M/S Automobile Corporation Of Goa ... vs M/S Delhi Transport Corporation
2010 Latest Caselaw 13 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          OMP No. 389/2001

                                                   6th January, 2010



M/S AUTOMOBILE CORPORATION OF GOA LTD.                           ...Petitioner

                           Through:     Ms. Surekha Raman, Advocate
              VERSUS

M/S DELHI TRANSPORT CORPORATION                                  ....Respondent

Through:

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

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

2. To be referred to the Reporter or not?

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

    %                            JUDGMENT (ORAL)

VALMIKI J.MEHTA, J

1. This is a petition under Section 34 of the Arbitration and Conciliation

Act, 1996, whereby the petitioner, who had agreed to supply and fix bus bodies

to the respondent, on the chassis supplied by the latter, is challenging the

Award dated 11.8.2001 of the sole Arbitrator.

2. I would take up the arguments qua each claim which has been very ably

urged by the counsel for the petitioner.

OMP 389/2001 Page 1

3. At the outset, the counsel for the petitioner has urged that the Award

decides issues which are beyond the scope of reference. I note that no such

objection was taken by the present petitioner before the Arbitrator that disputes

are beyond the scope of reference and hence cannot be arbitrated upon. In the

case titled as M/s Deconar Services Pvt. Ltd. Vs. National Thermal Power

Corporation being OMP No. 262/2000 decided on 16.12.2009, I have had an

occasion to consider two aspects which squarely applies to this case. The first

aspect is that an issue which has not been raised before the Arbitrator cannot be

raised for the first time before the Court. The second aspect, I have dealt with is

that as per the judgment of the Supreme Court reported as Inder Sain Mittal Vs.

Housing Board Haryana (2002)3SCC 175 once a person appears in the

arbitration proceedings and takes a chance of Award going in his favour, then,

he cannot turn around and raise an objection as to the jurisdiction of the

Arbitrator, once the Award is passed against him. Accordingly, on both these

counts I am unable to agree with the objection raised by the counsel for the

petitioner that the Award is beyond the scope of reference.

4. The first issue which has been urged pertains to Claim No.8. The issue

before the Arbitrator and the claim accordingly filed was that the

claimant/respondent was not entitled to the loose items of the bus chassis, and

which chassis was provided by the respondent to the petitioner after fitment

thereon of the bus bodies. Clause 14 of the contract dated 4.6.1998 in this

regard is relevant and the same reads as under:-

OMP 389/2001 Page 2 "The Contractor will have to return back the loose items/fitment supplied/provided on the chassis but not used in the fabrication of bus bodies to the Corporation alongwith the completed vehicles."

In view of Clause 14, it is therefore beyond any cavil that the loose items

of the chassis in fact belonged to the respondent and not to the petitioner. It is

not an issue that such loose items or chassis were not returned by the petitioner

to the respondent. These parts are of a huge amount of Rs.67,33,881/-. I see no

reason to interfere with the Award of the Arbitrator by which he has awarded

such an amount in case the petitioner does not return the necessary items within

15 days of the date of the issue of the Award. It is also not disputed that these

items have not been returned to the respondent within 15 days after passing of

the Award. The counsel for the petitioner has very strenuously urged that after

the contract dated 4.6.1998 was entered into between the parties, and which was

signed by both the parties, and pursuant to which the present petitioner acted in

terms thereof, the petitioner appears to have written certain letters whereby the

petitioner claimed that this Clause 14 was not found in the earlier contract dated

6.4.1998 and therefore, the petitioner should not be bound by the Clause 14.

This argument is, merely stated to be rejected, because once a contract, which is

a bilateral act, is entered into, then, no party, by an unilateral act can seek to,

alter the agreed terms and conditions of the contract. The only way in which a

bilateral contract can be altered is by an agreed novation of the same, and, I do

not find that there is any agreed novation, and nor is that the case of the counsel

OMP 389/2001 Page 3 for the petitioner, and which merely is, as stated above, that by writing letters,

the aforesaid Clause 14 would not apply. If I accept the contention of the

counsel for the petitioner, then, sanctity and solemnity of the final contractual

document can be whittled down by an unilateral act of writing of letters by a

party and surely which is not the legal position. Accordingly, I do not find any

merit with respect to the challenge to Claim No.8.

5. The next objection which has been taken up was with respect to grant of

liquidated damages under Claim No.1 to the respondent by the Arbitrator. The

liquidated damages have been granted at Rs.400 per bus per day. The counsel

for the petitioner canvassed that as per para 11 (ii) of the terms and conditions

of the tender, it is the date of inspection which is a date of delivery and since

inspections have been done before the scheduled/prescribed dates under the

contract therefore it should be held that there is no delay in the supply by the

petitioner to the respondent. The said clause relied upon by the counsel for the

petitioner reads as under:-

"ii) For the purpose of this clause delivery of the completed bus shall be treated as having been effected on the date on which the inspection is carried out. The mere fact that the buses may be made ready for inspection shall not be considered as completion of delivery unless delay in arranging inspection is caused by the Corporation."

