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1994 Supreme(Cal) 196
IN THE HIGH COURT AT CALCUTTA
Baboo Lall Jain, J.
Union of India - Petitioner
Versus
M/s. Navin Trading Co. – Respondent
Award Case No. 191 of 1993
Decided on : June 16, 1994
Mr. B. Debnath and Ila Chatterjee .....for the Petitioner
Mr. Sudhir K. Mehta ......for the Respondent
An arbitrator's decision on questions of law or fact is not reviewable by the court unless there is an error apparent on the face of the award.
Headnote:
ARBITRATION - SETTING ASIDE AWARD - GROUNDS - ERROR APPARENT ON THE FACE OF THE AWARD - JURISDICTION OF THE COURT - ARBITRATOR'S DECISION ON QUESTIONS OF LAW OR FACT - WHETHER REVIEWABLE.
Fact of the Case:
The petitioner, Union of India, sought to set aside an arbitration award made in favor of the respondent, a contractor, for the supply of cast iron anchors. The petitioner contended that the arbitrator erred in finding that the petitioner failed to provide raw material assistance to the respondent, that the respondent's claim was barred by limitation, and that the petitioner was entitled to cancel the order for the increased quantity of anchors.
Finding of the Court:
The court found that the arbitrator had considered all relevant documents and submissions of the parties and that there was no error apparent on the face of the award. The court also held that the arbitrator was not bound to give a reasoned award and that his decision on questions of law or fact was not reviewable by the court.
Issues: 1. Whether the arbitrator erred in finding that the petitioner failed to provide raw material assistance to the respondent. 2. Whether the respondent's claim was barred by limitation. 3. Whether the petitioner was entitled to cancel the order for the increased quantity of anchors.
Ratio Decidendi: 1. The court held that the arbitrator did not err in finding that the petitioner failed to provide raw material assistance to the respondent because the petitioner's own counter statement before the arbitrator admitted that the supplies were made without raw material assistance. The court also found that the two letters relied on by the petitioner to show that raw material assistance was provided did not relate to the contract in question. 2. The court held that the respondent's claim was not barred by limitation because the respondent had made a demand for arbitration within the limitation period and that the limitation period stopped running once the demand for arbitration was made. 3. The court held that the petitioner was not entitled to cancel the order for the increased quantity of anchors because the contract allowed the petitioner to increase the quantity and the respondent was liable to supply the additional quantity.
Final Decision: The court dismissed the petitioner's application to set aside the arbitration award.
This is an application made by the Union of India for setting aside the award made and published by Late, C. R. Chaudhury, an ex-officer of the Union of India, being the award dated 5th April, 1991. By the said award the arbitrator awarded a sum of Rs. 8,61,190/- ill favour of the respondent and interest thereon at the rate of 18 percent per annum with effect from April 30, 1985 to May 30, 1989 and further interest from April 5, 1991 until the fifth day of immediately proceeding month of the date of effecting payment by the respondent to the claimant.
2. The facts of the case may be shortly summarised as follows :-
On or about 26th March, 1981, tender enquiry was floated by the petitioner for supply of cast Iron Anchors. On 30th June, 1981, the respondent submitted its tender for supply of Cast Iron Anchors at the rate of Rs. 19.20 per piece with raw material assistance or @ Rs. 24.00 per piece without raw material assistance. On 30th April, 1982, the Divisional Engineer, Telegraph (S) accepted the offer of the respondent and placed an order being Purchase Order No. L-408/ P-82/Anchor/4592 for 80,000 pieces of Cast Iron Anchors at the rate of Rs. 19.20 with raw material assistance. On or about, 29th October, 1982 the total quantity under the contract was increased to 92,000 pieces instead of 80,000 pieces as originally ordered. Between 30th October, 1982 to 7th April, 1983 the respondent supplied the total quantity of 92,000 pieces of Anchors.
3. Before commencing delivery the respondent furnished bank guarantee for Rs. 51,800/- and submitted a certificate issued by the National Small Scale Industries Corporation covering Rs. 23,200/- as and by way of security deposit. The petitioner accepted the said security deposit. It is not in dispute that the respondent supplied the entire quantity of 92,000 pieces.
4. The case of the respondent is that the respondent demanded raw material assistance from the petitioner. According to the respondent the petitioner requested the respondent to supply the goods without raw material assistance assuring the respondent that supplementary bill covering difference of price may be raised later on. The contract provided in clause 14 thereof that the purchaser agreed to supply raw material assistance against the purchase order.
5. On 28th March, 1984 the petitioner as per clause 12 of the contract, asked the respondent to supply further 25 percent of the total quantity i.e. 23,000 pieces. The petitioner also demanded security deposit of Rs. 23,200/-. The respondent objected to the said demand for security deposit for the increased quantity. On or about 11th July, 1984, the respondent informed the petitioner by letter of the said date, that the goods are ready for inspection. By the letter dated 17th August, 1984, the petitioner cancelled the purchase order for the additional quantity of 25 percent. On or about 12th September, 1984 the respondent without prejudice sent a Bank Guarantee for Rs. 23,200/- with request to recall the letter of cancellation. By the letter dated 19th September, 1984 the respondent requested the petitioner to accept the manufactured quantity which were ready for inspection, but the petitioner refused to do so. The petitioner returned the bank guarantee for the sum of Rs. 23,200/-. On or about 30th April, 1985 the respondent raised supplementary bill for difference of price for a sum of Rs. 4,41,600/- on account of failure on the part of the petitioner to render raw material assistance. The respondent raised another bill for compensation being the difference of value of store chargeable from the petitioner and scrap value realised from the sale of 23,000 pieces. On or about, 11th April, 1986 the respondent referred the matter to the General Manager, Telecom Stores, for arbitration and submitted a statement of Claim. However, no steps were taken by the General Manager, Telecom Stores.
6. On 5th February, 1988 the respondent filed Special Suit No.8 of 1988 in this Court. A
