1 Kambli IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ... ARBITRATION PETITION NO.153 OF 2008 ... M/s.Dinamic Corporation ...Petitioner v/s. Oil & Natural Gas Corporation Ltd. ...Respondent ... Mr.V.P.Sawant with Mr.Vishal Ghosalkar for the Petitioner. Mr.S.A.Bhalwal i/b Vyas & Bhalwal for the Respondent. ... CORAM: D.K.Deshmukh DATED: 24th March, 2011 P.C.: . Admit. Heard finally by consent of parties. 2. The Petitioner by this petition challenges the award made by the learned Arbitrator directing the Petitioner to pay the amount of Rs.29,12,000/- to the Respondent which was the price of the material supplied by the Petitioner to the Respondent, which was found to be defective. 2 3. The learned Counsel appearing for the Petitioner invited my attention to clause (c) of special condition, which lays down that at the time of supply of the material four samples will be drawn of the material and two samples will be sent for testing to DIFR, Delhi. ( I have been informed that DIFR means Defence Institute of Fire and Research). The submission is that the material was not sent for testing to this Laboratory, but to some other Laboratory and the report of DIFR was not produced and the report of some other Laboratory was produced to claim that the material was defective. The learned Arbitrator had framed an issue on the basis of objection raised by the Petitioner. That issue reads as under: “Whether the Controller of Quality Assurance, Pune was the authorised laboratory for testing the material as per the contract documents? 4. This issue has been decided by the learned Arbitrator in paragraph 46 of the Award. Paragraph 46 reads as under: 3 46. Point No.6: Whether the Controller of Quality Assurance, Pune was the authorised laboratory for testing the material as per the contract documents? I have already setout above that despite the test report on the basis of which the material was accepted by the Claimants, the material deteriorated. In that view of the matter, having regard to the safety of the installations of vital importance, the Claimants decided to get the material tested from the Controller of quality Assurance, Pune which is a laboratory of Ministry of Defence, Government of India. It is not material whether the name of the said laboratory is mentioned in the contract or not. That does not debar the Claimants to get the sample tested from the above laboratory. The Respondent failed to challenge the report of the said laboratory on merits. I have already discussed this issue in paragraphs 37 and 38 above. In the light of what is stated hereinabove and the reasons set out in paragraph 38, I hold that the Controller of Assurance, Pune was proper laboratory for testing of the said material. The fact that the name of that laboratory was not mentioned in the contract document is irrelevant for the purposes of deciding the dispute in the present case in the light of the report submitted by the above laboratory. 5. The learned Arbitrator has held that he has discussed this issue in paragraphs 37 and 38 and for the reasons given in paragraphs 37 and 38 he holds that the claimant was free to send material for testing to any laboratory. Perusal of paragraphs 37 and 38 shows that the 4 learned Arbitrator, merely because according to claimant the material was defective, holds that though the material was not got tested from the Laboratory mentioned in the contract, the claim will have to be allowed and the finding that the material was defective will have to be accepted. Paragraphs 37 and 38 reads as under: 37. It is clear from the above discussion and the report of the Controllerate of Quality Assurance (Fire Fighting Equipments), Ministry of Defence (DGQA), Government of India, Anudh Camp, Pune that the material supplied by the Respondent deteriorated within a short span of less than two years and it was no more useful for fire fighting for which it was purchased. I do not find any merit in the contention of the Respondent that the sample should nothave been sent for testing to the Controllerate of Quality Assurance (Fire Fighting Equipments), Ministry of Defense (DGQA), Government of India, Aundh Camp, Pune as the said laboratory was not an approved laboratory. As the efficacy and quality of the fire fighting material supplied by the Respondent was vital for the safety of the installations of the Claimants, which are of great national importance,it was essential to ensure that the material continued to serve the purpose for which it was purchased. No fault could be found in the test report of the laboratory which is a laboratory of the Ministry of Defense of the Government of India. There is no tangible reason to reject the said report. Moreover, at no stage the Respondent challenged the said report on merits. 5 The Claimants asked the Respondent to replenish the said material with suitable material which he failed to do. The Respondent even did not take away the said material which is still lying with the Claimants despite repeated reminders to do so. No request was made even before the Arbitral Tribunal to get the material supplied by the Respondent, which is still lying with the Claimants, tested by any other laboratory. Nowhere it is contended that the material supplied by the Respondent has the shelf shell life of 10 years. The only case of the Respondent is that he is not bound by the Shelf life certificate dated 16th February 2001 given by him certifying that the shelf life of the material was 10 years and the warranty contained on the labels of the drums that the expiry date of the material was 2010 in view of the fact the requirement of 10 years ehelf shell life which was set out in the tender invitation as it was not reiterated in the supply order. 38. In the facts and circumstances set out above, I do not find any tangible reason to reject the report of the Controllerate of Quality Assurance (Fire Fighting Equipments), Ministry of defense (DGQA), Government of India, Aundh Camp, Pune, wherein the material has been found to have deteriorated and being of no use for fire fighting. I, therefore, accept the same. 6. Sub-section (3) of Section 28 of the Arbitration Act lays down that the arbitral tribunal shall decide the dispute in accordance with the terms of the contract. Section 28(2) reads as under: 6 28(3) 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. . Thus, Section 28(3) casts a duty on arbitrator to decide the questions that are raised before the learned arbitrator in accordance with the terms of the contract. Therefore, when a term in the contract provides that the material will be sent for testing to the laboratory which is named in the contract, unless the claimant gives cogent reasons for not sending material for testing to the named laboratory, the reports submitted by any other laboratory would not be acceptable, only because the other laboratory may be reputed laboratory or otherwise. In my opinion, the approach of the learned arbitrator that because the other laboratory from which the material was got tested by the claimant was also a Government laboratory that report can be acted upon, suffers from non-application of mind and is contrary to the mandate of Section 28(3) as the name of the laboratory was mentioned in the contract the claimant was obliged to send the material for testing to that laboratory only and rely on the report submitted by that laboratory. If the 7 material was not sent for testing to that laboratory and claimant was relying on the report submitted by some other laboratory, it was for the claimant to lead evidence to show and disclose the circumstances why material was not sent to the named laboratory for testing. In my opinion, the learned arbitrator while considering this aspect should have considered the case made out on behalf of the Petitioner that the material was actually sent to the laboratory named in the contract, but because the report of that laboratory indicated that the material was perfectly in order, the material was got tested from some other laboratory and for making the claim that report was relied on. As it is found that the basis of the finding recorded by the learned arbitrator that the material supplied by the Petitioner was not up to the mark is the report submitted by the laboratory which is not named in the contract, in my opinion, the award is liable to be set aside. Because the very foundation of the claim of the Respondent is the report of the laboratory which is not named in the contract. 8 7. In the result, therefore, the petition succeeds and is allowed. Award impugned in the petition is set aside. (D.K.DESHMUKH, J.)