Dda vs Cement Corporation Of India
2009 Latest Caselaw 3989 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

                                               Date of Reserve: September 01, 2009
                                                   Date of Order: October 05, 2009

+CS(OS) 1088/1994
%                                                                     05.10.2009
     DDA                                                       ...Plaintiff
     Through: Ms. Geeta Mehrotra, Advocate

        Versus

        Cement Corporation of India                          ...Respondent
        Through: Ms. Sunanda Roy, Advocate


        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 order, I shall dispose of the objections filed by DDA/ objector

against an award dated 12th October, 1993 passed by the sole arbitrator.

2. DDA had entered into a contract with respondent (Cement Corp. of

India) on 23rd December 1989. As per this contract, the supply was to be

made within six months from the 10th day of issuance of the contract. Two

qualities of cement, viz. Pozolana Portland Cement and Ordinary Portland

Cement were to be supplied by Cement Corporation of India to DDA at the

rates of Rs.1293 and Rs.1305 PMT respectively. The price was inclusive of

packaging charges and current taxes. However, if subsequent to date of

contract the taxes increased or decreased affecting the price, the same was

the liability of DDA and the price was to rise or fall accordingly. Respondent

did not supply the agreed quantity and the petitioner filed a claim against

respondent before the arbitrator in view of the arbitration clause that all

CS(OS) 1088 of 1994 DDA vs. Cement Corp. of India Page 1 Of 3 disputes between the parties were to be resolved through arbitration. The

first claim was in respect of levy of compensation of Rs.26,04,000/-. The

second claim was regarding risk purchase whereby DDA had claimed Rs.60

lac as difference in costs of material to be procured at the risk and costs of

respondent. The third claim was for Rs.20,000/- for expenditure incurred for

recalling the tender under R/P clause. The learned arbitrator allowed the first

claim of Rs.26,04,900/- which was the compensation levied by DDA under

clause 2 of the agreement. However, the learned arbitrator disallowed the

second and third claim on the ground that the claimant could have done risk

purchase only within the stipulated period and claimed the rate difference

prevalent during the supply period. The learned arbitrator observed that DDA

entered into an agreement with other party much after the supply period and

not at the market rate prevalent during the supply period therefore the

claimant was not entitled to the claim.

3. It is submitted by counsel for DDA that the claim no.1 was covered

under the excepted matter and the arbitrator passed this award in favour of

claimant DDA without jurisdiction and therefore the DDA had filed a suit for

this amount. Even otherwise, I do not find alleged clause 2 in the agreement

under which DDA could levy penalty in case of non delivery of cement. Since

counsel for DDA has stated that this part of award was covered under the

excepted matter, and DDA was not asking claim No.1 to be made rule of law,

this claim though allowed by the arbitrator shall not form part of the award.

4. As far as claim no.2 is concerned, I find nothing wrong with the award.

The delivery period as stated in the contract between the parties was only

two months and the first supply was to start within seven days of the

issuance. In case the delivery was not received within two months, DDA

CS(OS) 1088 of 1994 DDA vs. Cement Corp. of India Page 2 Of 3 would have procured cement from the market within this period at the price

prevalent during this period. The quotations on which reliance is placed by

DDA are not of this period. The delivery period ended in June, 1990. The

supply were stopped by CCI much prior to delivery period and the quotations

relied upon by the DDA were of February, 1991. The cement price used to

fluctuate during this period. DDA could have made purchase of cement only

during the supply period or immediately after the expiry of the supply period

in order to claim the price difference.

5. I also find that there is no clause in the contract between the parties

entitling DDA to do risk purchase at the cost of respondent and to claim price

difference. Rather the offer submitted by respondent specifically provides

that respondent was a wholly owned government enterprises and was

entitled to price preference of 10%. It was also specifically provided that the

risk purchase would not be applicable to respondent. The contract was

entered into between the parties in view of this offer of respondent. I consider

that the arbitrator rightly rejected the claims 2 and 3 raised by DDA.

6. Claim no.4 is in respect of cost of proceedings and interest. Since no

amount is payable under the award to DDA, DDA would not have been

entitled to costs of proceedings and interest. I, therefore, find no infirmity in

the award. The award except in respect of claim no.1, which comes under

excepted items, is hereby made a rule of the Court. The suit stands disposed

of.

October 05, 2009                                      SHIV NARAYAN DHINGRA J.
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