Judgement

RAMASWAMI, J. : These appeals are brought by certificate from the judgment of the Calcutta High Court, dated August 1, 1962 in Appeals Nos. 32 and 132 of 1961 by which the High Court allowed the appeals against the Union of India (hereinafter called the appellant ) in part and modified the award of the arbitrator and the judgment of Mallick, J.

2. The disputes relate to 3 contracts for the supply of bedsteads by the respondent - Bungo Steel Furniture Pvt. Ltd - (hereinafter called the Company ) to the appellant, namely, contract No. A.T. 3116 for the supply of 17202 bedsteads, contract No. A.T. 767 for the supply of 30,000 bedsteads and contract No. A. T. 816 for the supply of 7,000 bedsteads. Each of these contracts contained the usual arbitration clause embodied in Cl. 21 of the general conditions of contract in form No. W.S.B. 133. The disputes arising between the Company and the appellant out of the three contracts were referred to the arbitration of Sir Rupen Mitter. The award of the arbitrator is, dated September 2, 1959. The arbitrator found that the Company was entitled to be credited with the sum of Rupees 11,64,423 on account of the price (inclusive of the price of steel) of the bedsteads supplied under the three contracts made up of (a) a sum of Rs. 4,12,848 for the price of 17,202 bedsteads supplied under contract No. A.T. 3116 at Rs. 24 per bedstead, (b) Rs. 7,05,000 for the price of 30,000 bedsteads supplied under contract No. A.T. 767 at Rs. 23-8-0 per bedstead and (c) Rs. 46,575 for the price of 2,025 bedsteads supplied under contract No. A.T. 816. The appellant undertook to supply the requisite steel at basic rates and the price of steel so supplied was payable by the Company on presentation of material release orders called M.R.Os . The arbitrator found that the Company was entitled to a credit for Rs. 3,42,737 for payment on M.R.Os. for the price of steel and the appellant was entitled to credits for Rs. 29,188 on account of railway freight and transport charges, for Rs. 9,7l,030 on account of payments made to the Company directly and for Rupees 4,95,060 on account of price of steel supplied to the Company. The arbitrator also found that the appellant had deducted Rs. 3,57,500 from bills of the company on account of the price of steel and upon that finding the arbitrator subtracted the sum of Rs. 3,57,500 from the price of steel credited to the appellant.

3. The appellant thereafter applied to the Calcutta High Court for setting aside the award or the ground that there was an error of law apparent on the face of the award and the arbitrator had also exceeded his authority in awarding interest. The application was dismissed by Mallick, J. by his judgment, dated July 27, 1960 and a decree was granted to the Company on the basis of the award. The appellant preferred two appeals to the High Court from the judgment of Mallick, J., namely, Appeals Nos. 32 and 132 of 1961 These appeals were heard by the Division Bench consisting of Bachawat and Laik, JJ. who allowed the appeal in part and reduced the principal amount adjudged to be payable under the award by Rs. 30,970 and modified the award accordingly.

4. The first question to be considered in these appeals is whether the arbitrator committed an error of law in holding that the appellant had deducted Rs. 3,57,500 from the bills of the Company with regard to contract other than the three contracts of bedsteads which are the subject-matter of the present case, and whether the arbitrator could subtract the aforesaid amount of Rs. 3,57,500 from the price of steel credited to the appellant. On behalf of the appellant it was contended by Mr. Bindra that the deduction of Rs. 3,57,500 had been made from the bills submitted by the Company for the price of the bedsteads supplied under the three contracts Nos. A.T. 3116, A.T. No. 767 and A.T. 816 and the arbitrator should not have debited the appellant with this amount. It is not possible for us to accept this argu