Madras High Court
M/S.Bridge Track And Tower Pvt Ltd vs Union Of India Through Pcr/Sr on 28 January, 2025
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
O.S.A. (CAD) No.152 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 28.01.2025
CORAM :
THE HON'BLEMR.K.R.SHRIRAM, CHIEF JUSTICE
AND
THE HON'BLEMR.JUSTICE SENTHILKUMARRAMAMOORTHY
OSA(CAD) No. 152 of 2024
M/s.Bridge Track And Tower Pvt Ltd.
Rep.by its Authorized Signatory Legal Manager,
Chandranath Bhattacharya, 18, R.N.Mukherjee Road,
6th Floor, Kolkata-700 001. .. Appellant
-vs-
Union of India through PCR/SR,
Rep. by Dy.CE/TP/HQ, PCE Office,
Southern Railways, Park Town,
Chennai 600 003. .. Respondent
Prayer : Appeal filed under Section 13(1A) of the Commercial Courts Act,
20156, against the fair and decretal order dated 15.07.2022 passed in Arb.
O.P. (Comm. Div.) No.319 of 2022 on the file of original side of this Court.
For Appellant : Ms.Ramya Subramaniam
for Mr.Hitesh Singhvi
For Respondent : Mr.AR.L.Sundaresan,
Additional Solicitor General of India
Assisted by Mr.N.Ramesh,
Senior Panel Standing Counsel.
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O.S.A. (CAD) No.152 of 2024
JUDGMENT
(Judgment of the Court was delivered by
Senthilkumar Ramamoorthy, J.)
The appellant entered into a contract with the respondent for supply
of 6400 MM OR switches (curved) for BG 1 in 80.5-52 Kg rail on PSC
sleepers. These goods were required to be manufactured as per drawings
provided by the respondent. The contract also specified the delivery
schedule. The original contract contained a Price Variation Clause, which
was fixed on the basis of the Wholesale Price Index (WPI) 2004-05 series
published by the Ministry of Commerce. With effect from 01.04.2017, it is
common ground that the Ministry of Commerce stopped publishing the WPI
2004-05 series and instead started publishing WPI 2011-12 series. The
appellant received a communication dated 18.11.2017 from the respondent
informing the appellant about the replacement of the 2004-05 series with
the 2011-12 series and stated that the price variation formula is required to
be modified accordingly. By communications dated 01.12.2017 and
07.02.2018, the appellant objected to the change in price variation formula
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and, instead, requested the respondent to short-close the contract. By
communication dated 23.07.2018, the respondent terminated the contract
and forfeited the security deposit provided in the form of a bank guarantee.
This resulted in a dispute between the parties.
2. At the request of the appellant, a Sole Arbitrator was appointed in
accordance with the arbitration clause specified in the Indian Railway
Standing Conditions of Contract. Pursuant to the appointment of the
Arbitrator, the appellant lodged the statement of claim on 20.08.2021. In
the said statement of claim, the appellant prayed for refund of a sum of
Rs.15 lakhs, which had been withheld by the respondent. In addition,
claims were made towards damages for unnecessary harassment and loss of
reputation. The appellant also prayed for a declaration that the termination
by the respondent was illegal, unlawful and untenable.
3. The Arbitral Tribunal considered these claims and by the Arbitral
Award dated 27.12.2021 held that the termination was lawful and rejected
all the monetary claims of the appellant. The award was challenged by the
appellant in a petition under Section 34 of the Arbitration and Conciliation
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Act, 1996 before a learned Single Judge of this Court. The challenge was
rejected by order dated 15.07.2022. The present appeal arises in the said
facts and circumstances.
4. Learned counsel for the appellant raised three grounds of
challenge. The first ground of challenge was that the constitution of the
Arbitral Tribunal was unlawful inasmuch as it was an unilateral
appointment in contravention of the principles laid down in Perkins
Eastman Architects DPC and another vs. HSCC (India) Ltd., (2019 SCC
OnLine SC 1517) and TRF Limited vs. Energo Engineering Projects Ltd.,
(2017) 8 SCC 377 . The second ground of challenge was that the
respondent unilaterally altered the price variation formula in spite of
objections raised by the appellant, inter alia, under communications dated
01.12.2017 and 07.02.2018. The third ground of challenge was that the
Arbitral Tribunal disregarded the evidence adduced by the appellant with
regard to the delay being attributable to the respondent and not the
appellant.
5. These contentions were refuted by the learned Additional Solicitor
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General, who appeared for the respondent. He contended that the
appellant had submitted itself to the jurisdiction of the Arbitral Tribunal by
accepting the appointment and filing a claim statement and rejoinder
statement before the Arbitral Tribunal. As regards the price variation
clause, learned Additional Solicitor General submitted that the appellant
consented to the modified price variation formula by issuing an invoice on
the basis of the revised price variation formula on 24.04.2018. In any
event, he contends that the original price variation clause was only valid
until the expiry of the original term of contract, i.e., up to October, 2017.
