Gaurav Paper Mills (Prop. ... vs Union Of India (Uoi)
2006 Latest Caselaw 527 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The petitioner was awarded an advance rate contract dated 29.12.1993. The petitioner entered into a rate contract dated 17.01.1994 in pursuance to the same for the period 21.12.1993 to 20.12.1994. A supply order dated 25.04.1994 was placed on the petitioner by the Union of India on behalf of the Government of Assam for supply of different sizes of cream wove paper of 2000 MT. The petitioner did not make the supplies and the respondent made risk purchase and in view of the arbitration clause agreed to between the parties, the matter was referred to the sole arbitration of Shri B.L. Nishad, Additional Legal Advisor to Government of India, who made and published his Award dated 20.06.2001. The petitioner aggrieved by the same has filed the present objections.

2. Learned counsel for the petitioner contends that the petitioner is entitled to challenge the Award and there are a number of grounds which fall within the parameters of sub-section (2) of Section 34 of the Arbitration and Conciliation Act, 1996 ( hereinafter to be referred to as, `the said Act' ) as enunciated by the Apex Court in Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd. .

3. The first submission of learned counsel for the petitioner is that the Award is against a non-entity as the same has been made against Gaurav Paper Mills, while the legal entity is Ravindra Steel Ltd. and Gaurav Paper Mills is only a division of Ravinder Steel Ltd. Learned counsel for the petitioner on a specific query being posed states that before the Arbitrator, such a plea was not raised, but being a jurisdictional issue, the same can be raised even at this stage.

4. I am unable to accept this contention of learned counsel for the petitioner as the matter pertains to one of a legal entity and is not really one of jurisdiction. It is also relevant to note that the rate contract and the purchase orders were placed on M/s. Gaurav Paper Mills (Proprietor, Ravindra Steel Ltd.). A reference to the Award also shows that it has accordingly been forwarded to the petitioner, though the title states `Union of India v. Gaurav Paper Mills'. The description of the title would not make any difference as the arbitration took place in pursuance to the rate contract and the purchase orders, which were placed on M/s. Gaurav Paper Mills (Proprietor, Ravindra Steel Ltd.). The description itself shows that the proprietorship concern is named and the name of the Proprietor is also simultaneously given of M/s. Ravindra Steel Ltd. There is no merit in the objection, which is rejected.

5. The second plea of learned counsel for the petitioner is that there is a jurisdictional error as the contract was between the Government of Assam and the petitioner, while the Award has been made in favor of the Union of India. A perusal of the contractual documents show that the rate contract and purchase orders are by the Government of India, Director General of Supplies and Disposal ( for short, `DGSandD' ) but for and on behalf of the Government of Assam. This is apparent from the documents filed on record. It is, thus, the submission of learned counsel for the respondent that the contract orders are placed by the DGSandD on behalf of various authorities and the designation of the Intending Officer is given in each of the documents, which is quite apparent even from its perusal.

6. In my considered view, there is force in the contention of learned counsel for the respondent. On a bare reading of the documents, the orders themselves specify that the same are for supply of stores detailed in the schedule in accordance with the terms and conditions of DGSandD and the designation of the Intending Officer is given as Director, Printing and Stationery, Damunimaidan, Guwahati. The document is signed by Section Officer of the DGSandD on behalf of the Governor of Assam. Similarly on the failure of the petitioner to make supplies, communication dated 12.06.1995 was addressed by the DGSandD cancelling the order in view of failure of the petitioner to make supplies and the letter dated 03.11.1995 was similarly sent about the risk purchase.

7. It may be noticed that once again on a specific query being posed, learned counsel for the petitioner does not dispute that this plea was not raised before the Arbitrator and has been raised for the first time in the objections, but once again learned counsel contends that the matter is one of jurisdiction and the authority of the respondent to enter into the contract as required under Article 299 of the Constitution of India ( for short, `the Constitution' ).

