: 1 : USJ IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 136 OF 2009 The Union of India .. Petitioners v/s. M/s. Subrahmanyan & Co. .. Respondents ......... Mr. Suresh Kumar for the petitioners Mr. R.M. Vasudeo for the respondents ......... CORAM : R.Y.GANOO, J. DATE : 22nd JUNE, 2010. P.C. : 1. The petitioner were in need of concrete sleepers and for that a tender was floated by the petitioners prior to September, 1981 and the respondents were treated as a successful tenderer. Respondents had agreed to supply the sleepers at Rs.331.80 all along. Two agreements came to be entered into namely on 10th September, 1981 and 18th September, 1990. There is no dispute about those two agreements. The Railway Board by their letter dated 14th June, 1996 : 2 : placed second repeat order for supply of 3.75 lakhs sleepers based on tender of 1981. Formal agreement for supply of 3.75 lakhs sleepers @ Rs.331.80 was executed by and between the petitioner and the respondents on 14th August, 1997. 2. The petitioners floated another tender dated 27th June, 1997 and the respondents submitted their tender and offered to supply sleepers @ Rs.283.50. A formal agreement so far as this tender of 1997 was executed on 22nd April, 1998. The respondents continued to supply sleepers as per the agreement dated 14th August, 1997 and there appears to be no dispute about the performance of the agreement by the respondents in so far as agreement dated 14th August, 1997. While settling the claim of the respondents, the petitioner fixed the rate of Rs.283.50 for the supplies made after 22nd April, 1998 though as per tender rate of Rs.331.80 was fixed. According to the petitioner this was done on the basis of clause 15 of agreement dated 14th August, 1997. It would be appropriate to repeat the said clause which is as follows : : 3 : “In case any Open Tender for manufacture and supply of PSC sleepers on Western Railway in future during the currency of this repeat order is floated and low rates are accepted the same rate would also be applicable in this repeat order from the date of acceptance of such rate.” 3. The respondents claim monies on the basis of rate fixed as per earlier tender. The claim of the respondents came to be granted by the learned Arbitrator in terms of the award dated 13th March, 2008. This award is under challenge. 4. I have heard Counsels on both sides. It is to be noted that in the tender which was floated on 27th June, 1997, undoubtedly, there was what is referred to as the protection clause and the effect of the said protection clause was to protect the earlier supplies made at higher rate, despite the lower rates being quoted in a subsequent tender. The petitioners have denied the claim of the respondents @ Rs. 331.80 by taking the benefit of clause 15 of agreement dated 14th August, 1997. 5. It was argued across the bar by learned Counsel for the : 4 : petitioner that since second tender was floated on 22nd June, 1997, the petitioners were justified in paying to the respondents @ Rs. 283.50 in regard to the supplies made after 22nd April, 1998 i.e. after Agreement dated 22nd April, 1998. Learned Counsel for the petitioner tried to justify the stand and submitted that the award is incorrect to that extent and requires interference. 6. Learned Counsel for respondents submitted that on true interpretation of clause 15 of agreement dated 14th August, 1997 as also, reading the protection clause mentioned in the tender dated 27th June 1997, the respondents were entitled to receive monies @ Rs. 331.80 on the ground that if at all a tender is floated after 14th August, 1997, the clause which is entered into between the petitioner and the respondent being “fall clause” would be applicable. It was argued by learned Counsel for the respondents that second tender was floated on 27th June, 1997 i.e. prior to agreement dated 14th August, 1997 the fall clause would not be attracted. 7. I have considered the rival submissions. The purport of Clause : 5 : 15 was to protect the interest of both the parties. If a tender is floated after the date of the agreement namely agreement dated 14th August, 1997 the fall clause would have been attracted. It is pertinent to note that second repeat order was approved by the Railway Board by their letter dated 14th June, 1996. Some time was taken to execute the agreement and the agreement was executed on 14th August, 1997. Undoubtedly, the agreement dated 14th August, 1997 was executed by the petitioner and the respondents keeping in view the rate namely Rs.331.50. As the second tender was floated prior to execution of agreement dated 14th August, 1997, clause 15 of said agreement dated 14th August, 1997 would not be attracted for the supplies made after 22nd April, 1998. 8. The Arbitrator has taken correct view of the matter and has rightly interpreted clause 15 as well as the protection clause appearing in both the tenders and the relevant dates on the basis of which the parties have acted. It is pertinent to note that when a tender is floated on 27th June, 1997 and a party files its tender quoting a particular figure, the Railway Board are taking substantial : 6 : time of about 8 months to enter into a formal agreement namely the formal agreement is entered into on 22nd April, 1998. Surely, a party who is acting on the basis of an earlier tender cannot be put to losses by resorting to a fall clause i.e. Clause 15 of the Agreement dated 14th August, 1997. In my view, the finding recorded in the impugned award are right and do not require any interference. 9. So far as the question of interest is concerned, the Arbitrator has awarded interest @ Rs.18% per annum. Learned Arbitrator has considered the relevant dates and in any case I do not see any ground to interfere on the question of interest. Hence, following order is passed. ORDER (i) Petition is dismissed at the stage of admission. There shall be no order as to costs. (R.Y.GANOO, J.)