Delhi District Court
Klw Wheelco Sa vs Ministry Of Railways on 31 March, 2022
In the Court of Shri Sanjiv Jain,
District Judge (Commercial Court-03), Patiala House Courts
New Delhi
OMP Number. 32/2018
KLW WHEELCO SA,
Via Salvatore 13,
P.O. BOX 745, CH6902,
Paradiso-Lugano,
Switzerland
... Petitioner/objector
versus
Ministry of Railways,
Railway Board,
Rail Bhawan,
1, Raisina Road,
New Delhi.
... Respondent/claimant
Date of institution : 26.11.2018
Date of reserving judgment : 05.02.2022
Date of decision : 31.03.2022
JUDGME NT
1. This petition under Section 34 of the Arbitration and
Conciliation Act, 1996 (as amended upto date) hereinafter
called the 'Act' challenges the award dated 23.08.2018 passed
by the Arbitrator Sh. H. R. Soni, whereby, action of the
respondent forfeiting the earnest money of USD 42,000 of the
petitioner was held to be in accordance with the terms of the
tender and the claim of the petitioner for refund of earnest
money was refused.
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Brief facts:
2. The facts giving rise to this petition are that the
petitioner KLW Wheelco SA, having its registered office at
Switzerland and manufacturing plant at Ukraine was the
manufacturer and supplier of miscellaneous wheels. It had
authorized Khyati Nilum Associates Pvt Ltd, "Guru Kripa" at
New Delhi to represent it to bid, negotiate and conclude the
contracts on its behalf.
3. The respondent, Indian Railways invited global tender
bearing no. WTA-455 for supply of 12347 nos of Solid Forged
Wheels (Rolled Size Rough Turned) for BG EMU Motor &
Trailor coaches. The bid was to be opened on 14.10.2009. The
petitioner submitted its offer through its agent Kyati Nilum
Associates Pvt Ltd vide letter dated 14.10.2009. Its offer was
valid for 180 days from the date of opening of bid. The price
quoted by the petitioner was in US dollars keeping in view
clause 9.5 of General Instructions to Tender Section I of the Bid
documents Part II. It was stated that delivery of wheels would
be possible to commence in three months after receipt of
technically and commercially clear order (including
clarifications, if any) and complete within five months
thereafter (August excluded). The respondent, vide letter dated
16.11.2009 requested the petitioner to withdraw the commercial
deviation. The petitioner vide letter dated 18.11.2009 withdrew
OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.2 of 39
the commercial deviation as stated in the offer / bid. The
respondent, thereafter, issued a counter offer vide letter dated
23.11.2009 offering the rates in EURO instead of US dollars as
quoted by the petitioner, with a formula of transferring the risk
of exchange variation to the bidder through a clause which was
not notified in the original tender conditions. It also asked the
petitioner to furnish composite performance cum warranty
guarantee equivalent to 10% of the contract i.e. Euros 132.974
valid upto 30.01.2014 with claim period upto 31.07.2014 and
an unqualified acceptance to the counter offer within a week.
The petitioner vide letter dated 25.11.2009 refuted the counter
offer, explained the reasons for its disagreement and requested
the respondent to issue the contract in a single currency without
any variation clause of inter currency exchange rate. The
petitioner vide letters dated 03.12.2009 and 04.12.2009,
however, in order to show that it was honestly willing to
execute the work, informed that it has purchased raw materials
for manufacture and supply. The respondent vide letter dated
17.12.2009 informed the petitioner that the necessary
amendments regarding currency and performance bank
guarantee as requested vide letter dated 25.11.2009 have been
agreed to. It informed that the contract has to be placed in the
currency quoted by the petitioner i.e. in US Dollars. The
respondent also asked the petitioner to furnish performance
bank guarantee of 10% value of contract valid upto 30.05.2011
OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.3 of 39
with claim period till 13.11.2011 as per terms & conditions of
the tender.
