Pokhrayan Alums And Chemicals ... vs The Municipal Corporation Of ...
2003 Latest Caselaw 9 Del

JUDGMENT

S. Mukerjee, J.

1. This is a petition under Sections 14 & 17 of the Arbitration Act 1940. The respondent has preferred objections against the Award dated 6.6.1996 passed by Shri S.P. Rai, Sole Arbitrator. The objections have been registered as IA no. 3012/1997.

2. The background facts are in a very narrow compass. An agreement had been entered into between the parties for supply of "Alumina Ferric", required for purification of water by what is now the Delhi Jal Board (which at the relevant time was a part of the MCD). Admittedly, one of the main raw materials requiring for the manufacture of Alumina Ferric, is Sulphur.

3. At the relevant time, Sulphur happened to be a canalised item for which MMTC was the canalising agency under the statutory orders to that effect issued by the Government of India.

4. Amongst other clauses governing the terms and conditions between the parties, there was a price escalation clause as quoted below:-

"2(a) Price Escalation: The basic rate of Rs. 1545/PMT is based on the (Jan-March "91) sulphur price for non-fertilisers use on Ex-Jetty basis, which was Rs. 3125/- PMT as announced by MMTC. For every increase/ decrease in the sulphur price for non-fertilizers use, a variation of 20% will be allowed on Ex-Jetty basis in the basic rate of Alumina Ferric, as announced by MMTC from time to time."

5. In the context of the above quoted escalation clause, it is to be noted that the price of Sulphur announced by the MMTC used to be the price as determined on quarterly basis by a "Sale Purchase Committee", formed by the Government of India.

6. With effect from 1.4.92, Sulphur became a decanalised item, and thereupon, the said Committee was abolished.

7. It is the case of the petitioner, and not denied by the respondent, that after the de-canalisation of Sulphur, the respondents started adopting the lowest price of MMTC from data collected in relation to any of the ports/consignments. In other words, the lowest rate on All India basis, was treated to be the equivalent of MMTC announced price, and on that assumed basis, the respondent made deduction from the agreed contract price of Rs. 1545 per MT, ignoring the plaintiff's contention that after decanalisatiion, it was the contract price of basic rate of Rs. 1545 per MT itself, which was to apply.

8. This dispute regarding the applicability of the escalation clause, even to the post decanalisation period, went for adjudication by sole arbitration of Shri S.P. Rai. The Arbitrator has rendered his Award dated 6.6.96.

9. In my view, the objections raised by the respondent against the Award, are nothing but a challenge to his decision on the merits as if in the nature of an appeal or similar proceeding, which kind of challenge is not within the scope of this Court while dealing with objections under Sections 16 and 30 of the Arbitration Act, 1940.

10. Even otherwise, I note from the record that parties had agreed to a basic rate of Rs. 1545 per metric tonne. Since Sulphur earlier was a canalised item and prone to increase/decrease (at least partly attributable to non-market forces) in the form of price announced for each quarter by the MMTC, and then the same announced price, was to remain firm for that entire quarter, as such, a price variation clause described as "price escalation", had been incorporated in the contract.

11. There are some very good strong reasons why such a price escalation/ variation clause, could have no relevance to the agreed basic price, once canalisation ended w.e.f. 1.4.93:-

(i)The basis adopted had been the Sulphur price in relation to "non-fertiliser use", and the base period was January-March, 1991. It appears that as a part of the canalisation and the related governmental policy, there were separate rates announced for the ''fertilizer" and "non-fertilizer" uses of Sulphur. Once the item (Sulphur) was de-canalized, thereafter the distinction regarding these two sets of prices depending on the end user, no longer existed after decanalisation, and as such there was no surviving relevant parameter of "non-fertilizer use", in existence at all;

(ii)Moreover the basis of this price escalation clause was the "announcement" of Sulphur price, in relation to the "non-fertilizer" use by MMTC. The use of the word "announced", and the background circumstances, all clearly indicate that there had to be firstly the declaration of price and same was to be for information of, and having applicability towards atleast one or more sections of the consuming public. As against to this, after de-canalisation, there existed only and that too in the internal records of MMTC, mere instances of stray purchase prices, which are also differing from consignment to consignment, even within a port, and also from one port to another, and then again differing from time to time, based on individual transactions which could only be mere transaction prices borne on the records of the MMTC, for its internal accounting purposes, and could not have been converted by MMTC into an "announced price of Sulphur for non-fertilizer use".

