AVI COACH BUILDERS Vs. UOI

JUDGEMENT

(1.) AT the outset learned counsel for the appellant has delivered in Court a compilation of documents stated to form part of the arbitral record. The same is taken on record. This appeal challenges the judgment of the learned single Judge dated 11th September, 2006 upholding the award delivered by the Arbitrator on 30th September, 1991. The factual background may first be stated.

(2.) THE respondent invited the quotations for construction of passenger coaches on the chasis to be supplied by the respondent. The appellant submitted its tender. Under the agreement initially one chasis was agreed to be provided to the appellant to enable the appellant to fabricate a proto-type of the coach. Upon the approval of the proto-type, the appellant was required to fabricate the remaining 30 "coaches on the chasis to be supplied by the respondent. The chasis was to be supplied to the appellant against the security of a bank guarantee to cover the cost of the chasis. The appellant furnished a bank guarantee in respect of the price of one chasis against which the appellant received the chasis. The appellant fabricated the coach and the same was submitted to the respondent for approval on 04. 08. 1984, and finally accepted by the respondent on 21. 09. 1984. The remaining 30 coaches were to be developed in batches of six each, and for receiving each batch, the appellant was required to furnish the security of a bank guarantee.

(3.) ACCORDING to the respondent, the appellant failed to furnish the requisite bank guarantee for six coaches and consequently despite the approval of the prototype the contract remained unperformed by the appellant. The respondent sought to cancel the contract and claims to have proceeded to get the work done at the risk and cost of the appellant. The respondent, in these circumstances, preferred a claim before the arbitrator for Rs. 14,87,720/ -.