FRIENDS COAL CARBONISATION Vs. HINDUSTAN ZINC LTD

JUDGEMENT

(1.) This is an appeal under S. 37 of the Arbitration and Conciliation Act, 1996 (for short the Act") against the order of the Additional District Judge No.2, Udaipur passed in Civil Misc. Case No.2/98, by which the application under S. 34(2) of the Act filed by the respondent Hindustan Zinc Limited was partly allowed and part of the award dated 17-1-1998 was rejected and it was held that the appellant is entitled for Rs.11,42,203.90 and also allowed interest.

(2.) Brief facts of the case are that the appellant M/s. Friends Coal Carbonisation (for short 'FCC') entered into a contract with the respondent M/s. Hindustan Ziinc Limited (for short 'HZL') for supply of metallurgical coke in pursuance of a tender offered and concluded and as per the contract, the appellant-FCC was to supply 19,000 tones of metallurgical coke. According to the appellant-FCC, initially the Coking Coal Washery Grade-II was used for the manufacturs of metallurgical coke which was being a controlled item, was made available to the appellant-FCC through Coal Controller of India, that too, it was supplied at the instance of therespondent-HZL. This supply of Coking Coal Washery Grade II continued upto 14-7-1992.

(3.) According to the appellant and admitted by the respondent, after 14-7-1992, there was a deterioration in the quality of Washery Grade-II Coal and to maintain the standards as per purchase orders agreed between the appellant and the respondent, Washery Grade-I was required to be used so, that requisite quality ofmetallurgical coke can be supplied to the respondent-HZL. This was done for supply at both the units of HZL, namely, Vishakhapatnam -inc Smelter and tundoo Lead smelter. The appellant further submitted that coal, being an essential commodity under the Essential Commodities Act, its acquisition, transport and transfer etc. was controlled by the Coal Controller Order and the coal can be supplied only at the request for demand made by the actual user, i.e. M/s. Hindustan Zinc Limited in this case. It is further submitted that all the coke supplied for coal of Washery Grade-I, release orders were issued at the instance of the respondent HZL andthe release orders were also sent to the HZL by the Coal Controller. When the appellant claimed higher price on account of use of coal Washery Grade-I, the respondent disputed the claim and afterseveral letters, ultimately the appellant issued legal notice claiming that the appellant is entitled for escalation of price as per the clauses given in the contract and also demanded interest. The total claim of the appellant was Rs.19,89,977.37 and Rs.21,18,355.92 interest overthe above amount.