4. The respondent vide letter dated 07.01.2020 again asked
the petitioner to furnish the performance bank guarantee, which
was followed with a reminder dated 03.02.2010 to furnish the
performance guarantee within 10 days of issue of the letter
stating that if the petitioner fails to furnish the performance
bank guarantee, necessary action will be taken as per the terms
& conditions of the tender. The petitioner then vide letter dated
09.02.2010 requested the respondent to cancel the counter offer
dated 23.11.2009 further counter offered vide letter dated
17.12.2009 and return the bid amount / bond submitted by it
with the tender. The respondent then forfeited the earnest
money / bid guarantee of US $42000 vide letter dated
31.03.2010 alleging that inability to accept the counter offer by
the petitioner amounted to withdrawal of the original offer. The
petitioner then wrote letters dated 15.04.2010, 29.04.2010 &
05.05.2010 alleging that the counter offer by the respondent
does not amount to revocation of the offer of the petitioner and
once counter offer is amended by the respondent, it shall be
treated as the fresh counter offer and this counter offer was
never accepted by the petitioner. It requested the respondent not
to encash the bid guarantee and release the forfeited bid
guarantee of US $42000 in its favour. The respondent instead
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vide letter dated 16.04.2010 wrote to the Chief Manager, State
Bank of India, for encashment of the bid guarantee stating that
the petitioner resiled from its offer within its original validity.
The petitioner again requested the respondent vide letters dated
25.04.2015 and 23.05.2015 to refund the amount of the bid
guarantee but the respondent did not. This made the petitioner
request the respondent to refer the matter to arbitration under
the arbitration clause of the tender document vide letter dated
16.11.2015. It vide letters dated 23.03.2016 & 09.08.2017
invoked the arbitration clause 26.1 (b) of Section II of GCC.
Sh. H. R. Soni, Executive Director RS (C) / Railway Board
was appointed as the Sole Arbitrator.
The petitioner submitted its statement of claims
alongwith the annexures to which the respondent filed its
counter statement and documents. The Arbitrator then passed
the impugned award.
Objections:
5. The petitioner challenged the award on the following
grounds:
A. That the award passed by the Arbitrator is bad in
law and contrary to the settled principles of law. The
Arbitrator failed to appreciate that the respondent in its
letter dated 23.11.2009 had decided to counter offer
with new rates without giving an opportunity to the
petitioner to accept or decline the counter offer and
concluded the contract without there being any contract.
Reference is made of the case Somasundaram Pillai Vs.
The Provincial Government Of Madras AIR 1947 Mad
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366, to contend that to have an enforceable contract,
there must be an offer and unconditional acceptance. A
person, who makes an offer has a right to withdraw it
before acceptance in the absence of condition to the
contrary supported by consideration. A provisional
acceptance cannot in itself make a binding contract.
B. That the Arbitrator did not take into account the
changing stand of the respondent with the terms of the
tender.
C. That the Arbitrator failed to consider that since
the respondent in its letter dated 23.11.2009 had decided
to counter offer the price of the original offer, the same
cannot be interpreted as the original offer, nor the
conditional acceptance of the petitioner to the counter
offer be interpreted as unconditional acceptance to the
counter offer with modifications. He failed to consider
that the respondent in its letter dated 17.12.2011 had
changed its stance completely and kept speculating the
Dollar EURO Rupee Exchange Market, which was
against the public policy. He failed to appreciate that the
petitioner in its letter dated 25.11.2009 in response to
the letter of the respondent dated 23.11.2009 had clearly
stated that the price be fixed in the currency of EURO
but the respondent completely changed its stance on its
own counter offer taking advantage of its own wrong
making the entire transaction void ab intio. He failed to
appreciate that the respondent itself changed the terms
of its counter offer vide letter dated 17.12.2009 and
therefore, the entire transaction became null & void
since there was no consensus ad idem. He wrongly held
that conditional acceptance of the petitioner was to be
taken as an absolute acceptance.
Reply to the objection:
6. On getting notice of the petition, the respondent filed its
reply stating that the action of the respondent forfeiting the
earnest money of the petitioner was in accordance with the
OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.6 of 39
terms of the tender. It was stated that the award is within the
parameters of the tender documents and there is no illegality in
the award. It is stated that the petitioner had quoted the price in
US dollars. The agent of the petitioner had confirmed the
acceptance of the counter offer vide letter dated 25.11.2019. In
the said letter, the petitioner had made two requests i.e. (i)
placing the contract in single currency without any variation
clause of inter currency exchange rates (ii) separate bank
guarantee for performance and warranty. The petitioner vide
letter dated 03.12.2009 had accepted the offer of the respondent
and in furtherance thereof, written to RITES Limited,
Gurugram informing about the tentative schedule for inspection
of wheels as per the amended contract and to nominate
inspectors. There was no assertion in the letters dated
03.12.2009 & 04.12.2009 that the counter offer was required to
be amended by the respondent. It is stated that the respondent
vide letter dated 17.12.2009 had agreed for the placement of
contract in single currency and separate bank guarantee towards
performance and warranty as requested by the petitioner and
conveyed that the contract would be placed in the currency,
which the petitioner had quoted (USD). It is stated that the
petitioner never made a request for releasing the contract in
EURO but had requested for releasing the contract in single
currency, which was duly accepted and conveyed to the
petitioner vide letter dated 17.12.2009. It is stated that the
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respondent vide letter dated 07.01.2010 had requested the
petitioner to submit PBG since the petitioner had accepted the
counter offer. It is stated that on 03.02.2010 a reminder was
sent to the petitioner to submit PBG but it failed to do so.
