Calcutta High Court
Shree Laxmi Iron & Steel Works Pvt. Ltd vs Research Designs & Standard ... on 18 May, 2018
Equivalent citations: AIRONLINE 2018 CAL 1458
Author: Jyotirmay Bhattacharya
Bench: Jyotirmay Bhattacharya
IN THE HIGH COURT AT CALCUTTA Civil appellate Jurisdiction ORIGINAL SIDE Present:
The Hon'ble The Chief Justice Jyotirmay Bhattacharya And The Hon'ble Justice Shivakant Prasad A.P.O.T No. 392 of 2016 with G.A. No. 3396 of 2016 C.S 360 of 2012 Shree Laxmi Iron & Steel Works Pvt. Ltd.
Versus Research Designs & Standard Organisation (RDSO)& Ors. For the Appellant/Petitioner : Mr. Jayanta Mitra, Sr. Advocate, Mr. Debnath Ghosh, Advocate, Mr. Avijit Dey, Advocate.
For the RITES Ltd : Mr. Jishnu Chowdhury, Advocate,
Mr. Chayan Gupta, Advocate,
Mr. A. Basu, Advocate
For the RDSO : Mrs. Aparna Banerjee, Advocate.
For the Konkon Railways : Mr. Dilip Kumar Chatterjee, Advocate,
Mr. Dipanjan Datta, Advocate,
Mr. Atanu Basu, Advocate.
Heard on : 16.05.2018
Judgement on : 18.05.2018
Jyotirmay Bhattacharya, C.J, :-
This intra-court appeal is directed against the judgment and/or order dated 7th November, 2016 passed by learned Single Judge of this Court. By the said order, the order of arrest of supply of the Metal Liners by the plaintiff to the Railway authority which was imposed on the plaintiff by the Research, Designs and Standard Organisations (RDSO) vide letter dated July, 4th/9th , 2012 was made effective with immediate effect. The plaintiff /appellant was also directed to pay cost of the said interlocutory proceeding assessed at Rs.5 lakh to RDSO. The plaintiff was directed to deposit a sum of Rs. 1 crore by way of security as a condition for resuming supply of its product to Railways, besides other conditions imposed on the plaintiff for improving quality of its product and for keeping constant vigil upon the products to be supplied by the plaintiff to the Railways authority and the consequence for supply of inferior quality product.
Admittedly, the plaintiff supplied huge quantity of metal liners to Konkon Railway Corporation Ltd. Part of such supply was utilized by the railway authorities in the railway track within western railway jurisdiction and part of such supplies remains unutilized. The railway authorities decided not to use those unutilized metal liners in their railway track as according to them, the metal liners which were supplied to the railway authorities were defective and not in conformity with the measurement and specification as prescribed by the RDSO. Some samples of such metal liners were picked up by the vigilance cell of RDSO for testing. The first set of samples was tested by RDSO. RDSO found that those samples of metal liners were not in conformity with the norms of IRS specification for metal liners.
Referring to clause 20 of "the general guidelines for vendor development, QC-G-7.1-1 Rev.2 effective from 15th September, 2011", the plaintiff was advised to stop all further production of metal liners to drawing no.RT-3738 at its firm as precautionary measures to avoid production and supply of potentially inferior product with immediate effect.
The plaintiff was informed by the RDSO that the final decision would be taken based on outcome of results of second set of samples which was to be open and tested as per the provision of Clause 20 of the aforesaid guidelines. The plaintiff's business of manufacture and supply of metal liners was thus, stopped by said letter dated July, 4th/9th, 2012 issued by RDSO.
The plaintiff felt aggrieved. Hence the plaintiff filed the instant suit and prayed for some interim relief. Such interim relief having been denied to the plaintiff by the learned Single Judge of this Court, the plaintiff filed the instant appeal before the Appeal Court disputing the defendant's claim regarding supply of defective metal liners to the railways authorities by the plaintiff.
Since the plaintiff claims that the metal liners which were supplied to the railways authorities were in conformity with the specification of RDSO and such claim having been denied by the defendant in its affidavit, this Court felt that the dispute of such nature cannot be decided without verifying the accuracy of the products which were supplied by the plaintiff to the railway authorities by an independent expert. Accordingly an independent expert was appointed as a Special Officer of this Court with a direction upon him to conduct necessary tests and submit a report as to the accuracy of the metal liners supplied by the plaintiff to the railway authorities. The expert upon notice to the parties and with their assistance conducted necessary tests and submitted a report before this Court mentioning therein that the samples which were collected from the supplies made by the plaintiff to the railway authorities do not confirm with measurement and/ or specification approved by RDSO. The expert's report thus, confirmed that the metal liners which were supplied to the railway authorities by the plaintiff were defective as the dimension of such metal liners did not tally with the dimension of the metal liners specified by RDSO.
The plaintiff did not file any objection against the said report. The plaintiff rather has accepted the said report.
Thus, this Court has no hesitation to hold that that the disputed Metal Liners which were supplied to the plaintiff were defective as those were not in conformity with the RDSO specification.
Under such circumstances we have no hesitation to hold that the penal provision contained in 20.2.4.1 the Part I Firm of the "General Guidelines for Vendor Development, QC-G-7,1-1 Rev.2 effective from 05.09.2011" will be attracted in the instant case. For convenience of understanding as to the effect of the penal provision which is attracted in the instant case, the relevant clause of the said guidelines namely 20.2.4.1 Part I Firm is set out hereunder:
"20.2.4.1 Part I Firm: Depending upon gravity on test results, one of the following action will be taken:
a) The Firm shall be downgraded to Part-II. The production and inspection of such firms can be resorted only after satisfactory quality audit. The firm can return to Part-I list only after completion of one year period from date of delisting, provided all other conditions are fulfilled.
b) Firm shall be temporarily delisted for 6 months from date of stoppage of production and inspection or three months from the date of issue of orders, whichever is later. After completion or period of delisting firm shall be restored to Part II status only after satisfactory quality audit. The firm can return to Part-I list only after completion of one year period in part-II provided all other conditions are fulfilled.
The criteria for defining gravity of test results is available with QA Civil Directorate of RDSO."
Having regard to fact that the Metal Liners supplied to the railway authorities by the plaintiff were found defective and not in conformity with the RDSO specification, the plaintiff's firm may be temporarily delisted for six months from the date of stoppage of production and inspection of three months from the date of issue of orders whichever is later and after completion of period of delisting, the firm may be restored to Part-II status only after satisfactory quality audit. The firm may, however, return to Part-I list only after completion of one year period in Part-II provided all other conditions are fulfilled.
We have already mentioned above that the production of Metal Liners bearing marking No SLI-12 (RT- 3738) and supply thereof by the plaintiff to the railway authorities was stopped with effect from July 4/9 2012. Restrictive period of six months has long expired. The plaintiff now may be permitted to start manufacturing Metal Liner of the above specification and if on inspection of such products, it is found that the quality of the plaintiff's product has improved and the products are in conformity with the RDSO specification, the plaintiff's firm may then be restored to Part-II status and then again the plaintiff's firm can return to Part-I list only after completion of one year period in Part-II provided all other conditions are fulfilled.
Following the said restrictive clause the plaintiff's manufacturing process of such Metal Liners of the said specification was stopped with effect from July 4/9 2012 and since restrictive period of six months therform has long expired, the plaintiff is now permitted to start manufacture of such Metal Liner to drawing No. RT-3738 as Part II supplier, with the follow up actions as mentioned above. The plaintiff is however, be permitted to supply its product of the said description to the railways authorities only after its products are certified to be in conformity with the RDSO specification by the RDSO experts/RITES as the case may be.
With this observation the injunction application is disposed of by modifying the impugned order and by relaxing the condition imposed by the learned Single Judge upon the plaintiff, regarding deposit of Rs. 1 crore as a condition for resuming supply of the plaintiff's product to the Railway authorities and the other conditions related thereto. We also reduce the cost amount of Rs.5 Lakh to 3 lakh to be paid by the plaintiff to RDSO as cost of such interlocutory proceeding including that of the appeal.
Before parting with, we also like to mention here that this order will not prevent the Railway authority from realising damages and other relief which they are entitled under the law from the plaintiff, in accordance with law.
The appeal is thus disposed of.
Urgent photostat certified copy of this judgement and order, if applied for, be furnished to the appearing parties on priority basis.
(Jyotirmay Bhattacharya, C.J) I agree.
(Shivakant Prasad, J.)