[1] IN T IN T IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.955 OF 2005 IN ARBITRATION PETITION NO.400 OF 2003 Cimechel Engineering Company, 58/1203, M.I.G. Colony, Veera Desai Road, Andheri (West), Mumbai-400 058. .... Appellant - Versus - 1. Chief Electrical Engineer (Construction), Western Railway, Churchgate, Mumbai. 2. Dy. Chief Electrical Engineer (Construction) HQ Western Railway, Churchgate, Mumbai 400 020. 3. Shri R.K. Goel, Presiding Arbitrator, Addl. DG/RDSO, Lucknow. 4. Shri M.S. Lakha, Jt. Arbitrator, Chief Engineer (C&S) Western Railway, Churchgate, Mumbai-400 020. 5. Shri R.N. Verma, Jt. Arbitrator, F.A. & CAO (W&S), Western Railway, Churchgate, Mumbai-400 020. .... Respondents Sarvasri Shailesh Shah a/w Uday Sankar Samudrala for the Appellant. Shri Suresh Kumar for the Respondent Nos.1 and 2. [2] CORAM: CORAM: CORAM: SRI R.M.S. KHANDEPARKAR & SRI R.S. MOHITE, JJ. DATED: DATED: DATED: MARCH 31, 2008 ORAL JUDGMENT (Per Sri R.S. Mohite, J.): ORAL JUDGMENT (Per Sri R.S. Mohite, J.): ORAL JUDGMENT (Per Sri R.S. Mohite, J.): 1. By this appeal, M/s. Cimechel Engineering Company (hereinafter referred as ‘the Appellant’) impugnes a judgment and order dated 29-3-2005 passed by the learned single Judge of this Court in Arbitration Petition No.400 of 2003. By the impugned judgment and order, the learned single Judge has allowed the Arbitration Petition No.400 of 2003 filed by the present respondents under Section 34 of the Arbitration and Conciliation Act, 1996. 2. The brief relevant facts of the case are as follows: a. The appellant was a regular railway contractor having many ongoing projects in hand. The respondents had invited tenders relating to erection, testing and commissioning of 25 KV AC, 50 HZ Single Phase O.H.E. in the areas situated in the Ratlam Division of Western Railway. b. On 21-6-1993, the appellant had submitted its technical and price bids for the aforesaid tender. As [3] regards the price, the bid of the appellant was firm, inclusive of all taxes and duties, subject to price variation clause in case of upward revision for steel based on price of SAIL and copper and zinc based on price of IEEMA with base price of June, 1993. c. On 13-9-1993, a letter of acceptance was issued to the appellant duly incorporating the special condition of price variation which in a small variation stated that the price variation may be for either upward or downward revision for steel based on SAIL and copper and zinc based on the price of IEEMA. d. On 13-12-1993, the final agreement was signed between the appellant and the respondents. e. In view of certain price variations which occurred after the signing of the contract, the appellant submitted its first price variation bill for copper and steel for Rs.15,94,505/- which was thereafter revised to Rs.16,71,935/-. This matter was under consideration of the railways and meetings took place between the respondent and the appellant to resolve this issue. f. It appears that in the course of these meetings a letter dated 4-10-1995 was issued by the appellant to the respondents. On perusal of this letter which is on [4] record, it is clear from the same that the same refers to offer made by the railways on 26-9-1995. The letter stated that the proposal of the railways was acceptable as a special case restricting the claim for price variation at Rs.3.30 lakhs, subject to the railways accepting IEEMA formula for copper which was earlier submitted to the railways. The formula for copper was in fact reproduced in this letter. g. The records indicate that there was a meeting to consider this conditional counter offer made by the appellant and the formula suggested by the appellant in his letter dated 4-10-1995 was found acceptable and it was recommended that it should be accepted. In para 6 of the Minutes it was clearly noted that the rejection, acceptance or modification of the above recommendation was within the competence of CAO/C. h. It, however, appears that there is no final order of the CAO/C accepting the recommendation and communicating the acceptance to the appellant. 3. We find from the impugned judgment and order that the same proceeds on the footing that the appellant vide its letter dated 4-10-1995 agreed to accept the sum of Rs.3,30,000/- on account of price variation. The learned single Judge has not noticed that the letter [5] dated 4-10-1995 was not unconditional and was in fact in the nature of conditional counter proposal. The learned single Judge has also not noticed that the said counter proposal was never accepted and there was nothing on record to indicate that the acceptance was in fact communicated to the petitioner. The records further indicate that in fact after waiting for several years, the petitioner wrote a letter to the railways in the year 2000 contending that even their counter proposal was submitted under financial duress. 4. Apart from the above, a petition under Section 34 of the Arbitration and Conciliation Act, 1996 can be allowed only on very limited grounds as contained in Section 34. On behalf of the respondents, it was sought to be contended that the petition was allowed by the learned single Judge under Section 34(2)(b)(ii) which is to the effect that the arbitral award is in conflict with public policy. It is his case that this provision should be read with Section 28(3) of the said Act which provides that in all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction. It was contended that it was rightly held by the learned single Judge that the letter dated 4-10-1995 by itself amounted to change in the terms of the contract. For the reasons which we [6] have stated hereinabove, we are unable to accept this contention. In our view, the letter dated 4-10-1995 was in the nature of conditional counter proposal which was never accepted and in this background it cannot be said that the same would operate as change in the original contract. 5. It is well settled that a petition under Section 34 is not in the nature of an appeal. The single Judge has not indicated as to under which provision of Section 34 the award could be set aside. The Court hearing a petition has limited jurisdiction. In the present case no question of public policy was involved. 6. In this view of the matter, as there is no other reason given for varying the award, we feel that the appeal deserves to be allowed. Thus the impugned judgment and order passed by the learned single Judge on 29-3-2005 in Arbitration Petition No.400 of 2003 is quashed and set aside. The award passed therefore stands revived. The appeal, therefore, is allowed with no order as to costs. Needless to say that credit shall be given to any amount which have been already paid by the respondents. (R.S.Mohite, J.) (R.M.S.Khandeparkar, J.) [7] sjs/M8aj955.5 sjs/M8aj955.5 sjs/M8aj955.5