When the petitioner did not submit PBG, it vide letter dated
31.03.2010 conveyed the petitioner its decision of encashing
the earnest money / bid guarantee in view of clause 6.4 of the
conditions stipulated in the tender document. Reference is made
of clause 9.7, which stated that the prices be stated in one
currency either in US dollar or in freely convertible currency. It
is stated that clarification on the counter offer made to the
petitioner was issued on the specific request made by the
petitioner while accepting the counter offer. It is stated that the
bank guarantee was encashed since the petitioner failed to
submit PBG, which tentamounted to breach of conditions
stipulated in the bid document. It is stated that the counter offer
made by the respondent was accepted by the petitioner vide
letter dated 25.11.2009 and the respondent stands on its offer
and acceptance. It is stated that it was the petitioner, who had
requested for releasing the contract in single currency without
any variation clause of inter-currency exchange rate, which
request was agreed to and was communicated to the petitioner
regarding placing the contract in its quoted currency i.e. USD.
It is stated that the respondent had acted on the terms &
conditions of the bid document and there was a failure on the
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part of the petitioner.
Arguments & contentions:
7. I have heard the arguments advanced by Ld. Counsel Sh.
Hemant Manjani for the petitioner and Sh. Surender Suryan,
Ld. Counsel for the respondent.
8. Ld. Counsel for the petitioner reiterated what has been
stated in the petition. Ld. Counsel stated that before the
acceptance was unconditionally accepted and the contract was
executed, the respondent had issued counter offer vide letter
dated 23.11.2009 offering the rates in EURO instead in US
dollar with a formula of transferring the risk of exchange
variation to the bidder through a unique clause, which was
nowhere notified in the original tender conditions. It had also
asked the petitioner to furnish an unqualified acceptance to the
counter offer, whereas, the petitioner vide letter dated
25.11.2009 had requested to amend the counter offer in line
with the original terms of the tender keeping the contract in
single currency explaining the basis and reasons for
disagreement with the counter offer. It however vide letter dated
04.12.2009 sought its willingness to execute the contract in
case the workable contract comes into existence. Ld. Counsel
stated that pursuant to the request, the respondent merely
portrayed to agree to the amendments requested by the
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petitioner, however, kept the currency in US dollar instead of
EURO as requested by the petitioner and further asked the
petitioner to furnish PBG of 10% of the value of the contract
valid upto 30.05.2011. Ld. Counsel stated that this clearly
shows that there was no unconditional acceptance by the
respondent to the counter offer made by the petitioner because
the acceptance with variation is no acceptance and the
acceptance to be valid must be unconditional, absolute and be
communicated. Since, there was no acceptance, no contract
came into existence but the respondent yet again on 03.02.2010
asked the petitioner to submit the bank guarantee without
giving unconditional and absolute acceptance to the counter
offer of the petitioner. Ld. Counsel stated that since, there was
no concluded contract, there could be no question of any breach
of contract on the part of the petitioner to the contract but the
respondent instead unilaterally and arbitrarily forfeited the
earnest money / bid vide letter dated 31.03.2010. Ld. Counsel
referred the case of Padia Timber Company Pvt Ltd Vs. The
Board of Trustee of Visakhapatnam Port Trust through its
secreatary, CA No. 7469/2008 to contend that considering
Section 7 of the Indian Contract Act 1872, where unconditional
and complete acceptance was never given to a contract by the
respondent, no concluded contract came into existence and
hence, the earnest money deposited by the bidder was liable to
be refunded.
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9. Ld. Counsel for the respondent referring the letters
dated 23.11.2009 & 25.11.2009 and the letters dated 03.12.2009
& 17.12.2009 per contra argued that a conjoint reading of the
letters dated 03.12.2009 & 17.12.2009 makes it clear that the
counter offer had been accepted unconditionally by the
petitioner but thereafter, it failed to supply the wheels and tried
to wriggle out of the legal consequences of the breach of
contract. Ld. Counsel stated that the petitioner vide letter dated
25.12.2009 had acknowledged the receipt of the acceptance
letter dated 23.11.2009 against the tender and informed that
they are processing the urgent supplies of these wheels with the
manufacturers.
