Calcutta High Court
Promod Kumar Jain vs Union Of India & Ors on 29 April, 2008
Author: Patherya
Bench: Patherya
F.J(2)
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
PRESENT :
THE HON'BLE JUSTICE PATHERYA
G. A. No. 3099 OF 2005
A. C. No. 9 OF 2000
PROMOD KUMAR JAIN
-vs.-
UNION OF INDIA & ORS.
FOR THE PETITIONER/APPLICANT : Mr. Harish Tandan
Ms. Puja Das Choudhury.
FOR U. O. I : Mr. R. P. Mukherjee.
HEARD ON :15.01.08, 19.02.08, 26.02.08, 04.03.08, 06.03.08 &
11.03.08.
JUDGMENT ON : 29-04-2008.
PATHERYA, J. :
1. This is an application filed under Sections 30 and 33 of the Arbitration Act, 1940 for setting aside the award dated 15th June, 1992.
2. Petitioner's Case 2.1 The case of the petitioner is that tenders were invited for auction of condemned locomotives lying at Jamalpur on 31st December, 1986 at Jagadhari, Haryana. At the said auction five condemned locomotives bearing Lot Nos.3,4,5,6 & 7 along with other lots were put up for auction. At the auction the petitioner was declared the successful bidder in respect of Lot nos.3 to 7. The offers were made without inspection being taken and the General Conditions of Sale were provided by the respondents a few hours before the auction. The Officers conducting the auction assured the respondents at the time of auction that the locomotives weighed 89 Metric Ton and on such representation the offer was made in respect of Lot Nos.3 to 7. The entire sale consideration in respect of Lots 3 & 4 was paid on 14th August, 1988 and the said Lots were handed over to the petitioner. On receiving Lot Nos.3 & 4 it was detected that the said Lots weighed much less than 89 Metric Tons and for such short supply disputes and differences arose between the parties.
2.2 Similarly for non-delivery of Lot Nos.5, 6 & 7 by the respondents to the petitioner disputes arose and such disputes along with other disputes were referred to arbitration.
2.3 The learned Arbitrator by Award dated 15th June, 1992 has rejected all the claims of the petitioner except Claim-(d).
2.4 The award of the Arbitrator is liable to be set aside for the following reasons :-
2.4.1 The findings in respect of Claim No.(a) cannot be sustained as from the Bid Sheet dated 31st December, 1987 it will appear that the offer of the petitioner in respect of Lot Nos.3, 4, 5, 6 & 7 lying at Jamalpur has been accepted.
2.4.2 For non-delivery of Lot Nos. 5, 6 & 7 several protests were made and correspondence exchanged. The said correspondence are contemporaneous documents and have not been considered by the Arbitrator while passing his Award.
2.4.3 The Arbitrator has misdirected himself by not appreciating that the petitioner was ready and willing to deposit the sale value upon the Lots being made available to the petitioner. None of the correspondence has been considered by the Arbitrator and therefore the Award in respect of the Claim-(a) be set aside.
2.4.4 Claim-(b) was in respect of short supply. It is the specific case of the petitioner that Mr. Agarwal and Mr. P. D. Gupta made announcement that each of the condemned locomotives would weigh 89 Metric Tons. Such announcement was made verbally at the time of auction. On the representation made the petitioner participated in the tender and for short supply in delivery the petitioner is entitled to full delivery of the balance material. From the evidence it will appear that the announcement of 89 Metric Tons has not been denied. In view of Section 3(e) of the Evidence Act, in the event of no rebuttal it must be presumed that such announcement was made. The circumstantial evidence also proves that delivery of 89 Metric Tons was promised by the respondents to the petitioner. The Arbitrator has not considered the same and the findings that auction sale was on "as is where is" basis does not justify rejection of Claim-(b), and the Award in respect of Claim-(b) is bad and liable to be set aside.
2.4.5 Claim No.(c) is in respect of loss of profit suffered by reason of short supply of Lot Nos. 3, 4 and non-supply of Lot Nos.5, 6 & 7. Non- grant of the said claim is unjustified and liable to be set aside.
2.4.6 Claim No.(d) has been allowed and there has been no grievance in respect thereof.
2.4.7 For taking delivery of Lots 5, 6 & 7 labour had been engaged.
For non-supply of Lots 5, 6 & 7 labour sat idle and the claimant suffered loss of Rs.1 lakh. Non grant of such claim is unjustified. 2.4.8 Claim (f) is on account of cost of arbitration proceedings and disallowance therefore is also unjustified and it is for default on the part of the respondents that the petitioner had to initiate arbitration proceedings and therefore costs ought to have been awarded.