He also submitted that the amounts claimed by the appellant towards price
variation were paid to the appellant by applying the modified formula. He
also pointed out that no monetary claim was made in respect thereof before
the Arbitral Tribunal. As regards the conclusion on termination, learned
Additional Solicitor General submitted that such conclusion was based on
an appraisal of evidence.
6. The first issue that falls for consideration is with regard to the
unilateral appointment. The appellant has placed on record the pleadings
before the Arbitral Tribunal. The appellant filed its statement of claim and
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rejoinder. In neither of these pleadings, the appellant raised any objections
with regard to jurisdiction. Consequently, in the award, the Arbitral
Tribunal recorded as under with regard to jurisdiction:
"3.2. Both the parties confirmed that they had no
objection against appointment of the AT and during the course
of the Arbitral Proceedings, none of the parties, at any time,
raised any doubt/question about the ability, independence and
impartiality of the Arbitrator."
The award further records the following:
"4.0. Jurisdiction of the Arbitral Tribunal
4.1. None of the parties raised any objection on the
jurisdiction or the Arbitral Tribunal is exceeding
the scope of its authority during the arbitral
proceedings. No application was moved by any
Party under Section 16 of the Act.
4.2. Whereas the AT entered into reference on
09.07.2021 with the issue of Arbitration
Notification No.01, duly briefing the procedure to
be adopted by AT for conducting Arbitration as
per Section 19 of the Act and also laid down the
timelines for submitting Statement of Claims
(SOC) by Claimant, State of Defence (SOD) by
Respondent and Rejoinder by the Claimant."
After taking note of the above facts, the learned Single Judge concluded
that it is not open to the appellant to raise objections on the ground of
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unilateral appointment after participating in the arbitral proceedings,
without raising any objection with regard to the constitution of such
Tribunal. In this connection, reference may be made to a recent judgment
of this Court in V.R.Dakshin Private Limited, by its authority vs. SCM
Silks Private Limited, by its Director and others, reported in 2024 SCC
OnLine Madras 6761 , wherein, in substantially similar facts and
circumstances, we rejected the challenge on the basis of unilateral
appointment. It should also be noted that the SLP challenging the said
judgment was dismissed by order dated 16.12.2024 in Special Leave to
Appeal (Civil) Nos.30047-30048 of 2024. Therefore, we concur with the
conclusion arrived at by the learned Single Judge in this regard.
7. As regards the price variation formula, the first aspect to be noticed
is that the appellant did not make any monetary claim in respect thereof. In
addition, it should be noticed that the Arbitral Tribunal examined the
evidence by way of invoices issued by the appellant and recorded the factual
finding that the appellant had issued invoice dated 24.04.2018 based on the
WPI 2011-12 series and that this would tantamount to acceptance of the
revised series. The Arbitral Tribunal also calculated the amounts due and
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payable towards price variation under the old and new indices and recorded
a factual finding that the variation is negligible.
8. The last issue to be considered is whether interference is warranted
with the conclusion that the termination by the respondent was valid. On
this issue, after examining the evidence adduced by the parties, the Arbitral
Tribunal recorded the factual finding that the rails were received by the
claimant/appellant on 16.08.2017 and 05.09.2017, but 14 sets were
supplied by the appellant between 27.02.2018 and 04.03.2018. On the
basis of this factual finding, the Arbitral Tribunal recorded that the
contention of the claimant/appellant that the delay was attributable to the
respondent cannot be accepted. The relevant findings are set out below:
8.1.3.5 AT noted that the claimant supplied only 35 sets
within original delivery period and further 14 sets
supplied between 27.02.18 to 04.03.18 though the
rails received by the claimant on 16.08.17 &
05.09.17, which proves that the claimant had
breach the contract by delaying the supplies. The
Claimant insistence for short closure of agreement
for balance quantity inspite of delay in submitting
the BG for free rails by them and delay in supply
of 14 sets by them inspite of receiving the rails in
August 2017 hold no water rather it proved that
they are unable to manufacture intime due
holding more orders than their capacity. In view of
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above, AT is of the considered view that the
claimant failed to supply the material as per
contract agreement and breached the contract
hence AT dismiss the claim of the claimant and
considered the termination order issued by the
Respondent as legally valid and as per terms &
conditions of the contract agreement."
In matters relating to appraisal of evidence, the settled position is that this
Court does not sit in appeal over the award and, therefore, re-appraisal of
evidence is not permissible. The appellant has failed to establish that there
was perversity in the appraisal of evidence either because the award is
based entirely on irrelevant evidence or no evidence or by disregarding vital
evidence.
9. For reasons set out above, we find no infirmity in the impugned
order dated 15.07.2022 or the Arbitral Award dated 27.12.2021. Hence,
O.S.A. (CAD) No.152 of 2024 is dismissed, without any order as to costs.
(K.R.SHRIRAM., CJ.) (SENTHILKUMARRAMAMOORTHY, J.)
28.01.2025
Index : Yes/No
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NC : Yes/No
sra
THE HON'BLE CHIEF JUSTICE
AND
SENTHILKUMAR RAMAMOORTHY,J.
(sra)
To:
The Section Officer
Records Section, Original Side,
Madras High Court, Chennai.
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28.01.2025
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