Bangalore District Court
M/S.Binfo Electronics Pvt.Ltd vs Bharat Sanchar Nigam Ltd on 29 May, 2019
IN THE COURT OF THE VI ADDL. CITY CIVIL & SESSIONS JUDGE
AT BENGALURU CITY
(CCCH.11)
Dated this the 29th day of May, 2019
PRESENT: Sri. Rama Naik, B.Com., LL.B.,
VI Addl.City Civil & Sessions Judge,
Bengaluru City.
A.S.NO:02/2012
PLAINTIFF : M/s.Binfo Electronics Pvt.Ltd.,
No.1, 1st Cross, Kemegowdanagar,
Bengaluru -560 009.
Reptd.by its Director -
Sri.R.Guruprasad.
[By Pleader Sri.T.B.Kiran Kumar]
/Vs/
DEFENDANT : Bharat Sanchar Nigam Ltd.,
Erstwhile Department of
Telecommunications,
R.No.1203, Stateman's house,
Bharakambha Road, New Delhi - 11001
Rept. By its D.D.GMM-
Sri.Pradeed Nagapal
[By Pleader Sri.A.N.Gangadharaiah]
--
JUDGMENT
This suit is filed by the Plaintiff under Section 34 of the Arbitration and Conciliation Act, 1996, for AS.02/2012 2 setting aside the award No.AM(SC)Arbitration/08-09 dated 09.04.2009 passed by the Arbitrator (G.C.Bidka) BSNL, BGTD, Bengaluru -82.
2) The Plaintiff's case, in brief is that, the Plaintiff was the manufacturer of MARR RADIO systems and other electronic items connected with telecommunications. They applied for a tender for supply of "Boss Secretary System Model I & II" with the Defendant and the Defendant gave them the advance Purchase Order dated 26.10.1998 for supply of the quantity prescribed under the said order. Thereafter, as per the specifications, the Plaintiff furnished bank guarantee and manufactured the items by spending huge amounts and sought for type approval of the said material, which was also granted by the Defendant. Thereafter, instead of placing the purchase order for commitment made in the advance purchase order, the Defendant drastically reduced the purchase AS.02/2012 3 order to an extent of more than 40% of the original purchase order dated 24.02.1999 seeking for supply of the lesser quantity of the material. It is stated that, the Defendant cannot reduce the quantity more than 25% of the original purchase order. As the said order is not a viable proposition, the Plaintiff gave a representation to the Defendant by letter dated 01.03.1999 regarding the reduced quantity and requested the Defendant to allot the bulk quantity. Thereafter, instead of considering the request of the Plaintiff, the Defendant unilaterally cancelled the purchase order and sought and recovered amount under the bank guarantee.
3) It is stated that, Sri.G.C.Bidika was appointed as the Arbitrator. The Plaintiff received the copy of objection filed by the Defendant and also filed a letter notifying their present address as stated in the cause title, for the purpose of service of summons, etc. The Arbitrator, who took up the case AS.02/2012 4 by issue of notices dated 20.01.2009 and 10.02.2009 held two sittings, in which, it was noticed that he was not well versed with the procedure of conducting an arbitration. Further, he took the affidavit filed by the Plaintiff, did not record the same and though the Defendant Advocate was present and the witness was present, did not conduct the cross-examination. Further, he did not post the case for evidence of the Defendant, he straight away asked the parties to address argument and after hearing, in spite of Plaintiff's counsel objecting to the procedure adopted in conducting the arbitration, posted the case for orders, during the month of March, 2009. Thereafter, no communication was received from the Defendant. The Plaintiff under the impression that no orders are passed, filed another CMP before the Hon'ble High Court and the same was rejected. Thereafter, he wrote a letter to the Defendant to seek information regarding the outcome of the AS.02/2012 5 arbitration proceedings. The Defendant by its letter dated 24.11.2011 sent a copy of the award dated 09.04.2009 to the counsel for Plaintiff. It is submitted that, though in the arbitration proceedings it was informed that communication should be made to the address mentioned in the cause title, the Defendant has sent the award copy to the earlier address of the Plaintiff. Thus, the Plaintiff did not receive the award till the Defendant sent copy of the award along with a covering letter dated 24.10.2011. Hence, this suit is filed seeking to set-aside the award within three months from the date of receipt of the award, hence, the same is within the period of limitation.
