1 pps IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION Arbitration Petition No.1015 of 2009 M/s. Ahuja Plastic Works through its proprietor Manohar S. Ahuja having place of business at C-706, Lachepelle, Evershine Nagar, Malad (West), Mumbai 400 064 .. Petitioners v/s. 1. Union of India, through the Director of Supplies (Textiles) having his Office at New CGO Building, 6th floor, New Marine Lines, Mumbai 400 020 2. Mr.B.L.Choudhary, Addl. Legal Advisor to the Government of India, Ministry of Law & Justice, having office at Jeevan Tara Building, Room No.3, 1st floor, 5 Sansad Marg, New Delhi, 110 001 ..Respondents Ms.Amruta Thakur i/b. Singhi & Co. for the Petitioner Ms. S.I. Shah with Mr. Ashok Verma for Respondents 2 CORAM : R.Y.GANOO, J. DATED : 15th June , 2010 JUDGMENT. : 1. The Petitioners have challenged the award dated 19.6.2009 passed by the learned Arbitrator i.e. Respondent No.2 in Arbitration Case No.BLCM-44/2008. Few facts necessary for disposal of this petition are under: 2. Respondent No.1, Union of India, through Director of Supplies (Textiles) were in need of mosquito nets and had therefore floated a tender as per the normal procedure for supply of 4700 mosquito nets. This happened on 24.7.1995. It is common ground that the Petitioner had submitted a tender and had agreed to supply the mosquito nets as per the tender conditions. It is also agreed that out of the total order to be carried out as per the tender conditions the petitioner supplied 274 mosquito nets leaving a balance of 4676 as the one not supplied under the agreement. The Petitioner had requested the Respondent No.1 to extend the time of delivery and accordingly by letter dated 26.9.1995 time to deliver balance of mosquito was extended upto 31.1.1996. It is the case of the respondent no.1 that despite extension 3 of time the petitioner did not deliver the balance of mosquito nets and that is how the respondent no.1 was required to purchase the said mosquito nets at the risk of the petitioner. According to the respondent no.1 in the entire process, the respondent No.1 suffered loss to the tune of Rs.7,64,585/- and the same was demanded by letter dated 16.12.1997 and because the petitioner failed to pay the monies on demand, the respondent no.1 had no other alternative but to refer the dispute to arbitration for decision. 3. I have heard learned Advocates on both sides and I have perused the text of the application. In the body of the petition it is admitted by the petitioner that the petitioner could not supply all the quantity before the extended date. It is also admitted by the petitioner that the respondent no.1 issued fresh tender for purchase of balance of the mosquito nets and according to the petitioner, the petitioner had also put in their tender. However, the same was not accepted. It is admitted by the petitioner that the lowest bid was of one M/s. Neema Fabricators Pvt. Ltd., quoting the price of Rs.305/- per unit. It is also the case of the petitioner that the firm called Madhu Stores, Kanpur quoted price of Rs.449/- per unit and certain allegations are made as 4 regards rejection of the tender of Neema Fabricators Pvt. Ltd. It was sought to be argued by learned Advocate for the petitioner that the learned Arbitrator had no authority to proceed in the matter as time to pass the award had come to an end and therefore the mandate of the learned Arbitrator had come to an end and the application filed by the petitioner so as to seek an Order that mandate of the learned Arbitrator had come to an end wrongly came to be rejected by the learned Arbitrator. According to her the said order is illegal. She submitted that once a finding in that behalf is recorded, it is required to be set aside. 4. Learned Counsel appearing on behalf of the respondent no.1 opposed submissions of Counsel for the petitioner. I was taken through the text of the award by learned Counsel on both sides. It is required to be noted that in the beginning Arbitrator Mr.Nished was required to perform his job within a period of six months but he resigned. By order dated 12.4.2002 new Arbitrator was ordered to be appointed. Thereafter new Arbitrators were appointed on account of resignation of Arbitrators from time to time. Ultimately Respondent No.2 was appointed and he has passed the impugned award. On account of 5 order dated 12.4.2003 by the High Court to appoint new Arbitrator, there was no question of the Arbitrator performing his job within fixed period. The learned Arbitrator has considered this aspect in detail and has given reasons to reject the contention of the petitioner that the mandate of the learned Arbitrator had come to and end. I do not see any reason to disagree with the said observation. 