Calcutta High Court (Appellete Side)

M/S. Kalimata Vyapaar Pvt. Ltd. ... vs The General Manager Northern ... on 14 September, 2022

               IN THE HIGH COURT AT CALCUTTA
                 CIVIL APPELLATE JURISDICTION
                          (Appellate Side)

                                                MAT 877 of 2022
                                                    With
                                                 CAN 1 of 2022

                                           Reserved on: 04.08.2022
                                           Pronounced on: 14.09.2022

M/s. Kalimata Vyapaar Pvt. Ltd. and Another
                                                              ...Appellants
                                    -Vs-
The General Manager Northern Railways and Others
                                                            ...Respondents

Present:-

Mr. Suman Dutta, Mr. Asif Hussain, Mr. Kallol Saha, Advocates ... for the appellants Mr. Avinash Kankani, Advocate ... for the respondents

Coram: THE HON'BLE JUSTICE PRAKASH SHRIVASTAVA, CHIEF JUSTICE THE HON'BLE JUSTICE SUGATO MAJUMDAR, JUDGE

Prakash Shrivastava, CJ:

1. By this intra-court appeal, writ petitioners have challenged

the order of the learned Single Judge dated 10th of May, 2022 whereby

WPA 9866 of 2020 has been disposed of with liberty to the appellants

to seek remedy of arbitration in terms of the arbitration clause

contained in the contract and by extending the interim order for a

limited period.

2. The appellants had filed the writ petition with the plea that it

is engaged in the manufacture and supply of diverse track items and

had submitted the bid in response to the NIT published by the

respondent on or about 14th of February, 2019. While submitting the 2 MAT 877 of 2022

bid, appellant had indicated and included therein the deviation under

the Techno Commercial Part by mentioning it boldly in annexure 'A'.

The technical bid of the appellants was responsive and price offer of

the appellants was opened and tabulated by the respondent and in the

reverse auction, appellants had revised their financial bid and were

declared L-1 bidder. According to the appellants, they were under the

belief that the respondent no. 1 will issue the advance acceptance in

tune with the offered document of the appellants recording therein the

deviation but on 5th of September, 2019, appellants had received two

separate letters issued by the respondent no. 2 mentioning that the bid

submitted by the appellants was accepted subject to the terms and

conditions set forth in the letter. According to the appellants, the two

letters were not as per the terms set forth in the appellant's bid. The

appellant had sent the communication dated 6th of September, 2019 to

the respondents. The plea of the appellants is that they had proceeded

under the bona fide belief that there was no concluded contract. The

respondents had issued communication dated 5th of September, 2019

stating that the appellant's bid was accepted and mentioning that the

said advance acceptance letter shall constitute a binding and

concluded contract. Thereafter, the communication dated 24th of

August, 2020 was issued by the respondents mentioning that the

appellants had not deposited the security amount as requested by the

letter dated 5th of September, 2019 against the contract, therefore, the

contract was cancelled and the security money amounting to Rs.

59,59,348/- was forfeited. Thereafter, the respondents had issued the

communication dated 12th of November, 2020 stating that non-

acceptance of counter offer by the appellants was not permissible in 3 MAT 877 of 2022

the light of appellants having undertaken while submitting the bid that

the bid did not contain any deviation. Hence, in the writ petition, the

appellant had questioned the notices dated 24th of August, 2020 and

12th of November, 2020.

3. Learned Single Judge vide impugned order dated 10th of

May, 2020 has reached to the conclusion that the appellant has the

remedy of arbitration, therefore, permitted the appellant to seek

arbitration of the dispute in terms of the arbitration clause.

4. Submission of learned counsel for the appellant is that no

concluded contract exists between the parties as the offer of the

appellant was a conditional order. His further submission is that after

exchange of affidavit before the learned Single Judge, the appellant

cannot be relegated to the remedy of arbitration and alternate remedy

is not a bar in entertaining the writ petition.

5. As against this, learned counsel for the respondent has

submitted that the appellant himself had made a request for invoking

the arbitration clause and that the respondents were not bound to

accept the deviation and concluded contract exists and even otherwise

in terms of Section 16 of the Arbitration and Conciliation Act, 1996,

the issue relating to concluded contract can be decided by the

Arbitrator.

6. We have heard the learned counsel for the parties and

perused the record.

7. It is undisputed before this Court that Clause 2903 of the

Indian Railways Standard Conditions of Contract (Supply Contract)

1997 contains the arbitration clause to the following effect:

4 MAT 877 of 2022

"2903(i): In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account, or if the Railway fails to make a decision within 120 days (as referred in 2902), then and in any such case, but except in any of the "excepted matters" referred to in Clause 2902 of these Conditions, parties to the contract, after 120 days but within 180 days of their presenting their final claim on disputed matters shall demand in writing that the dispute or difference be referred to arbitration. Provided that where the claim is raised by Railways para 2903(i) shall not apply.

2903(ii)(a): The demand for arbitration shall specify the matters which are in question, or subject to the dispute or difference as also the amount of claim item-wise. Only such dispute or difference, in respect of which the demand has been made together with counter claims or set off, shall be referred to arbitration and other matters shall not be included in the reference.

2903(ii)(b): The parties may waive off the applicability of Sub-Section 12(5) of Arbitration and Conciliation Act 1996 (as amended), if they agree for such waiver in writing, after dispute having arisen between them.

2903(iii)(a): The Arbitration proceedings shall be assumed to have commenced from the day, a written and valid demand for arbitration is received by the Railway."

8. The record further reflects that though the appellant in

annexure 'A' to the bid document had mentioned the commercial

deviation but the offer of the bidder contains the following

declaration:

"3. I agree that the purchaser may, at his discretion ignore any deviation quoted by me in any uploaded document or else where in any tab other than the deviation 5 MAT 877 of 2022

tab while accepting my offer, and I shall be legally bound to accept any contract placed on me by the purchaser by ignoring any such deviation(s)."

9. It is also found that the appellant vide communication dated

10th of November, 2020 sent to the respondent no. 1 had made a

request for appointment of arbitrator for settling the matter with the

prayer to refer the matter to the arbitrator. Section 16(1) of the

Arbitration and Conciliation Act, 1996 in clear term provides that the

Arbitration Tribunal may rule at its own jurisdiction including ruling

of any objection with respect to the existence or validity of the

arbitration agreement.

10. In view of the aforesaid, learned Single Judge has rightly

observed that the issue as to whether there was a concluded contract at

all between the parties should be subject matter of the arbitration

invoked by the appellant.