4) The Plaintiff has challenged the impugned award on the following grounds :
(a) The Arbitrator appointed, has not conducted the proceedings in the manner as required.
AS.02/2012 6
(b) The reasoning adopted by the Arbitrator is illegal and erroneous. The basic question that was raised in the dispute was that "whether reduction in the quantity prescribed in the advance purchase order was in contravention of the Contract Clause- 25", has not at all dealt by the Arbitrator.
(c) The Plaintiff was entitled to return of the forfeited amount along with interest and other damages suffered by him on account of breach of contract committed by the Defendant. Therefore, dismissing the claim without properly considering the genuine claim on the ground that Plaintiff did not supply the material, etc., the order is perverse and only made with a view to see that Defendant escapes the liability.
Hence, prays for setting aside the arbitral award.
AS.02/2012 7
5) The Defendant marked appearance through its Counsel and filed written statement contending that, "Tenders were called for the supply of Boss Secretary System Model-I and Model-II for a quantity of 38000 of Model-I and 10000 of Model-II"
vide Notification dated 03.03.1998. The tender was opened on 30.04.1998 and an Advance Purchase Order [In short 'APO'] was issued to the Plaintiff on 26.10.1998 stating that the supply shall be completed within 4 months from the date of issue of APO, for which, the Plaintiff has given its unconditional and unequivocal acceptance of the subject APO with all terms and conditions and of the said Tender, vide letter dated 10.11.1998. Accordingly, the Plaintiff executed a Bank Guarantee for a sum of Rs.4,65,455/-. The Type Approved Model/version shall only be supplied against the Tender. The bidder is required to obtain Type approval Certificate from Telecom Engineering Center. Whereas, the Plaintiff did not obtain Type AS.02/2012 8 Approval Certificate within the stipulated time. There has been abnormal delay in obtaining the Type Approval Certificate by the Plaintiff. Only after attending to the deficiencies, the certificates in question have been obtained belatedly on 30.03.1999 for Model-I and on 23.04.1999 for Model-II. The APO has been placed on Plaintiff on 26.10.1998 calling upon the Plaintiff to make supply within a period of 4 months. The Type Approval Certificate itself is obtained after lapse of more than 5 to 6 months. The reduced quantity was re- distributed amongst all the supplies on whom APOs were placed and then Purchase Orders were issued for the revised quantity on 25.02.1999. As the quantity was reduced, the delivery period was also reduced accordingly. As per the revised Purchase Orders, the Plaintiff was required to supply 3786 numbers of Boss Model-I and 980 numbers of Boss Model-II and the same was to be completed within 30.04.1999.
AS.02/2012 9
6) It is stated that the Plaintiff did not evince any interest in making the supply. Even though the Plaintiff failed to make the supplies, the Defendant Department gave an opportunity to the Plaintiff by way of extending the delivery period upto 20.08.1999, vide letter dated 29.07.1999. The Plaintiff has not stated at any point of time that, it will not make any supplies at all in view of the reduction of the quantity. On the other hand, the Plaintiff has agreed to make supplies even after reduction of the quantity, but did not do so. The bid conditions also provide that the Purchaser has the right to accept or reject any bid without assigning any reason. The reduction in the supplies was not only made in the case of Plaintiff, but also, in case of several other Firms. All other firms completed the supply of goods as against the POs placed with them. It is only the Plaintiff who did not make any supply to the Defendant Department. As the Plaintiff failed to make any supply, it was decided to AS.02/2012 10 short close the PO and encash the Bank Guarantee only to the extent as per the quantity ordered in the PO i.e. for Rs.2,71,524/-. The action of the Defendant Department in forfeiting the Bank Guarantee is strictly in accordance with the terms of the contract. The delivery period after extension was expired on 20.08.1999 and after that there was no communications from the firm. Hence, the Defendant Department issued notice of short closure on 13.12.1999. The reduction of quantity is only an excuse, which demonstrates the Plaintiff's liability to perform its part of the contract. Due to non-supply of goods, the entire project of the Defendant Department has suffered and has caused huge loss to the Defendant Department.
