Decided on December 03,1970

UNION OF INDIA Respondents


S.K.Chakravarti, J. - (1.) This appeal is at the instance of the plaintiff in a suit for damages for breach of contract against the Union of India. The Union of India invited tenders for the supply of paints of the description compound recolouring Olive Green Scamic 314 for faded tents to Specification Ind/ 32/7037. The plaintiff offered a tender being sample No. 30/100. The laboratory did not consider the sample to be upto the mark, but the higher authorities of the Defence Department accepted this tender, and placed an order with the plaintiff for supply of 500 Cwt. of this article and the price was fixed at Rs. 256/-F.O.R. Calcutta per Cwt. According to the contract the goods were to be inspected by the Inspector at Calcutta, and if he was satisfied that these were upto the mark, then the same could be despatched by the plaintiff on receipt of the inspection notes. The original date of delivery was fixed on 15th of October, 1952, but the plaintiff stated that it might not be in a position to do so as it had to indent some of the ingredients from U K., and on their successive applications for extension of time, time for supply was finally extended upto the 30th of April 1953. 9 Cwt. of this article was inspected on the 16th October 1952 and accepted and despatched on the 5th December 1952. The second lot consisting of 591/2 Cwt. was inspected on the 16th March 1953, and was rejected on the 22nd April 1953, and again offered after some reconditioning on the 30th April 1953, and rejected on the 19th May 1953. The third lot of 150 Cwt. was inspected on the 30th March 1953 and accepted and despatched on the 17th April 1953. The fourth lot consisting of 188 Cwt. was inspected on the 13th April 1953, and was rejected on the 7th May 1953. The last lot consisting of 931/2 Cwt together with 591/2 Cwt. constituting the second lot, were inspected on the 30th April 1953, and rejected on the 19th May 1953. Therefore, the defendant had accepted 159 Cwt., and the balance of 341 Cwt. constitutes the disputed item. The defendant terminated this contract on the ground that the delivery was not made by the 30th April by its letter dated the 1st of May 1953 (Ext. 20). Before the receipt of this letter, Mr. Bogh (P. W. 1) the Technical Director of the plaintiff company went over to Kanpur to find out how the test was carried on them and he was given every opportunity to see that on the 1st of May 1953. On his coming back, the letter of cancellation of the contract was gone into, and the plaintiff requested the Kanpur authorities where the tests were to be done, to enable its chemist Mr. Ghosh to come and see for himself why the goods were rejected. Mr. Ghosh (P. W. 3) came there in the third week of May 1953, and with the help of Drs. Ranganathan and Balakrishnan (D. Ws. 1 & 5) he saw how the test was carried on. The reconditioned sample which he had brought was tested by the authorities at Kanpur, at the request of the plaintiff by its letter the 22nd May 1953, (Ext 23), and on the 30th May the Kanpur authorities wrote to the Inspector in Calcutta, with copy to the plaintiff, that this reconditioned sample was "found to conform to the quoted particulars in all respects and is therefore acceptable" (Ext. 24). There was further correspondence between the plaintiff and the defendant re: the acceptance of the goods but the defendant by its letter dated the 30th September 1953 (Ext. 51) intimated that its decision as conveyed by its letter dated the 1st of May 1953 was final and cannot be altered and further that the stores offered by the plaintiff "were not in accordance with the terms of the Contract for quality". Thereafter the plaintiff served the usual notices on the defendant and the matter had also been referred to arbitration. The Arbitrators however found that under the terms of the contract, the Inspector's decision was to be final and binding on the parties, and. as such, held that they had no jurisdiction to enter into this question of the rejection of the supplies on the ground that this did not conform to the required specification. The main ground of the plaintiff is that the test made by the Kanpur authorities was not in accordance with the agreement inasmuch as they "were carrying out the test by comparing the supplied material with a tinted slip prepared some months ago with the paint from the said sample No. 30/ 100" and not in the same manner and at the same time as provided for in the Agreement. It was further alleged that the Inspector carried out the inspection capriciously and not in accordance with the said specification. The plaintiff further alleged that the materials were specially manufactured for the purpose of this tender and could not be resold in the market and claimed a sum of Rupees 88,496/- as damages inclusive of storing charges on the basis of the price at which the plaintiff agreed to supply together with a sum of Rs. 5,228/- by way of interest. The total claim was thus laid at Rs. 93,724/-. The Union of India contested the suit alleging that time was of the essence of the contract and further that the tests at Kanpur were carried on in accordance with the rules, and that the Inspector's reports were not at all arbitrary, and that the supplies were not accepted as the same were not of the requisite quality. The learned Subordinate Judge at Alipore held in favour of the defendant on all the points involved, and dismissed the suit. Hence this appeal.
(2.) Now under the terms of that Agreement "the Inspector's decision as regards rejections aforesaid shall be final and binding on the parties " in this case, as we have already pointed out, the Inspector's reports (Exts. 26-28) are to the effect that the articles are not according to the specification and the shade Is lighter than the sample of 30/100" and "did not match also the standard olive green scamic 314." Prima facie, therefore, the plaintiff will be bound by It and its claim to damages cannot be entertained. Mr. Rabindra Mohan Mukherjee learned Advocate appearing on behalf of the appellant submits that the Inspector did not apply his mind to the point and merely dittoed what was written by the authorities at Kanpur and, as such his Reports are perverse and arbitrary and cannot bind the parties. In the next place, it has also been urged that the tests which had been made at Kanpur were not in accordance with the Contract, in view of the facts that the tests were not carried on with reference to the accepted sample 30/100 at the time of examination of the contents of the further supplies, but with tints made at a distant time. It has also been urged that the sample 30/100 had already been destroyed.
(3.) Now, if the contentions or either of them are accepted, then it must be held that the Inspector's reports would be arbitrary, and it would be open to the plaintiff to challenge the order of rejection prima facie passed on that basis, and the order of rejection would not stand.;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.