nC, we have not yet so far received your
\nconfirmation for our letter dt. 27.9.90.\n<\/p>\n
 …..\n<\/p>\n
 12. In spite of close follow up, due to very
\nsevere foreign exchange crouch the
\napplication were not processed and in fact
\nwere rejected by JCCI&E vide letter dt
\n29.4.91 received by Kooverji Devshi on
\n7.5.91.\n<\/p>\n
  13. We had sought your intervention to
\nrecommend to DGTD for import of these pumps
\nvide our letter SAL: SGKG dt 10.5.91 and
\n16.5.91 and we had also requested for
\nrefixing delivery date up to 37.7.91.\n<\/p>\n
 14. Though we are informally advised that
\nrecommendations were given by DGTD to
\nJCCI&E Bombay be end June 91 for clearance
\nof import license, this has not been
\nreceived so far.\n<\/p>\n
 15. With new announcement by Commerce Ministry
\non 3.7.91, this license may not be issued
\nat all.\n<\/p>\n
 We have to seek the path of obtaining a REP
\nlicense at a premium for importing these
\npumps.\n<\/p>\n
 We are not yet clear about the Import
\nPolicy and we may have to wait until the
\npresentation of Finance Bill on 24.7.91
\nabout the Customs Duty structure etc”\n<\/p>\n
 …..\n<\/p>\n
 18. While we had agreed to execute this
\ncontract at firm price, developments of
\nthis magnitude have not been foreseen and
\nit is virtually impossible to fulfill the
\ncontract without incurring very heavy
\nlosses.\n<\/p>\n
 19. The extent of losses suffered by us for
\nvarious reasons referred to in the
\nforegoing, are as follows:\n<\/p>\n
  Difference-Per chassis   <\/p>\n
Rs.\n<\/p>\n
 Increase on account of variation
\nin exchange rate from Rs. 140 to
\nRs. 207 per 100 ATS and also
\nincrease in Customs duty from 60
\nto 30% (effective 6.12.90)                    2,19,928<\/p>\n
Increase expected on account of
\nuse of EXIM scrips which has a
\npremium of 28% as on date
\n(3,06,360 x 28%)                                85,781<\/p>\n
Interest charges suffered @ 18%
\np.a. on the chassis value of Rs.\n<\/p>\n
26.8 lcas since March 91 up to<\/p>\n
31.7.91 due to non-receipt of fire
\npums- 5 months                                2,00,000<\/p>\n
                    TOTAL                     5,05,709<\/p>\n
 The above increase will be suffered by us
\nonly due to non-receipt of license in time
\non account of which we are obliged to pay
\nCustoms Duty @ 80% and also a higher
\nexchange rate on account of devaluation.\n<\/p>\n
 It may also be noted that we have not
\nreflected any price increase suffered by us
\nagainst escalation of indigenous materials
\nwhich is also substantial.\n<\/p>\n
 …..\n<\/p>\n
 This type of volatile changes have not been
\nwitnessed in recent years in our memory and the
\namount of cost escalation, as you will see, is
\nunbearable.\n<\/p>\n
 We would therefore request you to please issue
\nthe following amendments to facilitate
\ncompletion of the contract.\n<\/p>\n
 1. To refix delivery dates beyond two months
\nfrom the date of receipt of imports,
\nwithout any penalty.\n<\/p>\n
 2. To consider and agree to the increase in
\nprices as required.\n<\/p>\n
 Thanking you & assuring you of our best
\nservices at all times.\n<\/p>\n
 21. The Arbitrator also found the claimant’s case for
\nescalation was accepted by conduct by the respondent. The
\nArbitrator also finds the refusal of price escalation by
\nthe respondent’s letter dated 19.12.91 to be
\nunsustainable. The finding that the respondent’s refusal
\nby the 19.12.91 letter to escalate prices is
\nunsustainable, cannot be co-exist with the implied acceptance
\nby the respondent by conduct found by the Arbitrator.
