Steel Authority Of India Ltd vs Gupta Brother Steel Tubes Ltd

6. It appears that dispute/differences arose between the parties and the respondent lodged its claim to the appointing authority on March 11, 1989. Initially, one Shri K. Janardhana was appointed as Arbitrator but he resigned later on and in his place Shri K.P. Bhaumik was appointed arbitrator. 3

7. It may be noticed here that an application was made by the respondent before the arbitrator on September 12, 1991 for quantification of claims under the heads `A', `AA' and `AAA' and thereby they made a total claim of Rs. 1,75,41,359/- alongwith interest @ 21 per cent against SAIL before the arbitrator.

9. The arbitrator seems to have had fifty sittings and after hearing the parties and taking into consideration the documentary as well as oral evidence passed an award on September 7, 1993. The award runs into almost 290 foolscap pages.

10. The objections to the award were filed by SAIL before Sub-Judge, Ist Class, Chandigarh raising diverse grounds, inter alia; that the arbitrator was biased in favour of the claimant; that he committed a jurisdictional error in adjudication of claims for the period from July to September, 1988 and granting claim in this regard when there was no pre-existing dispute; that the arbitrator 4 entertained claim in respect of future disputes i.e. disputes not existing at the time of reference; that he went into constitutional questions such as discrimination, etc. which he had no jurisdiction to decide; that he ignored the terms of contract and returned the findings contrary to the express terms thereof; that the arbitrator failed to call for material documents and gave the award which is perverse and based on no evidence and that he committed jurisdictional error by ignoring the express term of the contract, particularly Clause 7.2 and the provisions of the Contract Act.

11. The Sub-Judge, Ist Class, Chandigarh, after hearing the parties overruled the objections raised by SAIL and made the award rule of the Court on May 9, 1994. The Sub-Judge, Ist Class, Chandigarh directed that claimant shall be entitled to interest @ 12% per annum from the date of the judgment until realization.

Clause 7.2 "SAIL shall supply materials as described in the offer/work order(s)/Delivery order(s) issued by SAIL from time to time. SAIL, however, shall have a period of one month after expiry of the indicated quarter/quarters as grace period for the purpose of supply or supplies. In the event of SAIL's failure(s) to deliver the indicated quantities even after the expiry of the grace period, SAIL shall pay to the customer(s) compensation @0.25% (quarter per cent) per month or part thereof on the value of the materials of the supplies delayed beyond the quarter/quarters plus the grace period(s) subject to a maximum of 3% (three per cent ) of the value of the delayed supplies. The value for this purpose shall be worked out on the same basis as mentioned in note (iii) to para 3.1 regarding calculation of Initial Financial Cover. The aforesaid compensation shall be paid within three months from the date of completion of order. In case an order is not executed within 12 months from the expiry date of the grace period, the order would be treated as closed after payment of applicable compensation, if and as due. Delay(s) caused in effecting supplies on account of or all of the force majuere conditions and/or on 8 account of the failure/non-observance of the required formalities by the customer(s) shall be accepted the SAIL shall not bear any liability for such period(s)."

39. Consequently, appeal has no merit and must fail. The same is dismissed with no order as to costs.

........................J (Tarun Chatterjee) 33 ........................J (R. M. Lodha) New Delhi September 9, 2009.