The legal principle established is that subsequent informal discussions cannot override the formal specifications in a contract, thereby affirming the arbitrator's ruling on the supplied machines' non-compliance.

1. The present appeal has been filed under Section 39 (I)(vi) of the Arbitration Act, 1940 for setting aside the order dated 28.03.2019 passed by the Sub-Judge-II, Dhanbad in Arbitration Case No. 23/1985 as well as the award dated 15.01.1997 passed by the learned Arbitrator.

2. Appellant is the Company against which the arbitral award has been made by the arbitrator and affirmed by the learned Court below. The arbitral Award is for refund of the amount with interest, for supply of the machines by the appellant which were found to be not as per the specification of the tender.

3. For convenience the parties shall be referred to as per their placement in this appeal.

4. The list of dates leading to the present appeal is as under : 14.11.1979 - The claimant/respondent.No.1 invited tenders for supply of automatic weighing cum tipping machines for Namrup III Expansion Project (Project 1025) for the weighing the fertilizer bags at their production lines. 07.02.1980 - In response to it the appellant company submitted its offer. 27.08.1980 - Prior to issuance of purchase order the claimant/respondent No.1 issued letter of intent dated 7.08.1980 for supply of 12 Automatic Weighing cum Tipping Machines as per specification sheet, engineering standard and electrical scope of supply for a total sum of Rs. 17,82,000/- only as per break up shown in the letter of Intent.
22.12.1980 - Purchase order issued by the claimant/respondent No.1 in favour of Principal appellant for supply of 12 Automatic Weighing cum Tipping Machines as per specification sheet, technical scope of supply, electrical scope of supply and other terms and conditions.
25.02.1982- The appellant company supplied the machine through Road Transport Corporation and forwarded the invoices and realized the amount through Bank .
27.9.1983 - It was agreed between the parties that the variation in any bags during the trial run should not be more than specified in the machine should give an overall average accuracy close to 0 (Zero), within tolerable limits if not exactly 0.
26.12.1983 and 27.12.1983 - A fresh trial run was conducted on 26.12.1983 and 27.12.1983 wherein the maximum error was found to be 200 gms- Annexure-6 series Para-13.
23.1.1985 - The claimant/respondent No.1 herein vide letter dated 23.1.1985 informed the appellant that since the required performance had not been achieved by the machines even after doing necessary rectifications, the claimant/respondent No.1 company exercise the rights under the terms of purchase order( Annexure 3) and asked the appellant to take back all the machines. It further claimed reimbursement of payments incurred by it.
20.07.1994 - Claimant/respondent No.1 moved the Court under Section 20 of the Arbitration Act for appointment of an Arbitrator and the learned Court below appointed Shri S.S. Gupta, Chief Engineer (Industrial Engineering), Fertilizer Corporation of India Limited, Sindri Unit, Sindri, Dhanbad as an Arbitrator. The said order was challenged in Civil Revision No. 410 of 1994 (R) and the Court appointed Justice S.K. Choudhuri as an Arbitrator vide order dated 05.07.1995. Both the sides had consented to the appointment of Justice S.K. Choudhuri in this case.
The following points were referred to the Learned Arbitrator for arbitration by Sub-Judge (2) Court, Dhanbad vide order dated 26.9.1993:
A. Whether the specifications contained in the contract with regard to fulfilment of all the terms of guarantee in respect of the machines supplied against the purchase order had been complied with?
B. Whether the defendant is bound to refund the money received by them and take back machines at its own cost?
C. Whether the defendant has made a breach of the contract and liable to pay damages and risk purch