Back
SUPREME COURT OF INDIA
K.Ramaswamy : N.M.Kasliwal
India Meters Limited, Madras
Versus
Punjab State Electricity Board
Case No. : 3496 of 1992
Date of Decision : 9/2/92
Advocates Appeared: Anand H.S. : Anand Hardeep Singh : Madan Arun : Nariman R.F. : Rekha V.S. : Singh Sarup
Arbitration Act - Section 33 - Electricity Board - Board had appointment - Communication sent purchase order cum contract for supply meters In this purchase order no reference was made to terms and conditions of payment and inability to furnish bank guarantee by appellant- In clause of purchase order Board further mentioned that meters supplied by appellant would be accepted subject to furnishing of samples - In clause it was mentioned that disputes if any would be referred to sole arbitration of nominee of Board - Appellant by letter informed Board that samples had already been sent and that fresh samples could not be insisted upon and called upon Board to send their acceptance offer made by appellant on basis of terms laid down by appellant - Board by its letter sent reply stating that exemption from bank guarantee was not acceptable to them and called upon appellant to send samples again – Held, Superintending Engineer also by another letter informed appellant that samples may please be got approved from their office before commencing supply as mentioned clause of purchase order- Appellant then vide their letter addressed to Chief Engineer again took stand that appellant factory was under revival and had been declared as relief undertaking by government of Tamil Nadu and that they had conveyed their acceptance to furnish permanent bank guarantee for value of rupees one towards per cent payment and security deposit- It was further mentioned that in absence of concurrence on above condition appellant was not in position to take any further action in tender and production planning has been dropped - As regards supply of sample meters appellant reiterated its earlier stand - Thereafter Board did not make any further correspondence nor agreed to counter offer made by appellant in respect furnishing of bank guarantee and sending samples and Board resorted to enforcement of arbitration clause and appointed respondent as an arbitrator - court have taken into consideration entire correspondence made between parties referred to above and court are clearly view that there was no concluded contract between parties and as such respondent Board was not entitled to enforce arbitration clause - High court was not correct in holding that subsequent correspondence regarding security deposit mode of payment and samples were merely consequential steps taken in furtherance of implementation of contract and contract already stood concluded between parties - Mode of payment which included furnishing of bank guarantee was an important term and condition of contract as well as furnishing of samples - Appellant in its offer made vide their first letter had clearly put their own terms and conditions as regards furnishing of bank guarantee and Board never concurred on those terms rather in their letter clearly turned down request of appellant - Thus there was no concluded contract between parties - It is not disputed that appellant at relevant time was sick unit and steps were being taken to revive same through Bharat Heavy Electricals Limited government of India undertaking and in those circumstances if appellant was insisting on being given exemption from furnishing bank guarantee it cannot be said that its action was unjustified - Thus in circumstances mentioned above court do not agree with view taken by High court – Appeal allowed
Judgment
N.M.KASLIWAL, J.
(1) SPECIAL leave granted.
(2) THIS appeal by M/s India Meters Ltd., hereinafter referred to as the appellant is directed against the judgment of the High court of Judicature at Madras dated 23/04/1991.
(3) THE Punjab State Electricity Board issued a tender notice by publication in the newspaper Indian Express dated 24/02/1978 inviting sealed tenders for supply of house service electricity meters and Amps. The appellant offered to supply their standard meter type OB-7 and stipulated their own terms of payment and indicated that they would not submit a bank guarantee as demanded in the tender notice. The appellant also sent a telegram on 3/06/1978 reiterating the offer to supply the meters, keeping all their terms and conditions unaltered.
(4) THE Board vide their communication dated 27/07/1978 sent a purchase order-cum-contract for supply of 75,000.00 meters. In this purchase order no reference was made to the terms and conditions of payment and the inability to furnish bank guarantee by the appellant. In clause (20 of the purchase order the Board further mentioned that the meters supplied by the appellant would be accepted subject to the furnishing of samples. In clause (26 it was mentioned that disputes, if any, would be referred to the sole arbitration of a nominee of the Board. The appellant by letter dated 19/08/1978 informed the Board that samples had already been sent, and that fresh samples could not be insisted upon, and called upon the Board to send their acceptance of the offer made by the appellant on the basis of the terms laid down by the appellant. The Board by its letter dated 30/08/1978 sent a reply stating that exemption from bank guarantee was not acceptable to them and called upon the appellant to send the samples again. The appellant then vide their letter dated 7/11/1978 informed the Board that they had been granted exemption from furnishing security deposit and bank guarantee for the various purchase orders placed by Tamil Nadu Electricity Board and Haryana State Electricity Board. It was also stated that the factory of the appellant was under revival and it had been declared as a relief undertaking by the government of Tamil Nadu. It was further mentioned that in spite of explaining special circumstances that appellant is a sick industry and is striving to revive with support from government institutions, it was understood that the Punjab State Electricity Board was unable to agree to the original offer of the appellant and repeated requests made regarding acceptance of a bank guarantee of rupees one lakh towards 100 per cent payment and security deposit and in the absence of such concurrence the appellant was not in a position to take further action in the tender and production planning had been dropped. Thereafter the Board by letter dated 23/12/1979 informed the appellant that the Board had appointed Shri A.N. Sharma, Superintending Engineer/T & MR Punjab State Electricity Board (respondent 2 as an arbitrator. On 25/01/1980 the appellant received a copy of the claim made by the Board before the arbitrator claiming Rs. 48,61,458.00 as damages for the alleged breach of contract made by the appellant.
(5) THE appellant then filed an application under Section 33 of the Arbitration Act alleging that there was no completed contract between the parties. The offer made by the appellant was subject to their own terms and conditions which were not accepted by the Board. The terms and conditions for the supply of the meters as made by the Board were not accepted by the appellant at any time. There was no consensus ad idem and there was no completed contract. Since there was no completed contract between the appellant and the Board, there was no arbitration agreement between the parties. The appellant in these circumstances prayed for an order declaring that there was no arbitration agreement between the appellant and the Board. It was al
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
