Delhi District Court
Union Of India vs Sakshi Engineering Works on 7 April, 2026
IN THE COURT OF MS. DEEPALI SHARMA,
DISTRICT JUDGE (COMMERCIAL COURT)-03,
PATIALA HOUSE COURTS, NEW DELHI
In the matter of:
OMP(COMM) 65/23
CNR No. DLND01-004114-2023
Union of India,
Through Principal Chief Material Manager,
Modern Coach Factory, Indian Railways,
Raeberali, UP-229120.
Also having its Head Office at :
Rail Bhawan, Raisina Road,
New Delhi.
........ PETITIONER
Versus
M/s Sakshi Engineering Works,
Khasra No. 1083, Plot No. 297,
Vikash Nagar, Opp. Uttam Toyota,
Meerut Road,
Ghaziabad, U.P.
......RESPONDENT
ORDER
07.04.2026
1. Present petition has been filed under Section 34 of Arbitration and Conciliation Act, 1996 (hereinafter referred to as "The Act") assailing the impugned award dated 26.12.2022 passed by the Ld. Sole Arbitrator, whereby the Ld. Sole Arbitrator awarded a sum of Rs.27,27,290/- alongwith interest of 12% as per the terms and conditions as mentioned therein.
OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 1 OF 15
2. Facts leading to the filing of the present petition as stated in the petition are that the petitioner had floated tender no. 07190256, which was published on 26.12.2019 for manufacturing Adjustable Tie Rod, Straight Type for the quantity of 1567 in number. It is stated that the tender clearly mentioned that the item was to be supplied as per Drawing no.ICF/J&T/MISC.-1343 Col.- I as per Dr. No. ICF/J&T/MISC.-1343 Col.-I Specn:
ICF/J&T/MISC.-1343 Col.-I.
3. It is stated that the petitioner issued a letter of acceptance to the respondent on 31.01.2020, whereby the contract between the petitioner and respondent stood concluded. The respondent deposited the entire security deposit amount and thereafter the purchase order dated 08.07.2020 was issued to the respondent for 1567 Tie Rods out of which 567 Tie Rods were to be supplied by 13.09.2020 and remaining 1,000 were to be supplied by 31.07.2021.
4. It is urged that the respondent vide its letter dated 08.09.2020, sought clarifications as to the standard to be applied for manufacture of Adjustable Tie Rods as provided in the drawing of STD-207. A modification advise dated 01.10.2020 was issued to the claimant/respondent informing him of the change in specification that only IS:2062-2011 is to be followed and STD-207 was deleted from mentioned drawing/specification.
5. Vide its letter dated 21.11.2020, the respondent claimant again sought clarification with respect to mention of COL-I in purchase order. Pursuant thereto a letter dated 16.01.2021 was issued to the respondent clarifying and informing OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 2 OF 15 that COL-I in the drawing meant those applicable to "BG coaches"
and a fresh drawing alongwith highlighted COL-I was provided to the respondent.
6. It is stated that vide its letter dated 31.07.2021, the respondent sought change of inspection agency from M/s Rites to the consignee itself. In reply thereto, the respondent vide letter dated 11.08.2021 was again informed that the length of Adjustable Tie Rod shall be 3060 mm for BG as mentioned in the drawing.
7. Vide its letter dated 26.11.2021, the respondent sought clear drawing with respect to the Adjustable Tie Rod to be supplied to him. Vide its reply dated 16.12.2021, fresh drawings were made available to the respondent by the petitioner. The petitioner issued modification advise dated 27.12.2021 to the respondent providing that the respondent would submit samples of Adjustable Tie Rod to Dy. CME/SHELL for fitment.
8. Pursuant thereto the respondent submitted sample on 30.12.2021 for fitment to Dy. CME/SHELL and after inspection, fitment report dated 20.01.2022 was prepared by the petitioner and vide letter dated 31.01.2022, the respondent was informed that the sample of Adjustable Tie Rod provided by it was only of 2140 mm length and 920 mm short in accordance with drawing no. ICF/J&T/MISC.-1343 Col.-I of 3060 mm length.
9. The respondent filed a claim before ld. Sole Arbitrator claiming an amount of Rs.23,16,652/- on account of non-payment of the purchase order no. 071902561100944 dated 08.07.2020 for Rs.23,16,652/-. The respondent also claimed interest on the amount due @ 18% p.a. till the date of realization.
OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 3 OF 15 A counter claim was filed by the petitioner.
10. The Ld. Arbitrator vide its award dated 26.12.2022, allowed the claim of the respondent for Rs.23,16,652/- qua claim no.1 subject to supply of actual quantity @ Rs.1320/- plus GST per Tie Rod. The Ld. Arbitrator also directed refund of security deposit of Rs.2,32,000/- to the claimant within 90 days of the award, failing which an interest of 12% was liable to be paid on all the three claims awarded. The Ld. Arbitrator also awarded interest of Rs.1,78,638/- to be paid as and when payment against supply would be made on the basis of actual quantity supplied @ Rs.114 per Tie Rod.
11. The award has been assailed by the petitioner on the ground that the Ld. Arbitrator has decided the present dispute by referring to the previous tenders and contracts entered into between the petitioner and the respondent, which was extraneous to the present dispute between the parties. It is stated that the dispute referred to the Arbitral Tribunal was with respect to tender no. 07190256 dated 26.12.2019, Letter of acceptance dated 31.01.2020 and purchase order no. 071902561100944 dated 08.07.2020, however, the Ld. Arbitrator has referred to other tenders and contracts entered into between the parties to decide the present dispute. It is urged that it is settled law that the arbitral proceedings have to be confined within the four corners of the agreement between the parties and, therefore, the award as passed by the Ld. Arbitrator is liable to be set aside in as much as Ld. Arbitrator has looked at documents beyond the scope of the dispute in issue.
OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 4 OF 15
12. It is further stated that the Ld. Sole Arbitrator did not consider that vide its letter dated 31.01.2022, the respondent had merely been informed that the sample supplied by the claimant was not in accordance with specifications and drawings provided to him. It is stated that no formal termination of the purchase award has been passed till date. It is stated that pursuant to the letter dated 31.01.2022, the respondent had an opportunity to correct the deficiency in the sample provided and furnish fresh sample for inspection, therefore, no cause of action had arisen to file the claim before the Ld. Arbitrator.
13. It is accordingly prayed that the impugned award dated 26.12.2022 be set aside and the counter claim filed by the petitioner be allowed.
14. Reply has been filed by the respondent, stating that the Ld. Arbitrator has duly passed the award after considering the entire record. It is urged that while hearing a petition under Section 34 of the Act, this court does not sit in appeal over the decision of the Ld. Arbitrator and can not re-apprise the evidence or the reasons behind the Arbitral Award.
15. It is stated that the Ld. Arbitrator vide the impugned award has directed the respondent to supply Adjustable Tie Rods to the petitioners by re-fixing the delivery period for 180 days from the date of issue of amendment by the petitioner, which has not been adhered to by the petitioner. It is stated that the Adjustable Tie Rods of quantity of 1567 items is a huge quantity, made of metals weighting thousands of kilograms causing damage to the building of the respondent and is prone to theft, thereby causing OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 5 OF 15 further loss to the respondent, who is a small supplier.
16. On facts, it is urged that after the award of tender, the respondent deposited the performance security of Rs.2,50,000/- and the respondent thereafter manufactured the Tie Rods for the petitioner as per terms and conditions provided in the tender document dated 26.12.2019. It is urged that upon manufacturing the Tie Rods to the satisfaction of the petitioner, the respondent periodically raised the bills and post orders in terms of the tender dated 26.12.2019 to the petitioner. It is stated that the petitioner had carried out orders for about three years after the last tender in the year 2016. It is stated that the terms and PL Number of all the earlier tenders were ad-verbatim as in the present tender and the respondent had also received the payments for the same.
17. It is stated that the respondent had supplied Tie Rods to the petitioner measuring 2150 mm vide PO no.
07x60193.R1670052 (PL No. 90987056) dated 02.12.2016, PO No. 92191212100251 dated 15.11.2019 and PO No. 07190253102375 dated 02.12.2019, which were duly accepted by the petitioner. It is stated that on perusal of the PO Number 92191212100251 dated 15.11.2019 and PO Number 07190253102375 dated 02.12.2019, it is manifest that the terms and conditions with regard to the description of the material to be supplied in the said purchase orders is ad-verbatim with the description mentioned in the PO No. 071902561100944 dated 08.07.2020, i.e. the purchase order in issue in the present case. It is stated that the Description clause mentioned in the purchase orders is as follows:
OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 6 OF 15 "ADJUSTABLE TIE ROD STRAIGHT TYPE as per Drg. No. ICF/J&T/MIS-1343 COL I, Quality Plan - N.A. as per Drg. No. ICF/J&T/misc-1343 COL 1 specn:ICF/J&T/MISC-1343 COL 1"
18. It is stated that the terms and conditions and the language of all the earlier purchase orders and tenders is identical to the tender and the purchase order in issue in the present case. It is stated that in all the previous transactions regarding the aforesaid purchase orders and tenders, the petitioner had accepted Tie Rods of the length of 2150 mm, however, all of a sudden, the petitioner refused to accept the Tie Rods of the length of 2150 mm for the tender/purchase order issue in the present case.
19. It is stated that the respondent had already manufactured the Tie Rods of the length of 2150 mm and even the bid of the respondent was with respect to Tie Rods of the length of 2150 mm and not for the length of 3060 mm. It is stated that in that event the bid of the respondent would have been much higher. It is urged that the purchase order issued subsequent to the purchase order in issue i.e. PO No. 0211130100747 dated 31.01.2022 provided for the following description clause :
"ADJUSTABLE TIE ROD STRAIGHT TYPE, LENGTH -3060 MM (As per Drawing), Spec:-
ICF/J&T/MISC-1343 COL 1."
20. It is urged that the purchase order dated 13.01.2022 categorically mentions the length of the Tie Rod as 3060 mm which was never mentioned in the earlier purchase orders and OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 7 OF 15 hence the respondent acted upon the basis of previous supplies made by the respondent to the petitioner under the various purchase orders issued by the petitioner, where-under no length was specified and the same were also accepted by the petitioner.
21. It is stated that the inspection of the product is a necessary per-requisite before final supply. The said inspection was got done from M/s Rites as per the purchase order. It is stated that the M/s Rites pointed out some irregularities in the drawings pursuant to which letters were exchanged between the parties in relation to supply of Tie Rods and proper drawings. It is stated that the petitioner in order to avoid the liability under the tender documents dated 26.12.2019 whimsically tried to portray that the size of the Tie Rods was not correct and, therefore, they could not accept the order.
22. It is urged that the respondent has already manufactured the Tie Rods and they would suffer huge losses, if the order was not accepted. In these circumstances, the respondent was constrained to initiate Arbitration proceedings seeking payment against purchase order no. 071902561100944 dated 08.07.2020 alongwith other amounts.
23. It is urged that there was no mention of the length of the Tie Rods in any earlier purchase order as well as purchase order in issue. No objection was taken regarding length of the Tie Rods at the time of supply qua the previous purchase orders. It is urged that the respondent had duly received the total order value from the petitioner for the supply of Tie Rods on the basis of previous purchase orders. It is also urged that Tie Rods being OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 8 OF 15 supplied were in terms of drawing no. ICF/J&T/MISC.-1343 Col.- I, in all the purchase orders. It is accordingly prayed that the present petition is liable to be dismissed.
24. I have heard ld. Counsel for the parties and perused the record including the impugned award passed by the Ld. Arbitrator.
25. Perusal of the impugned award dated 05.01.2023 passed by the Ld. Arbitrator reveals that the Ld. Arbitrator considered the submissions of the claimant as well as the respondent. The Ld. Arbitrator took note of the fact that after the award of contract dated 08.07.2020 certain clarifications were sought by the respondent/claimant regarding the material, which were accepted by the petitioner herein. Thereafter the respondent herein manufactured the item and offered the material for inspection to RITES, however certain discrepancies were found in the drawing regarding length of the item and the respondent herein was directed to get the same clarified. However, the material offered for inspection was not rejected. Thereafter, on 21.11.2020 the claimant approached the respondent for clarification on "COL1" in the drawing, which was subsequently clarified by the petitioner vide its letter dated 16.01.2021 stating that 'COL1"
means "this is applicable for BG coaches". There was no mention of length of 3060 mm in the said letter. Ld. Arbitrator further observed that the fact that the petitioner herein took two months to respond to the letter, indicated that they were trying to make an excuse and eventually took advantage of the word "COL1" in the drawing and linked it with the small table in the drawing.
OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 9 OF 15 Eventually the petitioner herein clarified to the respondent vide its letter dated 11.08.2021 that the applicable length was 3060 mm. Thereafter on 27.12.2021 the petitioner amended the inspection Clause stating therein that RITES to check the dimensional aspect as per approved sample by Dy.CME/SHELL. For this the respondent was to submit two Tie Rods to Dy.CME/SHELL for fitment and another Tie Rod was to be returned to the firm as approved sample. The respondent submitted the samples to Dy.CME/SHELL, which were rejected vide letter dated 31.01.2022 as the length of the sample was 2140 mm which was 920 mm short of the requisite length of 3060 mm as per the drawing.
26. The ld. Arbitrator took note of the argument of the respondent's advocate that in the past for the same PL No. of the item and the same drawing, three orders/contracts dated 02.12.2016, 15.11.2019 and 02.12.2019 were executed by the respondent herein and the petitioner had accepted the material and made the payment, which fact was also agreed to by the petitioner's advocate before the Ld. Arbitrator. The Ld. Arbitrator also took note of the argument of the petitioner herein that the drawing number ICF/JNT/MISC-1343 COL1 mentioned therein and COL1 means column 1 of a table in drawing, which showed the item as "For BG & DD3". The petitioner herein also contended that in the drawing the length of BG & DD3 is shown as 3060 mm and that the present contract is independent of the previous contracts.
27. Ld. Arbitrator after considering the drawing no.
OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 10 OF 15 ICF/JNT/MISC-1343 COL1 and noting that there were three items in the drawing having different lengths i.e. 2150 mm, 2570 mm and 3060 mm and observed that while awarding the contract, the petitioner herein did not clearly mention which item was required as in the previous three contracts/orders. The Ld. Arbitrator also took note of the fact that the respondent supplied against the previous three contracts/orders for the same drawing and the same PL No. It was further observed that since the item supplied against the previous three orders/contracts was of the length of 2150 mm with the same PL No. 90987056, the respondent herein quoted the rate for the item accordingly and the same was accepted by the petitioner and thus the contract dated 08.07.2020 was awarded to the respondent. It was also observed that the present contract was awarded at similar rate as the previous contracts and if the petitioner required a higher length, it would have entailed a higher rate which ought to have been taken into consideration by the petitioner at the time of awarding the contract. It was thus observed that the respondent cannot take a plea that the present contract had no connection with the previous contracts.
28. Ld. Arbitrator emphasized on the fact that the drawing in issue in all the contracts was identical and they had the same PL No. also. The fact that the tender subsequently floated by the petitioner being tender no. 0211130B, opened on 28.02.2022, the petitioner mentioned the length as 3060 mm specifically in the description at a rate higher than the earlier tenders, thereby indicating that there was some error in issuing the present tender which was awarded on 08.07.2020.
OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 11 OF 15
29. It was further noted that the contract is to be executed on the basis of the original contract and any post contract clarification which materially alters the conditions of the contract cannot be taken as valid. It was thus held that the respondent herein was not treated fairly by asking him to supply the item with the length 3060 mm vide letter dated 11.08.2021 and the letter was accordingly declared as being not in accordance with law.
30. As regards the scope of interference in an award passed by the Arbitral Tribunal under Section 34 Arbitration and Conciliation Act, the Hon'ble Supreme Court in the matter of National Highway Authority of India Vs. M/s Hindustan Construction Company Ltd., 2024, Law Pack(SC) 69472, wherein the Hon'ble Supreme Court observed as follows:-
"There cannot be any dispute that as far as the construction of the terms of the contract are concerned, it is for the Arbitral Tribunal to adjudicate upon. If after considering the material on record, the Arbitral Tribunal takes a particular view on the interpretation of the contract, the court U/s 34 does not sit in appeal over the findings of the arbitrator".
31. In M/s Gas Authority of India Ltd. Vs. M/s JSW Ispat Steel Ltd., 2023, Lawpack(Del)98694, the Hon'ble Delhi High Court took note of the decision of the Hon'ble Supreme Court in NHAI vs. Progressive- MVR(JV) 2018(14)SCC 688 wherein the Hon'ble Supreme Court held that even when the view taken by the arbitrator is a plausible view and/or when two views are possible, a particular view taken by the Arbitral Tribunal, which is also reasonable, should not be interfered with in proceedings under OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 12 OF 15 Section 34 of the Act. The Hon'ble Delhi High Court in the above judgment accordingly refused to interfere in the Arbitral Award and observed that the same was based on the interpretation of the contract (which is the domain of the Arbitral Tribunal) and it cannot be said that the view taken by the Arbitral Tribunal is not even a possible view. The court observed that the settled legal position does not permit embarking upon a full scale, merit based review of the award.
32. Viewed in light of law discussed hereinabove, it is manifest that the scope of interference in an arbitral award by way of petition under Section 34 of the Act is limited. It is also well settled that construction of the terms of the contract lies within the domain of an arbitrator and unless the arbitrator construes the contract in a manner that no fair minded or reasonable person would do, the award ought not to be interfered with ( Rashtriya Ispat Nigam Ltd. vs. Dewan Chand Ram Saran, 2012 (5) SCC 306 referred to). It is also well settled that where two views are possible, the court cannot interfere in the plausible view taken by the Arbitrator supported by reasoning.
33. In the present case, it is manifest from the perusal of the Award that the ld. Arbitrator has taken a reasonable view of the construction of the terms of contract regarding the length of the item in the contract dated 08.07.2020 while referring to the past practice of the parties to supply the item i.e. Tie Rods of the length of 2150 mm for the previous three contracts having same PL No. and same drawing. It is not the case of the petitioner herein that the drawing or the PL No. in the previous three tenders was different OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 13 OF 15 or that any specification was given in the present tender, which was not adhered to by the respondent herein. The Ld. Arbitrator has given a reasoned order and mere reliance upon past practice between the parties relating to identical drawing and identical PL No. in order to arrive at construction of the contract in issue cannot be termed as patently illegal or against public policy as urged by the petitioner.
34. Moreover, vide letter dated 31.01.2022 the samples of the respondent were rejected by the petitioner citing the reason that the length of the sample was 2140 mm and it was 920 mm shorter than the length of 3060 mm as per the drawing. The contention that the respondent was free to furnish fresh samples for further consideration and the contract was not yet terminated and hence, no cause of action arose is without any basis in as much as once the samples were rejected on the ground of short length, the only option left with the respondent was to manufacture the material afresh, which would have entailed huge cost and expenditure to the respondent. The fact that no formal order was passed terminating the contract would not be of consequence in as much as the sample of the respondent had already been rejected by the petitioner vide its letter dated 31.01.2022 and the entire material, which had already been manufactured by the respondent, could not have been delivered to the petitioner because of the rejection and thus being aggrieved by the same, the respondent initiated arbitration proceedings.
35. In view of the aforesaid discussion, I am of the opinion that the view taken by the Ld. Arbitrator being a plausible OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 14 OF 15 view, does not warrant any interference. In these circumstances, the present petition is dismissed.
ANNOUNCED IN THE OPEN COURT DEEPALI by
Digitally signed
DEEPALI
SHARMA
SHARMA Date: 2026.04.07
ON 7th APRIL, 2026 16:32:46 +0530
(DEEPALI SHARMA)
DISTRICT JUDGE (COMMERCIAL COURT)-03
NEW DELHI DISTRICT, PATIALA HOUSE COURTS,
NEW DELHI.
OMP (COMM.) 65/23 UNION OF INDIA VS. M/S SAKSHI ENGINEERING WORKS PAGE 15 OF 15