AJANTA TUBES LIMITED Vs. STATE OF UTTAR PRADESH

JUDGEMENT

(1.) These objections have been filed by the State of Uttar Pradesh against the award of 28/7/1997. The relevant facts are that respondents along with M/s BST Manufacturing Limited is alleged to have formed a consortium and submitted the tender before the objector (State of UP) for supply of 1060 MT of 168.3 MM-ODER Steel Pipes. It was accepted by the objector vide letter of 4/6/1988. M/s Ajanta Tubes Ltd, respondent no.1 was accepted as the leader of the consortium. After acceptance of the offer an agreement was executed on 18/7/1988 for supply of steel pipes. The value of the supply is stated to be Rs.99,58,700.00 and the quantity of the steel pipes had even been divided. The bank guarantee/security of the above named firms i.e. the respondents had been accepted. Disputes arose between the parties and matter was referred to the arbitrator on 14/5/1996 by the order of this court.

(2.) Against the award the State of UP, petitioner, asserts asserting that the arbitrator has misconducted himself. It is alleged that the findings given by the arbitrator that the objector had not suffered any loss or damages on account of breach of contract committed by the respondent/claimants is not true. It is asserted that it was the objector who had to manage for completion of the work through the material available. The BST had failed in supplying the material and In fact it caused heavy losses to the objector, and public at large. The findings of the arbitrator to the contrary are being assailed and it is asserted that the bank guarantee could not have been released. It has further been alleged that this court had directed that disputes referred to are as mentioned in the application under section 20 of the Arbitrator Act and only those disputes could be gone into. The arbitrator was not directed to decide the losses or damages, if any, due to non supply of the material. The arbitrator is stated to have gone beyond the terms and conditions of the agreement executed between the parties and on these grounds as per the objectors. State of UP, the award is liable to be set aside.

(3.) Reply has been filed by M/s Ajanta Tubes Ltd. Preliminary objection has been raised that the award of the arbitrator cannot be questioned on facts and therefore the objections are liable to fail. It is not in controversy that each one of the contractors i.e. M/s Ajanta Tubes Ltd., M/s Jindal Pipes Ltd and BST Manufacturing Ltd. were allowed to supply specified quantity of material independently allotted to each one of them. Each one of them furnished its own independent bank guarantee of its share equivalent to 10% of the value of the quantity to be supplied. It is denied that acceptance of these bank guarantees were subject to an undertaking. It is admitted that M/s Jindal Pipes Ltd supplied the quantity of material allotted to each one of them and became entitled to release of the bank guarantee. It is denied however that respondent no.1 had been at fault. Earlier when material was lying ready with BST the objector had told them not to supply the material unless the financial position/cash credit is available. Thereafter there was labour trouble in the factory of BST but objector had been sleeping over the matter for reasons best known to them. Non supply of material by M/s BST did not cause any injury. Thus it is the claim of the respondent that there is no ground to set aside the award because no loss had been suffered by the objector.