UNION OF INDIA Vs. RAIL UDYOG & ORS.

JUDGEMENT

(1.) The U.O.I. by invoking an Arbitration Clause allegedly in existence between the parties had referred its claim to the sole Arbitrator of the Deputy Chief Engineer (Construction) Northern Railway, New Delhi, 110 025. The Arbitrator published his award dated 25.10.1990 whereby he awarded an amount of Rs. 82,450 in favour of the Union of India against its original claim of Rs. 1,78,750. The petitioner, M/s. Rail Udyog, has filed objections against this award. Their contention is that there was no concluded contract between the parties and this being so, the arbitration clause which has been invoked was not available at all. Under these circumstances, the Arbitrator had no authority to entertain the proceedings. It is not controverted that this objection had been raised before the Arbitrator himself. In reply the Union of India had submitted that the question of whether or not a concluded contract had come into effect could not be decided by the Arbitrator and could be adjudicated only by the Court. It is also not in controversy that the Arbitrator has not specifically dealt with the question while disposing the claim before him. Learned counsel for the Union of India, however, submits that inasmuch as the Award is a non-speaking Award it must be inferred that all objections have been considered and disposed of by the Arbitrator. It is, also his submission that M/s. Rail Udyog ought to have approached the Court immediately on this objection having been raised so that this controversy could have been decided by the Court.

(2.) Mr. Shiv Khorana, learned counsel for the Rail Udyog has stated that one of the terms in the tender was that security deposit would have to be furnished, unless exempted. In reply thereto the objector had represented that it was registered with the N.S.I.C. and, therefore, it solicited exemption from depositing the earnest money. Subsequently it transpired that in respect of the item to be supplied, i.e. Joggled Fish Plates, the objector was not registered. In these circumstances, the Objector again addressed a letter to the respondent dated 1.3.1985 stating that they had already approached their bankers for issuing a Bank guarantee towards the security deposit of Rs. 41,000 and that they shall submit the same as soon as it was received. Prior to this another letter dated 7.2.1985 had been addressed to the respondent conveying acceptance of the terms except for the security money clause. Thereafter, in terms of his letter dated 29.5.1985 the objectors again informed the respondents that they were pursuing the matter vigorously and were hoping that the Bank guarantee would be released in a few days time. Alternatively, however, it was suggested that the formal order be placed with the submission that the amount of Rs. 41,000 would be deducted from the bills of the Objector against the subject order. But this suggestion/counter offer of the petitioner was not accepted. After sending reminders, the respondents, by their letter dated 19.8.1985 informed the Objectors that, since the latter had failed to furnish the security money for fulfilment of the contracted work, they had committed a breach of the contract. Invoking Clause 0502 of I.R.S. conditions of contract the advance acceptance letter was withdrawn, and the Objectors were informed that the loss occasioned to the respondents would be made good through risk purchase at their costs. It has also not been disputed at the bar that in the course of the risk purchase the Objector had again submitted that their bid, which was not accepted because of their reluctance to furnish the security deposit. This supports the objector's submission that it had not agreed to the terms insisted upon by the Union of India and therefore no concluded contract had come into effect.

(3.) Learned counsel for the respondents has relied on Dhan Raj Vs. Shamji, AIR 1961 SC 1285 it was observed in this case that: