UNION OF INDIA Vs. SUNNY BUILDERS

JUDGEMENT

(1.) For manufacture and supply of Furniture at Nagrota, a contract was entered between the Commander Works Engineers 138 and the respondent-claimant by contract agreement CA No. CWE/JP-83A/05-06 on 09.02.2006. The value of the contract agreement was Rs. 11,85,025.00. The contract was to commence from 09.01.2006 and 31.01.2006 and the completion date was fixed as 30.07.2006, which, subsequently was extended to 07.12.2006. It seems that the first consignment is stated that have been supplied by the claimant, for which an amount of Rs. 2,35,920/- was released in his favour. On completion of second set of supplies a bill to the tune of Rs. 3.35 lacs and odd was raised. This bill is stated to have not been cleared by the petitioner, as a result of which Clause 37 of the agreement was invoked by the claimant for referring the matter to the arbitrator. On reference being made to the arbitrator, he is stated to have entered into the reference on 17.12.2007. As many as ten claims were laid by the claimant. Except claim Nos. 3 and 5, all other claims were allowed by the arbitrator. The counter-claims raised by Union of India were rejected. Feeling aggrieved of this award, the objector has filed this petition under Section 34 of the J&K Arbitration and Conciliation Act of 1997 for setting aside the arbitral award dated 22.05.2008.

(2.) The grounds for setting aside the award relates to the fact that arbitrator has passed the award ignoring the stipulations in the contract and, without referring to the stipulations of the contract, the arbitrator has accepted the claims of the claimant.It is contended that articles supplied by the claimant were to be accepted strictly in consonance with the contract specifications. The arbitrator by traveling beyond the scope of the contract has allowed the claims. The second ground is that while accepting the plea of the claimant in accepting the supplies made by him in violation of the specifications provided in the contract, misconduct of the arbitrator is apparent. What is being contended is that, as the supplies were not found in consonance with the contract specifications, claimant was informed by letter dated 28.10.2006. In this behalf reference was also made to General Condition of IAFW-1815Z (General Condition of contracts for the supply of stores and material to the MES) which stipulated that Engineer-In-charge shall have the full power to reject the material brought to site by the claimant, which are not in accordance with the contract specifications and accordingly the material supplied by the claimant was rejected by Engineer-In-Charge. It is further contended that as per the condition of the contract, GE is the final authority in deciding whether the supplies are of quality inferior to that contracted for or otherwise under Condition 20 of IAFW-1815Z and the decision of the GE in this regard shall be the final. It is also contended that recommendations of the Board of Officers has not been concurred by the accepting officers. In nut shell the objection raised is that the supplies which are not in conformity with the specifications of the contract, as such, cannot be accepted and the arbitrator has no authority to allow the claims in this behalf.

(3.) The stand of the claimant is that reliance placed by the petitioner on general conditions of the agreement stands superseded by clause/ note 8 of the contract executed with the claimant, which provides as under: