Decided on April 04,1996



S. Chakravarthy, Member - (1.) THIS is a keenly contested case where objections have been taken at the threshold of the proceedings with submissions and counter-submissions of all the parties galore. But before proceeding with what we propose to adjudicate in this order, the germane facts need to be set out.
(2.) Ballarpur Industries Ltd., the applicant herein, is a company registered under the Companies Act, 1956, and is engaged, inter alia, in the manufacture of different varieties of paper. For the purpose of manufacturing paper, the applicant requires pulp which it manufactures in its own mills and which it also purchases from different suppliers. During the year 1992, towards its end, when the applicant required 2,000 metric tonnes of paper grade pulp, Sinarmas Indonesia, the first respondent herein (referred to as "respondent No. 1" hereafter), offered to supply pulp through its fax message dated December 2, 1992, enclosing the specifications of pulp. The applicant after examining the specifications informed respondent No. 1 that the brightness of the pulp has been indicated at 86 per cent. whereas the previous supply had the brightness of 87 per cent. and that similarly the dirt count (5 mm2/m2 down) is also different from that (3 mm2/m2 down) of the previous supply. Respondent No. 1 responded through its fax message dated December 4, 1992, stating that the average brightness would be 87 per cent. and the dirt count 3mm2/m2 down and that it was looking for a long-term relationship with the applicant. It also stated that the specifications as conveyed on December 2, 1992, was only to avoid "legal complications". Subsequently, on December 12, 1992, respondent No. 1 confirmed that it would supply 2,000 metric tonnes of pulp by December 25, 1992, at a price of U.S. $ 420.75 per AD metric tonne. Upon this, the applicant through its letter dated December 14, 1992, confirmed its order for 2,000 AD metric tonnes and opened a letter of credit also. The goods reached Bombay port on January 25, 1993, and respondent No. 1 operated the letter of credit and negotiated the documents. The applicant retired the documents and took delivery of the goods believing the representations of respondent No. 1 to be true and correct with regard to the quality, specifications and standard of pulp in its messages dated December 2 and 4, 1992.
(3.) ON arrival of the pulp at the applicant's unit, it was tested and analysed and it transpired that the pulp supplied by respondent No. 1 was "much below the standard, quality and specifications represented earlier" by it. The applicant informed respondent No. 1 of the analysis report and pointed out the deficiency in the quality of the pulp supplied. This was on February 10, 1993, after which, according to the applicant, it started discussing the matter with respondent No. 1 on its difficulty in using the pulp supplied by the latter.;

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