Bhasin Sales Corporation v. Union of India

Judgment

1. In this petition filed under Articles 226/227 of the Constitution of India, the petitioner has prayed for issuance of a writ in the nature of certiorari for quashing the notice dated 4.12.1990 (Annexure P-1) and action of the respondent in cancelling the tender. Further, a direction be issued to the respondent to refer the matter to the Arbitrator before taking any further action.

2. Briefly the facts relevant for the decision of the controversy raised in the petition may be noticed. The respondent invited tenders from the manufactures of Vest Cotton, for the supply of Vest Cotton Plain Knit Bleached Round Neck with Short Sleeves in different sizes. C.M. Nos.7863-64 of 1996 & CWP No. 16422 of 1990 -2- In pursuance thereof, the petitioner applied on 20th May, 1988 and it being old supplier and the rate being lowest, the tender was allotted to it for supply of Vest Cotton, Plain Bleached Round Neck with Short Sleeves vide covering letter dated 20.5.1988 (Annexure P-2). The petitioner was informed about the acceptance of the tender along with schedule specifying the quantity and conditions of acceptance vide letter dated 20.7.1988 (Annexure P-3). In the different tenders filled by the petitioner, it was specifically mentioned that the Stores will be supplied at the rate of 20000 numbers per month after the date of

confirmation of approval of advance samples. The tender was opened on 2.6.1988 and the date of completion was 30.4.1989. The said tender was accepted after more than one and half months but the last date of completion was not changed. Clause 16 provides for sending two advance samples against each size to the Indent and the said clause was amended and it provided to send two advance samples in all and it fixed 20.9.1988 as last date of sending advance samples instead of the earlier date i.e. 19.8.1988. The petitioner send an advance sample on

19.8.1988 but it was confirmed vide letter dated 29.11.1988 in spite of the fact that the indentor approved the sample on 27.10.1988 whereas the date for supply was refixed upto 31.7.1989. The respondent wrote letter dated 30.1.1989 for the acceptance of the extended date for which the petitioner protested that the time period was not in proportion to delay and was not in accordance with the original tender. The respondent vide letter dated 27.2.1989 (Annexure P-6) ordered for an additional supply of quantity of 212064 numbers to which again the petitioner protested and the respondent wrote letter dated 27.4.1989 C.M. Nos.7863-64 of 1996 & CWP No. 16422 of 1990 -3- (Annexure P-7) to accept the amendment in Clause-16. The petitioner wrote letter dated 9.5.1989 pleading that the stores will be supplied at the rate of 20000 numbers per month after the approval of its advance samples and confirmed vide letter dated 29.11.1988 received on

6.12.1988. The advance sample of the petitioner has been found to be in order and the delivery period was refixed vide letter dated 12.12.1988 received on 20.12.1988. According to the petitioner, the delivery period according to the terms of the contract would have been 15.12.1989. The petitioner vide letter dated 27.12.1989 (Annexure P-9) for extension of delivery period for three months from the date of issue of amendment letter. The respondent did not extend the delivery period. Thereafter the petitioner made a representation to the respondent but instead of responding to the said representation, the respondent invited fresh tender. The petitioner also filled tender at the earlier old rates. The tender was allotted to another firm at about 50% higher rates than the rates quoted by the petitioner and the petitioner came to know the same only vide letter dated 4.12.1990 (Annexure P-1). Thereafter, the petitioner informed the respondent that quantity of 70000 numbers was ready and the remaining was under production and vide letter dated

28.1.1990, it asked the respondent to give some days time to enable the petitioner to arrange bank guarantee. But the respondent neither gave any reply regarding acceptance or declining to accept the tender filed by the petitioner. The petitioner received notice dated 4.12.1990 (Annexure P-1) apprising the petitioner that the respondent was likely to incur extra expenditure of Rs.6,26,204/- over and above contract prices as per defaulted contract. The respondent instead of referring the C.M. Nos.7863-64 of 1996 & CWP No. 16422 of 1990 -4- matter to the Arbitrator had issued notice (Annexure P-1) and was bent upon to deduct the alleged extra expenditure from the petitioner by stopping payment due to the respondent against other contracts. Hence, the present writ petition.

3. The averments made in the petition were controverted by the respondent by filing written statement. In the written statement different pleas were taken by the respondent.

