Delhi District Court
M/S. Tirupati Texco Products (P) Ltd vs Union Of India on 10 November, 2010
1
IN THE COURT OF SHRI SURINDER S. RATHI:
ADJ:ROOM NO.32:TIS HAZARI COURTS :DELHI
CS NO: 400/01
IN THE MATTER OF :
M/s. Tirupati Texco Products (P) Ltd.
132B Cooperative Industrial Estate,
Kanpur 208022 .............Petitioner
Versus
Union of India
through
Director General of Supplies & Disposals
Sansad Marg,
New Delhi.
Sh. R.S.Bhalla
Sole Arbitrator &
Addl. Legal Advisor
Jeewan Tara Building,
New Delhi. ............Respondent
OBJECTION PETITION U/S 34 ARBITRATION & CONCILIATION ACT
Date of Institution : 06.05.2010
Date of Final Arguments : 10.11.2010
Date of Order : 10.11.2010
JUDGMENT
1. By this order I shall dispose of this objection petition preferred by petitioner company against the award passed by Ld. Sole Arbitrator on 13.02.2001 in a claim petition preferred by respondent Union of India. Under this award Contd......./D 2 claimant was awarded a sum of Rs.29,925/ apart from cost of Rs.5,000/ alongwith interest @ 18% p.a.
2. I have heard arguments of Ld Counsel for Objector Sh. R.Doraiswami and Ld. Counsel Sh. Sanjeev Yadav for Respondent Union of India.
3. Case of the respondent/claimant before Ld. Arbitrator as per claim petition was that on 28.09.90 a tender submitted by the Objector herein was accepted by Union of India wherein there was an order for supply of Cotton Ropes admeasuring 69210 meter, 94350 meter, and 50,000 meter of three different dimensions. This quantity was subsequently enhanced to 86512 M and 117938 Meters as far as first two items are concerned vide letter 25.10.90. Under the terms of the tender date of delivery was 31.12.90 qua items no.1 and 2, but qua item no.3 50,000 M the date of delivery was 31.08.90. But it was extended to 28.2.92 on the request of Petitioner herein. Still the Objector company failed to supply the material within the enhanced period. As a result the contract was cancelled on 6.5.92 qua the unsupplied quantity at the risk and expense of the Objector herein while reserving right to claim damages. The remnant quantity had to be repurchased under a risk purchase tender on 27.08.92 from M/s. S.R. Entrp. Kanpur. This firm was granted the purchaser th order despite it being 7 lowest. Detailed reasons were given as to why bids of other six bidders including the objector herein as Lowest bidder no.5 were not accepted. It was followed by issuance of Risk Purchases Loss Demand of Rs.29,925/ to the petitioner M/s. Tirupati on 16.2.295. When no payment Contd......./D 3 was made by M/s. Tirupati the claim petition was filed before Ld. Arbitrator as the tender had an arbitration clause. Notice of the Arbitration proceedings was issued to M/s. Tirupati. The claim petition was duly replied in Dec.1999 wherein M/s. Tirupati prayed for dismissal of the claim petition on a plea that they could make the delivery in time since the initial purchase order quantity was enhanced substantially. It was also objected that since the extended time was not in accordance with the offer given by M/s. Tirupati the consignment could not be delivered in time. Matter was heard by Ld. Arbitrator and he reached to a conclusion that there was a contract between the parties which was breached by the Objector herein. He passed an award of Rs.29,925/ apart from cost of Rs.5000/ with interest @ 18% p.a in favour of claimant / respondent i.e. UOI.
4. While opening his arguments on this objection petition Ld. Counsel for Objector Company submitted that it could not have been financially penalized for committing breach of contract in so far as there was no contract between them. It is argued that in the advertised tender UOI was desirous of purchasing cotton ropes of different dimensions measuring 1,10,100 meters, 94350 meters and 1,38,275 meters to be supplied on or before 30.June.1990 commencing from 1.4.1990. Objector herein was the successful bidder but in his offer letter he offered to supply 40,000 meter p.m. out of item no.1, 20,000 meters p.m. out of second item and 30,000 meters p.m. out of third item. Simultaneously with a rider that delivery shall start after receipt of formal acceptance tendered letter on specified rates. Admittedly, this offer of objector Contd......./D 4 herein was not accepted by the respondent/UOI since they entered into negotiation with the objector. After conclusion of negotiations objector herein furnished a revised offer dated 2.7.90. The change brought in the revised offer was only that item no.2 shall be supplied @ 20,000 Meter P.M. and rest offer was maintained.
