Penalty and price variation clauses in a contract can coexist and be applied independently without constituting double punishment for delays.

JUDGMENT :

Pranav Trivedi, J.

1. The present First Appeal is filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred as to "the Act") assailing the correctness and validity of judgment dated 12.01.2023 passed by the learned Judge, Court of 6th Additional District & Commercial Court, Mahesana (hereinafter referred to as the “learned Court”) in Civil Misc. Application No.218 of 2016.

2. The factual matrix leading to the filing of the First Appeal is that the appellant - Gujarat Urja Vikas Nigam Ltd. is a registered company engaged in the business of supplying electricity energy to specified areas in the state of Gujarat, whereas the respondent - original claimant is a private limited company registered under the Companies Act, 1956 and is engaged in the business of manufacturing PVC, insulated power and control cables etc. The tender was invited on behalf of different distribution of power companies and after finalization of tender, order was placed / issued by respective distribution of power companies. With regard to tender of the appellant, the respondent had submitted the tender, which being of the lowest rate and also satisfying the requirements, was considered and accepted by the appellant. Pursuant to the purchase order, contract was entered into between the parties. The acceptance of tender was with regard to supply of material and equipment specified in the schedule and as per the quantity, prices, specifications and conditions mentioned in the tender. The supply and payment of the goods were according to the conditions mentioned in the tender. Dispute arose between the parties with regard to the conditions of contract. The contract was for supplying goods at the periodical interval of seven months. For certain months the supply was at regular interval as prescribed by the tender. However, from March 2010 to April 2010, the claimant made the supply of the goods at a belated period, i.e. subsequent to period prescribed in the tender conditions. Therefore, a dispute arose with regard to the payment of price variation on the delayed supply of goods. As per the respondent, appellant had allowed price variation in certain invoices til February but had withheld price variation of goods for supply, which related to the months of March 2010 to April 2010. In addition to that, penalty was also levied for late delivery.

2.1 Pursuant to such dispute, arbitration proceedings were initiated before the learned Tribunal. The claimant preferred a petition being IIAP No. 41/2013 under the Act before this Court wherein, this Court by way of an order dated 27.09.2013, made appointment of sole arbitrator. Pursuant to the appointment of the arbitrator, the statement of claim, the defence statement and the counter affidavit were filed. Subsequently, the issues were framed and after going through the documentary and oral evidences, the learned arbitrator was pleased to partly allow a single claim, to the tune of Rs. 35,01,458/- (Rupees Thirty Five Lacs One Thousand and Four Hundred Fifty Eight only) being the principal amount of price variation in favour of the claimant. Being aggrieved and dissatisfied by the order passed by the learned Tribunal, the appellant preferred an application under Section 34 of the Act, which came to be dismissed by way of an order dated 12.01.2023. It is against this order, the appellant has preferred Appeal under Section 37 of the Act. Pursuant to non-grant of certain claims by the sole arbitrator, the respondent has also preferred a Cross Objection. However, prior to filing the Cross Objection, the respondent has not preferred any application under Section 34 of the Act. Therefore, the appeal as well as the Cross Objection are now subject matter for adjudication.

3. We have heard Mr. Anal Shah, learned advocate appearing for the appellant and Mr. Aditya Patel, learned advocate appearing for the defendant, who has also preferred cross-objection.

3.1 Mr. Anal Shah, learned advocate for