JUDGMENT :

1. Through the medium of instant application filed by the Applicant herein under Section 34 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997, (for short the Act) setting aside of the award dated 31.08.2005 passed by the Learned Arbitrator, Mr. Justice K.K. Gupta (Retd.) in case titled “M/S S.K.S. Kohli v. State of Jammu & Kashmir and others”, is prayed for.

2. Before adverting to the grounds of the challenge urged in the instant application, it would be appropriate to give a brief background of facts emerging from the application.

3. The Director Food & Supplies, Srinagar is stated to have issued a tender notice dated 31.01.2003 for lifting of gunny bags numbering 118.30 lacs of different classes lying in the Central Godowns at Lethpora / Gulab Bagh, Srinagar. The intending tenderers were given an option to inspect the bags on any working day before the last date of submission of tenders. It was mentioned in the NIT that the successful bidder shall have to lift the bags on ‘as is where is basis’.

4. It is stated that in response to the said tender notice, the respondent submitted his tender after depositing earnest money by way of CDR/FDR of Rs.24.00 lakhs offering a bid for Rs.7.80 crores. The respondent, being the highest bidder, was invited for negotiation, however, before entering into the agreement / negotiations, he had inspected the stocks in the godown and after satisfying himself about the condition of the stocks, he voluntarily agreed to enhance the contract value to Rs.8.67 crores.

5. It is stated that thereafter the respondent executed an Agreement with the Applicant-Department on 28.04.2003. It is further stated that the respondent after allotment of the contract had lifted 40,40,618 bags for which he deposited the payment and almost 40% contract was over.

6. It is next stated that the respondent not only failed to deposit the whole amount for the tendered quantity of the bags within the stipulated timeframe, but had also failed to lift the bags within the stipulated period as well as by the extended period sought by him in the meantime and ultimately the respondent turned a defaulter and raised dispute for which he requested for appointment of an Arbitrator.

7. It is being stated that Justice Mr. K.K. Gupta (Retd.) was appointed as an Arbitrator in the case and the learned Arbitrator passed the impugned Award on 31.08.2005.

8. The impugned Award is being challenged inter-alia on the following grounds;

(a) “That award impugned in application is against the law and facts of the case, as such, is required to be set aside.

(b) That the learned Arbitrator has dealt with a dispute not contemplated by or not falling with the terms of the submissions to arbitration and it contains decisions on matters beyond the scope of the submissions to arbitration.

(c) That the impugned award is patently against the public policy of the State as the same was affected by fraudulent means, which shall cause huge loss to the public exchequer.

(d) That the learned Arbitrator has not appreciated the counter claim put forth by the petitioner and exceeded jurisdiction in allowing the claims of the respondent. Further, it is submitted that the learned Arbitrator has not appreciated the evidence in proper perceptive, which led to the passing of the impugned award.

(e) That after the execution of the agreement, the future relationship between the parties will be regulated by the agreement as well as the clauses of the tender notice which form part and parcel of the agreement. The language of the agreement as well as the clauses of the tender notice being unambiguous, the principles of natural justice cannot be invoked for determining the rights and obligations of the parties to the contract. The principles of law ‘caveat emptor’ (buyer be aware) leaves no scope for the contractor to take the plea that the bags have out lived their utility when he had a right of inspection before submitting the tender, coupled with the fact that in