2.5 For the said reasons the award dated 15th June, 1992 is liable to be set aside.
3. Respondent's Case 3.1 Counsel for the Railway submits that in December, 1987 advertisements were published for sale of five condemned locomotives. The date of auction was 31st December, 1987. The auction was attended by the petitioner and other offerers. The petitioner's offer was accepted. Payment in respect of the first instalment was delayed and made on 14th January, 1988. On such payment being made Lot Nos. 3 & 4 were delivered. As per Clause 7 of the Special Condition of Sale, any Lot can be withdrawn at any time. According to Clause 18 of the Special Condition of Sale in case the wagon sold is not found, the purchaser would be entitled to get refund of the value. As per Clause 1(c) of the General Conditions of Sale the Railway administration is empowered to withdraw any lot before the auction sale without assigning any reason. Similarly, according to Clause 1(b) of the General Conditions of Sale any person bidding shall be deemed to be aware of the terms and conditions of auction sale and shall be deemed to have agreed to such terms and conditions. Therefore the petitioner was aware that payment ought to be made as per Clause 2(a) of the General Conditions of Sale. The sale was by Lot and not by weight. In the Special Condition of Sale and in the Bid Sheets it is the Lots which have been mentioned, no weight had been mentioned anywhere. There was no occasion for any announcement to be made nor does the Special or General Conditions of Sale empowers any announcement by an Officer with regard to weight of the locomotives. No written assurance has been produced nor has any document been produced evidencing sale by weight or the announcement of weight. Neither in the General Conditions of Contract, Special Conditions of Contract or Bid Sheet has any assurance been given. The terms and conditions as per Clause 1(a) of the General Conditions of Sale has been accepted by the petitioner and the earnest money deposited. The reasons in the award are therefore justified and the Award be upheld.
4. Petitioner-in-Reply 4.1 The petitioner-in-reply submits that it is no one's case that locomotives were "not found". Therefore Clause 18 is not applicable. Cancellation of two condemned locomotives sought by the Railway Authorities is totally unjustified. By the correspondence exchanged the Railway Authorities have, in fact, agreed to extend the time to make payment of Lot No.5 if the petitioner agrees to cancel Lot nos. 6 & 7. The cancellation of Lot Nos.6 & 7 is conditioned on the proposal given in the communication. It is only upon the condition being accepted that the balance sale value for Lot No.5 would be accepted thereby the time for payment has been extended. In case of non acceptance Lot Nos. 5, 6 & 7 was to be cancelled. In spite of all these conditions imposed it has been the consistent case of the petitioner that delivery of Lot Nos. 5, 6 & 7 be made and the authority of the Railways to cancel delivery of Lot Nos. 6 & 7 has been consistently questioned by the petitioner.
5. Conclusion 5.1 Having considered the submissions of the parties it appears that there is no justification for dismissing Claim (a). Several correspondence were exchanged between the parties and from the Bid Sheet it appears that bid in respect of Lot Nos. 3, 4, 5, 6 & 7 had been accepted without imposition of any condition. Therefore non-delivery of Lot Nos. 5, 6 & 7 cannot be justified. The said Lots were not withdrawn at the time of auction, although the Railways were empowered to do so as per its Catalogue and the General Conditions of Contract. In fact, by a communication the Railways have called upon the petitioner to cancel Lot Nos. 6 & 7 and make payment for Lot. No.5. This would not have been necessary in the event the petitioner's bid was not accepted in respect of Lot Nos. 5, 6 & 7. Imposition of this condition amounts to altering the terms and conditions of the Contract which the Railway is not entitled to do. In the light of the discussion above it appears that the Arbitrator has not considered the correspondence exchanged between the parties and therefore has misdirected himself. For the said reasons the Award in respect of Claim (a) is set aside. 5.2 The reasons for disallowing Claim-(b) is justified as admittedly the auction was held on "as is where is" basis. Neither the Catalogue nor the Bid Sheet nor the General Conditions of Contract nor the Special Conditions of Contract nor General Principles of Law empowered any officer of the Railway Authorities to make a declaration regarding the weight of the condemned locomotives. No assurance in writing was given. The witnesses on behalf of the petitioner- claimant have also admitted that weight was not a criteria in the auction sale. The petitioner's witnesses have also agreed that verbal assurance by an officer is meaningless. Therefore rejection of Claim-(b) is justified. 5.3 In view of the findings, in respect of Claim-(a) and such claim being set aside, the findings in respect of Claim-(c) can also not be sustained. Lot Nos. 3 to 7 had been sold to the petitioner. For non-delivery of Lots 5, 6 & 7 the petitioner is likely to suffer loss of profit. In view of the aforesaid rejection of Claim-(c) is unjustified and set aside.
5.4 The findings in respect of Claim Nos. (e) & (f) is justified. 5.5 For all the aforesaid reasons the Award dated 15th June, 1992 in respect of Claim Nos.(a) and (c) are set aside, and the same be placed before the Arbitrator for adjudication.
(PATHERYA, J.)