7) It is contended that, the Hon'ble Arbitrator being the Quasi Judicial Presiding Officer, acted as a Judge, having heard both the sides, considering the facts and circumstances of the case in its entirety AS.02/2012 11 and the observations made on the basis of the argument put forth by the parties and all the records of the said case available before the Arbitrator, had decided the said arbitration case and passed the arbitration award on 09.04.2009 following the prescribed procedures in the arbitration guidelines. The Hon'ble Arbitrator, after passing the award dated 09.04.2009 in the said arbitration case, had sent the said award copies to both the parties and the said award was also received by the Plaintiff, which is established by admission of the Plaintiff in his averments made in Para-8 of the plaint saying that "the Defendant has sent the award copy to the earlier address of the Plaintiff". It is stated that, the Plaintiff has filed this suit seeking to set-aside the said award after a lapse of 2 years and 11 months from the date of passing the award. Under the circumstances, this suit is barred by time. It is stated that the Plaintiff has not made out any grounds to seek the relief AS.02/2012 12 under Section 34 of Arbitration Act and there is no irregularities committed by the Arbitrator which warrants the interference of this court. The award passed by the Arbitrator is well reasoned and is final and it is binding on both the parties. There is no scope for interference by this court under Section 34 of the Arbitration and Conciliation Act and prays for dismissal of the suit with costs.
8) Heard counsel for the Plaintiff. Counsel for the Defendant filed his written arguments. Perused the records placed in this suit.
9) The points that arise for my consideration are:-
(1) Whether the suit is barred by limitation?
(2) What Order?
10) My answer to the above points are :-
Point No.1 - In the Affirmative;
AS.02/2012 13 Point No.2 - As per final order, for the following :
REASONS
11) POINT NO.1 : The Plaintiff has challenged the impugned award on various factual grounds, which are in the nature of pure facts that could be assailed before the Arbitral Tribunal. Sole Arbitrator has passed the arbitral award on 09.04.2009, whereby, the claim petition of the Plaintiff has been dismissed. The main question is that, Plaintiff has challenged the impugned award within the period of limitation as stipulated in Section 34(2) and (3) of the Arbitration and Conciliation Act, 1996. At this juncture, it is relevant to mention Section 34(3) of the Arbitration and Conciliation Act, 1996. Section 34(3) reads as follows :
"34. Application for setting aside arbitral award (3) An application for setting aside may not be made after three months have elapsed from the date on which the AS.02/2012 14 party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been dispoed of by the arbitral Tribunal.
PROVIDED that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."
12) Section 34(1) of the Arbitration and Conciliation Act, 1996 clearly states that, application for setting aside the arbitral award may be made in accordance with sub-Section (2) and sub-Section (3) of Section 34 of the Act. Sub- Section(2) envisages the grounds for setting aside the arbitral award. A bare reading of sub-Section (1) makes it clear that, application under sub- Section (2) can be maintainable if sub-Section (3) is complied with. Sub-section (3) prescribes the period of limitation to file the application under Section AS.02/2012 15 34(2) of the Act. It states that the application for setting aside may not be made after three months have elapsed from the date on which the party had received the arbitral award or a request had been made under Section 33 of the Act, from the date on which that request had been disposed of by the arbitral Tribunal. Proviso to sub-Section (3) of Section 34 authorizes the court to entertain the application within further period of thirty days, if the court satisfies that the applicant was prevented by sufficient cause, but not thereafter.
13) A bare reading of Section 34(3) of the Act it is clear that, the application to set aside the award can be made within three months from the date of receipt of the award or if the request is made under Section 33 of the Act, from the date of disposal of request by the Arbitral Tribunal. It is further clear that, if the application has not been made within three months, the said application may be AS.02/2012 16 entertained within a further period of 30 days, if sufficient cause is shown, but not thereafter. Here, in this case, the second part of sub-Section (3) of Section 34 is not applicable to the Plaintiff's case, since the Plaintiff had not made any request under Section 33 of the Arbitration and Conciliation Act, 1996. The first part of Section 34(3) of the Act, is applicable to the case of the Plaintiff.
14) After going through the plaint averments, a question arises as to whether the Plaintiff has no knowledge of the arbitral award passed by the learned Arbitrator? In plaint para-10, the Plaintiff has pleaded that "Since the award received by the Plaintiff on 24.10.2011, this suit is within the period of limitation prescribed under 34(3) of Arbitration and Conciliation Act, 1996..." The Plaintiff in the plaint has pleaded that, case was posted for orders during the month of March, 2009, thereafter, no communication was received from the Defendant.
