Punjab-Haryana High Court
M/S King Steel Rolling Mill vs Punjab State Electricity Board And ... on 20 December, 2012
Author: A.N. Jindal
Bench: A.N. Jindal
Civil Revision No.3713 of 2001 (O&M) 1
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
Civil Revision No.3713 of 2001 (O&M)
Date of decision: 20.12.2012
M/s King Steel Rolling Mill
......Petitioner
Versus
Punjab State Electricity Board and another
.......Respondents
CORAM : HON'BLE MR. JUSTICE A.N. JINDAL
Present: Mr. Sandeep Wadhawan, Advocate,
for the petitioner.
Ms. Meena Bansal, Advocate,
for the respondents.
*****
A.N. Jindal, J.
The petitioner has submitted that the respondent No.1-board had allegedly entered into an agreement with it on 11.03.1991 for supply of 325 M/T of M.S. Flats. Earlier, the tenders were floated by respondent No.1, against which the petitioner had filed a tender for some of the items. Without entering into an agreement, accepting the tender as a whole, the petitioner was given the order to supply only 163 M/T of M.S. Flats against 325 M/T. But, the petitioner did not accept the said order and sent a letter dated 22.04.1991 to respondent No.1-board in this regard. The said letter was replied by respondent No.1-board, whereby it was stated that under Clause 2 of Schedule (e) of the Punjab State Electricity Board specifications, the board reserves the right to place the order as a whole or in part. As such, in Civil Revision No.3713 of 2001 (O&M) 2 pursuance of the aforesaid Clause, the respondent No.1-board had issued partial order. The petitioner gave a reply to this letter, stating that the firm is not ready to accept the partial tender, as it had accepted the rates as given by respondent No.1-board while considering the entire bulk to be supplied by it. As such, on raising of the dispute, an Arbitrator was appointed and the Punjab State Electricity Board set up its claims on 28.12.1989 for a sum of Rs.4,04,240/- for damages/excess payments made due to risk purchase; Rs.21,042.63 Ps. on account of interest charged at the rate of 25% with effect from 17.07.1991 to 30.09.1991 and Rs.46,386.54 Ps. as interest at the rate of 21.25% per annum with quarterly rests with effect from 01.10.1991 to 31.03.1992.
The petitioner challenged the said claim.
The Arbitrator, vide order dated 25.01.1994, passed an Award for a sum of Rs.1,50,286/- on account of damages/excess payment made due to the risk purchase and Rs.55,942/- (total Rs.2,06,228/-) as interest charges on the amount at the rate of 18% per annum in favour of the respondent No.1- board and against the petitioner.
The said Award was made Rule of the Court by the Additional Civil Judge (Senior Division), Patiala, vide order dated 04.05.1998. The appeal preferred by the petitioner was also dismissed by the Appellate Court on 22.02.2001.
Learned counsel for the petitioner has raised a variety of contentions, inter alia, that since the petitioner had refused to accept the very first order, given by respondent No.1-board, therefore, there existed no contract between the parties and as such, respondent No.1-board had no cause of action to claim any damages. No evidence of damages has been led by Civil Revision No.3713 of 2001 (O&M) 3 respondent No.1-board, which it had suffered on account of non supply of the goods.
To the contrary, learned counsel for respondent No.1-board has urged that the petitioner never objected to the Award passed by the Arbitrator and never agitated the claim, as set up by the respondent No.1-board before the Arbitrator, therefore, the present petition is liable to be dismissed.
Now the questions arise, as to "whether there was a novation of contract on account of non-acceptance of the tender as a whole by the Punjab State Electricity Board and non supply of the goods by the petitioner on account of non-issuing the order for whole of the goods, regarding which the tender was filed and whether the Award is apparently illegal on the face of it."
In order to settle the aforesaid controversy, I need to trace back to the alleged agreement. The 'Short Term Notice Inviting Tenders' dated 17.12.1990, placed on record, indicates that the tender furnished by the petitioner was partially accepted for 'Prime Mild Steel Flats & Rounds of the following sizes conforming to IS:226/1975 (Standard quality) & Board's specification No.Q-3208/Works:-
"M.S. Flat 40 x 3 mm : 20
-do- 40 x 6 mm : 175
-do- 50 x 6 mm : 150
M.S. Round 4 mm : 48
-do- 6 mm : 50
Section details : As per IS:1731/71 & 1732/71
: As per IS:1852/73"
However, the letter dated 05.01.1991 issued by the chief Purchase Officer, Central Purchase Orgn., PSEB, Patiala, to the petitioner indicates that respondent No.1-board had asked the petitioner, as to whether the terms and conditions as mentioned in the agreement dated 17.12.1990, Civil Revision No.3713 of 2001 (O&M) 4 were acceptable to it or not. Thereafter, vide letter dated 08.01.1991, the petitioner quoted its own rates as well as terms and conditions for supply of the aforesaid goods.
