UNION OF INDIA Vs. BINOD KUMAR AGARWAL

JUDGEMENT

(1.) The present appeal is arising out of an order passed by the learned Single Judge in rejecting an application filed under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside of an award passed by a departmental Arbitrator appointed by the appellant. The disputes relate to non-delivery of certain quantities of scrap rails by the appellant to the respondent. The appellant invited a tender for sale by auction of 192.673 MT of scrap rails under lot no.BESY/1/98/R/UDL/5 lying in the Andal (Yard) of the Railways to be held on 27th January, 1998, the particulars whereof has been specifically mentioned in the concerned auction sales catalogue. The respondent participated in the tender which was conducted by the auctioneer, namely, Indian Auction Mart, a Government and Railway auctioneer. The respondent became the highest bidder and thereby a successful tenderer in respect of the aforesaid lot for 192.673 MT of scrap rails and after being declared to be the highest bidder, signed the bid sheet agreement in order to purchase and lift the material from Andal Yard of the Railways subject to fulfilment of conditions as laid down in the special and general conditions of sale by auction in Eastern Railway. In consideration of the appellant in accepting the respondent as highest bidder and having agreed to sell the said contracted quantities to the successful bidder, the said respondent deposited the earnest money of Rs.1,59,000/- on the date of auction and agreed to deposit the balance consideration in two installments and, accordingly, executed the bid sheet agreement in January, 1998.

(2.) The grievance of the respondent was that the respondent was prevented from depositing the balance consideration in installments in view of the failure of the Railway authorities to allow the petitioner to make available the quantities in terms of the auction sales catalogue. The respondent on reaching the site found that the lot that was agreed to be sold were disturbed after the auction and scattered all over the area. The lot that was agreed to be sold has undergone a change subsequent to the auction as to the physical status and character of the lot. In fact, the respondent complained that the lot that had been agreed to be sold had been completely changed and the Railway authorities were seeking to sell a completely different lot. The respondent noticing such discrepancy and hearing regard to the fact that he would be required to take delivery within twenty days against payment of entire consideration money and sixty days time for lifting the materials without interest and ground rent, immediately on February 9, 1998 ventilated its grievance and requested the appellant to restore the lot so as to enable the respondent to make payment and lift the contracted materials within the stipulated time. The said letter was followed by several representations. Since the appellant had failed to make available the required lots within the stipulated time, a request was also made for refixing payment and delivery time without interest and ground rent. The Railway authorities instead of remedying the breach in purported exercise of its power under Clause 23 of the special conditions read with Clause 4(b) of the general conditions sold the said lot to a third party giving rise to a reference being made to the departmental arbitrator who was the then Deputy General Manager, Eastern Railway praying, inter alia, for specific performance and other reliefs. The claimant, inter alia, prayed for specific performance of a contract with a direction upon the appellant for restoration, refixation and arrangement of materials from same or alternate location, damage and interest.

(3.) The principal grievance raised before the learned Arbitrator as it appears from the statement of claim is that in spite of repeated approach and request being made to the stock holder, railway for fixing an advance date for taking delivery of the subject materials so that on payment of the installments, the balance quantities could be lifted, the Railway authorities did not pay any heed to such request and failed, neglected and refused to deliver the entire identifiable and ascertained quantity which they had agreed to sell in terms of the said public tender. On the contrary, on a specious plea that the purchaser had failed to pay the balance consideration within the stipulated period in purported exercise of their power in terms of the clauses alluded to above sold the contracted quantities to a third party. Since the claimant was all throughout ready and willing to pay the balance consideration, the Railway authorities without discharging their obligation could not have by exercising their superior bargaining power compelled the respondent to pay the installment amounts without making the lot in a deliverable state in terms of Clause 22 of the general conditions of sale by auction. The respondent found, the quantities allotted in favour of the respondent were in a disturbed condition and the Railway authorities were unable to deliver the goods in terms of the bid sheet dated 27th January, 1998 and, accordingly, the Railway authorities acted illegally and in breach of the bid agreement in selling the said lot in favour of a third party.