Telangana High Court Security Printing Press vs M/S Shree Enterprises on 3 July, 2023 THE HON'BLE SRI JUSTICE SAMBASIVA RAO NAIDU CIVIL MISCELLANEOUS APPEAL No.386 OF 2022 JUDGMENT : Being aggrieved by the order of learned II Additional Chief Judge, City Civil Court, Hyderabad in Arbitration O.P.No.80 of 2021, dated 28.04.2022 by which the petition filed by the present appellant was dismissed, the appellant has filed this Civil Miscellaneous Appeal under Section 37 of Arbitration and Conciliation Act, 1996 (which hereinafter will be referred as Act, 1996). The appellant herein filed Arbitration O.P.No.80 of 2021 before the Court below with a prayer to set aside the award passed by 2nd respondent, dated 24.05.2021. The petition filed by the appellant herein was opposed by the respondent No.1 who filed a counter and after hearing both the parties, learned II Additional Chief Judge, City Civil Court, Hyderabad, dismissed the petition under the impugned order. 2. As per the brief case as set out in the appeal, it shows that the appellant is a Unit of Security Printing and Minting Corporation of India Ltd., in short "SPMCIL" under 2 CMA No.386 of 2022 the administrative control of Department of Economic Affairs, Ministry of Finance, Government of India and it is performing the sovereign functions like production and supply of different security and nonsecurity items for the use of various Central and State Government Departments/Offices. The appellant is engaged in printing in nonjudicial stamps, election material for Election Commission of India, Court fee stamps, material for Armed Forces, Postal stationary, CE stamps, Indira Vikas Patras etc. The 1st respondent is a private company registered under MSMED Act, 2006 (Micro Small and Medium Enterprises Development Act, 2006) with a registered office at Hyderabad and it is engaged in the business of manufacturing and supply of various types of inks. When the appellant herein floated tenders for the supply of fragrance of the micro encapsulate inks (Rose Ink, Tuberose Ink) 50 kgs each, the 1st respondent submitted its bid and was qualified. The appellant placed a purchase order, dated 18.10.2019 on 1st respondent for supply of inks and total costs of the purchase order placed on respondent No.1 for two varieties of inks of Rs.11,59,928/ 3 CMA No.386 of 2022 and date for delivery was stipulated as 13.11.2019. The 1st respondent supplied the inks on 14.11.2019. 3. The appellant has contended that when the inks supplied by the 1st respondent was sent for printing, the printing Department rejected the inks for the reason that the inks supplied by respondent No.1 were not up to the mark and do not match the technical specifications as laid down in the tender condition, thereby a letter was addressed on 08.01.2020 and rejection of inks was intimated to respondent No.1. The 1st respondent in response to the letter sent by appellant herein requested for joint inspection of supplied inks. Accordingly, some thin layers were drawn on coated paper and felt that the fragrance of inks by gently rubbing over the application. The appellant has claimed that the said fragrance of the sample was not up to the mark and ink was not engulfing the fragrance. The 1st respondent was requested to replace rejected inks with good quality fragrance inks. 4. The appellant has further contended that in view of covid19 pandemic, the office of the appellant was partially 4 CMA No.386 of 2022 closed from the last week of March, 2020 without any production activity and resumed production from 15.05.2020. The 1st respondent instead of replacing the rejected quantity, preferred to lodge a complaint and again on 2nd time a joint inspection was conducted at the office of the appellant on 14.05.2020 and trials were conducted on the printing machine in the presence of representatives of both parties. It is the case of appellant that the fragrance of all the inks was found not up to the mark. Therefore, the same was intimated to 1st respondent by letter dated 23.07.2020 and was asked to take back the rejected material and replace the same with good material as per the specifications of the purchase order. 5. It is the further case of appellant that respondent No.1 was bound to supply the material complying the terms and conditions of tender and purchase order. The Unit of the appellant is one of the national importance with very high reputation of maintaining high quality in security features with standards in the printing. The appellant has claimed that in view of breach of contract by respondent