O.M.P./46/2003 of UOI Vs ASHUTOSH CASTINGS on 14 December 2005

1. Whether the Reporters of local papersmay be allowed to see the judgment?

2. To be referred to Reporter or not?

3. Whether the judgment should bereported In the Digest?reported In the Digest?

SANIAY KISHAN KAUL I. (ORAL)

l)These are two awards both dated 09.10.2002 of the SoleArbitrator, Shri H.K. Jaggi, Chief Bridge Engineer, NorthernRailway against which the petitioners are aggrieved and havefiied objections under Section 34 of the Arbitration andConciiiation Act, 1996 (hereinafter to be referred to as, 'the said OMR No. 45 & 46 of2003

Signature Not Verified

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Act'). The two contracts forming subject matter of the twoawards are by the Railway Department of the Union of India withtwo sister concerns. An open tender was floated by the RailwayBoard for supply of SGCI inserts and the respondents weresuccessful bidders and the contracts were entered into on 18.06.1999. The relevant clauses are as under "Clause 6.3 : The rates and other terms andconditions as accepted under this contract willremain current an valid for a period up to 5-4-2000. The purchaser also has right to deferdeliveries and enhance (i.e. to slow downsupplies) delivery period up to 6 months beyond5-4-2000."

Clause 9.1 : The quantity on order shall besupplied up to 5-4-2000 in equal monthlyinstalments. The consignee-wise supplies are tobe effected on the same monthly instalmentbasis.

Delivery period of the said contractis up to 5-4-2000. Supplies have to becommenced from 5-4-1000 and consignee wisesupplies are to be effected on the equal monthlyinstalments basis.

Clause 10.1 : The Ministry of Railways (RailwayBoard) reserves the right to enhance or reducethe contracted quantity up to 30% at theaccepted rate, terms and conditions of the orderat its sole discretion. The discretion of theMinistry of Railways (Railway Board) in thisregard shall be exercised at least 30 days inadvance of the due date of completion of thecontracted quantity. If quantity is increased byor up to 30% suitable extension in deliveryperiod will be granted by the purchaser.

Further, the IRS conditions of contract(incorporated by Ciause 18 of the contract)provided Ciause 3800 Increase or Decrease ofQuantities - The purchaser shail be entitied atany time to increase or decrease theapproximate totai quantities of each descriptionof stores shown in the said contract by not morethan 30 per cent and will give reasonabie noticein writing of any such increase or decrease tothe Contractor."

2) The delivery had to be completed by 05.04.2000 and therespondent started delivery process under the contractaccording to the orders placed by the petitioner. The petitionersexercised their right to short-close the contract to the amount ofthe quantity of 70% as permissible under clause 10.1 in terms ofthe letter dated 09.02.2000 and that is what gave rise to theclaim of the respondent.respondent started delivery process under the contractaccording to the orders placed by the petitioner. The petitionersexercised their right to short-close the contract to the amount ofthe quantity of 70% as permissible under clause 10.1 in terms ofthe letter dated 09.02.2000 and that is what gave rise to theclaim of the respondent.

3) The Arbitrator on consideration of the matter found that 30 days'notice period in pursuance to the short-close notice dated09.02.2000 would expire only in the first week of March, 2000and, thus, the respondent, even if it has manufactured more, isnot entitled to damages for the full amount, but only to theextent the supplies had to be made up to March, 2000.notice period in pursuance to the short-close notice dated09.02.2000 would expire only in the first week of March, 2000and, thus, the respondent, even if it has manufactured more, isnot entitled to damages for the full amount, but only to theextent the supplies had to be made up to March, 2000.

4) ln view of the aforesaid, a specific query was put to learnedcounsel for the petitioners as to under which clause of subsection (2) of Section 34 of the said Act, would the objections ofcounsel for the petitioners as to under which clause of subsection (2) of Section 34 of the said Act, would the objections of OMP No. 45 & 46 of2003

the petitioners faii. It cannot be disputed that unless theobjections faii within the said parameters, it is not for this Courtto sit as an appellate court to examine the matter. The scope ofinterference of the court in objections filed under Section 34 ofthe said Act has already been explained by the Apex Court in Oiland Natural Gas Corporation Ltd. v. Saw Pipes Ltd.. AIR 2003 SC2629.

5) Learned counsel for the petitioners seeks to contend that suchan objection would faii within clause (iv) of para (a) of subsection (2) of Section 34 of the said Act as the arbitral awarddeals with dispute not contemplated by or not falling within theterms of the submission to arbitration. I am unable to persuademyself to agree with the submission of learned counsel for thepetitioners since the very question before the Arbitrator waswhether the respondent was entitled to damages and, if so, towhat extent on account of the petitioners exercising the right forshort-closure of the contract. This fell very well within thereference and, in fact, was the very substance of the reference.The Arbitrator on consideration of the material before him cameto the conclusion that the respondent would be entitled to partamount on account of the fact that the supplies had to be madeover a scheduled period of time and since the foreclosure was as late as 09.02.2000 to the extent the delivery had to be madeby the respondent by the first week of March, 2000, short-closure could not take place, but that the short-closure was valid for the remaining amounts.

6)1 find no merit In the objections.

7) Dlsmlssed.

-H lA No. 1209/2003 IN OMP No. 45/2003

-H lA No. 1210/2003 IN OMP No. 46/2003

*Dismissed.

December 14, 2005

am

SANJAY KISHAN KAUL, J.

OMP No. 45 & 46 of2003