\nThus it is clear that by ignoring the mandate of Clause 9
\nstipulating firm and fixed prices during the pendency of
\nthe Contract, the Arbitrator has exceeded its jurisdiction
\nis enhancing rates for 6 CFTs ordered on 7.9.90.
\nSignificantly, the arbitrator had itself found that the
\nletter of the respondent dated 17th June 1991 which
\nextended the delivery date up to 31st July, 1991,
\nstipulated that no price increase would be allowed.\n<\/p>\n
 22. Accordingly it is clear that the impugned award
\nin so far as it relates to 6 CFT’s as per supply order
\ndated 7.9.90 suffers from legal errors apparent on the
\nface of the record and accordingly deserves to be set
\naside.\n<\/p>\n
 23. The counsel for the respondent\/UOI has relied upon
\nthe position of law laid down in the following decisions:\n<\/p>\n
(i) In   New India Civil Erectors (P) Ltd  v. ONGC   1997 (2)<\/p>\n
 Supreme Today 265, the Hon’ble Supreme Court held that the
\narbitration being a creature of agreement cannot award any
\namount ruled out or prohibited by the agreement.\n<\/p>\n
 (ii) In   Continental Construction Co. Ltd. v. State of
\nMadhya Pradesh<\/a>   , it was held that an error
\nof law on the face of the award can be set aside.\n<\/p>\n
 (iii) In   Associated Engineering Co. Ltd. v. Govt. of
\nAndhra Pradesh and Anr<\/a>.   , it was held that
\nwhere by merely looking at the contract, the excess of
\njurisdiction is apparent, jurisdiction of arbitrator is
\nexceeded and the award deserves to be set aside.\n<\/p>\n
 (iv) In   Rajasthan State Mines & Minerals Ltd v. Eastern
\nEngineering Enterprises<\/a>   1993 (3) Arb. LR 350, it was held
\nthat an arbitrator cannot cant arbitrarily ad outside the
\ncontract.\n<\/p>\n
 (v) In 1988 (Supp) SCC 722, it was held that Article 299<\/a>
\nis based on public policy and singing of contract by
\nExecutive Engineers but not stated to be made in the name
\nof Governor, does not bring into effect a legal contract.\n<\/p>\n
 On the basis of the law laid down in the above
\ndecisions the learned counsel for the respondent\/Union of
\nIndia contended that the award disclosed an error apparent
\non record and was clearly beyond jurisdiction.\n<\/p>\n
 The learned counsel for the claimant relied upon the
\nfollowing decisions:-\n<\/p>\n
 (i) In   State of Kerala v. Kurian P. Paul<\/a>   (1991) 2 Kerala
\nLaw Times, 555, it was held that if the conclusion of the
\narbitrator is based on a possible view of the matter, the
\nCourt should not interfere with the award.\n<\/p>\n
 (ii) In   Mathbai Ramji v. Jeram Ramji  , AIR 1933 Sind 292 &
\n  Nizamuddin, v. Ghulam Ahmad  , (1909) 53 PLR: 1909 IC
\n353, it was held that Courts have long ceased to sitting
\nin appeal on award either with regard to errors of law or
\nerrors on questions of fact.\n<\/p>\n
 (iii) In   Mair A. & Co. v. Gordhandas Saqarmal    and   Dwarka Nath Sahai v.Kedar Nath<\/a>  ,
\n, it was been held that if the dispute is
\nwithin the scope of the arbitration clause it is no part
\nof the province of the Court to enter into the merits of
\nthe dispute.\n<\/p>\n
 (iv) In   Commander, Bangalore Area v. Armugam<\/a> nagarthnam
\nAIR 1954 Mys. 46 &   Rajmani Sinha v. Basant Singha<\/a>   , it was held that the Court cannot examine the
\ncorrectness of the findings of the arbitrator, as if it
\nwere sitting in appeal over his findings.\n<\/p>\n
 (v) In   Food Corporation of India v. Joqinderpal,
\nMohinderpal<\/a>  , , it was
\nheld that it is not misconduct on the part of an
\narbitrator to come to an erroneous decision, whether his
\nerror is one of fac turn law, and whether or not his
\nfindings of fact are supported by evidence.\n<\/p>\n
 (vi) In   Union of India v Unit Construction Co. (P) Ltd.
