Bombay High Court
M/S Sarathi Enterprises vs Union Of India Through Executive ... on 6 June, 2016
Bench: Anoop V. Mohta
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 123 OF 2016
IN
ARBITRATION PETITION NO. 950 OF 2013
M/s. Sarathi Enterprises
1101, Udhyan II, Off Marol Military Road,
Saki Naka, Andheri (East),
Mumbai-400 072 ....Appellant.
Vs.
Union of India,
Through Executive Engineer,
Mumbai Central Division No. I,
CPWD, M.K. Road, Churchgate,
Mumbai-400 020. ....Respondent.
Ms. Shilpa Kapil for the Appellant.
Dr. G.R. Sharma a/w Mr. D.P. Singh for the Respondent.
CORAM : ANOOP V. MOHTA AND
A.S. GADKARI, JJ.
DATE : 6 JUNE 2016.
ORAL JUDGMENT (PER- ANOOP V. MOHTA, J.):-
Heard the learned counsel appearing for the Appellant
finally, as the matter is fixed for the final hearing.
2 In nutshell, the case of the Appellant-Original Respondent,
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is that-
On 22 July 2010, a tender was invited for "providing and fixing
vitrified tiles flooring over existing flooring from Ground to sixth Floor at
Aayakar Bhawan, Mumbai". The work was awarded to the Appellant
by letter dated 22 July 2010. The Appellant by letter dated 5 August
2010, recorded the verbal discussion with the Executive Engineer
whereby, the Executive Engineer has directed to use only Johnson
vitrified tiles and no other equivalent brand. The Appellant has
further informed the Respondent that the Appellant intends to use
some other equivalent brand as per condition of contract. By letter
dated 16 August 2010, the Respondent again reiterated that only
Johnson vitrified tiles and no other equivalent brand be used as the
client has approved Johnson vitrified tiles only.
3 The Appellant was directed to execute the work with
Johnson vitrified tiles only and no other equivalent brand. The
Appellant by letter dated 28 September 2010, informed the
Respondent that they have already shown their inability to execute the
work with Johnson Vitrified tiles as M/s. H.R. Johnson (India) Limited
is quoting exorbitant price for the product specified in the tender in
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comparison to other equivalent brand by taking advantage of the fact
that he is the only preferred manufacture by the Respondent. By
letter dated 9 October 2010, the Appellant informed the Respondent
that they have lodged a complaint with Chief Engineer (Vigilance)
CPWD.
4 The Appellant, time and again, had stated that they are
always ready and willing to execute the work subject to approval of
"equivalent brand". The Respondent never agreed to it. On the aspect
of violation of Sections 3 and 4 of the Competition Act, 2002 (for
short, "the Competition Act"), the Executive Engineer by letter dated 7
December 2010, had stated that the agreement is entered into
between the parties and the breach is on the part of the Appellant.
5 On 22 January 2011, the advertisement appeared in the
newspaper for the work of "Providing and Fixing vitrified tiles flooring
over existing flooring from Ground to Sixth floor at Aayakar Bhavan,
Mumbai" which is the same work, which was awarded to Appellant.
Interestingly, except issuance of "final notice", the work awarded to
the Appellant is neither terminated nor foreclosed. The fresh tender
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invited, was also not the risk and cost tender. The Appellant, by letter
dated 29 January 2011, requested the Executive Engineer to foreclose
the contract without liability upon the Appellant and refund the EMD
and performance guarantee. On 8 February 2011, the Executive
Engineer by its letter stated that contract has already been determined
with forfeiture of EMD and Security Deposit by their letter dated 16
November 2010.
In view of an Arbitration under Clause 25, the Appellant
by letter dated 9 March 2011, requested the Chief Engineer to appoint
the Arbitrator. The Chief Engineer by letter dated 27 July 2011,
appointed Shri Rajiv Kumar as the sole Arbitrator in respect of the
claims of the Appellant and counter claim of the Respondent. On 6
March 2013, the Appellant and the Respondent filed their respective
pleadings before the Arbitrator. The Respondent also raised the
counter claim before the Arbitrator. The Arbitrator after hearing both
the parties passed Award dated 6 March 2013.
7 Being aggrieved, the Respondent filed an Arbitration
Petition under Section 34 of the Arbitration and Conciliation Act, 1996
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(for short, "the Arbitration Act") for setting aside the Award.
8 On 20 April 2015, the Arbitration Petition was allowed by
the learned Single Judge and impugned Award dated 6 March 2013 in
respect of claim No.1 and 2, was set aside. Hence the present Appeal.
