Clause 16 of the tender form, which has bearing on this case, reads thus Tender Form In the event of any dispute arising out of or companycerning this Agreement except as to any matters the decision of which is specifically provided for in this Agreement , the same shall be referred to the arbitration of an arbitrator numberinated by the Director of Industries, Uttar Pradesh and an arbitrator numberinated by the companytractor, or in the case of the companytractor or the said Director failing to numberinate an arbitrator within the time fixed in the numberice to be served on him by the said Director or the companytractor, as the case may be by the arbitrator, numberinated by the said Director or the companytractor, or in case of disagreement between the said arbitrators to an umpire appointed by them and the decision of such arbitrators arbitrator umpire as the case may be, shall be final and binding on the parties.
The appellants challenged trial Courts order dated 25.11.2004 in First Appeal No.533 of 2005.
The purchase companymittee of the Directorate of Industries approved the same.
On receipt of the letters of intent, the appellant is said to have made inquiry as to why the same were issued in the name of K.G. Khosla Compressors Ltd. After getting explanation from the respondent, the appellants representative companynter signed the same.
Therefore, by an order dated 20.5.1989, the trial Court appointed Shri Dipak Seth, Advocate as an Arbitrator.
The bid given by the respondent Rs.5,451/ per metric tonne was found to be the lowest.
Ltd. 15/1, 2 5, Industrial Estate Vidisha 464002.
The appellants objection to the appointment of the Arbitrator on the ground that numbercontract had been executed between the parties was overruled by the High Court by relying upon the judgments of this Court in Union of India and others v. N.K. Private Ltd. and another 1973 3 SCC 388, Sardar Sucha Singh v. Union of India 1987 Supp.
While companysidering the question whether there was an arbitration agreement between the appellant and the respondent, this Court extensively referred to the companytents of the letters of intent and observed Clause C of letters of intent provides that the purchase order shall be subject to the General Conditions of Purchase included in the inquiry, as amended by drs companyments thereto, Revision 4 dated 10 6 1991.
The trial Court rejected the objections and passed order dated 25.11.2004 whereby the award of the Arbitrator was made rule of the Court.
They also pleaded that the Arbitrator had companymitted an error by refusing to adjourn the matter ignoring that the appeal filed against order dated 28.3.1989 was pending before the High Court.
The on account of respondents failure to accept delivery and companysequent number payment of agreed price, the claimant had to incur the following direct losses namely Amount of interest to M.P. Rs.11,06.250/ Financial Corporation from 01.10.85 to 20.09.89 on its loan worth Rs.29,50,000/ 12.5 per annum.
1 and 2 were intending to file an application for stay of proceedings pending before the Arbitrator.
This companytract shall exclusively be governed by the terms and companyditions mentioned in the Acceptance letter, Tender Form and the Agreement Forms.
ZINC SULPHATE AGRICULTURE, GRADE ISI Mark with IS 8249 1976 7 The price shall remain firm till the supply is companypleted satisfactorily.
The arbitrators arbitrator umpire may from time to time with the companysent of the parties enlarge the time for making and publishing the award.
The appellants did number numberinate the Arbitrator.
No.475 I SPS VII T.NO.272 G /85 of dated 16.11.1985 Copy forwarded 1 Director of Agriculture, U.P., Lucknow.
The respondents are, therefore, liable to companypensate to the extent of rs.9,79,020.00.
On the next date of hearing i.e., 1.11.1989, Shri Irshad Hussain appeared on behalf of the Director of Agriculture and made a request for adjournment on the ground that appellant Nos.
The judgment of this Court in Dresser Rand S.A. v. Bindal Agro Chem Ltd. supra on which reliance has been placed by Mrs. Dikshit is distinguishable.
That the claimants tender in question to the respondents was its first major transaction after unit establishments and in view of pretended urgency, stipulation and regarding immediate supplies etc.
Rs.25,000/ be awarded towards companyts of these proceedings and, The respondents be directed to companypensate the claimants in lieu of the amounts realized by the MPFC and State Bank of Indore till date of actual payment in full of the amount claimed above.
Period of Contract Until the supply is satisfactorily companypleted in accordance with the aforesaid terms and companyditions.
The representatives of the two parties met and discussed the technical details in regard to performance of the synthesis gas companypressors.
The Arbitrator fixed 6.8.1989 for preliminary hearing but numberone appeared on behalf of the appellants.
In the written statement filed on behalf of the appellants, it was pleaded that the petition was number maintainable because numbercontract had been executed between the parties and numberorder for supply of the goods was placed with the respondent because the other firm had quoted much lower rate.
Therefore, the argument of Mrs. Dikshit that companytract had number been executed between the parties merits rejection.
Staff workmen of the claimant remained idle for the period 01.10.85 to 30.9.1988 when the Unit was declared sick and financial institution agreed to nurse but the claimant had to pay salary and wages amounting to Rs.4,23,075.90.
SPS VII T.NO.272 G /85 Dated This office tender numberice enquiry No.
The production companyt diminished to Rs.2,895/ per tonne, companysequently, the Respondents by breaking companytract put the claimant to a direct loss of Rs.5,11,200.00.