10. Ld. Counsel referred the case of D. Srinivas Vs. SBI Life
Insurance Co. Ltd, CA No. 2216/2018 & Kollipara Sriramvlu
Vs. T. Aswathanarayana & Ors, 1968 AIR 1028, SC decided on
04.03.198 to contend that a mere reference to future formal
contract will not prevent a binding bargain between the parties.
The fact that the parties refer to the preparation of an agreement
by which, the terms agreed upon are to be put in a more formal
shape does not prevent the existence of a binding contract. Ld.
Counsel stated that since, there was existence of concluded and
unconditional contract executed between the parties, the
petition deserves to be dismissed.
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11. I have given my thoughtful consideration to the rival
contentions and perused the award, the documents and the cases
referred above.
12. Section 34 of the Arbitration and Conciliation Act reads
as:
"34.Application for setting aside arbitral award-
(1)Recourse to a court against an arbitral award may be made
only by an application for setting aside such award in
accordance with sub-section (2) and sub- section (3).
(2)An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to
which the parties have subjected it or, failing any indication
thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper
notice of the appointment of an arbitrator or of the arbitral
proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated
by or not falling within the terms of the submission to
arbitration, or it contains decisions on matters beyond the
scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to
arbitration can be separated from those not so submitted,
only that part of the arbitral award which contains decisions
on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of the
parties, unless such agreement was in conflict with a
provision of this Part from which the parties cannot derogate,
or, failing such agreement, was not in accordance with this
Part; or
OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.12 of 39
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time being in
force, or
(ii) the arbitral award is in conflict with the public policy of
India.
Explanation- I For the avoidance of any doubt, it is clarified
that an award is in conflict with the public policy of India
only if the making of the award was induced or affected by
fraud or corruption or was in violation of Section
75 or Section 81."
ii) It is in contravention with the fundamental policy of
Indian law;
iii) It is in conflict with the most basic notions of morality or
justice.
Explanation-II- For the avoidance of doubt, the test as to
whether there is a contravention with the fundamental policy
of Indian law shall not entail a review on the merits of the
dispute.
[2 (A) An arbitral award arising out of arbitrations other than
international commercial arbitrations, may also be set aside
by the court, if the court finds that the award is vitiated by
patent illegality appearing on the face of the award: Provided
that an award shall not be set aside merely on the ground of
an erroneous application of the law or by reappreciation of
evidence.
13. Normally, the general principles are that the decision of
the Arbitrator unless there is an error apparent on the face of the
award which makes it unsustainable, is not to be set aside even
if the court as a court of law would come to a different conclu-
sion on the same facts. The court cannot reappraise the evi-
dence and it is not open to the court to sit in appeal over the
conclusion of the arbitrator. It is not open to the court to set
OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.13 of 39
aside a finding of fact arrived at by the arbitrator and only
grounds on which the award can be cancelled are those men-
tioned in the Arbitration Act. Where the arbitrator assigns co-
gent grounds and sufficient reasons and no error of law or mis-
conduct is cited, the award will not call for interference by the
court in the exercise of the power vested in it.
14. In the case of Associate Builders v/s Delhi Development
Authority, (2015) 3 SCC 49, it was held that interference with
an arbitral award is permissible only when the findings of the
arbitrator are arbitrary, capricious or perverse or when con-
science of the Court is shocked or when illegality is not trivial
but goes to the root of the matter. The arbitrator is ultimately a
master of the quantity and quality of evidence while drawing
the arbitral award. Patent illegality must go to the root of the
matter and cannot be of trivial nature.
15. In Ssangyong Engineering & Construction Co. Ltd. vs.
National Highways Authority of India Ltd. 2019 SCC OnLine
SC 677, the Supreme Court has held that under Section 34 of
the Act, a decision which is perverse while no longer being a
ground for challenge under public policy of India but would
certainly amount to a patent illegality appearing on the face of
the award. A finding based on the documents taken behind the
OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.14 of 39
back of the parties by the arbitrator would also qualify as a de-
cision based on no evidence inasmuch as such decision is not
based on evidence led by the parties and therefore would also
have to be characterized as perverse.
16. The legislative mandate clearly bars the Court to re-
appreciate the evidence for deciding an objection under Section
34 of the Act. The parties are also not allowed to expand the
scope of defences raised before the Arbitrator to get fresh
adjudication from the Court. However, in order to see whether
the Arbitrator has passed the award against the basis notions of
justice or it is patently illegal as alleged by the petitioner, I
deem it appropriate to consider the real controversy between the
parties, which gave rise to the cause of action for filing the
claims and the manner in which it were appreciated by the
Arbitrator in reference to the terms & conditions of the contract.
