Roof Rites (P) Ltd. vs Union Of India (Uoi)
1998 Latest Caselaw 191 Del

JUDGMENT

S.N. Kapoor, J.

1. This order shall dispose of Suit No. 2106A/88 a petition under Order 14 and objections vide IA 4521 /89.

2. The petitioner Company made certain supplies to respondent No. 1/UOI. In that connection some dispute arose. A Petition No. 1910A/84 was filed for referring the matter to Arbitrator. Accordingly, on 5th November, 1985, the matter was referred to Sole Arbitrator Dr. B.N. Mani, Addl. Legal Adviser. Dr. Marti had given his award on 29th July, 1988. Hence the application for filing that award.

3. The award has been filed by the Arbitrator. Notices were sent.

4. The claimant petitioner has preferred objections vide IA 4521/89. Learned Counsel for the petitioner, Ch. Amarjit Singh, Advocate, confined his arguments to the question of interest and unliquidated damages and 7% price reduction.

5. In so far as claim of 7% price reduction on the defective stores and testing charges is concerned, learned Counsel for the plaintiff submits that it is without basis and there was no reason to deduct the amount. On the other hand, it is submitted by learned Counsel for the respondent Mrs. Sudha Srivastava that it was certainly not a case of no evidence and in this connection, she referred to an intimation sent to the claimant dated 6th October, 1982 (at p.85 of the record of the arbitration proceedings). It reads as under:

"...The material fails to meet the requirements of IS 1580-69a--

(a)     Clause 4.1 Table 1 Item (iii) Flow A-3 heat test. The film shows slip of more than 6mm max. Specified (i.e. about 20 mm)
 

(b)    Flexibility & adhesion Item (v) Table 1: The film when tested shows cracking.
 

(c)     The specification calls for that the film shall show no cracking.
 

(d)    Consistency Table Item (vi) : The consistency after setting is 70 against a minimum of 80 specified." 
 

6. It also refers to test reports. This letter was followed by rejection advice dated 21st September, 1982 (p.92) indicating that 153 drums had been rejected. It was followed by another letter dated 8th October, 1982 (p.94) to confirm the rejection.

7. Before considering further submissions, it may be mentioned that in terms of acceptance letter of tender dated 8th February, 1982 (p.152 of the award), the inspection of the stores was to take place at the works of the petitioner/claimant "or to be decided in consultation with the Inspecting Officer". There is no dispute in between the parties that inspection did take place at the workshop of the petitioner. As is evident as per the documents at pp. 135-136, after sealing the stores in drums, the drums were despatched. According to the submissions of learned Counsel for the plaintiff if any loss occurs during the transit, or at the stores of the respondent/UOI, the claimant must not suffer. According to Annexure A containing special instructions of contract, BP-4 Section, Instruction No. 2 provides that the "consignee will as soon as possible, but not later than 30 days of arrival of stores at destination, notify the contractor any loss or damage to the stores that may have occurred."

8. It may further be noted that there is a warranty clause in the acceptance of tender dated 8th March, 1982 which reads as under:

  (d)    Warranty--The accepted supplies shall be deemed to bear a warranty
of the contract against defective material, workmanship and
performance for a period of 12 months from the date of receipt of
stores at consignee's depot. If during this period the stores supplied
are found by the consignee's to be so defective, the same shall be
replaced immediately with serviceable stores by the contractor free
of any charges at site.)
 

9. Since the defects were pointed out vide dated 20th September, 1982, 24th September, 1982, 6th October, 1982 and 8th October, 1982, it cannot be said that it is a case of no evidence in respect of 7% price reduction on the defective stores and testing charges. In the aforesaid circumstances, I do not find any force as far as this point is concerned.

10. In regard to the claim of interest, the learned Counsel for the claimant/ petitioner submits that the Arbitrator proceeded on the assumption that he had no powers to award the interest for the reference was made independently without approaching the Court and through Court. The learned Counsel for the petitioner relied upon Executive Engineer, Irrigation, Galimala and Ors. v. Abnaduta Jena, . This case does not advance the cause of the petitioner/claimant about interest for in para 22, the observations of the Supreme Court are as under;

"In the cases to which the Interest Act, 1978 applies, it was argued by Dr. Chitale, learned Counsel for the respondents, that the amount claimed was a sum certain payable at a certain time by virtue of a written instrument and, therefore, interest was payable under the Interest Act for the period before the commencement of the proceedings. In support of his contention that the amount claimed was a sum certain payable at a certain time by virtue of a written instrument, the learned Counsel relied upon the decision of this Court in State of Rajasthan v. Reghubir Singh, .

The case certainly supports him and in the cases to which the 1978 Interest Act applies, the award of interest prior to the proceeding is not open to question. In regard to pendente lite interest, that is, interest from the date of reference to the date of the award, the claimants would not be entitled to the same for the simple reason that the Arbitrator is not a Court within the meaning of Section 34 of the CPC, nor were the references to arbitration made in the course of suits.

11. Supposing for the sake of argument that there was some possibility of awarding of the interest, it is not open to this Court to go beyond the award and decide whether failure to award the interest was justifiable or not. Consequently, the claim of interest is rejected.

12. In so far as unliquidated damages are concerned, learned Counsel for the claimant Ch. Amarjit Singh submits that unliquidated damages need not be specifically pleaded and in support of his contention, he relied upon Shri Shambhunath Goenka v. Shri Madan Mohan Ghuwalewala, ILR (1977) I Delhi 247. If the unliquidated damages have not been awarded for want of pleadings, or for any other reason, this Court is not supposed to reopen the matter and decide that question for, reasonableness of reasons is beyond the limits of jurisdiction of this Court and it cannot be said to be perverse or baseless. Accordingly, this claim is also rejected.

13. Now the question of interest with effect from the date of making the award and till the date of decree and till realisation is required to be seen. Since the entire amount excepting the payment of Rs. 2,000/- or Rs. 3,000/- which remains to be paid, I feel that it would not be appropriate to interfere in this respect. However, in respect of unpaid amount, the petitioner shall be entitled to payment of interest at the rate of 18% per annum from the date of decree till realisation.

The award dated 29th July, 1988 is accordingly made rule of the Court. It shall form part of the decree. Decree sheet be prepared accordingly.