SHANKAR TIMBER INDUSTRIES Vs. UNION OF INDIA

JUDGEMENT

(1.) The parties entered into a contract dated 09.01.1987 for supply of various grades of 7727 cubic meters of soft wood sleepers to army depots. Disputes having arisen between the parties and in view of existence of arbitration clause, the matter was referred to the sole arbitration of Sh.B.L.Nishad, Additional Legal Advisor, Ministry of Law and Justice. The arbitrator made and published his award dated 25.11.1999. The respondent aggrieved by the same has filed the objections under section 30 and 33 of the Arbitration Act, 1940 (hereinafter referred to as the 'said Act').

(2.) The objections are confined to only three claims - Claim no.1, Claim no. 3 and Claim no.5. Some of the other claims have been disallowed and the counter claim of the respondent has also been disallowed.

(3.) The petitioner claimed the amounts on account of withholding of security and balance price payable for goods supplied. The stand of the respondent was that the price of the goods was withheld as the goods of the petitioner were rejected which the respondent was entitled to do as per the terms and conditions agreed to between the parties. The arbitrator found from the pleadings on record that it was not clear as to how much quantity was rejected and in what manner. It was also not clearly set out as to how supply did not meet the terms of contract and no counter claim on this account was at all raised. The arbitrator relied upon the material produced showing the supplies made. The plea of the respondent that the goods were rejected under the warranty clause providing for a warranty of twelve months was not accepted by the arbitrator. The arbitrator found that the general conditions of DGSandD as per the latest revision at the relevant time provided for rejection, loss/damage on account of transit or shortage to be intimated to the seller within 30 days of arrival of stores. The right of rejection was to be exercised within a period of forty five days if the stores were so defective and for the material, workmanship and performance within a period of 12 months from receipt. There were different clauses governing different ambits which were not overlapping. Thus there were clauses relating to transit damage due to carrier fault, detection of patent defect found at the time of acceptance by the stores {second clause 4 (ii) } and thirdly when the goods were used and found defective in material, workmanship and performance. The arbitrator found that the rejections relating to Shakur Basti and Delhi Cantt. dated 21.02.1989 and 29.04.1987 respectively were not rejection under clause 4 (ii) nor were such rejections under Clause 19(h). The reasons for rejection were not found to be within the warranty clause which was stated to be a consignment being mixed with stamped and unstamped stores. A letter was issued on the recommendation of the inspecting authority and not by the authorities receiving the goods. The right was, therefore, found not to be exercised under the warranty clause.