Jeevan Engineering Works vs Union Of India
2010 Latest Caselaw 3061 Del

         *IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                 Date of decision: 2nd July, 2010.

+                              CS(OS)2666-A/1996

%

JEEVAN ENGINEERING WORKS                                         ..... Petitioner
                               Through:    Mr. Shiv Khorana, Advocate.

                                        Versus

UNION OF INDIA                                                   ..... Respondent
                               Through:     Mr. R.V. Sinha with Mr. A.S. Singh,
                                             Advocates.

CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.      Whether reporters of Local papers may               No
        be allowed to see the judgment?

2.      To be referred to the reporter or not?              No

3.      Whether the judgment should be reported             No
        in the Digest?

RAJIV SAHAI ENDLAW, J.

1. The objections filed by the petitioner vide I.A. No.4766/1997

under Sections 30 and 33 of the Arbitration Act, 1940, upon service of

notice of filing of the award, are for consideration. Disputes arose

between the parties out of a contract placed by the respondent on the

petitioner for supply of six diesel dumpers. It was inter alia a term of

the said contract that if the respondent was not satisfied, after trial of the

two dumpers to be supplied initially, it could foreclose the order for the

remaining four dumpers without any financial liability. The respondent,

prior to the expiry of the period of trial of the first two dumpers supplied,

called upon the petitioner to rectify certain defects found therein.

However, simultaneously the petitioner was also called upon to supply

the remaining four dumpers. It is the case of the respondent that the

petitioner failed to rectify the defects in the first two dumpers and also

failed to supply the remaining four dumpers within the stipulated time.

The petitioner though had dispatched the remaining four dumpers;

according to the respondent though it was not inclined to accept the

delivery of the remaining four dumpers for the reason of the delivery

having been offered after the stipulated period therefor but there being

no procedure of the railways for returning the consignment the delivery

of remaining four dumpers was accepted and the same were rebooked

with the railways to the petitioner. The petitioner however failed to take

the delivery of such four dumpers and the same were ultimately

reconsigned back to the respondent. It is not in dispute that thereafter

the four dumpers remained with the respondent.

2. The petitioner before the arbitrator made a claim of Rs.8043/-

towards the balance 5% price of the first two dumpers and of

Rs.3,21,705/- being the price of the remaining four dumpers, besides for

interest and costs of arbitration. The respondent made a counter claim of

Rs.1,59,625/- for expenses towards repair/rectification of the first two

dumpers which the petitioner had failed to carry out and of

Rs.1,13,406.35p towards the infructuous expenditure incurred in

consignment / re-consignment and freight charges incurred with respect

to the remaining four dumpers, besides for interest and costs.

3. The arbitrator appointed by the respondent has vide award

impugned in this proceeding, though held the petitioner entitled to

Rs.8043/- towards balance 5% price of two dumpers, allowed the same

to be adjusted out of the amount of Rs.1,59,625/- towards expenses on

repairs of the said two dumpers allowed to the respondent. The claim of

the petitioner for price of the remaining four dumpers has been

disallowed for the reason of the petitioner having tendered the delivery

thereof after the expiry of the period stipulated therefor and for the

reason of the petitioner having otherwise failed to perform its duties with

respect to the first two dumpers. The claim of the petitioner for interest

on Rs.8043/- has also been declined. The arbitrator has allowed both the

counter claims of the respondent subject to adjustment of Rs.8043/- as

aforesaid but has rejected the claim of the respondent for interest.

4. The objections to the award have also remained pending before

this Court for long. The usual issues were framed and evidence by

affidavit was ordered to be led thereon, even though the arbitrator's

record has been requisitioned. The counsels for the parties have been

heard.

5. The petitioner has in the objections also pleaded lack of

opportunity of being heard before the arbitrator. However, no arguments

were addressed on that aspect. The counsel for the petitioner during

hearing before this Court has contended that even though it is not in

dispute that the remaining four dumpers were also with the respondent,

the arbitrator has still denied the price thereof to the petitioner. It is also

contended that there was no evidence whatsoever before the arbitrator of

the respondent having incurred expense of Rs.1,59,625/- for repair /

rectification of first two dumpers or of Rs.1,13,406.35p in payment of

freight /consignment/re-consignment of the remaining four dumpers.

The award is also challenged on the ground of being without reasons

though required to be speaking. It is also contended that there was no

delay in delivery of the remaining four dumpers inasmuch as the same

were offered for inspection within the stipulated time. Holes are also

poked in the claim of Rs.1,13,406.35p by contending that for the same

distance, different freights are being claimed. It is also pointed out that

while in the communication dated 12th February, 1992 C-24 in the

arbitrator's record, the respondent has claimed only Rs.17,518/- towards

repairs of the first two dumpers but in the claim before the arbitrator the

amount was inflated to Rs.1,59,625/-. It is also urged that there was no

reason for the arbitrator to decline interest on 5% balance price of the

first two dumpers admittedly found due to the petitioner. It was argued

that the award is without any application of mind and liable to be set

aside.

