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2018 Supreme(Bom) 651
IN THE HIGH COURT OF BOMBAY AT GOA
C.V. BHADANG, J.
Titagarh Wagons Limited – Appellant
Versus
Chowgule and Company Private Limited – Respondent
Arbitration Act No. 8 of 2016
Decided On : 10-04-2018
For the Appellant :Sudin Usgaonkar, Senior Advocate with R. Choudhary, Tanvi Kamat Ghanekar, Advocates
For the Respondent:S.D. Lotlikar, Senior Advocate with Prasheen Lotlikar, Aditi Naik, Advocates
Headnote:
Arbitration and Conciliation Act, 1996 - Section 37 - Contract Act - Section 74 - Agreement - Damages - Placed an order for supply wagons comprising in two rakes wagons each plus with appellant- said purchase was under Wagon Investment Scheme (WIS) of Indian railways- According to purchase order wagons being capital goods were exempt from duties and taxes- purchase order stipulated that wagons were to be supplied by appellant EPCG licence to be secured by respondent and an Advance Intermediate to be secured by appellant- purchase order was subject to execution of an agreement between respondent and CCM/FM South Western Railways (Karnataka)- payment of advance was to be made within a week of execution of agreement with South Western Railways- That agreement was executed –Held, WIS and had entered into contract with South Western Railways for investment in two rakes contract stipulated grant of rebate at rate of on normal tariff rates and a guaranteed supply of wagon at rate rakes per month in addition to guaranteed supply of two bonus rakes without concession rakes were intended to transport iron ore from (Karnataka) to Goa respondent had invested huge amount of more than as price of two rakes- In matters of business and commercial transaction any delay of present nature is bound to result into loss to party concern appellant contested claim mainly on three grounds accord and satisfaction where it was claimed that rakes have since been delivered and respondent had paid price and therefore there is no dispute which is subsisting between parties about delay being attributable to certain lapses on behalf of respondent invocation of force-majeure clause which have been negatived by Arbitrator and confirmed by District Judge Union of India and Another has held that District Judge exercising powers exercises supervisory and not appellate jurisdiction over award of Arbitral Tribunal- In case of ONGC Limited it has been held that an award can be set aside as being opposed to public policy of India only where award is contrary to fundamental policy of Indian Law or interests of India or justice or morality or if patently illegal or so unfair and unreasonable that it shocks conscience of Court Arbitrator does not show that it can be said to be patently illegal or so unfair and unreasonable that it shocks conscience of Court exercise by Court under Section being supervisory in nature scope of challenge Act would be still narrower- On a careful consideration of award passed by Arbitrator Court do not find that any case for interference is made out - Appeal dismissed
1. This is an Appeal, under Section 37 of the Arbitration and Conciliation Act, 1996 (Act, for short), challenging the judgment and order dated 10.06.2015, passed by the learned Principal District Judge, Panaji, in Arbitration and Conciliation Petition No. 43/2012. By the impugned judgment, the learned District Judge has confirmed the award passed by the learned Arbitrator on 30.05.2012.
2. The brief facts necessary for the disposal of the appeal may be stated thus:
On 20.02.2006, the respondent placed an order for supply of 122 wagons, comprising in two rakes of 58 wagons each plus 4% (60/61 wagons), with the appellant. The said purchase was under the Wagon Investment Scheme (WIS) of the Indian railways. According to the purchase order, the wagons being capital goods, were exempt from duties and taxes. The purchase order stipulated that the wagons were to be supplied by the appellant under the EPCG licence, to be secured by the respondent and an Advance Intermediate Licence, to be secured by the appellant. The purchase order was subject to execution of an agreement between the respondent and the CCM/FM South Western Railways, Hubli (Karnataka). The payment of advance was to be made within a week of the execution of the agreement with the South Western Railways. That agreement was executed on 08.08.2006.
3. It is a common ground that on account of non-availability of wheel sets indigenously, the respondent was required to obtain EPCG licence for import of 244 wheel sets each, for the two rakes, as per the advice of the Railway Board. This led the parties to amend certain terms of the contract, which were set out by the respondent in its letter dated 25.09.2006, which was accepted by the appellant, by its letter dated 27.09.2006. The material changes, which are relevant for the purpose are as under:
(i). The delivery of the wagons after rake formation is within 30 days from the date of the receipt of the required number of wheel sets at the workshop of the respondent (initially the rakes had to be completed and delivered to the claimant by 5/6 months from dispatch memo by RDSO).
(ii). Liquidated damages were provided under the amended contract for delayed delivery.
(iii). In the event of delay in effecting delivery of rakes, a penalty at the rate of 0.50% per week to be charged upto a maximum of 5% on undelivered rakes as per the schedule mentioned. The penalty to be applicable even if there is a single wagon shortage in formation of a rake.
4. It can thus be seen that the delivery of the rakes was to be made within 30 days, from the date of the receipt of the required number of the wheel sets, in the workshop of the appellant. In the event of delay, the contract stipulated payment of liquidated damages at the rate of 0.50 % per week, subject to a maximum of 5% on the undelivered rakes, as per the schedule mentioned therein. The said damages/penalty were applicable even if, there was a shortage of a single wagon in the formation of a rake, which were to comprise 60/61 rakes as per the Railway guidelines.
5. It is undisputed that there was a delay of 2 weeks in supply of the first rake, while there was a delay of 26 weeks in the delivery of the second rake. It is also not in dispute and in fact, it is a matter of record that extension for supply of the rakes, was granted by the respondent, subject however, to its right to claim/levy liquidated damages as per Clauses 7 and 8 of the purchase order. In view of the delay of supply of rakes, the respondent sought to levy liquidated damages of Rs.68,52,909/-, against the appellant. The appellant by a letter dated 25.08.2008, sought waiver of the liquidated damages, which was not acceded to, by the respondent.
6. As disputes and difference arose between the parties, on the point of damages, the dispute was referred to a sole Arbitrator, appointed by this Court, at the instance of
