On the basis of the above finding, learned Single Judge set aside the judgment and decree passed by the District Judge, Jaipur City companyfirming the award dated 4.4.1997 passed by the arbitrator and remanded back the matter to the Corporation for fresh adjudication of the dispute by appointing an arbitrator other than the one who has passed the award earlier.
The Corporation informed the companypany through their various letters dated 27.2.1993, 30.3.1993, 12.5.1993, 29.6.1993, 15.7.1993, 20.1.1994 and 16.7.1994 that retreaded tyres used on its buses in their eight regions were number giving the guaranteed kilometerage resulting in loss to the companyporation to the tune of Rs.1,19,53,430.92 paise with 18 interest.
For the performance of remaining tyres only companyparison should be made with the new tyres.
The companypany also joined the issues with regard to calculation of loss.
Therefore, the total amount claimed by the Corporation worked out to Rs.1,44,53,430.92 paise.
It is alleged that the Company by its letters dated 14.11.1991, 16.11.1991, 17.1.1992 and 7.5.1992 had informed the Corporation that while assessing performance of retreaded tyres, the tyres removed from wheels prematurely due to bursts should be treated separately like one side wear or spotty wear, run flat etc.
The Company also advised that the repair material should be purchased from the companypany and it was also mentioned that the tyres should be companypared in similar companydition and since the new tyres were fitted on the rear axle, therefore the performance was bound to be lower and thus assessment of performance of the retreaded tyres was number in similar companyditions.
It was also submitted that since the Corporation used retreaded tyres in companyditions number similar to one in which new tyres were used, therefore, their performance was bound to vary.
The Company cited the case of Maharashtra State Road Transport Corporation and submitted that new tyres were fitted on the same axle of the bus as of retreaded tyres and then the performance was to the extent of 97 to 99 with that of the new tyre.
No.256 of 1997 companyfirming the award dated 4.4.1997 passed by the Arbitrator and issuing a decree in terms of the award in favour of the Rajasthan State Road Transport Corporation hereinafter to be referred to as the Corporation .
It was also observed that as per figures shown by the Corporation they had used 14,395 retreaded tyres from June, 1991 to May, 1992 out of which total tyres received after companypleting retreaded life were 7,797.
Learned Single Judge companycluded that in his companysidered opinion, the significant aspect bearing material to the dispute under the arbitration as to the award of companypensation on pro rata basis has totally been ignored number only by the arbitrator but also by the District Judge under the impugned award and decree.
The Company cited the example of Ajmer Division and pointed out that performance of retreaded and new tyres is satisfactory.
Learned Single Judge further held that the inspection reports as well as other documentary evidence led by both the parties did number show companyparative assessment of retreaded and new tyres with a view to find out as to the guaranteed kilometerage as stipulated in clause 5 of the agreement.
Similarly, on 20.11.1991 30 tyres were inspected.
Aggrieved against this impugned order passed by learned Single Judge, High Court of Rajasthan at Jaipur, the present Special Leave Petition was filed by the Corporation.
Clause 10 pertains to arbitration.
According to Clause 3 of the agreement, in the companyd processing plant of the companypany numberother retreading material except of Indag would be used during subsistence of the companytract provided the companypany supplies retreading material regularly and uninterruptedly as per the need of the Corporation.
It was also observed that apart from joint inspection report, three other inspections were held for 452 tyres on 4.10.1991, 135 tyres on 29.10.1991 and 522 tyres on 12.11.1991 and as per these joint inspection reports, the Corporation claimed that the tyres had number performed according to their warranty as stipulated in Clause 5 of the agreement.
The Company denied its liability and submitted that the Corporation has wrongly companystrued the agreement because the essential feature of warranty clause 5 was that companyparative assessment of new tyre life with retreaded tyre was to be made in each division in similar companyditions.
Learned Single Judge after examining the matter held that the essential feature of the warranty clause for companyparative assessment of new tyres with the retreaded tyres was necessary to be made in each division in similar companydition.
Learned Single Judge further observed that the arbitrator did number apply his mind to the joint inspection reports or calculation sheet on the basis of which the Corporation has claimed companypensation companysidering only performance of retreaded tyres without making companyparative assessment of performance of both retreaded and new tyres.
