HIGHWAY ENGINEERING PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The award dated 8th September, 1988 in the arbitration matter between the petitioner and the first respondent was filed in this Court by the Sole Arbitrator Dr. B.N. Mani.

(2.) The petitioner and respondent No. I entered into a contract dated 8th July, 1985 (for short "original contract") by virtue of which the petitioner was to deliver 15 Hercules Industrial Platform trucks to COS Southern Railway (for short 'the contracted stores'). The contract was to be completed by 10th November, 1985. At the request of the petitioner, however, delivery period was extended up to 31st January, 1986. Inspite of the extension in the delivery period, the petitioner could supply only two platform trucks. Since the petitioner failed to supply the remaining 13 platform trucks by the extended date, the contract was terminated by the first respondent on 26th June,1986 and the remaining work was retendered at the risk and cost of the petitioner. The petitioner, however, did not submit its tender. On 31st July, 1986 the risk purchase contract was placed on M/s Josts Engineering Company Limited, Bombay which had offered the lowest rates. As per the aforesaid contract the respondent received the remaining 13 platform trucks from M/s Josts Engineering Company at the risk and cost of the petitioner. As a result thereof the first respondent had to allegedly suffer an extra expenditure of Rs. 1,76,646. Pursuant to the risk purchase the first respondent issued a demand notice to the petitioner for the said amount but the demand was turned down by the latter. As a consequence of the petitioner's failure to pay the amount, the Directorate General of Supplies and Disposal, New Delhi, appointed Dr. B.R. Mani, Additional Legal Adviser to the Government of India, Ministry of Law, as the sole Arbitrator. The Arbitrator upon hearing the parties disallowed the claim of the first respondent in respect of risk purchase loss for twin reasons, namely, the Union of India was not able to show that it had taken all reasonable steps for the mitigation of damages on account of risk purchase, and that the risk purchase store actually supplied was similar to the stores for which order was placed on the petitioner under the "original contract". Despite the rejection of the claim based on risk purchase, the Arbitrator awarded "token damages" of Rs. 25,000 in favour of the first respondent as against the petitioner on the ground that the petitioner had committed breach of the contract and the Union of India had to incur loss for the re-purchase of the stores. Accordingly the Union of India was also held entitled to adjust the said amount of Rs. 25,000 from the security deposit of the contractor amounting to Rs. 27,618.36 but directed that the balance amount of Rs. 2618.36 be paid by the Union of India to the petitioner.

(3.) Both the parties filed objections to the award, the objections of the petitioner being I A No. 3209/89 and of the Union of India being IA No. 1344/91. The petitioner in his objections challenged the award of the Arbitrator with regard to the finding that it was liable to pay Rs. 25,000 to Union of India as token damages. On the other hand, the Union of India in its objections to the award challenged the finding of the Arbitrator to the extent that the Union of India failed to show that it had taken all reasonable steps for the mitigation of loss and the risk purchase stores actually supplied were similar to the ones which the petitioner was required to supply under the "original contract".