{"id":44643,"date":"2010-10-08T00:00:00","date_gmt":"2010-10-07T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/union-of-india-vs-unknown-on-8-october-2010"},"modified":"2015-07-15T08:03:19","modified_gmt":"2015-07-15T02:33:19","slug":"union-of-india-vs-unknown-on-8-october-2010","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/union-of-india-vs-unknown-on-8-october-2010","title":{"rendered":"Union Of India vs Unknown on 8 October, 2010"},"content":{"rendered":"
Jammu High Court<\/div>\n
Union Of India vs Unknown on 8 October, 2010<\/div>\n
       \n\n  \n\n  \n\n \n\n \n \n HIGH COURT OF JAMMU AND KASHMIR AT JAMMU.            \nAA No. 27 OF 2008  \nUnion of India\nPetitioners\nM\/S Sunny Builders \nRespondent  \n!Mr. Sachin Gupta, Advocate \n^Mr. R. K. Gupta, Advocate\n\nHONBLE MR. JUSTICE SUNIL HALI-JUDGE       \nDate: 08.10.2010 \n:J U D G M E N T :\n<\/pre>\n
For manufacture and supply of Furniture at Nagrota, a
\ncontract was entered between the Commander Works
\nEngineers 138 and the respondent-claimant by contract
\nagreement CA no. CWE\/JP-83A\/05-06 on 09.02.2006. The
\nvalue of the contract agreement was Rs. 11,85,025.00. The
\ncontract was to commence from 09.01.2006 and 31.01.2006
\nand the completion date was fixed as 30.07.2006, which,
\nsubsequently was extended to 07.12.2006. It seems that the
\nfirst consignment is stated that have been supplied by the
\nclaimant, for which an amount of Rs. 2,35,920\/- was released in
\nhis favour. On completion of second set of supplies a bill to the
\ntune of Rs. 3.35 lacs and odd was raised. This bill is stated to
\nhave not been cleared by the petitioner, as a result of which
\nclause 37 of the agreement was invoked by the claimant for
\n2<\/span>
\nreferring the matter to the arbitrator. On reference being made
\nto the arbitrator, he is stated to have entered into the reference
\non 17.12.2007. As many as ten claims were laid by the
\nclaimant. Except claim nos. 3 and 5, all other claims were
\nallowed by the arbitrator. The counter-claims raised by Union of
\nIndia were rejected. Feeling aggrieved of this award, the
\nobjector has filed this petition under Section 34 of the J&K
\nArbitration and Conciliation Act of 1997 for setting aside the
\narbitral award dated 22.05.2008.\n<\/p>\n
The grounds for setting aside the award relates to the fact
\nthat arbitrator has passed the award ignoring the stipulations in
\nthe contract and, without referring to the stipulations of the
\ncontract, the arbitrator has accepted the claims of the claimant.
\nIt is contended that articles supplied by the claimant were to be
\naccepted strictly in consonance with the contract specifications.
\nThe arbitrator by traveling beyond the scope of the contract has
\nallowed the claims. The second ground is that while accepting
\nthe plea of the claimant in accepting the supplies made by him
\nin violation of the specifications provided in the contract,
\nmisconduct of the arbitrator is apparent. What is being
\ncontended is that, as the supplies were not found in
\nconsonance with the contract specifications, claimant was
\ninformed by letter dated 28.10.2006. In this behalf reference
\nwas also made to General Condition of IAFW-1815Z (General
\nCondition of contracts for the supply of stores and material to
\n3<\/span>
\nthe MES) which stipulated that Engineer-In-charge shall have
\nthe full power to reject the material brought to site by the
\nclaimant, which are not in accordance with the contract
\nspecifications and accordingly the material supplied by the
\nclaimant was rejected by Engineer-In-Charge. It is further
\ncontended that as per the condition of the contract, GE is the
\nfinal authority in deciding whether the supplies are of quality
\ninferior to that contracted for or otherwise under Condition 20 of
\nIAFW-1815Z and the decision of the GE in this regard shall be
\nthe final. It is also contended that recommendations of the
\nBoard of Officers has not been concurred by the accepting
\nofficers. In nut shell the objection raised is that the supplies
\nwhich are not in conformity with the specifications of the
\ncontract, as such, cannot be accepted and the arbitrator has no
\nauthority to allow the claims in this behalf.
\nThe stand of the claimant is that reliance placed by the
\npetitioner on general conditions of the agreement stands
\nsuperseded by clause\/ note 8 of the contract executed with the
\nclaimant, which provides as under:-\n<\/p>\n
Board of Officers will be convened by the Accepting
\nOfficer immediately after acceptance of samples by
\nG.E. The G.E shall intimate to the Accepting Officer
\nfor convening of the Board for approval of the
\nsupplies.
\nElaborating the manner in which the claim has been
\nrejected by the objector, it is stated by the claimant that it
\nsubmitted furniture items on 29.07.2006. A request was made
\n4<\/span>
\nby the G.E to the Accepting Officer to convene the Board of
\nOfficers for inspection and approval. The Board of Officers, after
\ninspecting the supplied items, found the same to be in order
\nand as per the contract specifications. The claimant submitted
\nhis first RAR on 18.09.2006 and payment of Rs. 2,35,920\/- was
\nmade to him. The second set of samples to the G.E Nagrota
\nwas submitted on 09.11.2006 and after approval of the same by
\nthe G.E, the supplies were made on 10.11.2006. Same
\nprocedure, as envisaged vide Note 8 of the Contract
\nAgreement, was followed. The Board of Officers assembled and
\nfound the furniture items as per the specifications of the
\nContract Agreement. No defects were pointed out by the Board
\nof Officers. The claimant submitted the second RAR on
\n05.02.2007 which has been denied to it.\n<\/p>\n
It is further contended that no communication dated
\n28.10.2006 was received by the claimant, intimating him that
\nquality of wood used in the manufacture of furniture was not in
\naccordance with the specifications. The general condition of
\nthe contract, as indicated in para no. 4 and 5 of the petition,
\nstood superseded by specific condition\/ note in the agreement
\nexecuted with the claimant by the petitioner. The other
\ncontention raised is that when the first RAR was submitted,
\nsame procedure was followed by placing reliance on note 8 of
\nthe contract agreement while releasing the first payment. What
\nis contended is that on the recommendations of the Board of
\n5<\/span>
\nOfficers, who inspected the material supplied by the claimant,
\npayment was released but here in this case different stand was
\ntaken by taking recourse to general conditions of the contract.
\nThis, in nut shell, is the stand of the claimant.
\nI have heard the learned counsel for the parties.
\nAn award of the arbitrator can be set aside only on the
\nfollowing conditions:-\n<\/p>\n
An arbitral award may be set aside by the Court
\nonly if:-\n<\/p>\n
(a) the party making the application furnishes
\nproof that:-\n<\/p>\n
(i) a party was under some incapacity; or\n<\/p>\n
(ii) the arbitration agreement is not valid under
\nthe law to which the parties have subjected it
\nor, failing any indication thereon, under the law
\nfor the time being in force; or\n<\/p>\n
(iii) the party making the application was not given
\nproper notice of the appointment of an
\narbitrator or of the arbitral proceedings or was
\notherwise unable to present his case; or\n<\/p>\n
(iv) the arbitral award deals with a dispute not
\ncontemplated by or not falling within the terms
\nof the submission to arbitration or it contains
\ndecisions on matters beyond the scope of the
\nsubmission to arbitration:\n<\/p>\n
..
\nAnalyzing the import of the controversy raised, what is
\nbeing insisted by the petitioner is that Claus 2(iv) of the Act is
\nsought to be invoked which contemplates following conditions:-
\n (iv) the arbitral award deals with a dispute
\nnot contemplated by or not falling within the
\nterms of the submission to arbitration or it
\ncontains decisions on matters beyond the
\nscope of the submission to arbitration.
\nThe specific case of the petitioner is that the arbitrator has
\nallowed the claims of the claimant on the issue which it had no
\n6<\/span>
\njurisdiction to adjudicate. The claimant was supposed to supply
\nthe furniture strictly in consonance with the stipulations
\nprovided in the contract and it is only after it is testified that
\nsame has been done in accordance with the specifications, that
\nhe would be entitled to receive payment for the same. The
\narbitrator could not have directed the petitioner to make
\npayment by accepting the supplies, which were not in
\nconformity with the specifications of the contract. This was a
\nmatter beyond the scope of submission to the arbitration.
\nAs already stated herein supra, the claim of the claimant
\nwas rejected on the ground that supplies were not made in
\nconformity with the specifications provided, as such the claim
\nwas rejected. There is no dispute with this proposition of law
\nthat arbitrator cannot decide a matter which is beyond the
\nscope of submission to the arbitration. The arbitrator was called
\nupon to resolve the dispute, strictly in consonance with the
\nterms of the contract. The decision of the arbitrator would be
\nillegal in case it is found that the arbitrator has allowed the
\nclaim which was beyond the scope of the contract. He could not
\nhave, as in the instant case, directed the petitioner to accept the
\nsupplies in violation of the specifications provided by the
\ncontract. This was beyond the scope of the submission to the
\narbitration.\n<\/p>\n
Having said so, the only question is as to whether the
\nsupplies have been accepted in violation of the specifications
\n7<\/span>
\nprovided by the contract. The plea of petitioner is that, general
\nconditions of the contract provide that, supplies have to be
\naccepted by the G.E and in case there is no such acceptance,
\nclaims cannot be allowed. However, it be seen that note 8
\nattached to the agreement executed by the claimant, clearly
\nprovides that if the samples are accepted by the G.E, the matter
\nis referred to the Board of Officers to accept the supplies made
\nby the claimant, and thereafter the amount is required to be
\npaid. The specific condition in the contract would over ride the
\ngeneral provisions of the contract. It is contended by the
\nclaimant that it was not a case where supplies were accepted
\nwhich were not in conformity with the specifications, but a case
\nwhere the G.E had, in violation of the contract, refused to make
\nthe payment to the claimant. The supplies were accepted and
\nthe arbitrator, who is the master of facts and law, has rightly
\ninterpreted the terms of the contract by allowing the claim.