17. A perusal of record reveals that the respondent had issued
global tender for supply of solid forged wheels for BG EMU
motor and trailer coaches. The petitioner had submitted its
offer, which was valid for 180 days. The respondent issued a
counter offer vide letter dated 23.11.2009 interalia with the
rates, terms & conditions i.e. net unit FOB rate @ Euro 359.00
equivalent to US Dollar 533.12 as per cross exchange rate
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prevailing on the date of tender opening and asked the
petitioner to submit a composite performance cum warranty
guarantee bond equivalent to 10% of the contract value i.e. for
Euro 1,32,974 valid upto 30.01.2014 with claim period upto
31.07.2014, as provided in clause 20 of GCC within 15 days of
issue of the letter. The petitioner vide letter dated 25.11.2009
suggested two amendments i.e. the price counter offered has a
question of exchange rate variability and in order to freeze the
same, the contract be issued in single currency without any
variation clause of inter currency exchange rate and their
principal normally prefers to keep the performance guarantee
separate from the warranty guarantee. It stated that the firm
(petitioner) will submit the performance guarantee immediately
and warranty guarantee after the supply of wheels. It also
informed that they are processing urgent supplies of the wheels
with the manufacturers. The respondent vide letter dated
17.12.2009 agreed to the above conditions i.e. to issue the
contract in single currency and submit separate bank guarantees
for performance and warranty stating that the contract shall be
placed in the firm's quoted currency in USD. It advised the
petitioner to furnish the performance bank guarantee of the 10%
of the value of the contract till 30.05.2011. The respondent
issued reminders dated 07.01.2010 & 03.02.2010 but the
petitioner vide letter dated 10.02.2010 requested to cancel the
counter offer and return the bid money. The respondent then
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vide letter dated 31.03.2010 informed that since, the petitioner
did not submit PBG, it would tentamount to withdrawal of the
acceptance to the counter offer and it has decided to forfeit the
earnest money.
18. In Part I of the bid documents, cost of bid document / bid
guarantee amount has been referred in Rupees / Dollars. Record
shows that the petitioner vide letter dated 14.10.2009 had
submitted its offer furnishing the bank guarantee dated
30.09.2009 for USD 42,000 issued by State Bank of India,
Overseas Branch, which was valid for 180 days from the date
of opening of the bid. The respondent vide letter dated
16.11.2009 had informed the petitioner that the commercial
deviations quoted by the petitioner are not acceptable and asked
the petitioner to withdraw the same. The petitioner immediately
vide letter dated 18.11.2009 withdrew the commercial
deviations as stated in the offer. It was thereafter, vide letter
dated 23.11.2009, the respondent made the counter offer. It is
relevant to reproduce the letter No. 2009/RS (WTA)-
149/Tender /455 New Delhi dated 23.11.2009:
M/s KLW Wheelco S.A
.....................................
The offer referred to above submitted by you for supply of EMU Solid to drg No. RDSO Sketch No. K.4004 alt. Latest against the subject tender, has been considered on higher side. The purchaser has therefore decided to counter offer following rates as per terms and conditions given below:-
OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.17 of 39 Item No. Description Specification Qty Net Unit F.O.B. Total F.O.B. of tender (Nos.) Rate (inclusive Value of agency (inclusive of commission @ agency Euro 2.02 per commission) wheel) 1 Solid IRSR 19/93 3704 Euro 359* Euro Forged (Part II) Rev.3 nos. 1,329,736* Wheels for of March, B G EMU 2006) with Motor & corrigendum Trailor No. 1 of July, Coaches to 2006, 2 of RDSO July, 2008 & 3 Sketch No. of June, 2009 K.4004 latest * Equivalent to US$ 533.12 as per cross exchange rate prevailing on the date of tender opening. Unit FOB rate payable on the date of shipment, will not exceed US$ 533.12 as per cross exchange rate of US Dollar and Euro on that date.
(TOTAL F.O.B. VALUE - EURO EURO ONE MILLION, THREE HUNDRED TWENTY NIEN THOUSANDS, SEVEN HUNDRED & THIRTY SIX ONLY) The purchaser however reserves the right to take C & F supplies of aforesaid quantity of wheels at Unit C & F rate of Euro 385.
