LAWS(ORI)-1997-7-16

ORISSA POWER GENERATION Vs. Z ENGINEERS CONSTRUCTION

Decided On July 23, 1997
Orissa Power Generation Appellant
V/S
Z Engineers Construction Respondents

JUDGEMENT

(1.) The above appeal is against the judgment dated 17.1.1994 of the Subordinate Judge, Bhubaneswar, dismissing the appellant's petition under Sections 30 and 33 of the Arbitration Act (hereinafter referred to as the 'Act') thereby refusing to make the award of the Arbitrator the rule of the Court.

(2.) THE dispute relates to non -payment of the dues of the respondent -claimant arising under the contract of agency. Pursuant to the acceptance of the lowest tender of M/s. Z. Engineer's Construction (P) Limited (hereinafter called the 'Agent'), floated by the Corporation (a Government of Orissa undertaking), the parties entered into a contract, the terms being that the claimant company would work as the liaisoning -cum -handling agent of the corporation for procuring 5545 Metric Tonnes of steel materials from the Steel Authority of India Limited from their Bhilai Steel Plant to the site at IB Thermal Power Transmission. It was agreed that for such liaisoning and handling work the Agent would be paid at the rate of Rs. 125/ - per metric ton. The appointment was dated 9.11.1989 and the company was required to procure the materials by February, 1990 which was the period of contract. Several other terms and conditions were prescribed including the one that in case of breach of contract by the agent, the Contract could be prematurely terminated and further, in case of delay in delivery of materials, the agent will be liable for penalty at the rate of 5 per cent of the service charges.

(3.) MR . R.K. Mohapatra, learned counsel though has advanced extensive argument, yet the whole of his contentions may be conveniently confined to the following points : i) It is contended that under Clause 9 of the agreement, since the claim was for payment of the dues, the decision of the General Manager, Ib Thermal Power Station was final and the latter having rejected the claim, the reference for arbitration was illegal and so also the consequent award. This, according to Mr. Mohapatra, automatically excluded the application of Clause 10 of the agreement which provided that only legal disputes between the parties should be referred to the arbitration and not the present one which is a factual dispute. The reference and the award being illegal, the learned counsel contends that the award should be set aside holding the same to be invalid otherwise' and prescribed under Section 30(c) of the Act. Mr. Mohapatra. to support his above point relies on the case of She Union of India v. Shri Omprakash, reported in AIR 1976 SC 1745. ii) the Company did not perform any service for procuring the material and the Arbitrator committed gross error putting the burden of proving this fact on the Corporation. iii) Though an average 1000 metric ton materials were expected to be received every month, in the month of November, 1989 a total quantity of 3195 metric -tonnes were received at one lost causing great inconvenience for the Corporation to handle the stock. iv) The Company did not procure the rolling programme from the Steel Authority of India as per the agreement and this affected the Construction activities carried on by the Corporation. v) The Agent did not establish an office at Jharsuguda for facilitating the liaisoning and co -ordinating work though required under the agreement.