Wesman Engineering Co. Ltd. vs Union Of India
1996 Latest Caselaw 700 Del

JUDGMENT

Manmohan Sarin, J.

(1) The petitioner has filed the above petition under Section 14,17 and 29 of the Arbitration Act, 1940, for filing of the original award alongwith the arbitral proceedings and for making the award dated II- 6-1993, by Sh.K.D. Singh, Sole Arbitrator, rule of the Court. The petitioner also prays for award of interest @ 18% P.A. The learned Arbitrator has filed the award together with the record of the arbitral proceedings upon notice being issued by this Court. Notice of the filing of the award were issued to the parties. Petitioner has not filed any objections to the award.

(2) The respondent-Union of India, has moved the present I.A. bearing No-6270/94, filing its objection Under Section 30 and 33 of the Arbitration Act, 1940. The respondent on the basis of the objections filed pray for the award to be set aside viz, claim No. I of the award by the Arbitrator in favour of the petitioner and the rejection of counter claim of the respondents.

(3) The pleadings in the I.A.6270/94 were completed and issues had been framed on 8-8-1995. However, having regard to the nature of the objections, it was ordered that no evidence is required to be led and the record of the proceedings of the arbitrator would be considered for this purpose.

(4) The petitioner had raised a preliminary objection that the objection

(5) The petitioner had tendered for and was awarded the contract for erection and commissioning of 7 Furnaces equipped with Multi-zone tomaticcum Manual Control vide At No. SDP-4-107/94/5226/6.6.74/ 24.1.76/PAOC/ 1359 dated 22-4-1976. The Furnaces together with accessories were to be installed at Filed Gun Factory, Kanpur. Disputes had arisen between the petitioner and respondent with regard to the said contract and were referred to arbitration in accordance with Clause 25 containing an arbitration agreement, initially, Sh. Shiv Prakash, Additional Legal Advisor, to Government of India was appointed a Arbitrator. He, however, tendered his resignation and the appointing authority in its place appointed Sh. K.D. Singh, Additional Legal Advisor to Government of India, Ministry of Law, as the Sole Arbitrator to adjudicate upon the disputes and differences between the parties under the contract. Learned Arbitrator entered upon the reference. Pleadings were completed and the arbitrator made and published his award after giving the parties full opportunities of being heard in the matter. The claim of the petitioner was for payment of the balance 5% of the price for the supply of Furnaces that had been retained by the respondents. The claim included amount 15% on account of spares and for the common flue system. The total claim including Cst amounted to Rs.4,25,527.55 paise. The particulars of claim No.l as given in para 30 of the statement of the claim are as under:- Final 5% of supply for Furnaces A 1,11,405.89 B 91,714.12 C 54,956.47 F 95,770.80 3,53,847.28 Add final 15% of spares 28,343.43 Add for common flue system 26,989.40 (deducted from payments made by Pay & Accounts Office) Total -------- 4,09,161.11 Add Cst at the rate of 4% on the above. 16,366.44 Total amount payable 4,25,527.55

In addition, the petitioner had claimed interest on the amount that had been withheld in respect of the payment made for the supply of Furnaces under claim Nos.2 and 3. The respondents Union of India had also made a counter claim for a sum of Rs.2.0335 crores plus Central Sales Tax amounting toRs.7,85,400.00 .

(6) The learned Arbitrator in the award allowed claim No.l of the petitioner while rejecting 3 and 4 which were for interest. The learned Arbitrator also rejected the counter claim of the respondents-Union of India. The case of the petitioner before the Arbitrator was that the petitioner had duly erected and commissioned Furnaces Nos.A, B1 and B2 on 7-4-1979, 30-4- 1979 and 3-5-1979. It was claimed that as the factory was to be inaugurated by the then defense Minister on 17-5-1979, the respondent had desired that the heavy duty presses for forge shop should also be demonstrated to the Minister. For this purpose, furnaces were required to be ignited. The respondents were, however, unable to provide the heavy furnace oil and steam required. The respondent instead desired the petitioner to light up the furnaces with light fuel oil and compressed air available. The claims with a view to extend cooperation, agreed to light up the furnaces used light fuel air and compressed air. The furnaces were accordingly, lighted and commissioned using the light fuel oil and compressed air. It is also not in denied that the furnaces after being commissioned and erected were put into production use by the respondents. By 19-5-1979, 3 out of 7 furnaces were already commissioned. The remaining furnaces namely furnaces C D E and F were also, thereafter, commissioned on 24-7- 1979, 14-8-1980, 20-8-1980 arid 16-5-1981.