6. The counsel for the respondent per contra contended that the

respondent is not liable for the price of the remaining four dumpers,

having already rejected the same and there is no error inviting

interference in the award.

7. Though the counsel for the petitioner has along with the written

arguments handed over, annexed a number of judgments but need is not

felt to deal with the same inasmuch as considering the long time which

has elapsed and the amounts involved and for the reasons stated

hereinbelow, and to hopefully put a quietus to the matter it is deemed

expedient to modify the award:

a. The award of Rs.1,59,625/- for repair/rectification of the

first two dumpers i.e. equal to the cost thereof is not found to be in

accordance with law. It defies logic that the price of repair/rectification

would be the same as the cost of the product. If that were to be so, the

respondent, instead of having the goods repaired/rectified ought to have

gone for new goods. It is unbelievable that the respondent would go

ahead with the work of repair/rectification without obtaining estimates

therefor. There is no commercial sense which is expected even from

government in spending the same amount as the cost / price of the goods

on repair/rectification.

b. It being not a dispute that notwithstanding rejection and to

and fro movement of the remaining four dumpers, before the

commencement of arbitration the possession thereof was with the

respondent only. The award does not record and it is not the case of the

respondent that before the arbitrator the respondent offered delivery of

the remaining four dumpers. The remaining four dumpers having

remained in the possession of the respondent and the arbitrator having

not made any award for return thereof to the petitioner, could not have

deprived the petitioner of the price of the said four dumpers.

8. For the aforesaid reasons it is deemed expedient to modify the

award as under:

a. The claim of the respondent of Rs.1,59,625/- for

repair/rectification of the first two dumpers is modified to that of

Rs.17,518/- claimed by the respondent in its communication

dated 12th February, 1992 C-24 in the arbitrator's record. There

being no other evidence before the arbitrator save for the claim

simplicitor, of the respondent of having incurred the remaining

amount, the claim of the respondent for remaining amount over

and above Rs.17,518/- is disallowed. Out of the said sum of

Rs.17,518/-, payable by the petitioner to the respondent, the

petitioner shall adjust Rs.8043/- being the 5% balance price of the

first two dumpers, due from respondent to petitioner.

b. Though the petitioner is found entitled to price of the remaining

four dumpers of Rs.3,21,705/- but subject to adjustment

therefrom of Rs.1,13,406.35p allowed in the award to the

respondent towards freight and cost of consignment/re-

consignment of the remaining four dumpers. In the entirety of

the facts and circumstances, no case for interference with the

award for the sum of Rs.1,13,406.35p in favour of the respondent

is made out. A perusal of the arbitration record does show that the

dispute between the parties with respect to the delivery of the

remaining four dumpers, acceptance of delivery/rejection was a

highly contentious one involving interpretation of

correspondence and the view taken by the arbitrator is not found

to be such which could not be a possible view from the entire

record. The view taken by the arbitrator being a possible view,

interference in exercise of power under Sections 30 and 33 of the

1940 Act is impermissible. The award for the said amount

cannot be said to be perverse or such which is de hors the record.

c. Thus, the respondent is liable to pay a total sum of

Rs.1,98,823.65p to the petitioner as under:

i) Towards cost / price of four dumpers. : Rs.3,21,705/-

          ii)    Towards 5% balance price / cost of
                 two dumpers.                              :    Rs.8,043/-
                                            A.     Total :      Rs. 3,29,748/-
          iii)   Less repair / rectification cost of two
                 dumpers.                                  :    Rs.17,518/-
          iv)    Less freight / consignment / reconsignment
                 cost of four dumpers.                     :   Rs.1,13,406.35p
                                            B.     Total :     Rs.1,30,924.35p
                    Balance i.e. A-B                       :   Rs.1,98,823.65p

d. I have also considered the question of interest. The award does

not grant any interest to either party. Considering the nature of

controversy it is not deemed appropriate to grant any interest

while modifying the award, also not in exercise of powers under

Section 29 of the 1940 Act.

9. The award, subject matter of the proceedings, is thus modified as

aforesaid with the direction to the respondent to pay to the petitioner the

sum of Rs.1,98,823.65p within eight weeks herefrom failing which the

same shall incur simple interest at 9% per annum. A decree in terms of

the modified award is also passed. However, the parties are left to bear

their own costs.

RAJIV SAHAI ENDLAW (JUDGE) 2nd July, 2010 M