Decided on February 09,1983



D.R.Khanna, J. - (1.)ON an application moved under Section 14 of the Arbitration Act by the Union of India, Shri P.S. Kaicker Additional Legal Adviser to the Government of India, Ministry of Law, Justice & Company Affairs, New Delhi, who acted as sole arbitrator inter-se parties for determining the disputes and differences inter-se them under A/T No. POM-I/20/ 098/17.5.78/PI/389/PAOD/096. dated 9.11.78, filed his award dated 29.8.1980 in Court. Notice of this filing was given to the parties. The respondent Coventry Metals Corporation Pvt. Ltd. then filed objections to the award.
(2.)IN the meanwhile, it appears that the respondent had as well moved the arbitrator under Section 13(d) of the Arbitration Act for giving a finding on the 5/o balance price due to them, which the learned Arbitrator had missed to give. The award was their amended by the arbitrator on 21-11-1980 so as to allow 5/o balance price to the respondent. No. objection has been filed from the side of the Union of INdia to this allowance of 5/o balance price.
It has thus been against the allowance of the amount of Rs. l,24,142.00 which had been awarded in the original award, that the objections now remain to be adjudicated.

The following issue in this regard was framed : -

"Whether the award is liable to be set aside on the grounds set out in grounds ?"

Before proceeding with the merits of the controversy involved under the issue, it may be mentioned that the respondent had as well filed claim before the Arbitrator for damages. The same was not allowed. The respondent has not filed any objections, seeking reversal or amendment of the award on that score.

The background of the facts is that a tender enquiry was floated by Union of India in May 1978 for the purchase of a number of brass items. It was mentioned therein that the tenders submitted in response would remain open for acceptance till 30th October, 1978. The respondent then submitted the tender dated 21-8-1978, and in this the description of the stores to be supplied was the same as mentioned in the tender enquiry. The Directorate General of Supplies & Disposals on behalf of the Union of India, then issued an advance acceptance on 30-10-1978. It was clarified in it that the contract had stood concluded with the issue of the advance acceptance, and that the formal A/T indicating the details of the terms and conditions, and also the complete specifications would be under issue separately. This advance acceptance was thus on the last day upto which the tender was open to acceptance in terms of what was stated in the tender enquiry. There was a mention of five different items of the store which the respondent was required to supply. Three of them tallied with the tender enquiry and the tender. Those stores were actually supplied by the respondent, and their price too has been paid upto 95% to the respondent. For the remaining 5% the learned Arbitrator amended the award as aforesaid.

However, with respect to two other items, the description of the stores was different from that mentioned in the tender enquiry and the tender of the respondent. That description given was 10,000 kgms. of brass sheet cold rolled of 1.2 mm thick HH. In the tender enquiry and the tender, the description given was 1.22 m.m. thick HH. The other item was of 3000 kgms. brass sheet cold rolled of 0.56 mm. thick HH (which meant half hard) In the tender enquiry and the tender description of this item was 0.56 mm thick spring hard.

After the receipt of this advance tender, the respondent wrote to the Director General of Supplies & Disposals that it was proceeding with the manufacture of the store items to be supplied.

The formal acceptance was sent by the Director General on 9-11-1978. In this the store items were described in the same manner as mentioned in the tender enquiry and the tender. The respondent by letter dated 18-11-1978 objected to the change of the description of the stores with regard to two items vis-a-vis the advance acceptance of tender, and stated that the goods were already in an advance stage of manufacture and could not be utilised elsewhere for the sizes and tampers.

(3.)THE respondent having failed to supply the other two items, the Director General proceeded to make risk purchase. Tender in that regard was floated on 5-5-1979, and the tender of a third party was accepted on 12-6-1979. Earlier on the failure of the respondent to supply the said two items, the contract was cancelled on 28-4-1979.
Here it may also be mentioned that in the advance acceptance of tender, the last date for effecting supplies was mentioned as 15-2-1979. This date in the final acceptance was changed to 28-2-1979.

The sum and substance of the case of the respondent is that with regard to the two items of the stores which had not been supplied, there could not be said to be any concluded contract between the parties, and that in any case, there was an uncertainty about the nature of goods, and, therefore, the contract was hit by Section 29 of the Contract Act. Since the arbitration clause was part of the contract, and when it is found that there was no concluded contract vis-a-vis these two items, the arbitration clause as well fell.

From the side of the Union of India, however, it is conteded that there was only a mistake committed in the advance acceptance, and the same should not be allowed to be exploited by the respondent. This advance acceptance had itself clarified that the formal acceptance would follow, and so also the details and specifications of the stores to be supplied. The formal acceptance was in consonance with the tender submitted by the respondent, and in the circumstances, the respondent should not be allowed to make a grievance of the same, and take benefit of the default committed in not making the supplies accordingly.


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