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IN THE HIGH COURT OF BOMBAY
(O.S.)
Dr. B.P. Saraf, Actg. C.J. V.C. Daga, J.
Maharashtra State Electricity Board, Bombay ..... Appellants.
Versus
Sterlite Industries (India) Ltd...... Respondents.
Appeals Nos. 836 and 837 of 1997 in Arbitration Petitions Nos. 147 and 145 of 1993 in Arbitration Awards Nos. 41 and 42 of 1993, decided on 17-2-2000.
Advocates appeared :
Siraj Rustomjee with G.R. Joshi and Ms. A. Dhake, for the appellants.
F.P. Bharucha, Sr.C. with A. Sethi, for respondents.
Section 73 and Sale of Goods Act (3 of 1930), Section 62-Contract between parties containing specific provisions reserving the purchasers right to purchase material from open market and claim damages from seller-Right of purchaser under Section 73, Contract Act stands specifically excluded-Claim for damages by purchaser under Section 73. Contract Act not tenable.-A contract was entered into M.S.E.B. for purchase of certain equipment. One of the clauses of the Agreement provided that in case the purchaser terminated the contract in whole or in part, it reserved right to purchase upon such terms as it may deem appropriate, equipment similar to that which was to be purchased from the contractor and contractor would be liable to the purchaser for additional cost for such similar equipment and/ or liquidated damages for delay. As the contractor defaulted in supply of the said equipment, the Electricity Board terminated the contract reserving its right to recover damages for non- supply of balance quantity of goods. In terms of the agreement, reference was made to three arbitrators and by majority award it was held that the Electricity Board was not entitled for damages from the contractor. The said award was made rule of the Court by the Single Judge under Section 30 of the Arbitration Act, 1940. On appeal by the Electricity Board it was contended that the appellant was entitled for damages under Section 73 of the Contract Act.
Held, that under the contract vide Clause 14 (2) special provision had been made by the appellant reserving its right to purchase materials and equipments from open market and claim damages from the contractor. Thus the right to claim damages under Section 73 of the Contract Act had been excluded. This was in consonance with Section 62 of the Sale of Goods. Act which clearly recognises rights of parties to vary the ordinary incidence of contract by express terms of the contract of sale of goods between them. Therefore, in view of the specific provision in the Agreement, damages as claimed by the Board on the basis of Section 73 of the Contract Act could not be awarded. Appeal dismissed. AIR 1958 Bom 291, Rel., AIR 1962 SC 366, AIR 1984 Delhi 360 and AIR 1982 Delhi 267, Dist.
2.The appellants-Maharashtra State Electricity Board (hereinafter referred to as "M.S.E.B." for short), are Statutory Corporation constituted under the provisions of the Electricity (Supply) Act, 1948, (hereinafter referred to as "the Supply Act" for short) which inter alia is engaged in distribution and supply of electricity within the State of Maharashtra.
3.In the discharge of its duties under the Supply Act, the appellants frames schemes for generation, distribution and supply of electricity in accordance with the policy of the State and its schemes include rural electrification for the purpose of spreading the benefit of electricity to the rural areas in the State of Maharashtra. The schemes are implemented in the phased manner from year to year. The implementation of such schemes for rural electrification and development of rural areas is a continuous process forming part of the five-year plans of the State. The appellants require supplies of material and equipments of different kinds for their schemes which include conductors of different kinds needed for transmission distribution and supply of electricity. Such conductors were needed in large quantities and the appellants have to place orders according to their estimated requirements every year and from time to time during a year.
4.The appellants had floated tenders for purchase of conductors for its rural electrification schemes sometime in 1982. The respondents (1) M/s. Sterlite Industries (India) Ltd., and (2) M/s. Pravin Trading Corporation (hereinafter referred to as "both respondents" for short) were the tenderers in response to appellant's notice inviting tenders. The appellants had accepted tenders submitted by both the respondents for manufacture and supply of conductors on terms and conditions stated in the appellant's letter of acceptance of tenders issued to both the respondents on 19/22nd November 1983, respectively. The letters of acceptance of tenders set out inter alia the scope of the work, the specification of the form the goods to be manufactured and supplied under the contracts, the terms relating to the price and payment, the conditions relating to price variation, delivery, inspection, consequences of delay or default, termination of contract, arbitration and such other matters. The said letters of acceptance also incorporated therein, inter alia general conditions of contract set out in the tender documents which were issued by the appellants.
5.According to the terms of the aforesaid contracts respondents were under an obligation to supply the entire quantity of the various kinds of conductors and stay wires by the end of June 1985. At this juncture it is necessary to refer to Clause 14(ii) of the contract between the parties dealing with default liability of contractors which reads as under :
14. "The purchaser may upon written notice of default to the contractor terminate the contract in circumstances detailed hereunder :
(a) ................
(b) ................
(ii) In the event the purchaser terminates the contract in whole or in parts as provided in paragraph 14(i), the purchaser reserves the right to purchase upon such terms and in such manner as he may deem appropriate. Equipment similar to that terminated and the contractor will be liable to the purchaser for any additional costs for such similar equipment and/or liquidated damages for delay as defined in Article 22 of the General Conditions until such reasonable time as may be required for the final supply of equipment." (Emphasis supplied)
In both the cases, the respondents have defaulted i
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