5. Since the initial tender supply period of 1.4.90 to 30.6.90 stood expired by the time revised offer dt 02.07.90 came to fore no last date of supplying period was mentioned in the offer. In furtherance of this offer formal AT was issued for the first time on 28.9.90. But admittedly, in this formal AT although quantity to be supplied qua item no.1 was @ 40,000 Mtrs p.m., qua item no.2 @ 25000 Mtrs. p.m. and qua item no.3 @ 50 Mtrs. p.m. but another rider was put by the respondent/UOI which required the objector to supply the entire quantity by 31.12.90 and qua item no.3 the quantity was to be supplied by 31.08.90. These AT are suffered from inherent mistakes in so for as it was issued on 28.09.90 and it require the objector to supply item no.3 by 31.08.90. This defective AT Letter was responded to by Objector herein vide its letter dated 15.109.90 requesting for amendment in the AT letter. In this regard it is pertinent to observe that as per Section 3 of the Indian Contract Act 1872 no concluded contract was achieved in so far as in response to the offer of one party a counter offer was given instead of an unequivocal acceptance. Since this above AT letter did not accept the revised offer of M/s. Tirupati Texco Products (P) Ltd. in totality, the AT letter in the eyes of law is mere a counter offer and not a letter of acceptance which can give rise to concluded contract Contd......./D 5 in legal terms. Thereafter M/s. Tirupati Texco Products (P) Ltd. wrote two letters dated 8.11.90 and 20.4.91. Meanwhile UOI issued amended order thereby enhancing the quantity by 25% for item no.1 and 3 with agreed delivery period of 30.9.91 only qua enhanced quantity. It is admitted case of the parties that in the sequential offers, and counter offers were given under the same deliberations. Despite this Plaintiff wrote three letters to UOI from September 90 to April 1991. They were responded to by UOI vide their letter daed 27.5.91 for refixing the delivery period of the original quantity to, Ist item nd rd by 30.08.1991, 2 item by 30.09.91 and 3 item by 30.07.91. This delivery period letter in the eyes of law again is a counter offer which was again not accepted by M/s. Tirupati Texco Products (P) Ltd. vide their reply daed 3.6.91 wherein they said that they would need atleast 5 months time to complete the order in the light of enhanced quantity sought, but the delivery period ( DP Letter) given to them was only three month period. This letter was not responded to by UOI. Thereafter M/s. Tirupati Products (P) Ltd. wrote another letter vide dated 15.11.91 which was responded to by UOI vide their letter dated 13.12.91 wherein they fixed the delivery period now upto 28.2.92 for all the three items. This letter was responded to by M/s. Tirupati Texco Products (P) Ltd. vide letter dated 20.1.92 wherein they did not agree to delivery period upto 28.2.92 and requested to refixed it by 31.3.92. It was followed in cancellation of the tender of M/s. Tirupati Texco Products Ltd. vide communication dated 6.5.92.
Contd......./D 6
6. The above detailed factual matrix and communications exchanged between the parties clearly shows that from the day one the only thing which occurred between the parties was repeated exchange of offers and counter offers.
7. It is a settled legal proposition that until and unless an offer is responded to by unequivocal acceptance, it does not graduates/crystalizes into an actionable contract as defined in Indian Contract Act.
8. Once it is found that all that occurred between UOI and M/s. Tripuati Texco Product (P) Ltd. is exchange of offers and there was no concluded contract, in my considered view UOI has no legal right to seek reimbursement of loss suffered during the risk purchase exercise.
9. I have no hesitation in concluding that Ld. Arbitrator wrongly concluded that there was a concluded and binding contract between the parties merely because M/s. Tirupati Texco Products (P) Ltd. in its communication admitted that they are in process of manufacturing the articles sought to be supplied. Since the terms were not settled between the parties there cannot be a concluded contract between the parties. In Tarsem Singh Vs. Sukhvinder Singh AIR 1998 SC 1400, it was ruled that , "a proposal when accepted give rise to an agreement. This at this stage when agreement is reduced into writing and formal document is executed .................
Contd......./D 7
10.In another case titled as D.K.Industries Ltd. Vs. Mohan Investment and Properties Ltd. AIR 1992 Delhi 305, it was ruled that a contract come into existence only when all the issues and conditions have been finalized.
11.In Bhagwan Das Goverdhan Das Kedia Vs. Girdhari Lal & Co. AIR 1966 SC 543, it was ruled that, "mere making an offer does not form part of the cause of action for damages for breach of contract which resulted from the acceptance of the offer. Ordinarily, it is the acceptance of the offer and intimation of that acceptance which results in a contract............." Hon'ble Supreme Court ruled that, "even if there is no agreement signed by the parties, consensus ad idem can be spelt out from contemporaneous correspondence exchanged between the parties".
12.In view of the above discussion and case laws, I am of the considered view that impugned award cannot be sustained. The objection petition is hereby allowed with cost. Impugned award is set aside. File be consigned to record room.
ANNOUNCES IN DICTATED IN OPEN Court on 10.11.2010.
(SURINDER S RATHI) ADDL. DISTRICT JUDGE07 DELHI Contd......./D 8 Contd......./D 9 Contd......./D