\nThe other aspect of the matter is with respect to bar in
\ncontract against admissibility of claim. This prohibits the
\ndepartment but not the arbitrator from entering such a claim.
\nIt be seen that Regulation 439 of the MES Regulations,
\n1968, fixes the pecuniary jurisdiction of the Chief Works
\nEngineer at Rs. 20,000\/- only. He cannot accept any claim
\nabove 20,000\/-.The matter can be decided by the arbitrator. I
\nam supported in taking this view by a judgment of Supreme
\nCourt delivered in Asain Techs Limited vs. UOI and Ors, reported as
\n8<\/span>
\n(2009) 10 SCC, 354, where it has been held as under:-
\nThe stipulation in the contract regarding finality of
\nthe decision of CWE ( the competent authority
\nspecified in the contract) for fixation of rates for any
\nwork order which was incapable of being calculated
\nby the methods specified read with the stipulation
\nsaving the rights of the parties to correct any
\nmistake in rate fixation even after receipt of the last
\npayment make it clear that the finality provided by
\nthe former stipulation applied only to cases of
\ndeviation and not in a case when there was a
\nmaterial alteration and addition in the work done.
\nMoreover, Regulation 439 of the MES Regulations,
\n1968 fixes the pecuniary jurisdiction of the CWE at
\nRs. 20,000 only. The CWE has no jurisdiction to
\ndecide the dispute where the valuation is above Rs.
\n20,000, as in the present case. The finality of the
\ndecision of the CWE applies only where the dispute
\nis not exceeding Rs. 20,000. Hence the arbitrator
\nwas within his jurisdiction to decide the matter ion
\nquestion.
\nRegarding the other claim, it be seen that damages have
\nbeen awarded on the basis of with-holding of the amount of the
\nclaimant. In this aspect, be noted that, where in a works
\ncontract, the party entrusted the work commits breach of the
\ncontract, the contractor would be entitled to claim damages for
\nloss of profit which he expected to earn by undertaking the
\nworks contract. I am fortified in this view by a judgment of Apex
\nCourt delivered in case M\/S A. T. Brij Paul Singh and Bros. vs. State of
\nGujarat, reported as AIR 1984 SC, 1703, where their lordships
\nhave held as under:-\n<\/p>\n
where in a works contract, the party entrusted
\nthe work commits breach of the contract, the
\ncontractor would be entitled to claim damages
\nfor loss of profit which he expected to earn by
\nundertaking the works contract. What must be
\nthe measure of profit and what proof should be
\n9<\/span>
\ntendered to sustain the claim are different
\nmatters. But the claim under this head is
\ncertainly admissible.
\nTherefore the contention raised by the petitioner is not
\nsustainable as such is rejected.\n<\/p>\n
What is concluded is that:-\n<\/p>\n
(a) Supplies made by the claimant were referred
\nto the Board of Officers constituted by the G.E,
\nwho inspected the same and his rejection was
\nnot proper;\n<\/p>\n
(b) It is further found that it is not a case where
\nthe arbitrator had permitted a claim regarding
\nsupplies of the material in violation of the
\nspecifications provided under the contract but
\na case where the material was accepted in
\nconformity with the specifications of the
\ncontract, as the same were accepted by the
\nBoard of Officers.\n<\/p>\n
(c) Regarding other claims it be seen that about
\nthe jurisdiction of the arbitrator to award
\ndamages\/ compensation for loss of profit,
\nprofit turn over, loss due to blockage of capital
\nas also interest, nothing has been spelled out
\nby the petitioner on this count that it violates
\nany one of the conditions stipulated by Section
\n34 of the Act.\n<\/p>\n
1<\/span><\/p>\n
For all what has been said above, this application is
\nrejected. The award of the arbitrator is directed to be enforced
\nas a decree.\n<\/p>\n
(SUNIL HALI)
\nJudge
\nJAMMU:\n<\/p>\n
08. 10. 2010
\nAnil Raina, Secy.\n<\/p>\n
1<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Jammu High Court Union Of India vs Unknown on 8 October, 2010 HIGH COURT OF JAMMU AND KASHMIR AT JAMMU. AA No. 27 OF 2008 Union of India Petitioners M\/S Sunny Builders Respondent !Mr. Sachin Gupta, Advocate ^Mr. R. K. Gupta, Advocate HONBLE MR. JUSTICE SUNIL HALI-JUDGE Date: 08.10.2010 :J U D G M E […]<\/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":[8,17],"tags":[],"class_list":["post-44643","post","type-post","status-publish","format-standard","hentry","category-high-court","category-jammu-high-court"],"yoast_head":"\nUnion Of India vs Unknown on 8 October, 2010 - 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\/union-of-india-vs-unknown-on-8-october-2010\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Union Of India vs Unknown on 8 October, 2010 - 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