(7) The petitioner's case is that after successful erection and commissioning of the furnaces, the respondents authorize the release of full 100% payment towards erection and commissioning for all the furnaces, amendment letters were issued. The respondents also authorized payment of 5% out of remaining 10% due on account of the supply price after about 10-12 months. However, remaining 5% payments were wrongfully withheld for which claim No.l has been preferred. It is the petitioner's case that the joint inspection report for completeness and installation was issued by the Director of General Inspection and Field Gun Factory in July 1980. It is also not in dispute that as per the agreement the warranty period for the furnaces expires within 18 months of the date of last despatch or 12 months from the date of commissioning. It is the petitioner's case that all the supply as per the terms were completed by 13-12-1979 and warranty period stood expired. The petitioner had produced on record sufficient material and evidence in support of their contentions.

(8) Learned counsel for the respondents arguing in support of the objection has not questioned the various dates of commissioning of furnaces or the computation of the amount of claim No.l and its non payment. The case of the respondent is that though the furnaces were supplied by the petitioner, the commissioning and inspection and testing thereto were not done as per the terms and condition of the contract. It is stated that the said commissioning were wrong and faulty. The defects and deficiencies were brought to the notice of the claimants. The claimants failed to rectify them. Reliance is placed on the meeting of 25-8-1993 and the minutes of which were recorded on 26-8-1993. The respondents also question the findings of fact arrived at by the Arbitrator that the inspection could not be held as ideal conditions could not be achieved since the furnaces were admittedly used for long time for factory production. It is claimed that the petitioner has failed to rectify the defects pointed out. The rejection of the counter claim is also assailed as contrary to facts and law. It is stated that the respondents have spent a sum of Rs .29.05 plus Cst 4% towards the modification, and revamping of one furnace. On the basis of the expenses incurred for it, the respondents computed the counter claim for 6 furnaces. The respondents also contended that the furnaces did not correspond with the description of goods undertaken to be supplied as required under Section 15 of the Sale of Goods Act.

(9) I have carefully considered the submissions made by the learned counsel for the respondents in the objections. The objections are really seeking a reappraisal of the evidence by the Arbitrator and assailing the findings of facts and law as reached by him. This is not permissible within the ambit of objections under Section 30 and 33. Learned Arbitrator has given reasons and indicated his thought process for the conclusions reached. The learned Arbitrator has found that 3 of the furnaces were erected and commissioned by 19-5-1979, the remaining 4 were commissioned between July 1979 and May 1981. It is seen from the pleadings and documents on record that the conclusion of the Arbitrator that the respondents were unable to provide the ideal conditions for detailed inspection, was on account of the respondents admittedly having used the furnaces in factory production for a long time. The petitioner cannot be faulted for the detailed inspection not being carried out. It was the respondents who had not provided the heavy furnace oil.

(10) There is no error apparent or infirmity in the award specially considering that the warranty period for the furnaces would expire within 12 months of the commissioning and 18 months of the supply which according to the petitioner were completely by 10-12- 1979. The award in respect of claim No.l, therefore, appears to be justified in the facts and circumstances as also the rejection of the counter claim. It bears out from the record that the furnaces have been in production and used for nearly more than three years. The respondents cannot draw any benefit from the petitioner having offered a further demonstration in respect of Auto control system in an attempt to amicably settle the matter and receive their dues. The legal rights which would have vested in favour of the petitioner would not get diluted by the above Act. In any case, the Arbitrator is the master of Law and facts. The objections are without merit and I.A.6270/94 is dismissed. I accordingly, direct that a decree in terms of the award dated 1-6-1993 be passed. The award shall form of the decree. The petitioner shall also be entitled to interest @ 12% from the date of decree on the awarded amount.