UNION OF INDIA Vs. RAMA PAPER MILLS LIMITED

JUDGEMENT

(1.) Since the counsel for the caveator has put in appearance the caveat stands discharged.

(2.) The two grounds on which the appeal primarily rests are; First, that the findings vis-'-vis the "no dues" or "no objection" certificates issued by the claimant foreclosing its demands in arbitration and second, the rejection of the test reports was, under the circumstances, unwarranted.

(3.) The agreement in question entered into by the parties was for the supply to Union of India, quantities of news-prints. The quantities and the rates were agreed upon. The contract conditions stipulated, inter alia, that every batch of supply was to be subjected to deductions based upon assessment of the quality and for that purpose, the samples from the batch were to be referred to Government approved laboratories. The fee for the sample testing was to be borne by the claimant. The claimant sought a reference complaining that its dues were withheld unjustly by the Union of India. The claimant's ground was that a sum of Rs. 1,31,58,471/- in respect of three invoices was withheld. The Union relied upon a letter or no claim certificate dated 22.10.2014 and the second, no dues certificate dated 30.12.2014. Both the Arbitrator and the learned Single Judge (who examined the merits of the award on the basis of the Union of India's objections) concluded that the Union's claims with respect to foreclosure of the claimant's dues, by its own conduct, were insubstantial and meritless. It was held that Union was holding on to a bank guarantee of Rs. 1.5 crores and had even insisted for its extension after the completion of the supplies and that since the claimant was facing problems with its bankers, in effect, it was compelled to issue the two letters relied upon by the Union. The reliance was placed upon the judgment of National Insurance Company Limited vs. Boghara Polyfab Pvt. Ltd., (2009) AIR SC 170, outlining the circumstances where an apparent waiver of claims has to be closely examined in the background of the overall circumstances of the case. As far as the test reports relied upon by the Union in the Arbitration proceedings were concerned, the learned Single Judge was persuaded with the reasoning of the Arbitral Tribunal that the documents were not properly proved in Arbitration proceedings and that the samples were supplied after undue delay without appropriate monitoring. Most importantly, the absence of any expert in support of the deductions on behalf of the Union, was held against it.