Parties can enter into contracts without fixing the price at the time of agreement, and the determination of price can be left to a later date.

The Petitioners have challenged Award dated 17 September, 2009, under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, “Arbitration Act”). The operative part of the Award is as under:

“To sum up, I hold that (a) letter dated 28th June 1999 modified the terms and condition of agreement dated 1st May 1999 and (b) recoveries and adjustments can be made in accordance with letter dated 31st October 2000.”

2. The basic events, as per the Petitioners, are as under:

On 01.05.1999, the Petitioners entered into a contract with the Respondent for supply of LPG Cylinders during the financial year 1999-2000. The Contract was incorporated in writing in the Purchase Order No. PG/EQPT/9/2055 dated 1.5.1999 and annexure thereto (hereinafter referred to as the “Purchase Order”). Under the Purchase Order the price was kept provisional at Rs. 679.67 ps. Per cylinder. A letter was forwarded to emphasize that the price of cylinder was provisional.

3. On 30.07.1999, the Respondent issued amendment to the Purchase Order which was signed by both parties fixing the price of cylinder at Rs. 702.98 ps. The rest of the conditions were same. The Petitioner sold and delivered contracted quantity of cylinders for which the Respondent paid at fixed price of Rs. 702.98. The Contract came to an end and fresh contract was entered into for supply of cylinders during the financial year 2000-2001. The Respondent released the Bank Guarantees of Rs. 7,00,000/-and Rs. 30,000/-given by the Petitioner inter alia for due performance of contract for the year 1999-2000. The contract stood completed by supply of goods and receipt of consideration at the fixed price and in any event by efflux of time.

4. On 31.10.2000, the Respondent issued a Circular/Letter alleging that the Industry/Committee was reviewing the price of cylinders with the assistance of M/s. Price Waterhouse Cooper and pending finalization the Respondent purported to revise the price of the cylinder supplied during the previous year, from the fixed price of Rs. 702.98 ps to provisional price of Rs. 645/-on the alleged ground that pursuant to a letter dated 26 June, 1999, the price of cylinder was kept provisional. Pursuant to the aforesaid circular/letter the Respondent alleged to have unlawfully, arbitrarily retained/deducted about Rs. 28.69 lakh from the amount payable in respect of cylinders.

5. On 30.06.2001, the Advocate for the Petitioner issued a Notice to appoint arbitrator under the Arbitration Clause contained in the contract. On 06.08.2001, the Director (Marketing) of the Respondent nominated Mr. V.V. Ramamurthy the then Executive Director (Corporate Affairs) of the Respondent to act as Sole Arbitrator. He conducted the Arbitration till the stage of evidence. On being transferred he expressed inability to continue with the Arbitration proceedings. On 03.05.2003 The Director (Marketing) appointed Shri A.C. Sen as the sole Arbitrator. On 27.04.2006, Shri A. C. Sen published his Award inter alia dismissing the claim of the Petitioner.

6. The Petitioner filed Arbitration Petition No. 367 of 2006 and challenged the aforesaid Award. On 09.10.2006, the Petition was allowed and award was set aside. Shri A.C. Sen was re-nominated as sole Arbitrator. On 23.04.2008, Shri G. S. Baveja was appointed as sole Arbitrator in place and stead of Shri Sen. On 17.09.2009, the present Award was published. There is no dispute that the parties entered into a contract on 1 May 1999 for supply of LPG Cylinder for the financial year 1999-2000. The terms were incorporated in purchase order and the annexure thereto. The provisional price of cylinders effective from 1 April 1999 was Rs. 679.67 ps. The price formula was MOP and NG approved pricing formula. The price was also irrespective of source of body steel used. Both the parties, being in the field since long, know the trade, practice and procedure including fixation of provisional price for supply of LPG cylinders. It was well known that the