9 The Appellant has challenged impugned Judgment and
order dated 20 April 2015, passed by the learned Single Judge under
Section 34 of the Arbitration Act, thereby prayer clause (a) of the
Petition to the extent of claim Nos. 1 and 2 of the Respondent has
been allowed and thereby, the award of the learned Arbitrator in
respect of claim Nos. 1 and 2 are set aside. The rest of the award has
been upheld.
10 The learned counsel appearing for the Appellant has
strongly relied upon the following contract clause (8) of Special
Condition and thereby, submitted that the Respondent ought to have
permitted the Appellant to provide equivalent brand as an alternative.
"8. Unless otherwise specified, the brand/make of the
material as specified in the item nomenclature shall
be used in the work. In case of non availability of the
brand specified in the contract the Contractor shall be
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allowed to use alternate equivalent brand of the
material subject to submission of documentary
evidence of non-availability of the specified brand.
The necessary cost adjustments on account of above
change shall be made for the material with wastage
and contractor's profit."
11 After hearing the learned counsel appearing for the
Appellant, we have noted that there is no material and/or documents
placed on record to show that the tiles of M/s. H.R. Johnson (India)
Limited was not available at the relevant time, though it was
specifically agreed by and between the parties to use the same for the
concerned purposes. The Appellant was fully aware of the terms and
conditions of the agreement, by which it was specifically insisted and
also agreed by the Appellant to supply and use the agreed branded
tiles. The reasons behind the selection of those brands, at this stage,
cannot be gone into so also the Respondent's decision to use the said
tiles.
12 The Appellate Court, at this stage, would not like to even
test/accept the submission that the insistence of particular branded
product by the Respondent-Union of India, in view of Section 3 of the
Competition Act, read with Section 23 of the Indian Contract Act,
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1872, inspite of Clause 8 of Special condition, was impermissible and
contrary to contract conditions. The Appellant was fully aware of the
Competition laws and the related circulars, still instead of raising the
objections at initial stage, submitted the offer for the supply of
branded tiles. The Appellant therefore, was under contractual
obligation to provide/supply the said branded tiles. There was no
case of non-availability of the said tiles. The Respondent's insistence
for the branded tiles, which the Appellant was not ready to supply,
therefore, was within the frame of the contract. The defence of law of
Competition Act, therefore, is unsustainable in the present case.
13 This is also for the reason that the Appellant, in the
commercial contract like this, knowing fully the effect of selection of
the branded tiles by the Respondent, as the insistence of use of
particular brand at the relevant time, in no way can be stated to be
with ulterior motive to favour the brand. The Appellant having
agreed upon therefore, bound by it. There was no choice, unless
specific case made out of non-availability of those branded tiles. The
insistence upon only for equivalent product, as sought to be done by
the Appellant, was contrary to the contract condition.
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14 The Departmental internal quality test and the reasons for
selecting the brand, therefore, cannot be gone into at the instance of
the Appellant, at this stage. The acceptance of other equivalent quality
tiles after awarding the contract, in the present case, would have
affected the basic terms and conditions of the contract. This would
definitely give leverage to the contractor to use and utilize the other
sub-standard products/tiles.
15 This Court (Coram:- Anoop V. Mohta and S.C. Gupte, JJ.)
1 has already
in Indian Oil Corporation Ltd. Vs. Artson Engineering Ltd.
recorded the power and scope of Appellate Bench while deciding the
Appeal. In paragraph No.17 it is observed that:-
"17. The Apex Court in the case of M/s. Chebrolu
Enterprises Vs. Andhra Pradesh Backward Class
Cooperative Finance Corporation Ltd. reported in
2015(12) Scale 207, recently reiterated and reinforced
the the principle that unless case of perversity and/or
error on the face of the record and/or any issue of
jurisdiction is raised which goes to the root of the matter
and/or any Award and/or order is contrary to the agreed
terms and conditions, no interference is called for by the
learned Judge as well as the Appellate Court in the
finding of facts. In para 20 of the Judgment, the Apex
Court has observed thus:
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"20. ....This Court or even the Appellant Court
would not look into the finding of facts unless
they are perverse."
16 Therefore, taking overall view of the matter and as there is
no perversity. The learned Single Judge has passed the reasoned
order referring to the clauses and conditions so referred above and
interpreted the same correctly. Considering the total rival
submissions, including the clauses and the provisions so read and
referred, we see no reason to interfere with the order passed by the
learned Single Judge.
17 Hence, the Appeal is dismissed. No costs.
(A.S. GADKARI, J.) (ANOOP V. MOHTA, J.)
