BRIJ BASI UDYOG Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner, Brij Basi Udyog, had, entered. into a contract with respondent no.1 for supply of crash wire tenders with mounted equipment. The said contract had an arbitration clause whereby the disputes between the parties were to be settled through arbitration. Certain disputes had arisen between the petitioner and respondent no.1 and respondent no.3 (Brig. Gur Das Verma) was appointed as the sole arbitrator. The arbitrator has since submitted the award and therefore the petition had been filed for making the award a rule of the court and for passing a decree in terms of the said award.

(2.) . In pursuance of the notice having been issued objections had been filed on behalf of respondent no.1 under Section 30 and 33 of the Arbitration Act, 1940. The objector/respondent no.1 pleaded that according to the delivery schedule two numbers required for aviation research centre were to be supplied by 31/3/1983 and trie balance quantity were to be supplied at the rate of two numbers per month commencing 12 weeks after receipt of chassis. The chassis were to be imported from West Germany. The import recommendation certificate was to be issued by the Department of the respondent/objector on application of the petitioner. The petitioner took seven months to submit the application to the department for issuance of the import recommendation certificate. Thus delay of seven months was entirely on the petitioner. The objector on receipt of the application immediately had forwarded the same to the relevant department for no objection certificate. After receipt of no objection certificate the objector forwarded the petitioner's application to Chief Controller of Imports and Exports. Therefore, the objectors case was that delay was entirely caused by the petitioner. The petitioner got delivery of all the nine chassis in July 1983 but caused delay in importing BCF and pumps in stages. All the facts were given by the objector that petitioner is responsible for delay in procurement of pumps and BCF.

(3.) . It is pleaded that these stores were urgently required for operational preparedness of the Air Force and due to non-availability of this equipment because of failure of the petitioner to supply the same within the stipulated period, a great loss was caused to the respondent/objector. Therefore, for the delay caused by the petitioner the liquidated damages of Rs.1,27,000.00 were levied. These liquidated damages were levied after the time was extended under clause 12(8)(a) of Schedule B to the supply order. The extension had been accepted by the petitioner unconditionally. The objectors suffered a loss of Rs.30,23,125.00. On reviewing the position objector claimed in all liquidated damages of Rs.18,97,949.00. It has also been asserted that the arbitrator had not applied his mind to the controversy. He had only incorporated the pleadings of the parties and then stated his conclusions. Plea has also been raised that reimbursement of custom duty of Rs.25,601.00 has wrongly been adjudicated. The arbitrator projected the defence of the government that custom duty was to be paid on actuals. This in fact was not the defence of the government. The defence of the government was that extension of time was allowed on specific condition. It has also been contended that with respect to the liquidated damages which was later enhanced to Rs.18,97,949.00 the case of the government was that under clause 9(iii)(a) of the Conditions of the contract it was agreed between the parties that should the contractor fail to deliver the stores or any consignment thereafter within the period prescribed for such delivery, the purchaser shall be entitled to recover from the contractor as agreed liquidated damages and not by way of penalty. A sum of 2% of the price of any store which the contractor had failed to deliver as aforesaid for each month or part of the month exceeding 15 days could be charged. The arbitrator failed to consider the relevant documents and therefore it was asserted that the award is liable to be set aside.