M/S Delhi Paper & Product Company ... vs Union Of India
2009 Latest Caselaw 2636 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                 Date of Reserve: July 10, 2009
                                                    Date of Order: July 15, 2009

+OMP 363/2009
%                                                                     15.07.2009
    M/s Delhi Paper & Product Company Ltd.                     ...Petitioner
    Through: Mr. Shiv Khorana, Advocate

       Versus

       Union of India                                         ...Respondent
       Through:


       JUSTICE SHIV NARAYAN DHINGRA

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

2.     To be referred to the reporter or not?

3.     Whether judgment should be reported in Digest?


       JUDGMENT

1. By this petition under Section 34 of the Arbitration & Conciliation Act,

1996 (for short, "the Act"), the petitioner has assailed the award dated 17th

February 2009 on the ground that the learned Arbitrator wrongly rejected the

claim of the petitioner on the ground that the store was offered by the

petitioner after the validity of the rate contract. It is submitted that a

concluded contract had come into operation between the petitioner and

respondent when respondent received the supply order on 11th October 2002

and offered to supply the material. The arbitrator should have held that a

concluded contract was there and hence should have awarded the claims of

the petitioner.

2. Brief facts relevant for the purpose of deciding this petition are that the

respondent had entered into a rate contract with the petitioner for delivery of

OMP 363/2009 M/s Delhi Paper & Product Company Ltd. v.UOI Page 1 Of 4 paper. This rate contract was valid from 14th August 2001 to 1st August 2002.

An official of the respondent dispatched a supply order for supply of material

under the rate contract on 5th October 2002 which was received by the

petitioner on11th October 2002. The letter /supply order though was

dispatched by respondent's official on 6th October 2002 but it was ante-dated

as 27th July 2002. After the petitioner received this supply order on 11 th

October 2002, the petitioner wrote to the respondent's department that the

material, as mentioned in the supply order, was ready for inspection.

However, respondent never inspected the material and instead extended the

delivery period up to 30th April 2003. Respondent vide another letter dated 2nd

July 2003 cancelled the RC on the ground that its validity had already expired

on 1st August 2002 and no delivery of material could be taken.

3. After this cancellation of RC, claimant protested and stated that it had

manufactured the store and suffered losses and invoked the arbitration

clause claiming loss of Rs.37 lac.

4. Learned Arbitrator observed that the rate contract was valid from 14th

August 2001 to 1st August 2002 and there was no contract for supply of stores

between the parties existing on 11th October 2002 i.e. after the expiry of the

rate contract and the arbitration clause also ceased to exist. There was no

valid and binding contract between the parties. The supply order did not

constitute any valid contract between the parties and therefore no claim

could be laid by claimant.

5. It is not disputed by petitioner that the rate contract entered into

between petitioner and respondent come to an end on 1st August 2002.

OMP 363/2009 M/s Delhi Paper & Product Company Ltd. v.UOI Page 2 Of 4 Through the petitioner has not placed on record the rate contract but the

general conditions of the rate contract of DG&SD provides a specific period up

to which requisition under the contract can be placed on the contractor and

this period was between 14th August 2001 and 1st August 2002. Another

clause (clause 5) of the rate contract specifically provided that a requisition

under the rate contract has to be so placed so as to reach the contractor on

or before the last date on currency of the rate contract. Thus, requisition on

the petitioner for supply of material had to reach the petitioner before 1st

August 2002. If any requisition reached the petitioner after 1 st August 2002,

that could not be said to be under the rate contract. In the present case, the

supply order/ requisition was dispatched on 5th October 2002, much after the

expiry of the rate contract and had reached the petitioner on 11 th October

2002. It is obvious that the rate contract was not in force at that time and had

already come to an end by afflux of time. The arbitration clause of the rate

contract had also come to an end. The supply order thus did not constitute a

contract under the rate contract. The respondent was therefore not obliged to

take any supply under the rate contract from petitioner and the cancellation

letter issued by respondent was merely an intimation of something which had

already happened i.e. rate contract having come to an end on 1 st August

2002.

6. The contention of the counsel of petitioner is that the supply order in

itself constituted a new contract and it was an offer made by respondent

which was duly accepted by the petitioner by writing a letter that the

petitioner was ready to supply the stores and the same should be inspected.

If the supply order is considered as a separate offer and letter of the

petitioner is considered as an acceptance even then petitioner has no case.

OMP 363/2009 M/s Delhi Paper & Product Company Ltd. v.UOI Page 3 Of 4 The supply order had no arbitration clause independent of rate contract. The

supply order only was a requisition of the goods and if the letter written by

petitioner was taken an acceptance, this would constitute a contract separate

from the rate contract having no arbitration clause. The petitioner in that

eventuality could not have invoked the arbitration clause and could not have

laid any claim before the arbitrator. The very fact that the petitioner invoked

the arbitration clause shows that the petitioner relied on the rate contract,

that expired on 1st August 2002. Since the rate contract had already come to

an end, no requisition could have been entertained by petitioner without

asking the respondent to renew the rate contract so that he could supply the

material. Since the rate contract was not renewed, no contract came into

force between petitioner and respondent and the award made by the learned

arbitrator is a valid award.

7. The petition is hereby dismissed. No orders as to costs.

July 15, 2009                                      SHIV NARAYAN DHINGRA J.
rd

OMP 363/2009 M/s Delhi Paper & Product Company Ltd. v.UOI Page 4 Of 4