Ajudhia Distillery vs Delhi Administration & Anr.
1998 Latest Caselaw 2 Del

JUDGMENT

S.N. Kapoor, J.

1. This judgment shall dispose of petition No. 296A/91 filed under Sec- tion 14 of the Arbitration Act,1940 as well as I.A. No. 8510/93, objections relating thereto filed by the claimant-petitioner against the award given by Shri D.M. Spolia on 15th October, 1990.

2. Learned counsel for the petitioner has just argued only one point before this Court relating to the claim of the petitioner about enhanced excise duty and submits that Section 64A of the Sale of Goods Act, 1930 has not been applied in its proper perspective..

3. Relevant facts of the case are as under:

3.1. In response to tenders of the petitioner M/s. Ajudhia Distillery Ltd. Co. a formal agreement dated 10th December, 1984 was entered into for the wholesale supply of 50 degree U.P. rum in the Union Territory of Delhi for the period starting from November 9, 1984 to 31st March, 1985. The supply rates per dozen of 750 ml. and 375 ml. bottles respectively included excise duty of 1.20 and 0.60 and export duty of Rs. 4.80 and 2.40.

3.2. During the contract period Government of Uttar Pradesh from where the rum was exported, enhanced the Export Duty on 50 degree rum vide notifica- tion No. 241-2/13-301/83 dated 31.1.1985 issued by Excise Department of the Government of Uttar Pradesh from Rs.1.89 per A.L. to Rs. 4/- per A.L. Thus such enhancement in the Export Duty per case of 12 bottles of 750 ml. works out to Rs. 5.41 and total duty from Rs.4.85 prior to 31.1.1985, to Rs. 10.26 after 31.1.1985. The petitioner accordingly submitted the bills and claimed a sum of Rs. 1,49,877 which they have paid as enhanced rate to the Government of Uttar Pradesh. This claim was denied. The dispute relating thereto was referred to arbitration. The arbitrator rejected this claim of Rs. 1,49,877 with 18% interest thereon.

4. In view of the controversy involved one has to appreciate import and intendment of Section 64A of the Sale of Good Acts, 1930 (hereinafter called as 'the Act') and clause 3 of the agreement. Section 64A of the Act reads as under:

"64A. (1) Unless a different intention appears from the terms of the contract, in the event of any tax of the nature described in sub-section (2) being imposed, increased, decreased or remitted in respect of any goods after the making of any contract for the sale or purchase of such goods, without stipulations to the payment of tax where tax was not chargeable at the time of the making of the contract, or for the sale or purchase of such goods taxpaid where tax was chargeable at that time,

(a) if such imposition or increase so takes effect that the tax or increased tax, as the case may be, or any part of such tax is paid or is payable, the seller may add so much to the contract price as will be equivalent to the amount paid or payable in respect of such tax or increase of tax, and he shall be entitled to be paid and to sue for and recover such addition; and

(b) if such decrease or remission so takes effect that the decreased tax only, or no tax, as the case may be, is paid or is payable, the buyer may deduct so much from the contract price as will be equivalent to the decrease of tax or remitted tax, and he shall not be liable to pay, or be sued for, or in respect of, such deduction.

(2) The provisions of subsection (1) apply to the following namely:

(a) any duty of customs or excise on goods,

(b) any tax on the sale or purchase of goods."

5. Clause 3 of the agreement signed by the parties stipulates_

"The above rates are for F.O.R. retail sale vends and inclusive of all charges, including bottles, calling, corking, capsuling, labelling, packing and storing in cartons, besides the cost of the bottles, spirit and material used, transportation charges and all levies by local bodies and Government, except special duty payable in Delhi, Sales Tax Form will be issued by the office of the Commissioner of Excise, Delhi Administration, Delhi.

6. It appears that the submission of the learned counsel for the petitioner appears to be misdirected for the matter is covered by the exceptional Clause of Section 64A of the Act "unless a different intention appears from the terms of the contract as would be evident hereinafter". Aforesaid clause is clear and made applicable to future also by using phrase "shall be" and by spelling out the supply period. It no where makes the rates dependant on any subsequent events. In this sense it covers all levies "present and future". This clearly rules out the possibility of invoking Section 64A of the Act and arguably places the responsibility to pay enhanced duty on the petitioner.

7. The export duty or excise duty is certainly a levy charged by the Government of U.P. and there could not be any doubt that it can be charged with retrospective effect also in terms of M/s. Chhotabhai Vs. Union of India, relied upon by the learned counsel for the petitioner.

8. Learned counsel for the petitioner also relied upon the case of M/s. Sramajibi Stores, Calcutta Vs. Union of India, . But in that case the question of interpretation of any exception clause as referred to above was not raised. There could not be any doubt that fair approach has to be adopted while interpreting statutes, intention of Legislature, and object of Statute has to be looked into and further interpretation should be purposeful and one does not have to give literal interpretation which can defeat the object of the provisions.

9. It may be mentioned that subsection (b) of Section 64 of the Sale of Goods Act, 1930 would apply only to those cases which are governed and covered by Section 64-A of the Act Section 64-A of the Act envisages that if the intention of the parties is apparent from the terms of the contract that in case there was any increase in any export duty that would not be paid by the purchaser but could be borne by the supplier, as is evident in this case, there could certainly be a contract. Such a term of the contract, being protected by the exception clause would not be contrary to the intention of Section 64A. Accordingly in such a circumstance vendor like the plaintiff would not be charging anything extra over and above the rates agreed to in so far as the increase in the rates, duties and levies of the Government concerned. There could also be a contract to the effect in view of the opening phrase of Section 64A of the Act where in case of reduction of export duty, the rates may stand reduced applying principles of Section 64A and the increase in export duty may not be reimpossible under the contract. Consequently submission of the learned counsel that same analogy should apply to increase and decrease of excise or export duty cannot be accepted. Another argument advanced in this connection is that in case IMFL (Indian Made Foreign Liquor), the price was reduced when excise duty was reduced and it was recovered by the respondent therefore the price should be increased. Learned Arbitrator had noted the distinction between imported rum and other IMFL.

10. Since there was undisputably a specific agreement in between the parties it is not possible to hold that the claimant could claim any enhancement in price on account of increased export duty also. Even otherwise there is a provision under Section 9 of the Sales of Goods Act which provides that the price in a contract may be fixed by the contract. This provision is read with the phrase "Unless different intention appears from the contract", it is not possible to accept that the purpose of Section 64-A of the Act is likely to be defeated.

10.1 Moreover, supposing it is possible to accept this submission, would be possible for this Court to sit in appeal over the view taken by the learned Arbitrator? I think, it would amount to exceeding the jurisdiction in such matters to set aside an award for two views are possible and this court favours the view contrary to the view taken by the learned Arbitrator. High Court has no jurisdiction to set aside an award by substituting its own view in place of the arbitrator's view as if it was dealing with an appeal (See B.V. Radha Krishan Vs. Sponge Iron India Ltd., (1994) 4 SCC 639).

11. For the above said reasons, I feel that there is no force in the objections filed by the claimant. Objections vide I.A. No. 8510/93 are rejected accordingly.

12. Since objections IA 8510/93 stands dismissed, the award passed by Shri D.M. Spolia dated October 15, 1990 is hereby made rule of the Court. The said award shall form part of the decree. Let a decree sheet be prepared accordingly.