Jain Accessories & Fittings vs Union Of India And Another
1996 Latest Caselaw 802 Del

JUDGMENT

A.K. Srivastava, J.

1. Jain Accessories and Fittings filed this petition under Section 14 of the Arbitration Act, 1940 saying that the respondent No. 2, Dr. B. N. Mani was appointed sale arbitrator in a contract A/T. No. HW 4/218/0028/15-4-7/44/COAD/707 dated 5.1.1988, that the arbitrator entered into the arbitration and registered the arbitration case as 66-B/88 and that thereafter made in this petition was that the arbitrator be directed to file the award along with all the records of the proceedings relating to the aforesaid arbitration case and thereafter the petitioner he allowed to file objections.

2. Directions were issued to respondent No. 2 to file the award. He accordingly filed the award along with the records. Thereafter Jain Accessories and Fittings, the petitioner, in this suit filed its objections under Sections 16, 30 and 33 of the Arbitration Act against the aforesaid award. Those objections are in I.A. No. 7746/89. After the pleadings were completed Mohd. Shamim, J. framed the following issues on 13.9.1993.

"(1) Whether the impugned award is liable to be set aside for the reason stated in the objection filed by the petitioner, i.e., I.A. No. 7746/39 ?

(2) Relief, if any ?"

3. The objector filed its evidence by may of affidavit on 20.1.1994 In reply the Union of India filed one affidavit on 23.3.1995 and the other on 14.7.1995.

4. By the impugned award the claim of M/s. Jain Accessories and Fittings for Rs. 1,02,241/- has been dismissed.

5. The facts leading to the arbitration case are that tenders were invited by Director General of Supplies and Disposal New Delhi for supply of PVC pipes. The claimant Jain Accessories and Fittings gave its tender dated 24.5.1987 a coy of which is at page 40 of the record of the arbitration case in which price quoted was as follows :

"(I) PRICE :

The prices given are For Destinations as per Annexure 'A' and inclusive of Sales Tax. No Sales Tax will be charged extra. Local Tax and octroi will be extra, if applicable. The prices, quotes are applicable for supplies maximum of 50 lacs. For Order value exceeded Rupees fifty lacs the rate applicable would be two per cent higher than quoted at Annexure 'B', considering upward trend of resin prices and its availability. At Annexure 'C', rates applicable for order above Rupees fifty lacs are enclosed."

6. After the tenders were considered a letter of acceptance was issues to the claimant M/s. Jain Accessories and Fittings a copy of which is at pages 27 to 35 of the record of the arbitration case. Under that letter of acceptance there was on order of supply worth Rs. 2,80,32,982/- but corrected as Rs. 2,81,54,546/-. In the notes at the end of the letter of acceptance signed by Om Prakash, Deputy Director of U.P., the following was specifically mentioned :

"Notes : (i) Firm shall be allowed to claim and will be paid prices/values @ 8% higher than indicated above.

(ii) For value of order exceeding Rs. 50 lakhs, 20% extra price will be paid."

After receipt of the letter of acceptance the claimant started making supplies. But in the meantime he sent a letter dated 8.1.1988 to the Director General of Supplies and Disposal which way be reproduced as follows :

"Dear Sir,

We thankful acknowledge receipt of your subject A/T, where a minor take has occurred inadvertently, which may kindly be rectified.

We along with our tender Quotation No. JA & F/DES and D/PBB/87/217, dated 24.7.1987, submitted two sets of Rates as per Annexures 'A' and 'C' Rates of Annexure 'A' are applicable to an order upto 50 lacs and if order exceeding Rs. 50 lacs the Rates quoted in Annexure 'C' should be applicable. Although your A/T, is clear" Rates quoted in Annexure 'C' should be applicable. Although your A/T, is clear." for value exceeding Rs. 50 lacs 2% extra price will be paid, "but this can be misinterpreted.

You are therefore, requested to issue amendment to read 2% extra is payable on Rates shown in A/T. Notes No. (ii) Clause 20 since the order is already exceeding value of ten crore eight lacs.

It will not be out of the place to mention that Rate quoted in Annexure 'C' under reference are much lower than the lowest Rates quoted in Tenders opened on 4.12.1987.

Kindly to the needful and oblige.

Thanking you."

The Director General of Supplies and Disposal, Government of India, sent the following reply to the claimants' aforesaid letter. This reply is dated 16.2.1988 which is as follows :

"Dear Sirs,

The issues raised in your letter of 8.1.1988 have since been examined. I am directed to inform you that as per stipulations in the tender and acceptance of tender under subject rates for first quantities worth of Rs. 50 lacs shall be as stipulated in the contract and only for quantities beyond that value 2% extra shall be payable. This may kindly be noted and bills should be raised accordingly.

2. Kindly acknowledge receipt

This is however, without prejudice to the terms and conditions of the contract".

Thus, the only between the claimants and the DGS & D was whether the claimant was to get a 2% price if the supplies are worth more than Rs. 50 lacs or he is to get the normal price upto the supplies worth Rs. 50 lacs and 2% extra price on supplies made over and above the said Rs. 50 lacs. The DGS & D had categorically replied to the claimant that as per stipulations in the tender and acceptance of the tender rates for the first quantities worth Rs. 50 lacs shall be as stipulated in the contract and only for, quantities beyond that value 2% extra shall be payable. In spite of receipt of this reply the claimants continued to make supplies and when it was paid 2% extra only on those supplies the quantity of which was beyond worth Rs. 50 lacs it raised a dispute and wanted to get the matter referred to arbitration. So this issue was actually before the arbitrator.

