UNION OF INDIA Vs. RAMPUR DISTILLERY AND CHEMICAL CO LTD

JUDGEMENT

(1.) This is an. appeal against the order of the learned Single Judge on a petition praying for setting aside of an award dated 7th December, 1973 made by Ch. Ramakrishna Rao, Additional Legal Adviser, Ministry of Law & Justice. The petition seeking to set aside the award was numbered as Suit No. 25-A of 1974. The learned Single Judge referred to the pleadings of the parties, the correspondence exchanged between the parties before submission to the arbitrator was made, and the contentions raised in this Court and found that "the controversy between the parties was in regard to the interpretation of the clauses of the agreement, inparticular clause 3 thereof". The learned Judge then referied to the letter dated 11th March 1971 wherein a request was made to the Secretary, Government of India, Ministry of Food and Agriculture to appoint an arbitrator. The learned Judge came to the conclusion that a reading of the request made to the Secretary to the Govt. of India and the letter of the Secretary dated 4th June 1971 appointing the sole arbitrator "leaves no manner of doubt that the question of law, namely, interpretation of Clause 3 was specifically referred to the sole arbitrator for his decision" and since the parties wanted a decision on a point of law, namely, the interpretation of Clause 3 of the agreement as a separate and distinct matter, the court cannot interfere with the award of the arbitrator. Relying on the ruling of the Supreme Court in M/s. Alopi Parshad and Sons, Ltd. v. Union of India, AIR 1960 Supreme Court 588(1), the learned Single Judge held that since the reference was of a specific question of law, the award shall bind the parties.

(2.) In this appeal, two contentions are raised, (1) that the submission to the sole arbitrator was not a submission of a specific question of law and the award can be challenged, (2) that the arbitrator has committed an error of law which is evident on the face of the award.

(3.) The undisputed facts are that the appellants invited tenders on 1st December, 1969 on running contract basis for the supply of approximately 22,02,330 litres of Rum within a period of one year from the date of acceptance of tender. (The tender was issued subject to the terms and conditions already communicated to the prospective tenderers by letter dated 9th August 1968). The tenderers were also requested to indicate the quantity of Rum that they will be able to supply on one month's notice. It was further clarified in the invitation to tender that the quantity afore-mentioned was only approximate and the exact quantity to be supplied during the period, i.e. one year will be specified in the acceptance of tender which would be subject to increase or decrease of 50 per cent at the option of the purchaser. The tenderers were given the option to quote for the entire quantity or for a smaller quantity. For other terms and conditions applicable to the tenders the tenderers were referred to the terms and conditions circulated earlier. One of the conditions thus circulated was as follows :