\n, it has been held that the Court has no
\njurisdiction to look into the contract or the records of
\nthe arbitration proceeding unless the contract or its
\nclause of the particular document from the records
\nconcerned has been incorporated in the award either
\nexpressly or impliedly and the ground taken is an error
\napparent on the face of the award.\n<\/p>\n
 (vii) In   Superintending Engineer v. R. Ramana Reddy<\/a>  ,  it was held that erroneous conclusion arrived
\nat by an arbitrator on a question of fact does not amount
\nto misconduct.\n<\/p>\n
 (viii) In   Puri Construction Pvt. Ltd v. Union of India<\/a>
\n, it was held that the
\nCourt cannot sit in appeal over the view of the arbitrator
\nby re-examining and re-assessing the materials.\n<\/p>\n
 (ix) In   Jawahar Lal Wadhwa v. Haripada Chakroberty<\/a>   , it was held that where the
\narbitrator has laid down the principles of law correctly,
\nthe award cannot be challenged on the ground of erroneous
\napplication of those principles when no reasons for
\narriving at the conclusion are given in the award.\n<\/p>\n
 The learned counsel for petitioner\/claimant by
\nrelying on the above decisions has submitted that the
\naward is fair and fully sustainable in law and on facts
\nand further submitted that the award in any event cannot
\nbe looked at by the Court as if were sitting in appeal
\nand if the conclusion arrived at by the arbitrator is a
\npossible view of the matter and even if the award
\ndiscloses an error of law, it does not call for
\ninterference.\n<\/p>\n
 24. However, in so far as the finding of the
\nArbitrator qua 5 CFTs concerned, it has rightly come to
\nthe conclusion that the erstwhile rats quoted by the
\npetitioner by its letter dated 27th July, 1990, were open
\nup to 30.9.90. The relevant extract of the letter dated
\n27th July, 1990 reads as under:-\n<\/p>\n
  “We had extended validity of our
\noffer for your acceptance up to 16.8.90 vide
\nour letter No. RON: SAL:RPV:A:1026 dt.
\n26.7.90. We further advise that for 7 nos.
\n(beyond 6 nos.) 6×6 crash fire tenders, this
\nvalidity stands further extended to 30.9.90.
\nWe would, therefore, request you to place
\nyour formal order positively before this
\ndate.”\n<\/p>\n
 25. This letter of petitioner clearly demonstrates
\nthat the offer of the erstwhile lesser rates was
\ncategorically offered only if the orders were placed up to
\n30.9.90. It is not in dispute that the orders were in
\nfact placed by the respondent only on 1.11.91. By its
\nletter dated 2.12.91, the claimant had declined to accept
\nthe offer dated 1.11.91, and had in fact quoted revised
\nprices in consonance with the terms of the letter dated
\n27th July 1990, for the supply of CFTs. Even the
\nrespondent’s own letter stated that the extension of the
\ndelivery period did not extend the contract period. The
\nrelevant portion of the claimant’s letter dated 2.12.91 is
\nsignificant and reads as under:-\n<\/p>\n
 “We acknowledge with thanks your letter No. 1<\/span><\/p>\n
(1)\/90\/D(S.I.)\/CPO (VGE)-1636\/AL-169 dt.
\n1.11.91 advising us that the quantity
\nordered to be supplied is to be increased
\nfrom 6 to 11 units.\n<\/p>\n
 In this connection we wish to place the
\nfollowing facts for your consideration.
