M/S Telephone Cables Ltd vs Bharat Sanchar Nigam Limited
2008 Latest Caselaw 1210 Del

*                IN THE HIGH COURT OF DELHI AT NEW DELHI


+                        Arb.P.461/2007

%                              Date of decision : 01.08.2008


M/S TELEPHONE CABLES LTD            ....... Petitioner
                Through: Mr. Rajiv Nayar, Sr. Advocate with
                Mr. Manu Nair & Mr. Arun Mohan, Advocates


                                  Versus


BHARAT SANCHAR NIGAM LIMITED         ....... Respondent

Through : Mr. Randhir Beri and Mr. Lalit Bhardwaj Advocates.

CORAM :-

HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

     1. Whether reporters of Local papers may
        be allowed to see the judgment?                    YES

     2. To be referred to the reporter or not?             YES

     3. Whether the judgment should be reported            YES
        in the Digest?


RAJIV SAHAI ENDLAW, J

1. The petitioner was a bidder for a tender floated by the

respondent for Polythene Insulated Jelly Filled Cables. As per the

terms and conditions of the tender, the eligible bidders were to be

allocated shares in the tendered quantity depending on their

respective vendor ratings. The said vendor ratings were to be

calculated on the basis of formula laid down in the tender.

2. M/s NICCO Corporation Limited was another bidder. Both the

petitioner and NICCO were found eligible. According to the

Arb.P.461/2007 Page no. 1 of 8 petitioner, the vendor rating of NICCO was altered by the respondent

contrary to the terms of the tender and subsequent to the date of the

issue of the tender and whereby the vendor rating of the petitioner

was adversely affected. The petitioner filed Civil Writ No. 5808/2001

in this court for quashing the purchase order issued by the

respondent to NICCO (impleaded as respondent No.4 in writ petition)

in excess of its correct vendor ratings. This court vide judgment

dated 29th April, 2004 in the said writ petition, inter alia, held as

under:

"14. ...........Therefore, the action of the respondents and in particular BSNL in altering the Delivery Rating based upon a 45-day extension period was not at all permissible in law. However, it was permissible for them to arrive at the calculations of Delivery Rating based on the 30-day extended period, such extension having already been granted much prior to the issuance of the NIT. This, as indicated above, is also an admitted position as clarified in the rejoinder filed by the petitioner.

15. Thus, in the facts and circumstances of the case it does appear that the Delivery Rating of the respondent No. 4 ought to have been calculated only on the basis of the 30-day extended period and not on the basis of a 45-day extension. According to the petitioner, if that were done then the petitioner would have retained its position as V- 1 and would have been entitled to 30% of the tender quantity. However, we are not going into these calculations which are required to be done by the respondents following the formulae laid down in the tender document and giving the benefit of the force majeure clause to the respondent No. 4 (NICCO) limited to the 30-day extension which was granted to the respondent No. 4 (NICCO) much prior to the issuance of the notice inviting tender. In this Court's order dated 9.10.2002 it is recorded that there are some supplies which are to be made for which no orders have been placed. On 16.12.2002 it is further recorded that "Statement made by the Counsel for the respondents at the Bar that though the requirement is there but no order will be placed, will continue till the next date". Thereafter, this matter has been adjourned from time-to- time and has been finally heard by us. From these interim orders, it is clear that there are some supplies which remain to be made under the tender in question.

Arb.P.461/2007 Page no. 2 of 8 Orders in respect thereof shall be placed after the respondents have recalculated the Delivery Rating of the respondent No. 4 (NICCO) as indicated above and consequently the relative Vendor Ratings of the petitioner and the respondent No. 4 (NICCO). If the petitioner is rated as V-1 then it shall be given the benefit in the balance supplies that are yet to be made. If after adjusting the balance amount the petitioner is still entitled to further supplies then it will be open to the petitioner to pursue its remedies against the respondents for compensation/damages that may be available to it in law."

3. The respondent is stated to have preferred a Special Leave

Petition against the aforesaid judgment and which is stated to have

been dismissed.

4. The respondent vide its letter dated 10th July, 2006, inter alia,

informed the petitioner as under:

"The case has been examined. With the approval of the competent authority Rs 20,000/- has already been paid as costs quantified by the Hon'ble High Court of Delhi vide this office sanction letter No.243-50/2001-MMS/P/186 dated 03.03.06. Your request of compensation asked for is not tenable in view of the direction of the Hon'ble Court."

5. The petitioner preferred another writ petition being

WP(C)18393/2006 in this court, challenging the vendor ratings

worked out by the respondent pursuant to the judgment dated 29 th

April, 2004. However, the said writ petition was withdrawn by the

petitioner on 11th December, 2006 after some arguments with liberty

to take appropriate civil remedies against the respondent and which

liberty was granted to the petitioner.

6. It is the admitted position that the tender leading to the

agreement of the respondent with the petitioner contained an

Arb.P.461/2007 Page no. 3 of 8 arbitration clause as under:

"In the event of any question, dispute or difference arising under this agreement or in connection therewith (except as to the matters, the decision to which is specifically provided under this agreement), the same shall be referred to the sole arbitration of the CMD, BSNL, New Delhi or in case his designation is changed or his office is abolished, then in such cases to the sole arbitrator of the officer for the time being entrusted (whether in addition to his own duties or otherwise) with the functions of the CMD, BSNL or by whatever designation such an officer may be called (hereinafter referred to as the said officer), and if the CMD, BSNL or the said officer is unable or unwilling to act as such, then to the sole arbitration of some other person appointed by the CMD, ABNL or the said officer. The agreement to appoint an arbitrator will be in accordance with the Arbitration and Conciliation Act 1996."