12. In view of the above, the entire basis of having a price-variation clause, thus disappeared with the advent of the post de-canalisation period. As such the Sole Arbitrator's conclusion is the only lawful conclusion, possible viz that once there was no longer "announcement' of price by MMTC in terms of the earlier applicable Government policy, thereafter the reliance by the respondent upon a decision of it's Technical Committee, to adopt the lowest price ex-jetty from amongst the various prices, at various ports, as per sales made by MMTC, to be equivalent to the announced price, was clearly violative of the terms and conditions of the contract.

13. In the facts and circumstances of the case, I feel that the view adopted by learned Arbitrator is the only possible view to be adopted. The Ld. Arbitrator having taken such a view, and objectors having been unable to establish that the said view is perverse, or suffering from any other infirmity of the kind warranting setting aside the award, the same has to be upheld. As held by the Hon'ble Apex Court in The arbitrator is the final arbiter for the dispute between the parties and it is not open to challenge the award on the ground that the arbitrator has drawn his own conclusion or has failed to appreciate the facts. Court cannot substitute its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to the bargain between the parties.

14. As regards claim no. 2, nothing has been established during the arguments to show why the finding of the Arbitrator warrants interference. Even the perusal of the reply to the claim, as filed by the objector before the learned Arbitrator, shows that the claim in question has not been seriously disputed at all, and it was merely receipt of the letters have been denied. In this regard, reference can also be had to clause (1) of terms and conditions of supply order which reads as under:-

"Any statutory variation in excise duty, central sales tax, octroi and levies is payable as per actual at the time of supply during the contract period."

This clause also exists in the contract document dated 25th May, 1991 between the objector and the respondent as clause no. (4). Nothing has been brought on record to suggest that the actual Excise Duty in fact was 5.25%.

15. In any case the finding of the learned Sole Arbitrator, is at least one possible view in relation to claim No.2. There are a catena of judgments on the point, and I need refer only to the judgments of the Apex Court in State of Rajasthan vs. Puri Construction Company Limited and Another 1995 ALR page 1, where it has been categorically held that if the view taken by the Arbitrator, is one of the possible views, then the Court will not interfere at the instance of an Objector canvassing that the other possible view, is the correct view. The objection against this claim No.2 also merit dismissal.

16. Claim nos. 3, 4 and 6 have been rejected by the Arbitrator but no objections have been filed by the petitioner.

17. Under claim no. 5, the Arbitrator has awarded simple interest at 12% per annum from the date of Award onwards, instead of 24% from the date when each payment fell due. As such the award of interest is moderate and reasonable. It therefore also warrants no interference.

18. Resultantly, the objections are dismissed and the Award dated 6.6.96 is made a Rule of the Court.

19. I find from the record that Arbitrator had granted simple interest @ 12% per annum on the amount, to be worked out after deleting the effect of the price variation clause for the period from 1.4.1992, and in doing so he had turned down the higher rate of 24% p.a. claimed by the petitioner. I furthermore direct that in case the respondent makes payment of the entire amounts due to plaintiffs/claimants, on the said basis, within a period of four months from today, then there will be no further accrual of interest. In case complete payment is not released within the said period of four months, then the plaintiff/claimant will be entitled to interest @ 18% from the date of expiry of period of four months, and up to the date of realisation of entire amount including interest by the petitioner.

20. The Award dated 6.6.96 is made a Rule of the Court. Parties are however left to bear their own costs. Decree sheet be drawn up accordingly.