Learned counsel for the petitioner has urged that the petitioner never accepted the terms and conditions, as mentioned in the tender, which were offered, rather it had given its own conditions vide letter dated 08.01.1991. Then, vide letter dated 11.02.1991, the respondent No.1-board while accepting the said conditions, placed an order for half of the goods, as mentioned in the tender. Thereafter, the petitioner issued a letter dated 22.04.1991 to respondent No.1-board. The relevant part of the said letter is reproduced as under:-
"We do not accept purchase order for the partial quantity and are not interested to execute the same.
Moreover, you have not accepted our terms and conditions as mentioned in our letter dt. 8-1-91 vis-a-vis against clause No.1 of terms and conditions, we had very clearly written that the above rates are Ex-our factory delivery, excluding frt. charges, loading and insurance charges, which has not been accepted, except payment of loading charges of Rs.10/- per tonne, in comparison to high loading charges, prevailing in the market. We request to reconsider the case & offer the entire quantity of 325 M/T against the above tender enquiry immediately, alongwith the acceptance the clause No.1 of our terms and conditions as laid down in our letter dt. 8-1-91. In case qnty. of the purchase order is not raised to 325 M/T, within 7 days from the date of our letter, the matter shall be deemed to be as dropped and cancelled, without further correspondence with your good office."
The petitioner again vide letter dated 04.05.1991, reminded that the offer made by the respondent No.1-board was not acceptable to it, as they had not accepted their offer mentioned in the letter. Thereafter, respondent No.1-board issued a notice while raising the claim.
In the circumstances, learned counsel for the petitioner has submitted that the contract never reached culmination and it was dropped Civil Revision No.3713 of 2001 (O&M) 5 before it commenced. There is no evidence of loss caused to the respondent No.1-board and the board has also not led any evidence in order to prove that on account of non-supply of the goods, it had to suffer some loss, for which, the Award was passed in its favour.
The board has mainly placed reliance on the letter/agreement dated 11.02.1991 written by the Chief Purchase Officer. But, it appears that it was a purchase order of half of the goods, out of the goods mentioned in the tender, which was never accepted by the petitioner. Since this offer was never accepted by the petitioner, therefore, the latter could not be termed as a concluded contract with the board. Besides this letter dated 11.02.1991 written by the Chief Purchase Officer of the Board, there is no agreement entered into between the parties for supply of the goods, but only a tender. The respondent No.1-board does not claim that the tender was a contract agreement.
Even otherwise, the tender amounts to a mere offer, against which respondent No.1-board had placed an order for supply of certain goods. That offer was not accepted by the petitioner and it placed its own terms and conditions. As such, the tender cannot be said to have been accepted by the board, which may give rise to an arbitrable claim.
Learned counsel for the petitioner has further contended that as a matter of fact, the tender dated 17.12.1990 as well as letter dated 11.03.1991 do not contain any clause, whereby the board reserved its rights to modify the order, yet clause-II of the Schedule, sent along with the said letter, provides a right to the board to reserve its rights to modify the schedule of requirements, technical particulars and the specifications at any time and place the order as Civil Revision No.3713 of 2001 (O&M) 6 a whole or in part and to reject any or all of the order received, without assigning any reasons.
Be that it may be, this schedule is also not signed by any of the parties, still, vide letter dated 22.04.1991, the petitioner had rejected the offer made by the board. The first paragraph of the letter reads as under:-
"Dear Sir, Reg:- Tender Enquiry No.Q-3208/Works/90-91 opened on 08.01.1991 for M.S. Flats : 40 x 6 MM.. 175 M/T Flats: 50 x 6 MM.. 150 M/T (Total qnty. 325 M/T) Please refer to your above mentioned Tender Enquiry, for the purchase of 325 M/T of Flats, in the sizes as afore-mentioned.We participated in the Tender Enquiry, for the entire qnty., to be supplied by us, thus, offered to supply the same, vide our letter No.KSRM/91/57 dated 8-1-91, but we are sorry, you issued the purchase order dt. 11-3-91, for the partial qnty. Of 163 M/T i.e. M.S. Flats : 40 x 6 MM.. 88 M/T &
-do- : 50 x 6 MM.. 73"
It has also been pointed out that on 26.04.1991, the board had again informed the petitioner that it could reserve its rights to place the order as a whole or in part, but the letter dated 04.05.1991 written by the petitioner indicates that it did not accept the said clause of the agreement. All this goes to show that the contract was never concluded between the parties, as to give rise to arbitrable claim. The Arbitrator as well as the Additional District Judge having not touched the aforesaid aspects of the case have gravely erred in passing the Award in favour of the board on the basis of a non-existing agreement. As such, both the orders deserve interference.
Resultantly, this petition is accepted; the impugned orders as well as the Award dated 25.01.1994 are set aside and the Rule is discharged.
(A.N.Jindal) 20.12.2012 Judge ajp