\nWhile we are keen to supply additional
\nquantities, we regreat that we unable to
\nsupply at the prices and terms and
\nconditions of the original order.\n<\/p>\n
 In this connection we wish to recall the
\ndiscussions held with yourselves and to the
\noffers for supply of 13 CFTs against your
\nearlier enquiry ref. letter No. 1(1)\/90\/D
\n(S.I.) dt 22.2.90.\n<\/p>\n
 During the discussions held with yourselves
\non 4.4.90, we had requested that we should
\nbe considered for placement of order for all
\nthe 3 units and this was agreed to.\n<\/p>\n
Accordingly we had submitted revised offers.\n<\/p>\n
 We had at that time offered a very special
\nprice for these vehicles which was related
\nto the specified volumes as mentioned in our
\nletters dt 5.3.90 and 6.4.90 and for orders
\nplaced within the validity periods
\nspecified. WE had neither during the
\ndiscussion nor in our offers agreed to
\ngiving option for placement of order on us
\nfor additional quantity other than for 7
\nunits tobe placed within the offered
\nvalidity which expired on 30.9.90.\n<\/p>\n
 Subsequently when your Letters of Intent was
\nreceived in August’ 90 followed by your firm
\norder dt 7.9.90, we had pointed out that the
\n‘option clause for procuring additional 7
\nnos. included in our order was not a part
\nof our offer and could not, therefore, be
\naccepted by us. This was pointed through
\nour letters SAL:SGKG of 27.9.90 and 21.1.91
\nwherein we had sought deletion of this
\nclause. It will be apparent that the option
\nclause that has been included was not a part
\nof the offer made by us.\n<\/p>\n
 Inspite of our abovementioned requests the
\namendment to Purchase Order by MOD vide
\nletter No. 1(1)\/90\/D(S.I.)\/CPO (VGE)-1636\/
\nAL-44 dt 11.3.91 included a response to our
\nletter SAL:SGKG dt 26.9.90 only but
\noverlooked our letter SAL:SGKG dt 27.9.90
\nand 21.1.91 in regard to deletion of option
\nclause.\n<\/p>\n
 This anomaly was again pointed out by us
\nvide our letter SAL:SGKG of 9.4.91 for which
\na reply is yet to be received.\n<\/p>\n
During the currency of the contract,
\nextraordinary events affecting performance &
\ncosts of executing the contract has taken
\nplace viz. the August’ 90 GUlF crisis
\nfollowed by import restrictions, forging
\nexchange rate fluctuation.devaluation,
\ncredit squeeze, import curbs etc. just to
\nmention a few. You will appreciate that
\nwith such developments of a force majeure
\nnature (over which we have no control) has
\nboth delayed execution of contract and we
\nIncurred losses through increase in input
\ncosts & delays. In such an extraordinary
\nsituation it would be reasonable to expect
\nthat due consideration be given to here
\nfactors & prices\/deliveries be refixed if we
\nare to execute order now for additional
\nquantities.\n<\/p>\n
 We, therefore, propose for your
\nconsideration and approval that following
\nrevised prices be agreed to for supply of
\nadditional quantities of 5 nos. now
\nsought:-\n<\/p>\n
 Basis price of AL F23 6×6
\nchassis ex-works Hour                     Rs. 28,50,000.00<\/p>\n
(Rupees twenty eight lakhs & fifty
\nthousand only)<\/p>\n
Super structure with Magirus
\npump to the design of Brijbasi
\nUdyog.                                    Rs. 12,25,000.00<\/p>\n
(Rupees twelve lakhs & twenty five
\nthousand only<\/p>\n
                     Total price          Rs. 40,75,000.00<\/p>\n
(Rupees forty lakhs & seventy five
\nthousand only) <\/p>\n
 Since the claimant by its letter dated 2.12.91
\nwhile not accepting the order for the additional 5 CFTs on
\n1.11.91 on the erstwhile rates as the order was placed
\nbeyond 30.9.90, quoted revised prices for supply of
\nbalance 5 CFTs. The claimant had in fact by its letter
\ndated 31.7.92 iterated its demand for price revision
\nwhile dealing with the extended period of delivery up to
\n31.12.92.\n<\/p>\n
 The findings of the Arbitrator on this issue
\nabout the limited duration of the offer of lower prices
\nup to 30.9.90 are entirely justified and in any event
\nunassailable in the present proceedings which give a Court
\nvery limited grounds for judicial review. for this
\npurpose it is also necessary to consider the effect of the
\nletter dated 6th April, 1990 sent by the petitioner which
\nspecified that the price of Rs. 33,35,000\/- is valid for
\norders placed within the validity period for a total
\nquantum up to 13 numbers only. Thus it is clear that the
\nrate of Rs. 33,35,000\/- was valid for the additional no.
