BHARTIYA VEHICLES AND ENGINEERING Vs. AIRPORTS AUTHORITY

JUDGEMENT

(1.) IA No 3760/1995(u/S 30 and 33 of Arbitration Act, 1940) The petitioner is a limited company engaged inter alia in the manufacture and assembly of Crash Fire Tenders (for short, 'CFTs'). The petitioner is stated to have supplied such tenders to different departments of Government of India including the respondent. A requisition was sent by the Director General of Technical Development of the respondent on 13.09.1989 to the petitioner for supply of tenders on an urgent basis which was followed up with the respondent inviting quotations from the petitioner for supply of 56 such CFTs as per the letter dated 24.10.1989. The petitioner submitted the offer vide letter dated 25.10.1989 specifying the price of 40,27,625/- per piece on terms and conditions as set out in the letter. The price indicated was ex- factory, Sahibabad, UP, and any taxes and duties were liable to paid by the respondent. Negotiations were held thereafter between the parties and the price was reduced to Rs.31,20,000/- per CFT in view of the bulk order as well as the change in technical specifications. This settlement at reduced prices is stated to have been made subject to exchange rate variation in accordance with Indo- Czech Trade and Payment Agreement dated 04.12.1974 which was governing the trade between the two countries. In terms of this Trade and Payment Agreement, all commercial contracts where the period from the date of signing of the contract to the date of payment extended beyond one year, it was permissible to safeguard the amount of payment falling beyond one year on the basis of SDR and the RBI, Bombay was to advise the Indian parties the SDR-rupee rate. The respondent accepted the terms of the offer and issued the supply order dated 16.12.1989. In terms of this supply order, the price of one CFT was specified at Rs 31,20,000/- (firm and fixed) including customs and all duties. The Central Sales Tax was to be paid extra at 10 per cent at the time of delivery. The price was also inclusive of custom duty at the rate of Rs.2,09,232/- per unit. Any increase or decrease in custom duties was to be adjusted on the basis of actuals paid at the time of clearance as assessed by the custom authorities at any time thereafter. Any refund of custom duties was in turn to be paid back to the respondent.

(2.) The entire quantity of 56 CFTs was to be supplied in six months commencing from the date of the receipt of the import licence and was to be completed within one year. The parties entered into an agreement dated 09.08.1990 indicating the terms and conditions specified in the supply order and making all the offers, letters exchanged and the minutes of the meeting held on 04.12.1989 and 12.12.1989 (for negotiation of price) as part of the agreement.

(3.) The supply of 56 CFTs was to be dependent on the availability of import licence to be granted to the petitioner which in turn required the clearance of a number of authorities. The import licence was granted on 21.03.1990 only for 19 chassis out of which 12 were designated for the respondent. The petitioner informed the respondent on 22.06.1990 that it had completed the manufacture of the indigenous content of all the 56 CFTs and that the same had been inspected by the officers of the respondent. A further information was sent to the respondent about the delivery of 10 CFTs and that the remaining two earmarked for the respondent would be delivered shortly. The import licence for the remaining 44 CFTs was, however, received only on 30.01.1991 and all the CFTs were supplied within one year from the said date. The petitioner claimed that whatever was within the hands of the petitioner was done, but due to delay in issuance of import licence there was some time lag and the respondent had acknowledged the efforts of the petitioner as per a review meeting held on 30.04.1991.