2. Port of Loading FOB Ukrainian Black Sea Ports
3. Prices Firm FOB Ukrainian Black Sea Ports prices
4. Payment 100% direct payment by SWIFT transfer against submission of shipping documents as specified in formal contract. Equivalent to US$ 533.12 as per cross exchange rate prevailing on the date of tender opening . Unit FOB rate payable on the OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.18 of 39 date of shipment, will not exceed US$ 533.12 as per cross exchange rate of US Dollar and Euro on that date.
5. Agency Commission The unit FOB price of Euro 359 is inclusive of agency commission @ Euro 2.02 per wheel which shall be payable to M/s Khyati Nilum Associates Pvt Ltd, New Delhi in non convertible Indian rupees as specified in the formal contract.
6. Delivery period Delivery of wheels shall commence within three months from contract and to be completed within 5 months @ minimum pro rata supply rates to be maintained. However, higher rate of supplies is acceptable.
7. Inspection RITES / Gurgaon will carry out inspection.
8. Performance & You are required to submit a composite warranty Guarantee performance cum warantee guarantee bond equivalent to 10% value of the contract i.e. for Euro 132,974 valid upto 31.01.2014 with claim period up to 31.07.2014 as provided in clause 20 of General Conditions of Contract (Bid Documents Part II) within 15 days of the issue of this letter.
9. Quantity Variation The Purchaser reserves the rights to increase the Clause ordered quantity by a maximum of 30% during the currency of the contract at the same rates, terms & conditions.
10. Other Terms & As per Bid Documents, Part II conditions You are requested to furnish your unqualified acceptance to the counter offered rates within a week and also furnish the requisite performance cum warranty guarantee bond in terms of para 8 of this acceptance letter. The contract is hereby concluded with the issue of this acceptance letter. Formal contract shall be issued on receipt of requisite acceptable P.G.Bond.
Yours faithfully (SANJEEV MISRA) OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.19 of 39 Director, Railway Stores (F)
19. On this counter offer, the petitioner sent a reply acknowledging the receipt of the acceptance letter of the respondent dated 23.11.2009 stating that they confirm the acceptance of its letter of intent (LOI). It informed that they are processing the urgent supplies of wheels with the manufacturers, however, they requested the respondent that the contract be issued in single currency without any variation clauses of inter currency exchange rates and amend clause 8 of the counter offer making them submit the performance guarantee immediately and the warranty after the supply of wheels. It is relevant to reproduce the letter dated 25.11.2009:
KNA/KLW/455/77/2009/725 25th November, 2009 The Director, Railway Stores (F) Ministry of Railways, Railway Board, Rail Bhawan, New Delhi Kind Attn: Shri Sanjeev Misra Subject: Global Tender No. WTA-455 for supply of Solid Forged Wheels (Rolled size-Tough Turned) for BG EMU Motor& Trailor Coaches opened on 14.10.2009.
Dear Sir, We thankfully acknowledge the receipt of your acceptance letter No. 2009/RS(WTA)-149/Tender/455 dated 23.11.2009 against the above mentioned tender. We are over whelmed with your good confidence on ourselves and our Principals for being able to undertake such a supply. We hereby confirm the acceptance of your LOI and inform you that we are processing the urgent supplies of these wheels with the manufacturers.
OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.20 of 39 The tender was issued asking for fixed and firm prices to be quoted. Having have gone through the conditions offered in your counter offer it is noted that the prices counter offered have a question of variability which has never been done before in the history IR to the best of our knowledge. Our request in this respect shall be to freeze the same as in EUROs to make it equitable with the other offers as issued.
It is to mention that such an exchange variation clause is possibly not practical to make the clause contractually workable. It is not clear how this exchange rate shall be certified and from which Bank, the delivery of the wheels shall take place in Ukraine and the export custom clearances of Ukraine authorities shall desire a clear clause of the cost of the wheels being dispatched. It is also not clear in your LOI which international bank shall certify these cross exchange rates, the trading of foreign exchange results into variations of the same on possibly every hour basis. The free trade of foreign exchange in the commercial banks is a negotiable rate whereby we can negotiate the exchange rate applicable in a particular deal through a particular bank. In India the cross exchange rates are not issued as a regular trade instrument and exchange rates are normally issued for conversions into / from INR only which are valid for a period of one working day. This could result into speculative trading in a contract which is not permitted either at our manufacturing plant in Ukraine or at the customs evaluation point of India. Keeping all these points in view we request that the contract is issued in a single currency without any variation clauses of inter currency exchange rate. Clause 8 of your Counter Offer requires us to submit performance cum warranty guarantee bond which was never offered by ourselves and has been an optional requirement in the tender documents. Our Principals normally prefer to keep the bank guarantees separate and we would therefore, request your goodself to please amend the same and we shall submit the performance guarantee immediately while submit the warranty after supply of wheels.
