In The High Court Of Judicature At ... vs Unknown
2013 Latest Caselaw 361 Bom

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                   IN THE HIGH COURT OF JUDICATURE AT BOMBAY,

                          NAGPUR BENCH : NAGPUR




                                                                                       
                                                               
    First Appeal No. 328 of 2008




                                                              
    Appellant             :       M/s R. N.  Tandon and Sons, 

                                  1, South Civil Lines, Jabalpur




                                                   
                                  versus

    Respondent            :

Union of India, through its Deputy Chief

Engineer, Central Railway, Nagpur

Mr R. R. Srivastava, Advocate for appellant

Mr N. P. Lambat, Advocate for respondent

Coram : A. P. Bhangale, J

Dated : 17th December 2013

Oral Judgment

1. This is appeal under Section 37 of the Arbitration and

Conciliation Act, 1996. The appellant is aggrieved by judgment and order

dated 18th December 2007 passed by learned District Judge, Nagpur when

he had set aside the Award of Arbitral Tribunal in respect of price

escalation awarded to the contractor in the sum of Rs. 7,36,469/- with

interest @ 8% per annum.

2. It is grievance of the appellant that respondent Union of India

had awarded the work of construction of bridges between CH. 3550 meters

to 8000 mtrs in Section III of Metpanjara-Kohli Section of Central Railway

which included Earth Work also for tender value in the sum of Rs.

57,21,132/- The work was to be completed within nine months from the

date of acceptance letter excluding monsoon period of four months from

15th June to 15th October and, therefore, total period for completion of

contract was 13 months. On issuance of acceptance letter dated 23.1.1991,

appellant undertook the aforesaid work. The contract agreement was

signed on 25.9.1991 by the appellant and it was sent for signature of

respondent at Mumbai, which was received back sometime in November

1991 - January 1991.

3. It is grievance of the appellant that some official of the

respondent scored off the price variation clause from the contract

unilaterally without knowledge and consent of the appellant and thus, the

mischief was committed by an endorsement made without consent of the

appellant. Despite correspondence by appellant with respondent the

mischief was subsisting. According to appellant, there was no justification

for respondent to deny benefit of price variation clause to the appellant

when the appellant was similarly placed at par with other contractors.

My attention is invited to the price variation clause in the contract which

appears struck off by pen with endorsement "escalation clause not

applicable". Who struck off the price variation clause and who made the

endorsement as above and whether appellant had consented or not

remains a mystery since oral evidence of signatory on the contract was not

obtained by Arbitral Tribunal.

4. Learned counsel for the appellant submitted that learned

District Judge failed to consider this aspect before setting aside the award

passed by the Arbiral Tribunal. Learned District Judge also erred to answer

in the negative a question as to whether escalation is available in the

agreement and whether interference is possible in the Award under Section

34 of the Act. Considering that three similar agreements were entered into

by respondent with other similarly circumstanced three contractors in

respect of adjoining Sections during the same contract period as that of the

appellant, the Arbitral Tribunal could have exposed malafide action if any

of the respondent by insisting upon evidence of the contracting persons

when price variation clause appeared scored off in the contract. The

dispute is, as to who scored off and who made the endorsement and

whether Appellant had consented to it. Oral evidence insisted upon could

have settled this vital controversy between the parties. That being so,

impugned order passed by learned District Judge must be set aside in

exercise of appellate jurisdiction.

5. In the result, impugned order is set aside. The proceeding is

remanded to learned Arbitral Tribunal to record evidence as may be

available regarding price variation clause which is a matter of dispute

between the parties. The Tribunal would decide the question as to who

made endorsement and who struck off price variation clause and what is its

effect and whether the price variation clause was scored off uniterally. The

Tribunal shall decide the question as early as possible preferably within six

months from the receipt of writ from this Court. If the members of Arbitral

Tribunal who decided the controversy are not available presently, new

Arbitral Tribunal shall be constituted by the General Manager, Central

Railways, Mumbai as per the procedure agreed between the parties. R & P

be sent back immediately. The Arbitral Tribunal be constituted

expeditiously and appellant would appear before it soon after the issuance

of notice by the Tribunal.

A. P. BHANGALE, J

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