Case: M/s. S.R. Ghosh Vs. Union of India

the price rise notification dated 3.7.1996 was to the knowledge and notice of the appellant, and as such, when the appellant executed the formal agreement on 16.09.1996, it consented to the position as it prevailed on that date. The entire controversy was examined in the aforesaid background. Clauses 16 and 43 were also viewed in that background.8. The order passed by the learned Single Judge on 8.4.2005 was assailed unsuccessfully by the appellant before a Division Bench of the High Court. The Division Bench dismissed the challenge through the impugned order dated 19.12.2005. Through the instant civil appeal, the appellant is seeking to assail the findings recorded by the learned Single Judge dated 8.4.2005, and that of the Division Bench of the Calcutta High Court dated 19.12.2005.9. We have heard learned counsel for the rival parties at some length. The first issue that falls for our consideration is, whether or not the arbitral Tribunal had the jurisdiction in the matter. We are of the considered view, that the assumption of the courts below, that the contractual obligation bound the parties when the formal agreement was executed on 16.09.1996 was based on an unacceptable foundation. When the offer made by the appellant in response to the tender notice dated 18.01.1996 was accepted by the respondent on 10.05.1996, the obligations between the parties must be understood to have attained finality, inasmuch as, if the appellant chose to walk out of the contractual obligation after its offer was accepted by the respondent, there would be adverse civil consequence, as for instance, the earnest money deposited by the appellant, could have been forfeited. In the above view of the matter, we are of the view, that the obligations between the parties in furtherance of the tender notice dated 18.01.1996 came to be crystalized on 10.05.1996, when the formal acceptance letter was issued by the respondent to the appellant.10. Having concluded as above, it is obvious that the price rise emerging out of the notification of the Central Government dated 3.7.1996 fell within the jurisdiction of the arbitral Tribunal. We say so, because the above notification was issued after ( and not before) the dates of finalization of the contract between the parties. And as such, the appellant must be deemed to have entered into the contractual obligation, without knowledge and notice of the price escalation. The arbitral Tribunal was therefore obliged to deal with the claim of escalation made by the appellant, premised on the notification dated 3.7.1996.11. The first question that arises for our consideration is, whether the arbitral award can be considered to be justified in the background of clause 16 of the general conditions of contract. We are of the considered view, that the parties were bound on the rates executed in the agreement and "any fluctuation of market rates" would not be a ground to entertain a challenge to the determined rates under the contract. First and foremost, we must record that it was well within the domain of the arbitral Tribunal to construe the provisions of the contract. The arbitral Tribunal on analysing clause 16 arrived at the conclusion, that fluctuation of market rates would not be a sufficient ground to entertain a claim for escalation. The arbitral Tribunal however arrived at the conclusion, that the escalation of rates in question was based on a statutory notification issued by the Central Government on 3.7.1996 which did not fall within the realm of clause 16. We are of the view, that the interpretation placed by the arbitral Tribunal on clause 16 was a possible view, and calls for no interference at our hands. Our instant determination is also based on the fact that the appellant had made a stake for escalation in two express communications addressed by the appellant to the respondent dated 22.07.1996 and 13.09.1996, and therefore must never be seen to have accepted the position adopted by the respondent through the letter dated 15.07.1996 (extracted above).12. The only remaining issue that requires our attention is based on clause 43 of the general conditions of contract. A perusal of the above clause, according to the learned counsel for the respondent, leaves no room for any doubt that after the contractor had signed a "No Claim Certificate" in favour of the respondent, it was not open to the appellant, to raise a claim that he is presently agitating, based on the Central Government notification dated 3.7.1996. It was submitted, that it is not even the case of the appellant before this Court, nor has it been before the courts below, or even before the arbitral Tribunal that the appellant did not sign the "No Claim Certificate", and that too after the works were finally measured up. It was accordingly submitted, that the factum of having signed a "No Claim Certificate" renders the claim of the appellant unacceptable.13. It is not necessary for us to seriously examine the issue canvassed at the behest of the respondent, based on clause 43, in view of the following findings recorded by the arbitral Tribunal:"(5) The respondent argued during hearing meeting that as per clause 43 of General conditions of contract, after signing of No Claim Certificate and acceptance of final bills no further claim is maintainable. During the proceedings this tribunal came to learn from the respondent that signing of No Claim Certificate is compulsory on the part of the claimant in getting the payment for undisputed portion of final bills. Otherwise, the final bills will not be passed; in other words, the claimant had no way but to sign the No Claim Certificate for getting the payment. However, this tribunal considers that payment of final bills after signing the said No Claim Certificate in no way affects the instant claim of the claimant."(emphasis is ours)We find no justification to interfere with the afore-stated findings recorded in the arbitral award, especially on account of the fact, that the same was recorded on the basis of inputs furnished at the behest of the respondent itself.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]We are of the considered view, that the assumption of the courts below, that the contractual obligation bound the parties when the formal agreement was executed on 16.09.1996 was based on an unacceptable foundation. When the offer made by the appellant in response to the tender notice dated 18.01.1996 was accepted by the respondent on 10.05.1996, the obligations between the parties must be understood to have attained finality, inasmuch as, if the appellant chose to walk out of the contractual obligation after its offer was accepted by the respondent, there would be adverse civil consequence, as for instance, the earnest money deposited by the appellant, could have been forfeited. In the above view of the matter, we are of the view, that the obligations between the parties in furtherance of the tender notice dated 18.01.1996 came to be crystalized on 10.05.1996, when the formal acceptance letter was issued by the respondent to the appellant.10. Having concluded as above, it is obvious that the price rise emerging out of the notification of the Central Government dated 3.7.1996 fell within the jurisdiction of the arbitral Tribunal. We say so, because the above notification was issued after ( and not before) the dates of finalization of the contract between the parties. And as such, the appellant must be deemed to have entered into the contractual obligation, without knowledge and notice of the price escalation. The arbitral Tribunal was therefore obliged to deal with the claim of escalation made by the appellant, premised on the notification datedare of the considered view, that the parties were bound on the rates executed in the agreement and "any fluctuation of market rates" would not be a ground to entertain a challenge to the determined rates under the contract. First and foremost, we must record that it was well within the domain of the arbitral Tribunal to construe the provisions of the contract. The arbitral Tribunal on analysing clause 16 arrived at the conclusion, that fluctuation of market rates would not be a sufficient ground to entertain a claim for escalation. The arbitral Tribunal however arrived at the conclusion, that the escalation of rates in question was based on a statutory notification issued by the Central Government on 3.7.1996 which did not fall within the realm of clause 16. We are of the view, that the interpretation placed by the arbitral Tribunal on clause 16 was a possible view, and calls for no interference at our hands. Our instant determination is also based on the fact that the appellant had made a stake for escalation in two express communications addressed by the appellant to the respondent dated 22.07.1996 and 13.09.1996, and therefore must never be seen to have accepted the position adopted by the respondent through the letter dated 15.07.1996 (extractedfind no justification to interfere with thefindings recorded in the arbitral award, especially on account of the fact, that the same was recorded on the basis of inputs furnished at the behest of the respondent itself.