H. M. Kamaluddin Ansari And Company: Shankar Vijay Saw Mills vs Union Of India

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1983 Supreme(SC) 220

SUPREME COURT OF INDIA
D.A. DESAI, V. BALAKRISHNA ERADI AND R.B. MISRA, JJ.
M/s. H. M. Kamaluddin Ansari and Co., Appellant
Versus
Union of India and others, Respondents.
Civil Appeals Nos. 2853 and 2863 of 1982
Decided on 2-8-1983.
AND
Shankar Vijay Saw Mills, Appellant
Versus
Union of India and others, Respondents.
M/s. D. C. Singhania, Raju Ramachandran, Mukul Mudgal, J. P. Gupta, Advocates (in C. A. No. 2853/82) and 30 Mr. S. N. Kacker, Sr. Advocate, M/s. D. C. Singhania, Raju Ramachandran, Mukul Mudgal, J. P. Gupta, advocates (in C. A. No. 2863/82), for Appellants; Mr. K. G. Bhagat, A. S. G. (in C. A. No. 2853/82) and M/s. Girish Chandra, C. V. Subba Rao and R. N. Poddar, Advocates (in C. A. No. 2863/82), for Respondents.

Advocates:
C.V.SUBBA RAO, D.C.SINGHANIA, GIRISH CHANDRA, J.P.Gupta, K.G.Bhagat, Mukul Mudgal, R.N.Poddar, RAJU RAMACHANDRAN, S.N.KACKAR

Headnote:
Arbitration Act - Section 33 and 41 - Appellant in this appeal is a registered firm and carries an business of manufacturing and selling timber - Director General of Supplies and Disposals (for short DGS & D) functions as a purchase organisation for Government of India and makes purchases for various departments - In response to an invitation for tender by DGS & D for supply of Bijasal logs first class appellant firm made an offer to supply 1016 cubic metres at a flat rate per cubic metre - DGS &, D accepted tender - Pursuant to acceptance of tender a standard form of contract was drawn up containing various clauses - Whenever any claim for payment of a sum of money arises out of or under contract against, contractor, purchaser shall be entitled to recover such sum by appropriating in whole or in part, security, if any, deposited by contractor - Whether such an injunction as prayed for could be issued under Section 41 of Arbitration Act learned single judge referred matter to a larger Bench - Whether any amounts were payable by appellant to respondent under other contracts was not subject matter of arbitration proceedings -Whether appellant is liable to pay such amounts to respondent or not – Held, Court could grant an injunction restraining respondent from appropriating or recovering amount of damages claimed from appellants other pending bills, but no order restraining Union of India from with holding payments of other pending bills could be issued - Court obviously could not, therefore, make an interim order which, though ostensibly in form an order of interim injunction, in substance amounted to a direction to appellant to pay amounts due to respondent under other contracts - Such an interim order would clearly not be for purpose of or in relation to arbitration proceedings as required - Power of Court under S. 41 (b) because claim for damages forms subject-matter of arbitration proceedings and Court can always say that until such claim is adjudicated upon, appellant shall be restrained from recovering it by appropriating other amounts due to respondent - Court are clearly of view that an injunction order restraining respondents from withholding amount due under other pending bills to contractor virtually amounts to a direction to pay amount to contractor-appellant - Such an order was clearly beyond purview of Clause (b) of Section 41 of the Arbitration Act - Union of India has no objection to giant of an injunction restraining it from recovering or appropriating amount lying with it in respect of other claims of contractor towards its claim for damages - Appeals dismissed.

JUDGMENT

MISRA, J.:—These two connected appeals by special leave are directed against the judgment and order of the Allahabad High Court* and Delhi High Cour## dated 24th January, 1980 and 13th November, 1979 respectively. The first one arises out of proceedings under Section 20 of the Arbitration Act while the other arises out of proceedings under Section 33 of the Arbitration Act. Reported in AIR 1980 All 312.##Reported in (1980) 17 Delhi LT 179.

2. These appeals raise a common question regarding the interpretation of Clause 18 of the general conditions of contract contained in the standard form of contract entered into by the parties and the ambit and scope of Section 41 of the Arbitration Act. The facts giving rise to these appeals follow a common pattern and it would, therefore, be sufficient if we set out the facts relating to Civil Appeal No. 2863 of 1982 to bring out clearly the points which arise for consideration in these appeals.

3. The appellant in this appeal is a registered firm and carries an the business of manufacturing and selling timber. The Director General of Supplies and Disposals (for short DGS & D) functions as a purchase organisation for the Government of India and makes purchases for various departments. In response to an invitation for tender by the DGS & D for the supply of Bijasal logs first class the appellant firm made an offer to supply 1016 cubic metres at a flat rate of Rs. 669/- per cubic metre. The DGS &, D accepted the tender on 24th of December, 1973. Pursuant to the acceptance of the tender a standard form of contract was drawn up containing various clauses. Two important clauses of that standard form of contract with which we are mainly concerned are Clauses 18 and 24, which read :

"18. Recovery of Sums Due : Whenever any claim for the payment of a sum of money arises out of or under the contract against, the contractor, the purchaser shall be entitled to recover such sum by appropriating in whole or in part, the security, if any, deposited by the contractor, and for the purpose aforesaid, shall be entitled to sell and/ or realise securities forming the whole or part of any such security deposit. In the event of the security being insufficient, the balance and if no security has been taken from the contractor, the entire sum recoverable shall be recovered by appropriating any sum then due or which at any time thereafter may become due to the contractor under the contract or any other contract with the purchaser or the Government or any person contracting through the Secretary. If such sum even be not sufficient to cover the full amount recoverable, the contractor shall an demand pay to the purchaser the balance remaining due............."

24. Arbitration : In the event of any question, dispute or difference arising under these canditions or any special conditions of contract, or in connection with this contract (except as to any matters the decision of which is specially provided for by these or the special conditions) the same shall be referred to the sole arbitration of any officer in the Ministry of Law, appointed to be the arbitrator by, the Director General of Supplies and Disposals. It will be no objection that the arbitrator is a Government servant, that he had to deal with the matters to which the contract relates or that in the course of we duties as a Government servant he has expressed views an all or any of the matters in dispute or difference. The award of the arbitrator shall be final and binding on the parties to this contract. "

4. The appellant, however, failed to supply the books. The contract was cancelled an 28th of August, 1974 at the risk and cast of the appellant The DGS & D claims to have made risk purchases incurring an extra cost of Rupees 92,364/-. By notice dated 27th December, 1974 the DGS & D called upon the appellant to pay that amount failing which alternative arrangements would be made to recover the same.

5. It appears that there were some other contracts betw

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1983 Supreme(SC) 220

Cases Referred (2)