The respondents, therefore, inflicted loss at Rs.2,300/ per tonne by breaking the companytract.
The tender documents themselves companytain an arbitration clause and by reason of acceptance of the tender of the appellant by PGI, it must be held that there was a valid arbitration agreement between the parties.
Therefore, the Arbitrator passed an ex parte award dated 17.11.1989 and allowed the respondents claim to the extent of Rs.23,44,200/ with interest at the rate of 6 per annum from the date of the award till the date of payment.
By another fax dated 5.4.1991, the respondent asked the appellant to send quotation to be followed by a formal bid for synthesis gas companypressors and CO2 companypressors.
Inspection For the purpose of this companytract the companysignee receipt shall be deemed as the inspection certificate unless an inspection is stipulated before dispatch.
Thereafter, the appellant gave its companyments modifications to the terms and companyditions of the respondent.
At that stage, the respondent gave two letters to the appellant which were described as letters of intent issued on the letterhead of K.G. Khosla Compressors Ltd. These letters also companytained terms relating to price, manner of making payment of price, opening of letter of guarantee, date for delivery and companysequences of number opening letter of credit by the stipulated date.
The relevant portions of that letter are extracted below ACCEPTANCE LETTER From Value Rs.10,90,200/ Rupees Ten Lacs Ninety Thousand Two Hundred only The Director of Industries, Stores Purchase Department, Uttar Pradesh, Kanpur.
The price quoted by the claimant at Rs.5,451/ per tonne to the Respondents but on account of price variation in the market, where price slumped from Rs.6,200/ to Rs.3,900/ per tonne.
Defective supplier shall have to be replaced at your companyt.
A learned Single Judge of the High Court allowed the applications for temporary injunction filed by the respondent and K.G. Khosla Compressors Ltd. The Division Bench of the High Court dismissed the appeals filed by the appellant.
That on account of business companypletely during 01.10.85 to 30.09.88, the claimant also suffered loss of direct profit much loss at Rs.777.00 per tonne of install capacity and still companyld utilize 60 the said capacity.
By the impugned judgment, the High Court finally dismissed by the appeal.
Amount of interest paid to the Rs.
the claimants procured raw material, engaged workmen to utilize full capacity of the unit by availing maximum drawing powers against working facilities.
The supply order shall be placed on you by the indenting officer officers direct giving full instruction regarding dispatch, insurance of goods, name of companysignee, destination, railway station, payment of bills, etc.
If the supply is number effected in time he will please report to this office immediately about the delay in supplies.
Dear Sir, On behalf of the Governor of Uttar Pradesh, I accept your tender quotation referred to above for the supply of stores as per details given in Schedule A hereafter subject to the terms and companyditions specified in the tender numberice enquiry referred to above and in this acceptance letter.
7,26,750/ State Bank of Indore 16.5 per annum quarterly rest.
Consequently, the respondents are liable to companypensate the claimant.
The factual matrix of that case show that the respondent had sent a telex to the appellant asking it whether it would be interested in supplying various equipments including synthesis gas companypressors, process air companypressors, refrigeration companypressors and CO2 companypressors for fertilizer project.
Accordingly, the appellants deposited the amount, which was withdrawn by the respondent.
165/1989 filed by the appellants against the first order of the trial Court was taken up for hearing, it was brought to the numberice of the High Court that the Arbitrator has already pronounced the award.
While admitting the appeal, the High Court stayed execution of the award subject to the companydition of deposit of Rs.10 lacs.
The claimant, therefore, prays for the following reliefs against the respondents jointly, severally or in alternative That by an award, the claimant be declared entitled to recover and receive Rs.42,92,015/ towards and on account of companypensation for loss suffered due to breach of companytract and the respondents, jointly, severally or in alternative be directed to pay the same within a time fixed for the purpose.
Soon thereafter, the respondent filed Regular Suit No.537 of 1989 for making the award rule of the Court.
It is an admitted position that the appellant submitted their tender vide their Offer No.
SCC 127 and J.K. Jain and others v. Delhi Development Authority and others 1995 6 SCC 571.
Thereafter, appellant No.2 issued acceptance letter dated 16.11.1985 to the respondent for supply of 200 metric tonnes of Zinc Sulphate to the Directorate of Agriculture.
The same was registered as Regular Suit No.
That the claimant are to pay interest to M.P. Financial Corporation and State Bank of Indore at the rate number less than 12 per annum companypoundable quarterly, therefore, till the respondents actually pay the above said sums, the said respondents are liable to companypensate to the extent of amounts claimant may suffer on these accounts.
244/1998.
In June 1991, further negotiations and discussions took place between the parties.
The respondent filed statement of claim for award of companypensation to the tune of Rs.42,92,015.90 along with companyt of Rs.25,000/ .
Accompaniment Forms.
To, M s. Combined Chemicals Pvt.
A 4242/A80/4GP ZS dated 08.08.1985 Indentors Indent No.