Once again a reference to the written statement filed by the

petitioner before the Arbitrator does not show that such an objection in this

manner has been taken before the Arbitrator that merely on inspection, the

OMP 389/2001 Page 4 delivery stands completed. Even assuming this to be so, this argument has no

legs to stand upon because this clause is with reference to the subject matter that

if the respondent delayed inspection, then, delay in delivery should not be

attributable to the petitioner. This is clear from a reading of the complete

paragraph in question. In any case, it is not the stand of the petitioner that

actual deliveries were made to the respondent before the prescribed/scheduled

dates as per para iii (running page 10) of the contract by which the buses were

to be delivered in lots every 30 days and the last lot in the fortnight after the

penultimate delivery. I may state that though the counsel for the petitioner

obviously did not refer to Clause 11, this clause of the contract is indeed

relevant because it prescribes that both delivery and inspection have to be at

Delhi and not at Goa as was sought to be contended by the counsel for the

petitioner. The aforesaid para 11 of the Contract dated 4.6.1998 reads as

under:-

"11. The final inspection of the completed bus body/bodies be done at Delhi before effecting delivery of the completed vehicle at Central Workshop-1, of the Corporation at B.B.Marg, Delhi-9. In case, any defects/deficiencies/discrepancies are observed after the receipt of vehicle at DTC Delhi, the same shall be removed by DTC at your cost without giving any notice."

In any case, the Arbitrator is the final fact finding authority and I

do not find any perversity whatsoever in the approach of the Arbitrator for this

court to interfere within the parameters of the law under Section 34. Though,

only the view as taken by the Arbitrator is correct that the deliveries were not

OMP 389/2001 Page 5 done by the prescribed dates and hence liquidated damages were payable, even

assuming for the sake of argument, if I accept the contention of the counsel for

the petitioner, yet the objections have to fail, because, the Arbitrator can take

one plausible view, and which if done, the court is not entitled to interfere

with the Award merely because an alternate view can also be canvassed.

Therefore objection with respect to Claim no.1 is also accordingly rejected.

6. Claim Nos. 2 and 3 awarded by the Arbitrator are basically towards

defects and deficiencies in the bus bodies supplied by the petitioner. The

Arbitrator has arrived at a finding of fact that there were defects and

deficiencies. This finding of fact has been arrived at by the Arbitrator by

noticing that the defects and deficiencies were observed at the time of final

inspection carried out in the presence of the representatives of the present

petitioner. The Arbitrator has also referred to relevant reports which have been

countersigned by the representatives of the present petitioner and which show

the agreed defects observed by the inspecting team. Further, the Arbitrator has

referred to the various test reports of a Government Lab.Test House and the

bills for payment with respect to getting the material tested and also for the

replacement of the substandard material used in the bus bodies fabricated by the

present petitioner. The Arbitrator has therefore, allowed 50/70% of the amount

as claimed by the respondent.

I may note that the Arbitrator has for no apparent reason reduced the total

claim by 30/50%, which logic is not understood, however, since there are no

OMP 389/2001 Page 6 objections filed by the respondent, the Award in this regard has to stand. While

so observing, I may also note that even with respect to Claim No.1 where

liquidated damages have been awarded by the Arbitrator, he has only awarded

50% of the liquidated damages without giving any reasoning. Once again since

there are no objections by the respondent to the Award, this Court can do

nothing except sustaining the Award with respect to 50% of the amount

awarded.

Accordingly, there cannot be any valid basis for challenge to Claim Nos.

2 and 3 as awarded for the defects and deficiencies in the bus bodies as supplied

by the petitioner to the respondent.

7. The next Claim No.4 is with respect to the warranty period defects. The

counsel for the petitioner argued that when delivery of the buses was taken, no

such defects were pointed out. I have completely failed to understand this

argument. A warranty clause is with respect to warranty against defects if the

goods are used and not when the goods are taken in a brand new condition from

a supplier. Not only this, the Arbitrator has referred to, in this regard the four

letters written by the respondent to the petitioner whereby the petitioner was

asked to come and rectify the defects but the petitioner failed to do so. Once

again while awarding this claim, I may note that the Arbitrator has awarded

only 50% amount claimed by the DTC, though once again without any rationale

whatsoever, but since as stated above, there are no objections of the DTC

OMP 389/2001 Page 7 nothing can be done except sustaining 50% of the amount awarded under this

claim.

8. In view of the above, I do not find any merit whatsoever in this petition

which is dismissed, leaving the parties to bear their own costs. Let a copy of this

judgment be sent to the Chairman of the DTC, to bring to his notice the

negligent lack of representation on behalf of the respondent during the hearings

of the objections.

                                                        VALMIKI J.MEHTA, J


January 06, 2010
ib




OMP 389/2001                                                                 Page 8