\nof CFTs such an order for the balance CFTs (up to 7 more
\nCFTs) had to be placed by 30.9.90 in order to qualify for
\nthe lower price of Rs. 33,35,000\/- per CFT. This also
\nstated that the offer was valid for acceptance up to 6th
\nApril, 1990 Along with the essentiality certificate
\nrequested in Para 9 of the Letter dated 5th March, 1990.
\nClause 8 where the purchase has reserved right to place
\nan additional order of 7 numbers of CFTs on the same terms
\nand conditions during the currency of the contract,
\ntherefore, has to be understood, in the light of the above
\nletters, sent by the respondents, restricting the period
\nfor which their offers were valid for the additional CFTs
\nnot exceeding 13 CFTs. The amendment to the clause during
\nthe currency of the contract was also sought by the
\npetitioner by its letter dated 15th July, 1991. Even the
\nletter dated 1st November, 1991 reads as under:\n<\/p>\n
 “….. 1.   Clause 8 -quantity covered
\nin the contract
\n  For               : Existing  <\/p>\n
 Read              : 11 nos. <\/p>\n
 2.   Clause 10- Total Price
\n FOR                : Existing  <\/p>\n
Read               :Rs. 3,66,85,000 (Rupees Three
\n                    crores sixty six lakhs,
\n                    eighthly five thousand only)<\/p>\n
 3.   Clause 11- Delivery schedule   <\/p>\n
 Supply for additional 5 nos to be
\ncompleted by 31.1.1992 or earlier.\n<\/p>\n
 Amendment was made and the quantity covered from
\nthe existing was changed to number 11. Delivery schedule
\nfor additional period was also to be completed by 31st
\nJanuary, 1992. The perusal of the correspondence also
\nindicates that the petitioner had forsaken the validity of
\nthe option clause as the offer of the petitioner was only
\nfor limited period and it is not disputed that the offer
\nfor the balance 5 CFTs was not made by the respondent
\nwithin the period stipulated by the petitioner. the
\nletter dated 5.3.90 specified that the offer was subject
\nto receipt of order prior to 31.3.90 and the letter dated
\n6.4.90 sent by the petitioner stated that the offer was
\nvalid subject to acceptance by 16.4.90. Significantly
\neven the letter of respondent\/UOI dated 3.8.90 referred to
\nquotations of the petitioner dated 5th December and 6th
\nApril, 1990. The formal supply order dated 7.9.90 also
\nreferred to the quotation dated 5.3.90. Thus right from
\nthe inception of the contract between the parties, the
\npetitioner had been insisting on a time limit to its
\nquotations and the formal supply order itself
\ncategorically referred to petitioner’s quotations dated
\n5.3.90 and 6.4.90 and stated that the said quotations had
\nbeen accepted. The term of the letter of the claimant
\ndated 2.12.91 are categorical and clearly decline to offer
\nthe remaining 5 CFTs at the rate of Rs. 33,35,000\/- per
\nCFT. Thus it is clear that while the terms of the
\ncontract between the parties were governed by the format
\nreferred to in the formal supply order dated 7.9.90
\nnevertheless the contract in so far as it provided a rate
\nof Rs. 33,35,000\/- per CFT was limited by the period of
\noffer as per the respondent’s letter dated 7.9.90 which
\nreferred to the petitioner’s letters dated 5.3.90 and
\n6.4.90. Even the acceptance of the formal supply order
\ndated 7.9.90, by the petitioner was categorically for 6
\nCFTs as per the letter of petitioner date 26.9.90. Thus
\nit is clear that the contract in so far as it stipulates
\nfirm and fixed prices i.e. Rs. 33,35,000\/- per CFT bears
\nthe intent and meaning sought tobe given by the
\nrespondent except for the fact that it enured for six CFTs