4. This Court vide order dated 9.9.1991 on the consensus between the parties had referred the matter for arbitration. The said order reads as under:- “Counsel for the parties are agreed that the dispute be referred for arbitration. We order accordingly. The matter is referred to the Arbitrator named in the contract. Parties are directed to appear before the Arbitrator on 25.11.1991. The disputed amount may be released to the petitioner if petitioner furnishes a sufficient security to the satisfaction of Director General Supplies and Disposal, New Delhi for the reimbursement of the amount he is found liable to pay to the Union of India with 12% interest after the matter is decided by the Arbitrator.”

5. In pursuance of the aforesaid order, Shri R.N. Poddar was appointed as Arbitrator who had decided the lis between the parties vide award dated 24.1.1996. The petitioner filed objections under Sections 30 and 33 of the Arbitration and Conciliation Act, 1940 (in C.M. Nos.7863-64 of 1996 & CWP No. 16422 of 1990 -5- short “the Act”) to the said award vide Civil Misc. No. 7864 of 1996.

6. Learned counsel for the petitioner in view of judgment of the Hon'ble Supreme Court in M/s Guru Nanak Foundation v. M/s. Rattan Singh and Sons, AIR 1981 SC 2075 submitted that the objections to the award dated 24.1.1996 were maintainable before this Court. He, however, during the course of arguments pressed only objection No.(iv) which is to the following effect:- “(iv) That claim No.1 has been disallowed on the ground that the contract did not specify the gap between the approval of advance sample and date of delivery. Further, it was observed that the contract for delivery is not by instalments but stipulates the completion of delivery of the entire quantity by the date mentioned and held that the stand of the claimant that monthly instalment under the contract cannot exceed is not tenable. This approach of the Arbitrator is against the agreement itself which specifically provides a period in proportion to the quantity to be supplied and it was also the term of the contract that the bulk supply will be made after approval of the advance sample. The Arbitrator has fully misread the Agreement and documents on record. It is inherent in the contract that when the sample was not approved in time fixed for delay should be in proportion to the delay caused. This aspect has wholly been side tracked by the C.M. Nos.7863-64 of 1996 & CWP No. 16422 of 1990 -6- Arbitrator. It is well settled that when once Arbitrator has chosen to give a reasoned Award, it was incumbent upon him to discuss the whole matter and Court can examine the reasons in the Award.”

7. We have heard learned counsel for the petitioner and perused the record with his assistance.

8. Sections 30 and 33 of the Act deals with cases for setting aside of an award given by an Arbitrator. The said sections read thus:- “30. Grounds for setting aside award.-An award shall not be set aside except on one or more of the following grounds, namely:- (a) than an arbitrator or umpire has misconducted himself or the proceedings; (b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35; (c) that an award has been improperly procured or is otherwise invalid.” “33. Arbitration agreement or award to be contested by application.-Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court shall decide the question on affidavits: C.M. Nos.7863-64 of 1996 & CWP No. 16422 of 1990 -7- (a) the provisions of the Code of Civil Procedure, 1908 shall apply to all proceedings before the Court, and to all appeals, under this Act, and (b) the Court shall have, for the purpose of, and in relation to, arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relating to, any proceedings before the Court; Provided that nothing in clause (b) shall be taken to prejudice any power which may be vested in the arbitrator or umpire for making orders with respect to any of such matters.”

9. After carefully examining the matter with the able assistance of the learned counsel for the petitioner, we do not find any merit in the contention raised by him. Section 30 enumerates the grounds on which an award may be set aside. Learned counsel for the petitioner could not substantiate that the case of the petitioner falls under any of the grounds specified therein. He sought to challenge the award by urging that the award by the Arbitrator was bad on merits but even this contention is devoid of any merit. Moreover, a perusal of the award shows that the Arbitrator after examining the matter in detail and by giving cogent reasons had taken a possible view and denied the claim made by the petitioner.

10. In view of the above, we do not find any merit in the contention raised by the learned counsel for the petitioner. Accordingly, C.M. Nos.7863-64 of 1996 & CWP No. 16422 of 1990 -8- finding no merit in this writ petition as also the objections raised by the petitioner to the arbitral award, the same are dismissed. (AJAY KUMAR MITTAL) JUDGE July 5, 2010 (ADARSH KUMAR GOEL) JUDGE