8. Learned counsel for the petitioner relies upon the judgment of learned Single Judge of the Rajasthan High Court in Mrs. Chand Kunwar and Ors. v. State of Rajasthan AIR 1989 Rajasthan 23 to advance the proposition that a rate contract is only a standing order. Learned counsel referred to judgment of the Supreme Court in Union of India v. M/s. Hanuman Oil Mills Ltd. and Ors. 1987 (Supp) SCC 84 which dealt with the issue of a government contract and the authority to enter into the same under Article 299(1) of the Constitution. It was held that where the authority has been expressly questioned by the respondent contractor and the government failed to establish the same, there was no concluded contract. In the present case, in the arbitration proceedings, there was no such objection raised and, thus, there would be no question of the respondent failing to establish the authority. This is more so since the contract itself on its plain reading is made by DGSandD and the purchase orders are placed by DGSandD though on behalf of different State authorities.

9. Learned counsel for the petitioner seeks to contend that such an objection can be raised even at this stage in view of the judgment of learned Single Judge of this Court in Airports Authority of India and Anr. v. S.N. Malhotra and Sons 2002 (3) RAJ 292 (Del). In the said case, the question considered was relating to the provisions of Section 16 read with Section 34(2)(a)(iv) of the said Act about the Arbitrator exceeding the scope of the authority or his act being without jurisdiction. It was held that the provisions of Section 34(2)(a)(iv) were independent of Section 16 and if the intention of the legislature was that the matter not raised before the arbitral tribunal pertaining to his jurisdiction could not be raised subsequently, then a clear reference would have been made in the provision of Section 34 of the said Act. There can be no dispute about this proposition but, in my considered view, it would have no material bearing in the facts of the present case. It is not a case of inherent lack of jurisdiction of the Arbitrator, but a question whether the contracting parties had the authority to enter into the contract. The plea of the petitioner that this is a pure question of jurisdiction is, thus, misconceived.

10. Learned counsel for the petitioner also referred to judgment of the Supreme Court in State of Punjab and Ors. v. Om Parkash Baldev Krishan, AIR 1998 SC 2149 where it was held that in respect of a government contract, the letter of acceptance was signed by the Executive Engineer, but not in the name of the Governor and, thus, there would be no valid and binding contract. It was further held that there cannot be any question of estoppel or ratification in a case where there is contravention of the provisions of Article 299(1) of the Constitution.

11. It has already been noticed above that on the basis of the documents placed on record, it cannot be said that there were such inherent lack of authority to enter into the contract on the part of the respondent. It is a misconception arising from the manner of transaction as understood by the petitioner. The purchase orders are placed by DGSandD in pursuance to the requisitions made and as per authority on behalf of the Governor of the State.

12. The next submission advanced by learned counsel for the petitioner arises from the grievance that the Arbitrator saw the purchase file in the absence of the petitioner, which could not have been done. It is, however, not disputed that the petitioner failed to appear on the last date fixed before the Arbitrator. There was no justifiable reason for the same. Learned counsel for the petitioner, however, tried to canvass that the non-appearance would have no material bearing since at that stage arguments had finally taken place and the matter was listed on an application filed by the petitioner arising from some liquidation proceedings against the petitioner and since the respondent had not filed reply in time, the absence of the petitioner should make no difference. I am unable to accept the plea of learned counsel for the petitioner since once the proceedings were fixed by the Arbitrator, it was for the petitioner to have appeared. If the petitioner chose to stay away from the proceedings and the records referring to risk purchase are produced and perused by the Arbitrator, the Arbitrator cannot be faulted on this account.

13. The last submission of learned counsel for the petitioner arises from the plea of the absence of reasons. It is the submission of the learned counsel that the pleas of the petitioner were not considered and the Arbitrator has only recorded conclusions. I am unable to accept this plea of learned counsel for the petitioner since the Arbitrator is not required to write an award like a judgment, but the basic reasoning and thought process of the Arbitrator should be available. The Arbitrator is not a trained Judge. The Arbitrator, in the present case, has noted the relevant clauses of contract and the legal provisions and on the basis of the evidence produced before the Arbitrator, has given a reasoned Award. I find, thus, no merit in this contention and the same is rejected.

14. In view of the aforesaid, I find no merit in the objections and the same are dismissed leaving the parties to bear their own costs.