UNION OF INDIA Vs. DECCAN ENTERPRISES

JUDGEMENT

(1.) The Union of India through the Ministry of Railways placed three purchase orders dated 1.8.85, 14.9.92 and 14.11.93 on M/s Deccan Enterprises Private Limited for the supply of G.R. Sole Plates. The first and the third purchase orders were non-starters in the sense that no supply at all was made thereunder. As regards the second, unlike the other two it did take off, for some supply in respect thereto was made though not completed. The end result was that the Railways cancelled all the purchase orders and forfeited the security amounts of M/s Deccan Enterprises Private Limited (hereinafter called the contractor) in respect of each purchase order. From here started the blame-game.

(2.) According to the Railways, time was the essence of the contract and even though it had granted extension of time to enable the contractor to execute the contracts it failed to do so. On the other hand, as per the contractor, it was the Railways and the Railways alone which was responsible for non-execution of the contracts. It is alleged that the Railways altered the terms of the purchase orders in relation to the specification of the stores, particularly with regard to the first and second purchase orders which disturbed the entire delivery schedule and that, when the stores were ready, it did not carry out the inspection in time. Therefore, to say, that time was the essence of contract was not warranted.

(3.) Feeling aggrieved by cancellation of the contracts and forfeiture of the security amounts, the contractor gave notice to the Railways for appointment of an Arbitrator to which it did not respond . The silence of the Railways compelled the contractor to move this court under Section 20 of the Arbitration Act, 1940 for adjudication of the disputes detailed in the petition. The Court, vide its order dated 26.7.2000, referred the disputes as mentioned in para 10 of the petition to the sole arbitration of Justice P.K.Bhari, a retired Judge of this Court. The Arbitrator entered upon the reference and on 11.12.2002 awarded a sum of Rs.47,500/- in favour of the contractor in respect of the first purchase order; Rs.2,46,200/- in respect of the second and Rs.4,22,800/- in respect of the third with interest @ 12% per annum w.e.f. 21.8.96 until payment besides cost of Rs.25,000/-.