7. However, since by then no supplies remained to be made, the

petitioner wrote to the chairman of respondent on 30th June, 2007 for

appointment of an arbitrator to adjudicate the claims of the petitioner

for compensation. The respondent, however, vide its reply dated 17th

July, 2007 took a stand that the vendor ratings had been worked out

in terms of the order dated 29th April, 2004 and as per the new vendor

ratings also, the petitioner was not entitled to any further orders and,

therefore, the question of the petitioner being entitled to any

compensation did not arise; thus no further action (of appointment of

Arbitrator) was required. The petitioner, thereafter, filed the present

petition for appointment of an arbitrator.

8. The respondent has contested the petition pleading (i) that the

application is not maintainable owing to the petitioner having filed the

two writ petitions aforesaid prior thereto and with respect to the same

subject matter; (ii) that the tender was of the year 2001 and the

Arb.P.461/2007 Page no. 4 of 8 matter is now stale; (iii) that the respondent has in terms of the

direction of this court vide judgment dated 29th April, 2004 (supra)

worked out the vendor ratings again and as per the said vendor

ratings also, the petitioner was not found entitled to order for any

additional quantities and as such the question of the petitioner being

entitled to any compensation did not arise; (iv) that the disputes, if

any, between the parties stood adjudicated vide order dated 29th

April,2004 (supra).

9. The petitioner in rejoinder argues that the petitioner is

challenging the correctness of the vendor ratings worked out by the

respondent in pursuance to the order dated 29th April, 2004 and if the

vendor ratings were to be correctly worked out by the respondent in

terms of the said order, the petitioner would have been entitled to

order for additional quantities from the respondent and the

respondent having not placed the said order, the petitioner is entitled

to compensation from the respondent.

10. I have during the course of hearing inquired from the

counsel for the respondent if there was any clause in the agreement

that the vendor ratings worked out by the respondent were to be

binding on the petitioner or were not to be arbitrable or were

excepted from arbitration. The learned counsel for the respondent

has not been able to point out any clause of the agreement making the

decision of the respondent with respect to the vendor ratings binding

on the petitioner or excepting the same from the purview of

arbitration agreement between the parties. My attention was drawn

Arb.P.461/2007 Page no. 5 of 8 to clause 19.3.4 prescribing the formula for computing the said

ratings and which does not contain any such restriction. I had also

inquired from the learned counsel for the respondent whether it was

the case of the respondent that the claim was time barred; no

submissions were made on this aspect also. The letter dated 17 th July,

2007 of the respondent itself contains an admission that the

respondent had communicated the vendor ratings worked out in

terms of the order dated 29th April, 2004 to the petitioner vide its

letter dated 10th July, 2006 only. This court has in the judgment dated

29th April, 2004 (supra) not found the vendor ratings earlier done by

the respondent to be in accordance with the agreement. The

respondent was directed to re-calculate the vendor ratings of the

petitioner and M/s NICCO. This court further realizing that by the

time the said recalculation is done, no quantities may remain for

delivery, has also ordered that it will be then open to the petitioner to

pursue the remedy against the respondent for compensation/damages.

The petitioner by invoking arbitration is seeking to do that only. The

cause of action to the petitioner for recovering

compensation/damages could thus accrue to the petitioner only on the

respondent working out the new vendor ratings in terms of the said

order and which as aforesaid were communicated to the petitioner

only on 10th July, 2006. The petitioner immediately thereafter asked

for appointment of arbitrator and also filed the present petition well

within the period of three years. Thus, it cannot be said that the claim

is barred by time.

Arb.P.461/2007 Page no. 6 of 8

11. In the facts and circumstances aforesaid the plea of the

respondent of the matter being stale or being dead because of the

earlier writ proceedings is not tenable. The earlier vendor ratings of

the respondent were interfered by this court in the judgment dated

29th April, 2004 (supra). The said judgment itself reserved the right of

the petitioner to pursue the remedies for compensation/damages.

Thus it cannot be said that the claim of petitioner for compensation

was settled in CW 5808/2001. Similarly, though WP(C) 18393/2006

was filed by petitioner challenging the vendor ratings after the

judgment dated 29th April, 2004, but while dismissing the same as

withdrawn also, liberty was given to the petitioner to take civil

remedies. Thus, the matter is very much alive and cannot be

classified as dead or long barred within the meaning of para 39 of the

judgment of the constitution Bench of the Supreme Court in SBP &

Co v Patel Engineering Ltd and Another (2005) 8 SCC 618.

12. It was not for the Chairman of the respondent to become a

judge in his own cause and refuse to appoint arbitrator stating that no

further action was required. The petitioner has raised a dispute that

the vendor ratings were not calculated by the respondent in terms of

judgment dated 29th April, 2004 and that if the vendor ratings are

done as per said judgment, the petitioner would have been entitled to

make further supplies and is entitled to compensation in lieu thereof.

The respondent has admittedly failed to appoint the arbitrator not

only in spite of notice but also till date. The petitioner has thus

become entitled to appointment of an independent arbitrator. The

petitioner had proposed the names of Justice P.K. Bahri (Retd) or

Arb.P.461/2007 Page no. 7 of 8 Justice R.C. Chopra (Retd) as the arbitrators in the notices issued to

the respondent. I appoint Justice P.K. Bahri (Retd) as the sole

arbitrator. The arbitrator will fix his own fee in consultation with the

parties and the fee is to be borne equally by the parties subject to the

final award as to costs. A copy of this order be also forwarded to

Justice P.K. Bahri (Retd).

                                          RAJIV SAHAI ENDLAW
                                              (JUDGE)

August 01, 2008
M




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