Decided on April 05,1983

R.N.DATTA Respondents


Pratibha Bonnerjea, J. - (1.) THIS is an application by the petitioner Steel Authority of India Ltd. for setting aside the award dated 30-1-1981.
(2.) PURSUANT to the invitation to tender No. MP/69132/1B/1311 dated 14/11/1973, the respondent submitted a tender dated 23/11/73 for manufacture and supply of 2,40,000 metres of 1/2" M. S. Black Pipes and the same was accepted by the petitioner by acceptance of tender dated 28/2/1974. Disputes and differences arose between the parties in connection with the said contract and the same were referred to arbitration in accordance with the arbitration agreement in the contract. It appears from the award dated 30/1/81 that the main claim of the respondent before the joint arbitrators was damages for non-accept-ance of goods by the petitioner. The arbitrators made and published their award dated 30/1/81 in favour of the claimant. R. N. Datta as follows :-- "That the respondent to pay to the claimant the sum of Rs. 2,30,814.48 as damages for failure to accept 66,326 metres of 1/2" M. S. Black Pipes which was the subject-matter of contract between the parties." The petitioner's counsel submits that in the statement of claim, the claimant alleged that the time to deliver the goods was from January 1975 to February. 1976. According to the claimant the petitioner committed an anticipatory breach of contract by asking the claimant not to despatch goods by letter dated 5/6/1975. Under the circumstances two options were open to the claimant, first to accept the breach committed on 5/6/1975 immediately and secondly to wait until expiry of the last date of performance on 28/2/1976. Therefore the date of breach could be either on 5/6/1975 or on 28/5/1976. The damage should have been assessed on the basis of difference between the agreed price and the market price on 5/6/1975 or 28/2/1976. The claimant, however, claimed damage on the basis of alleged loss suffered by it on resale of the goods on 10/9/1977. Resale could only be made if all the conditions laid down in Section 54 (2), Sale of Goods Act, are fulfilled. But the claimant was not the unpaid vendor, property in the goods did not pass to the petitioner and no notice of resale was served on the petitioner by the respondent before resale. Not a single requirement of Section 54 (2) was fulfilled. Hence Section 54 (2), Sale of Goods Act. could not be invoked in the present case. If the arbitrators awarded damage on the basis of Section 54 (2), Sale of Goods Act, the award was based on a wrong proposition of law. If, however, the damage had been assessed on the basis of Section 73, Contract Act. then the arbitrators would be guilty of legal misconduct as they did not have any iota of relevant evidence of market price on the date of the breach and as such could not have awarded any damage on that basis. In either case, the award is liable to be set aside. In support of his contention he relies on He further submits that the arbitrators must act according to law as held in (1929) 56 Ind App 128 at p. 136 : (AIR 1929 PC 103 at p. 106).
(3.) IN (1949) 53 Cal WN 828, which is a Division Bench decision of this High Court, the transaction was in jute goods and during the period of contract, the ceiling price of jute was controlled by the Jute Price Control Order then in force. The due date of delivery was within June 1946. IN 1947, the control was lifted. IN August 1947, the buyer demanded supply and due to non-supply, referred the matter to the Bengal Chamber of Commerce for arbitration. The Tribunal awarded damage of Rs. 7312.80. There was no case of extension of due date nor there was any evidence in support of extension of due date before the arbitrators. It was, however, admitted that the damage had been awarded on the basis of price of jute exceeding the ceiling price prevalent during the period of contract. It was argued that as there was no error appearing on the face of the award it was not open to court to make an enquiry about the basis of damage. But the court held that the Tribimal could not have awarded damage unless they had held by implication that the due date was extended till Aug., 1947 and that would amount to legal misconduct on the part of the arbitrators as there was no such case or evidence before them. It was further held: -- "An award can be set aside on the ground of error of law when it is manifest on the face of the award. It is, however, open to the court to look into the relevant statements filed before the arbitration Tribunal. If the court is satisfied that the arbitrators were guilty of misconduct then the court should set aside their award. The expression 'legal misconduct' is an ambiguous term. It means and includes some honest though erroneous breach of duty causing a miscarriage of justice. If there has been a mishandling of the arbitration proceeding or serious neglect of duties on the part of the arbitrator vested with judicial authority to determine the rights and liabilities of parties which is likely to lead to substantial miscarriage of justice, then the court is justified in setting aside the award.";

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