Thanking you, Yours faithfully For Khyati Nilum Associates Private Limited OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.21 of 39
20. The petitioner in continuation of its letter also wrote to RITES Limited Gurgaon, vide letter dated 03.12.2009 informing tentative schedule for inspection for the contract for the first quarter of 2010 requesting to nominate Inspectors. The copy of the letter was also sent to the respondent. The petitioner vide letter dated 04.12.2009 referring the letter dated 03.12.2009 also requested the respondent to issue necessary instructions to the Inspecting Authority to carry out inspection as per the schedule given to avoid any implication in the supply of material referring the letter dated 23.11.2009.
21. The respondent then vide letter dated 17.12.2009 agreed to the request of the petitioner for issuing the contract in single currency and submitting separate bank guarantees for performance and warranty obligations taking the decision that the contract shall now be placed in the quoted currency of the petitioner i.e. at unit FOB rate of US $ 533.12. It advised the petitioner to furnish PBG of 10% value of the contract valid till 30.05.2011 with claim period till 30.11.2011 as per the terms & conditions of the subject matter and submit the requisite warranty guarantee at the appropriate time while claiming payments against shipment of wheels. It is also relevant to reproduce the letter dated 17.12.2009:
No.2009/RS(WTA)-149/Tender/455 New Delhi, dated 17.12.2009 M/s KLW Wheelco SA OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.22 of 39 Via G. Guisan 12, Dear Sirs, Sub: Indian Railway Board's Global Tender No. WTA 455 opened on 14.10.2009 for procurement of Solid Forged wheels for BG EMU Motor & Trailor coaches to RDSO Sketch No. K.4004 alt.2.
Ref: This office letter No. 2009/RS(WTC) 149/Tender/455 dated 23.11.2009.
2. Your Indian Agent's letter No. NA/KLW/455/77/2009/725 dated 25.11.2009 Your request for issuing the contract in a single currency and submission of separate bank guarantees for performance and warranty obligations, as contained in your above referred letter has been examined and the same has been agreed to. It has been decided that the contract against the subject tender shall now be placed in your quoted currency i.e. at unit FOB rate of US $ 533.12 (US Dollars Five Hundred Thirty Three point One Two Only) inclusive of agency commission of US $ 3.00 (US Dollars Three Only). Your request for submission of separate bank guarantees is also acceptable to this office.
It is therefore, advised to furnish performance bank guarantee of 10% value of the contract i.e. for an amount of US $ 197,468 valid till 30.05.2011 with claim period till 30.11.2011 as per terms and conditions of the subject tender. You would be required to submit the requisite warranty guarantee at appropriate time while claiming payments after shipment of wheels.
The wheels are urgently required by IR. It is, therefore, requested that the performance bank guarantee may please be submitted immediately to enable release of formal contract.
All other terms and conditions of counter offer issue vide this office above cited letter dated 23.11.2009 and accepted vide your letter dated 25.11.2009 shall remain unchanged.
Your faithfully (SANJEEV MISRA) OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.23 of 39
22. Record reveals that the respondent had sent reminders vide letters dated 07.01.2010 and 03.02.2010 to the petitioner to furnish the requisite PBG but the petitioner vide letter dated 10.02.2010 requested the respondent to cancel the counter offer and return the bid bond against the subject tender. It is relevant to reproduce the letter dated 10.02.2010:
KNA/KLW/455/77/2010/987 10th February, 2010 The Executive Director, Railway Stores (P) Subject: Global Tender No. WTA-455 for supply of Solid Forged Wheels (Rolled size - Tough Turned) for BG EMU Motor & Trailor Coaches opened on 14.10.2009.
Dear Sir, This is reference to your office letter No. 2009/RS(WTA)- 149/Tender/455 dated 03.02.2010, kindly find enclosed herewith our principals letter no. 099 dated 9th February, 2010 which is self explanatory. In this respect, we second the request of our principals and further request your goodself to cancel the counter offer to our principals while also return us the bid bond submitted by our principals against the subject tender.
