MAHABIR INDUSTRIES Vs. UNION OF INDIA

JUDGEMENT

(1.) In the present proceedings under Section 14 and 17 and 30/33 of the Arbitration Act, the plaintiff calls into question the validity of an award of a sole Arbitrator dated 12.2.1996 and the further correction carried and made available to it on 25.4.1996.

(2.) Briefly, the facts necessary to decide the case are that the plaintiff entered into a contract on 8.11.1988 with the respondent (hereafter referred to as "the Union") for supply of 500 kms. of hard drawn standard aluminum ingot conductor. In terms of the contract, supplies were to be completed on or by 15.10.1989. The contract also contained inter alia a price variation clause for raw material grade aluminum ingot in Annexure "A" to the agreement and contained a mechanism under clause 19, for variation of prices in case of increase in price of cost of raw material for E.C. Grade Aluminum Ingot. Clause 19(c) stated that excise duty was applicable at the time of dispatch; the existing rate of duty was 20% basic excise duty + 5% excise duty on the basic excise duty. Crucially the clause also stipulated that any valuation in the rate of duty was to be to the buyers' account.

(3.) It is averred by 27.2.1989, more than 50% of the quantity, i.e. 264.103 Km. had been supplied. While so on 3.3.1989, the Central Government announced its aluminum Decontrol policy. Concurrently the prices of aluminum allegedly escalated; also the excise duty component upon it increased. The plaintiff, therefore, demanded differential payments on account of increased costs of the product by writing letters on 25.3.1989, 29.3.1989, 25.5.1989, 24.7.1989 and 25.7.1989. Eventually, the Union of India by its letter dated 4.9.1989 refused the request for absorbing the increase for price of aluminum under clause 19(a) read with Annexure "A" as well as increase in the Excise Duty.