Alfa Laval (India) Ltd. vs Union Of India
1999 Latest Caselaw 1075 Del

ORDER

Vikramajit Sen, J.

1. This application has been filed on behalf of Union of India under Sections 30 and 33 of the Arbitration Act for setting aside the Award dated 25.9.1992 on the grounds that the Arbitrator has misconducted himself and the proceedings and that he has committed an error of law which is apparent on the face of the Award. Brief facts of the case are that M/s.'the Contractor') had been awarded a tender on 26.11.1997 for the supply of 2856 Milk Aluminium Containers on the specifications detailed in the Acceptance of Tender. The Contractor failed to supply these Containers even for the extended delivery period and hence the contract was cancelled by the Union of India. The security amount furnished by the Contractor was forfeited and in addition thereto a claim for Rs. 2,12,446.40 was preferred on account of loss suffered. This amount is the difference between the rate at which the order had been placed on the Contractor and the rate at which risk purchase had been effected. It appears that after the cancellation of the Contract, a Risk Purchase Order had been placed on M/s. Delhi Brass & Metal Works, but this was also subsequently cancelled. After 2 1/2 years a second Risk Purchase Order was placed on the same Company i.e. M/s. Delhi Brass & Metal Works. The Contractor was not invited to participate in the second Risk Purchase. The learned Arbitrator had framed the following four issues:

1. Whether contract has been illegally cancelled by the Union of India?.

2. Whether Risk Purchase is in order?.

3. Whether Union of India is entitled to any damages whatsoever?.

4. Whether the Contractor is entitled to the claimed amount by way of counter claim?.

2. On issue No. 1 the Arbitrator returned the finding that the Contract had not been illegally cancelled by the Union of India and that the security deposit had been rightly forfeited by it in the absence of due performance of the contract by the Contractor.

3. On Issue No. 2 the Arbitrator held that the Risk Purchase was vitiated and was not in order since no notice had been given to the original contractor in the second Risk Purchase and that this had been delayed for 2 1/2 years after the contract was cancelled.

4. On Issue No. 3 the Arbitrator reiterated that the Risk Purchase was invalid and that since the security deposit of Rs. 26,989/- have been forfeited, the Union of India was not entitled to any general damages. It was specifically held that Union of India had not proved the actual General Damages suffered by them.

5. On Issue No. 4 it was held by the learned Arbitrator that, on the decision on Issues 1 to 3, the Contractor was entitled to a refund of a sum of Rs. 2,12,466.40, which is the amount illegally withheld by the Union of India.

6. I have perused the Objections filed on behalf of Union of India and in my view none of the points raised therein disclose any ground for concluding that the Arbitrator had misconducted himself and/or the proceedings. There are no manifest errors of law apparent on the face of the Award. The thought process of the Arbitrator is evident from a reading of the Award. He has firstly found in favour of the Union of India for the forfeiture of the security deposit and thereafter having decided that the Risk Purchase effected after 2.1/2 years could not be upheld, and since no other evidence had been produced by the Union of India, he had concluded that no loss occasioned to Union of India had been proved. It could well be argued that in the face of this finding, even though the Arbitrator had concluded that the contract had been illegally terminated by the Union of India, no justification for the forfeiture of the security deposit had been made out. However, this point was not agitated before me and in the estimation of the learned Arbitrator he was of the opinion that the forfeiture of the security deposit sufficiently compensated the Union of India for the Contractor's failure to deliver goods.

7. There is no justification for assailing the Award, as sought to be done in these Objections, merely because the claim of the Union of India for the differential between the contracted price and the price in the second Risk Purchase, has been turned down. The Arbitrator has not misconducted either himself or the proceedings. There is no error apparent on the face of the record which would warrant the setting aside of the Award.

8. I accordingly reject the application and make the Award Rule of the Court. The Union of India will pay costs of Rs. 3000/- to the Petitioner/Contractor.

9. Decree sheet he drawn up accordingly.

10. The Award shall form part of the decree.