7. The claim petition before the Arbitrator is at pages 55 to 59 in the arbitration record. In para 16 of the claim petition it was stated that the claimant never made any offer of discount for the first Rs. 50 lacs, as apparent from Annexure C and his quotations and that the claimant was very clear that if the order exceeds Rs. 50 lacs, price would be as per Annexure C1 and there was no slab given for it.

8. The learned arbitrator in the award has considered the contentions of the claimant but has not been able to find favour with it. He has categorically said that the condition given in the AT is "for entitled or order exceeding Rs. 50 lacs, 2% extra price will be paid and therefore the contractor was entitled for 2% extra price on the value above Rs. 50 lacs and not on the value upto Rs. 50 lacs. He also says that this was clear to the contractor also as by its letter dated 8.1.1988 it had sought an amendment of the said stipulation and that the Union of India by letter dated 16.2.1988 intimated the contractor that 2% extra price was stipulated only for value beyond Rs. 50 lacs, and that in spite of receipt of the letter the contractor continued the supply. On these grounds he rejected the claim.

9. Now in its objection filed under IA 7746/89 the claimant after stating the whole case upto para 12 has challenged the award on the following grounds given in para 13 of the objections :

"(i) The arbitrator had misconducted and there is error apparent due to non-decision of several vital issues by arbitrator.

(ii) The arbitrator had misconducted himself and proceedings since there is no application of mind by arbitrator.

(iii) The arbitrator could not make a new contract between the parties.

(iv) The award based on no evidence/contrary to evidence.

(v) The arbitrator misconducted himself by going beyond reference".

The Union of India has filed its reply to these objections which is at pages 43 to 53 of the paper book.

10. I have gone through the entire record of the case specifically the objections, the reply and the affidavits filed by the objector and the opposite party. The argument of the learned counsel for the objection is that the learned arbitrator has not decided the issue raised by the claimant objector that there could not contract contrary to the offer given by the claimant. He has, however, no argued on other points taken in his objections. Therefore, the only thing to be seen is whether there has been non-decision by the arbitrator on issues raised by the claimant. In order to examine it, a reference will have to be made to the claim petition of the claimant before the arbitrator. I have gone through the entire claim petition and I do not find at any place that the claimant has taken a legal plea that there could not be any acceptance contrary to the tender offer. The only points raised were that if the supplies were worth more than Rs. 50 lacs higher price by 2% was to be paid on the entire supplies, that is to say, if the supplies were worth more than Rs. 50 lacs a higher price by 2% was to be paid. On the other hand, the contest was that upto the supplies worth Rs. 50 lacs the lower price was to be paid and 2% extra was to be paid only on those supplies which were more than Rs. 50 lacs worth. The aforesaid disputes were raised before the arbitrator. Nowhere any legal plea was taken that the letter of acceptance ought to have been as per the tender and therefore the opposite party was bound to make payment as per the tender given by the claimant. Before the arbitrator the claimant filed a copy of the letter sent by it to the opposite party asking for amendment of the letter of acceptance. That letter is dated 8.1.1988 and a copy thereof is at page 71 of the record of arbitration case. In this letter a request was made that a mistake in letter of acceptance my be rectified. In reply to that letter the opposite party had categorically noticed to the claimant that there was no mistake and the supplies were to be as per the terms of the letter of acceptance, that is to say, 2% extra price was to be made only for those supplies which were over and above the supplies worth Rs. 50 lacs. The claimant in spite of receipt of that letter continued to make supplies and raised an issue that the supplies worth upto Rs. 50 lacs, were also to be paid at a higher rate by 2% and raised disputes for being referred to arbitrator.

11. If the letter of acceptance was not as per the terms of the offer the contractor was as liberty not to make supplies till the letter of acceptance was issued to it as per the terms of the tender offer. But instead of being clarified that there was no error in the letter of acceptance the contractor continues to make supplies and now he is challenging that the letter of acceptance ought to have been in terms of the tender.

12. On a careful consideration of the claim petition made before the arbitrator I do not find that the claim raised a legal plea before the arbitrator that the letter of acceptance could not be contrary to the terms of the tender and, therefore, I am of the view that he cannot say that the arbitrator has not decided that issue.

13. In my opinion the arbitrator has decided all the issues referred to it. I also do not find any ground to say that the arbitrator has misconducted himself and there has been no application of mind. The award is a speaking award. I also do not find the arbitrator has made a new contract between the parties. He has entirely relied upon the letter of acceptance on which the claimant contractor has acted upon. There is also nothing on record to show that the arbitrator was based in his finding or that the aware is based on no evidence or on anything contrary to evidence. I am also of the view that the arbitrator has not gone beyond the reference made to him.

14. Accordingly, the objections in I.A. 7746/89 are hereby rejected.

15. In the affidavit filed by Deputy Director on 23.3.1995 a request has been made that the award given by the arbitrator be made rule of the court. Therefore, since objections to that award have been dismissed under this judgment and order, the aforesaid award is hereby made rule of the court.

16. The suit is, accordingly, decided in the aforesaid terms.