\nand could not apply to the balance 5 CFTs, the order for
\nwhich was placed later on beyond the validity of the
\ncontract as per the petitioner’s offer and these would be
\ncovered by the revised prices quoted by the petitioner in
\nits letter dated 2.12.91. The respondent’s own case set
\nout in the Affidavit of A.K. Aggarwal filed in this Court
\nis that the respondent had accepted the revised offer of
\nthe petitioner dated 6.4.90. Even the letter dated 6.4.90
\nof the petitioner made the offer valid for a limited
\nperiod up to 16.4.90.\n<\/p>\n
 Thus the arbitrator’s finding qua 5 CFTs that
\nthis was not covered in the order dated 7.9.90 placed by
\nthe respondent and was ordered by the letter dated 1.11.91
\nbeyond the validity of the offer of the petitioner is
\njustified and the petitioner\/claimant was fully justified
\nin claiming higher prices for these 5 CFTs based on the
\nrevised prices quoted by the claimant on 2.12.91. and
\nwarrants no interference.\n<\/p>\n
 26. In view of the above discussion in so far as the
\nclaim of the respondent towards the additional 5 CFT’s is
\nconcerned it stands on a separate footing in view of the
\nunassailable finding of the Arbitrator supported by the
\ncorrespondence between the parties that the claimant had
\nnot agreed to supply the balance 5 CFT’s on the same rate
\nfor orders placed beyond 30.9.90. The arbitrator’s
\nfindings in respect of the balance 5 CFT’s in my view is
\nunassailable and disclose no jurisdictional error
\nvitiating it. After considering the correspondence
\nbetween the parties I am unable to accept the plea of the
\nrespondents that the exercise of the option by the Union
\nof India on 1.11.91 was only an exercise under the option
\nclause. I have in the foregoing discussion held that the
\nArbitrator has failed to construe the impact of Clause 9
\nwhich stipulated firm and fixed prices so long as the
\ncontract subsisted and further held that the
\ncorrespondence between the parties shows that the offer
\nmade by the petitioner was accepted in the terms and
\nconditions mentioned in Schedule A, B & c of the Letter
\ndated 7th September, 1990 which stipulated that no other
\ncondition shall govern the contract. In this view of the
\nmatter, the award to the extent it relates to the 6 CFTs
\nis clearly beyond jurisdiction as per the contract between
\nthe parties as it seeks to award an amount prohibited by
\nthe agreement and consequently this error of the
\narbitrator is an error of jurisdiction apparent on the
\nface of the award. Accordingly, the position of law
\nquoted by the learned counsel for the respondent squarely
\napplies in so far as the award of the arbitrator qua 6
\nCFTs is concerned. Consequently, the decisions relied
\nupon by the learned counsel for the petitioner would not
\nbe applicable as it is not a mere error or law or fact but
\nan excess of jurisdiction which has been found by this
\nCourt in so far as the award qua 6 CFTs is concerned. The
\ndecisions relied upon by the respondent are in fact
\napplicable and in a particular the decision in Associated
\nEngineering’s case (supra) wherein it was held that
\napparent excess of jurisdiction in an impugned award could
\nbe interfered with. It is also apparent that the
\nnon-consideration of the true effect of Clause 9 makes it
\nan error apparent on the face of the award as per the law
\nlaid down in Continental Construction Co.’s case
\nHowever, in so far as the award qua the balance 5 CFTs is
\nconcerned, I have found that since the offer was valid
\nonly up to 16th April, 1990 or at best 30th September, 1990
\nand the exercise of option by the respondent was made only