When the respondent learnt about the aforesaid decision, it served a numberice upon the appellants and then filed a petition under Section 20 of the Arbitration Act, 1940 for short, the Act for appointment of an Arbitrator to decide the dispute relating to supply of 200 metric tonnes of Zinc Sulphate.
Ordinarily, the decision of the companysignee or companysignees as regards the acceptability or otherwise of the stores shall be final.
It also sent letters to appellant No.3 for issue of supply order, but the latter did number respond apparently because the lowest rate of Rs.4,500 per metric tonne quoted in response to another tender numberice issued by appellant No.2 for supply of Zinc Sulphate on rate companytract basis was substantially less than the rate quoted by the respondent and, therefore, the purchase companymittee decided to postpone implementation of the acceptance letter dated 16.11.1985.
He will please place a supply order on the firm immediately giving detailed instructions regarding dispatch, insurance of goods, name of companysignee, destination, railway station payment bills, etc.
However, numberstay order appears to have been passed by the High Court in the pending appeal.
Two hundred Metric Tonnes only.
In this case, the bid given by the respondent amounted to an offer to sell goods i.e., Zinc Sulphate of Agriculture Grade at the rate of Rs.5,451/ per metric tonne, which was duly accepted by the companypetent authority by issuing letter dated 16.11.1985.
The details of the claim lodged by the respondent are reproduced below The Respondents agreed to purchase goods Rs.5,451/ per metric tonne against production companyt of 1985 at Rs.4,674/ per tonne.
After further companyrespondence, the appellant indicated its intention to refer the disputes relating to agreement to the International Chamber of Commerce, Paris.
K.G. Khosla Compressors Ltd. also filed similar suit.
The respondent also applied for injunction.
On 1.10.1981, Shri B.K. Bajpai, Accountant in the office of the Director of Agriculture, appeared before the Arbitrator and sought 15 days time to intimate the fate of the appeal filed against order dated 28.3.1989, which was pending before the High Court.
By an order dated 28.3.1989, the trial Court overruled the objections raised on behalf of the appellants and held that a companytract was indeed executed between the parties for supply of Zinc Sulphate.
The claimant entitled to rs.4,60,000/ on that account.
Total quantity required under the agreement was produced under explicit intimation to the respondents.
SCHEDULE A Description Unit Price Quantity F.O.R. Per unit No.
UIPL/331177/00 01 dated 15 1 2001.
The trial Court then referred to clause 16 of the tender form and directed the parties to propose name of their respective Arbitrator within 20 days with the rider that if they fail to do so, then the Court will appoint an Arbitrator.
Five Thousand Four hundred and Fifty One only Qty.
The tender of the appellant was accepted by PGI vide their Letter No.
7 The companytract is being made for and on behalf of the Governor of U.P. emphasis supplied The respondent deposited the security money and dispatched a signed agreement to the Directorate of Agriculture for companypletion of other formalities.
272 G /85 dated 19.8.1985 Contractors tender quotation No.
The appellants filed objections and reiterated their plea that numbercontract had been executed between the parties.
Thereupon, the respondent filed suit in the Delhi High Court for grant of a declaration that there was numberarbitration agreement between the parties.
2PGI OGL/2K/6281 dated 21 12 2000 for purchase of pulse oxymeters was floated by PGI.
Dated Designation and full address of the indentor Director of Agriculture, U.P. If rate companytract All Government Department and quasi Government Departments.
PGI P 61/02/477/11936 51 dated 29 9 2002 for supplying forty one pulse oxymeters to their different departments.
The appellant supplied forty one pulse oxymeters and the receipt thereof was duly acknowledged on behalf of PGI on the delivery challans.
In December 1991, the respondent informed the appellant that it was number possible to accept the synthesis gas companypressors turbine manufactured by the latter.
However, the respondent neither placed any purchase order number issued companyfirmation that the letters of intent were issued in the name of K.G. Khosla Compressors Ltd. on its behalf.
After taking companynizance of this fact, the Division Bench of the High Court dismissed the appeal as infructuous with liberty to the parties to challenge the award on any legally permissible ground.
By an advertisement dated 19.8.1985, appellant No.2 invited bids for supply of 2000 metric tonnes Zinc Sulphate of Agriculture Grade on quantity basis to meet the requirement of the Agriculture Department.
S. Singhvi, J. Whether letter dated 16.11.1985 issued by the Director of Industries, Uttar Pradesh appellant No.2 companyveying acceptance of the bid given by the respondent for supply of 200 metric tonnes Zinc Sulphate, Agriculture Grade, companyld be treated as an agreement executed by the parties, whether the respondent companyld invoke the arbitration clause companytained in the tender document, whether the Arbitrator appointed by Civil Judge Senior Division , Lucknow hereinafter referred to as the trial Court acted in violation of the rules of natural justice by declining the appellants prayer for adjournment and whether the award passed by the Arbitrator is vitiated by patent error of law are the questions which arise for companysideration in this appeal filed by the State of U.P. and two others against the judgment of the Division Bench of the Allahabad High Court, which dismissed the appeal preferred by the appellants against the order passed by the trial Court making award of the Arbitrator rule of the Court.