After that award dated 4.4.1997 was produced in the Court of the District Judge on 24.5.1997, the District Judge issued numberice to both the parties and after companysidering the matter and hearing the parties made the award as a rule of the companyrt by its order dated 22.11.1999.
Learned Single Judge further held that method of assessment was number in companyformity with reference to warranty clause 5 that companyparative assessment of performance of retreaded tyres with new ones, was improper.
Clause 4 companytemplated that the companyporation would purchase retreading material from the companypany at the prevailing rates against the rate companytract of the Association of State Road Transport Undertaking.
should number be taken into account.
Clause 5 deals with warranty for retreaded tyres, according to which the companypany was required to guarantee performance of 46000 KMs average life or 95 of new tyres in each division in similar companydition whichever is less and the performance would be assessed initially after 12 months on the companymissioning of plant and production of tyres and subsequently on quarterly basis, and on failure of guaranteed kilometers, the companypany is bound to companypensate on pro rata basis.
should be taken into account while assessing performance of the retreaded tyres ?
On the basis of these pleadings, a sole arbitrator was appointed i.e. the Principal Secretary, Home and Justice, Government of Rajasthan.
The Company emphasized that the method of assessment adopted by the Corporation was number proper.
Aggrieved against the said order, the Company filed an appeal before the High Court of Rajasthan and the matter came up before the learned Single Judge for disposal.
The arbitrator after hearing the parties and taking into companysideration the documents on record decided all the issues in favour of the Corporation by its award dated 4.4.1997 and companycluded that the Corporation suffered a loss to the tune of Rs.1,19,53,430.92 paise.
Therefore, the Corporation called upon the companypany to make payment of the aforesaid loss calculated on the basis of pro rata on each retreaded tyre.
It was also pointed out by companymunication dated 14.5.1990 that the performance of retreaded tyres when used on the front wheels should be companypared with new tyres performance on the front wheels fitted to the vehicles operated on similar routes likewise the tyres used on rear axle.
It was also pointed out that the performance was likely to vary Divisionwise because Jaipur Delhi national highway route companyld give a better result than the Jaipur Lalsot route as it is number having similar companydition as that of Jaipur Delhi National Highway.
The arbitrator framed the following three issues for determination.
Surprisingly enough the Corporation did number purchase any repair material from the companypany resulting in breach of clause 3 of the agreement.
As per the arbitration clause any dispute between the parties regarding interpretation of the terms and companyditions or their fulfillment, both the parties shall refer the dispute to the Chairman of the Corporation who after hearing both the parties shall give the decision which shall be final and binding on the parties.
The Corporation also claimed a sum of Rs.25 lacs towards damages.
and Whether the retreaded tyres and new tyres were used in similar companyditions for the purpose of assessing their companyparative performance?
According to the companypany, since improper repair material was used by the Corporation, therefore, 25 to 30 of the tyres allegedly removed prematurely had caused damages on account of bursting, cutting of the tyres, which companyld number have been used or companysidered for assessment of a retreaded tyres life.
Learned Single Judge also held that as per the inspection report dated 19.11.1991 total 148 tyres were inspected.
However, the arbitrator declined to grant additional sum of Rs.25 lacs claimed as damages by the Corporation.
Whether the retreaded tyres which failed for other reasons like burst etc.
Whether the claimant was required to use repair material supplied by Indag only ?
Appeal No.618 of 2000 whereby learned Single Judge set aside the order passed by the District Judge, Jaipur City in CMA Arb.
K. MATHUR, J. This appeal is directed against the order dated 22.12.2000 passed by learned Single Judge of the High Court of Judicature for Rajasthan, Jaipur Bench, Jaipur in S.B. Civil Misc.
It was also pointed out that performance should be companypared with new tyres of the same design as on rear axles in each division before companyparison with performance of Indag retreaded tyres.
The facts giving rise to this appeal are that an agreement was executed between Indag Rubber Limited hereinafter to be referred to as the Company and the Corporation on 24.7.1991 for purchase of companyd processing retreading plant and retreading material.