\non 1st November, 1991 beyond the subsistence of the
\ncontract in so far as it related to the firm and fixed
\nprices of Rs. 33,35,000\/- per CFT. In fact the option
\nunder Clause 8 A reads as under:\n<\/p>\n
  “Purchaser reserves right to
\nplace order additional 7 numbers
\nat the same terms and conditions
\nduring the currency of the
\ncontract.”\n<\/p>\n
 However, the said clause would apply during the
\ncurrency of the contract. I have already come to the
\nconclusion that the above clause was not applicable
\nbeyond 30th September, 1990 because in view of the
\ncorrespondence between the parties it was evident that
\nthe contract was current at best up to 30th September,
\n1990 and consequently this option under Clause 8 A could
\nnot have been exercise qua the balance 5 CFT’s beyond
\nthat dates. I am, therefore, satisfied that the
\narbitrator has correctly found in law, that the contract
\nin so far as it fixed prices at Rs. 33,35,000\/- per CFT
\ndid not subsist beyond 30th September, 1990 and this
\nconclusion is not amenable to interference as per the
\nlaw laid down by the Hon’ble Supreme Court in Jawahar
\nLal Wadhwa’s case (supra). This finding of the
\narbitrator about the limited and time bound subsistence
\nof the contract in so far as prices of Rs. 33,35,000\/- is
\nconcerned is a pure finding of fact based on
\nappreciation of evidence not liable to be interfered
\nwith as per the law laid down in Puri Construction Pvt.
\nLtd. (supra). The petitioner is justified in therefore
\nrelying upon inter alia the judgment of the Hon’ble
\nSupreme Court reported as FCI v. Joginderpal
\nMahinderpal,  that
\neven an erroneous finding is not amenable to challenge
\nin these proceedings. In the present case, I have found
\nthat the option was sought to be exercised by the
\nrespondent only after the contract ceased to be
\noperative. Accordingly the Award in so far as it
\nrelates to 5 CFT’s as per supply order dated 1.11.91 is
\nconcerned is unassailable and is confirmed and the Award
\nto the extent it relates to claim for Rs. 23,02,066\/- in
\nrespect of six CFT’s covered by the supply order dated
\n7th September, 1990 is set aside in view of the findings
\nrecorded hereinbefore. However, the awarded in so far as
\nit relates to the 5 CFTs ordered on 1.11.91 is
\nunassailable and the award of a sum of Rs. 37,00,000\/- in
\nrespect of additional number of 5 CFTs is confirmed and
\nthe objections to that portion of the award are
\ndismissed and the award made a rule of the Court to that
\nextant. The petitioners would also be entitled to
\ninterest @ 18% from the date of award up to the date of
\npayment for the award of Rs. 37,00,000\/-.<\/p>\n","protected":false},"excerpt":{"rendered":"
Delhi High Court Ashok Leyland Limited vs Union Of India (Uoi) on 14 August, 2002 Equivalent citations: 2003 (1) ARBLR 83 Delhi, 101 (2002) DLT 65 Author: M Mudgal Bench: M Mudgal JUDGMENT Mukul Mudgal, J. 1. This application filed under Section 14 and 17 of the Indian Arbitration Act, 1940 seeks to make the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[14,8],"tags":[],"class_list":["post-268949","post","type-post","status-publish","format-standard","hentry","category-delhi-high-court","category-high-court"],"yoast_head":"\nAshok Leyland Limited vs Union Of India (Uoi) on 14 August, 2002 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ashok-leyland-limited-vs-union-of-india-uoi-on-14-august-2002\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ashok Leyland Limited vs Union Of India (Uoi) on 14 August, 2002 - 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