AS.02/2012 17 At this juncture, it is relevant to mention Para-8 of the plaint. It reads as follows :
"8. Thereafter no communication was received from the Defendants. The Plaintiff was under the impression that no orders are passed, filed another C.M.P before the Hon'ble High Court. The same was rejected. Thereafter he wrote a letter to the Defendant to seek information regarding the outcome of the arbitration proceedings. The Defendant by its letter dt 24.11.2011 sent a copy of the award dt 09.04.2009 to the counsel for Plaintiff. It is submitted that though in the arbitration proceedings it was informed that communication should be made to the address mentioned in the cause title. The Defendant have sent the Award copy to the earlier address of the Plaintiff. Thus the Plaintiff did not receive the award till the Defendant sent the copy of the award along with a covering letter dt 24.10.2011 was sent to the Plaintiffs counsel. Hence, this suit is filed seeking set-aside the award within three month from the date of receipt of the awards. Hence, the same is within the period of limitation."
(underlined by me)
15) The Plaintiff states that, it wrote a letter to the Defendant for information regarding outcome of the arbitral Proceedings; the Defendant sent a copy of the award on 24.11.2011 and after coming AS.02/2012 18 to know of passing of the award, this suit has been filed within the period of limitation. On perusal of the award makes it clear that, the award was sent to the address of the Plaintiff as mentioned in the Claim Petition of the Plaintiff. Moreover, the Plaintiff has emphatically admitted in its plaint that, the Defendant has sent the copy of the award to its earlier address. Hence, it has been established that at the time of initiation of arbitral proceedings by the Plaintiff, its address has been shown as described in the claim petition, accordingly, the learned arbitrator has sent the award to the Plaintiff to the address as shown in the claim petition. The Plaintiff's contention is that, the learned Arbitrator was informed that communication should be made to the address mentioned in the cause title. No such reference has been found in the arbitral award. Moreover, the Plaintiff has not produced any document to show that the learned arbitrator was informed as such.
AS.02/2012 19 More so, if the Plaintiff had changed its address as shown in the cause title during arbitral proceedings, it could have brought suitable amendment in the claim petition before the learned arbitrator. It did not do so. Further, it is highly improbable that how could the Plaintiff anticipate its present address as shown in cause title of this suit during the arbitral proceedings. Under such circumstances, it can be said that the Plaintiff has not substantiated its contention by placing cogent evidence before this court that it had no knowledge of the arbitral award soon after its passing. As admitted by the Plaintiff the award was sent to its earlier address (address shown in the claim petition). It substantiates the fact that, the Plaintiff having knowledge of passing of the award, has not challenged the award within the period of limitation as envisaged in Section 34(3) of the Arbitration and Conciliation Act, 1996. It has also been clear that, just to show that the suit has been filed within the AS.02/2012 20 period of limitation, the Plaintiff got obtained the copy of the award from the Defendant through its Advocate and has contended that it came to know of passing of the award as per Defendant's letter dated 24.10.2011. Even perusal of the Defendant's letter dated 24.10.2011 placed before this Court, it is clear that it has been brought to the notice of the Plaintiff that the award dated 09.04.2009 had already been sent to the Plaintiff. When matter stood thus, the Plaintiff has filed this suit after lapse of one year eight months from the date of the award. Thus, the Plaintiff has not filed this suit within the prescribed period as enumerated in Section 34(3) of the Arbitration and Conciliation Act, 1996. In view of non-compliance of Section 34(3) of the Arbitration and Conciliation Act, 1996, the suit under Section 34(2) of the Arbitration and Conciliation Act, 1996, cannot be entertained. Accordingly, I answer the Point No.1 in the affirmative.
AS.02/2012 21
16) Point No. 2 : For the foregoing discussion and answer to Point No.1, I proceed to pass the following :
ORDER The suit filed under 34 of the Arbitration and Conciliation Act, 1996 by the Plaintiff to set aside the award No.AM(SC) Arbitration/08-09 dated 09.04.2009 passed by the Arbitrator (G.C.Bidka) BSNL, BGTD, BANGALORE-82;
is hereby dismissed.
No order as to costs.
(Dictated to the Judgment Writer, transcribed and computerized by her, transcript thereof corrected and then pronounced by me in open court, on this the 29th day of May, 2019.) (RAMA NAIK) VI Addl.City Civil & Sessions Judge, Bengaluru City.