5. Adverting to the merits of the matter, my attention was drawn by learned Counsel appearing for the petitioner to paragraphs 8.7, 8.8 and paragraph 8.11 of the impugned award to submit that except stating certain developments which took place between the petitioner and the respondent No.1 the learned Arbitrator has not mentioned the reasons as to why he has come to the conclusion that the respondent No.1 has made out a case to grant the claim to the tune of Rs. 7,64,585/-. She has also pointed out that no reasons are given about the grant of interest at the rate of 12% p.a. from date of award till realisation. She also submitted that the date of award does not set out reasons as to why the learned Arbitrator came to grant claim of Rs. 7,64,585/-. 6 6. As against this, learned Counsel appearing on behalf of respondent no.1 supported the award and submitted that the learned Arbitrator has gone through the entire file and has passed proper award and no interference is required. 7. He had submitted that if it was admitted by the petitioner that the petitioner could not supply the entire quantity of mosquito nets then the respondent no.1 were entitled to have the loss compensated and that is why right award is passed. Learned Advocate appearing on behalf of the respondent no.1 pressed for dismissal of the petition. 8. After having considered the rival submissions and the record, I am inclined to set aside the award. Reasons are as under: 9. Paragraph 8.7 and 8.8 no doubt give the facts which transpired in the matter. It is noticed that the petitioner did not supply the requisite quantity of mosquito nets as agreed as per the tender. It is the claim of the respondent no.1 that the respondent no.1 did purchase the balance mosquito nets by entering into a procedure referred to as the purchase of the stores at the risk of the petitioners. However, in the 7 entire award, there is nothing to show as to what evidence was placed before the learned Arbitrator to prove that the respondent no.1 had purchased the balance mosquito nets at a particular price. It is true that in the body of the petition there is some reference about acceptance of the tender by a Company by name M/s. Madhur Stores, Kanpur. However, on record nothing is placed before the Court to show that in fact respondent no.1 paid to said Madhur Stores, Kanpur a particular amount for having purchased balance of mosquito nets. In my view, it was absolutely necessary for respondent no.1 to place before the learned Arbitrator evidence to show as to what amount was paid by the respondent no.1 to purchase the nets from M/s.Madhur Stores, Kanpur and surely if that would have been done, the learned Arbitrator would have been able to calculate the total loss suffered by the respondent no.1 on account of non supply of the entire quantity of material by the petitioner. The way in which the award has been delivered by the learned Arbitrator, it is apparent that the learned Arbitrator proceeded to accept the contention of the respondent no.1 without any evidence before him. Surely, if the respondent no.1 would have produced evidence in the nature of oral testimony of the concerned officer, as well as the documentary 8 evidence, petitioner would have been able to challenge the said evidence and the learned Arbitrator could have resolved the dispute. Paragraph 8.11. reads as follows: “ In view of the position exposed in foregoing paras, it is observed that the action of claimant/UOI in `cancelling’, the contract for the balance unsupplied qty. and raising R/P loss against the respondent, is `legally sustainable’, for which the respondent firm is liable to pay the losses, towards R/P suffered by the Claimant/UOI.” This observation cannot be treated as good reasons to arrive at final decision. There is no whisper in the award as to why the learned Arbitrator granted interest at the rate of 12% per annum. For the reasons mentioned aforesaid, I am inclined to observe that the impugned award is required to be set aside and the petition is required to be granted. Hence following order is passed to dispose of the petition. ORDER Petition is allowed. Impugned Award dated 19.6.2009, passed by the learned Arbitrator is set aside. 9 In the aforesaid facts and circumstances of the case, there shall be no order as to costs. [R.Y.GANOO, J.]