Thanking you Yours faithfully For KHYATI NILUM ASSOCIATES PRIVATE LIMITED
23. The said letter made the respondent write a letter dated 31.03.2010 stating that vide letter dated 25.11.2009, it (petitioner) had confirmed the acceptance of the offer made to it (petitioner) vide letter dated 23.11.2009 subject to issuance of contract in a single currency, which request was accepted vide OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.24 of 39 letter dated 17.12.2009 but it vide letter dated 09.02.2010 expressed its inability to accept the counter offer, which tentamounts to withdrawal of the offer. It has therefore decided to encash / forfeit the earnest money / bid guarantee. It is also relevant to reproduce the letter dated 31.03.2010:
No. 2009/RS(WTA)-149/Tender /455 New Delhi dated 31.03.2010 M/s KLW Wheelco S. A. Dear Sirs, Sub:- This Ministry's Global Tender No. WTA-455 opened on 14.10.2009 for procurement of Solid Forged Wheels for BG EMU Motor & Trailor Coaches to RDSO Sketch No. K.4004 alt latest. Ref:- (i) Your offer No. 667 dated October 13, 2009.
(ii) This office letter of even number dated 23.11.2009 followed by letters dated 17.12.2009, 07.01.2010, 21.01.2010 & 03.02.10.
(iii) Letter No. KNA/KLW/455/77/2009/725 dated 25.11.2009.
(iv) Letter No. 099 dated 09.02.2010 through letter No. KNA/KLW/455/77/2010/987 dated 10th February 2010.
Please note that vide letter dated 25.11.2009 you have confirmed the acceptance of the offer made to you vide this office letter dated 23.11.09 subject to issue of contract in a single currency. Your this request was accepted vide our letter of even number dated 17.12.2009. Further, vide your letter dated 09.02.2010 you have expressed your inability to accept the counter offer. This tantamount to withdrawal of offer. It has therefore been decided to encash/forfeit your earnest money /bid guarantee No. 0480309FG0012696 dated 30.09.2009 for US$ 42,000 valid upto 12.5.2010 issued by SBI Overseas Branch, New Delhi submitted with your offer against the subject tender.
This is however issued without prejudice to Purchaser's rights under the tender / contract terms & conditions.
Yours faithfully Sanjeev Misra OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.25 of 39
24. The petitioner then made a representation vide letter dated 29.04.2010 that their acceptance to the counter offer was 'a qualified acceptance' and its requests was not agreed by amending the offer in USD as against the requested contract in EUROs, though, in the meetings, post the issuance of, the so called 'qualified acceptance', they were given to understand that the contract can be placed in Euros based on which they got their principals to issue the inspection call also. It was the much delayed response of Indian Railways, which lead the situation differently and the offer was modified by the Indian Railways to be read in US dollars. "Contractually speaking, once the counter offer from the Railways has been amended, it shall be referred as a fresh counter offer, which has been declined by our principals in due course of time. Interim silence from our side cannot be accepted as our acceptance to the contract. No LOA was issued to our principals on the due course of time".
25. Section 2 (a) of the Indian Contract Act defines 'Offer'. It reads as: when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal.
An offer is the starting point of an agreement, which can be by words spoken or written or by conduct. There are certain OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.26 of 39 essentials of a valid offer as under:
(i) Terms of the offer must be certain, definite and not vague
(ii) The offer must be distinguished from a mere declaration of intention
(iii) Offer must be communicated to the person to whom it is made
(iv) The offer should not contain a term the non-compliance of which would amount to acceptance
(v) Special terms and conditions in the offer must also be communicated
(vi) The terms of the proposal must be legal.
26. Section 2 (b) defines 'Acceptance'. It reads as: when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise. The essentials of a valid acceptance are:
(i) There must be a communication of the acceptance to the offeror
(ii) The acceptance should be absolute and unqualified
(iii) Acceptance must be made before the revocation of the offer
(iv) Acceptance must be within the time specified by the offeror and if no time is specified it must be made within a reasonable time.
(v) Acceptance must be made in the form prescribed by the offeror and in the absence of any direction from the offeror, must be made in an usual and reasonable manner.
27. When an offer is not accepted by the offeree as it was proposed and certain new terms and conditions are put forward, then the initial offer is said to have lapsed and another offer comes into place as a reply to the initial offer which is termed as Counter Offer. Acceptance with a variation is no acceptance.
OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.27 of 39 It is simply a counter proposal, which must be accepted by the original promisor before a contract is made. If the offeree rejected the original offer, once a counter offer is made, the offerree can no longer accept the original offer.
28. Section 7 of the Indian Contract Act reads as :
In order to convert a proposal into a promise, the acceptance must -
(1) be absolute and unqualified;
(2) be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he accepts the acceptance.
29. A reading of this Section shows that acceptance of an offer must be absolute and unqualified. It is one of the essentials of an agreement that the acceptance must be a mirror image of the offer. If the offeree does not agree with the terms of the offer as it has been proposed, the offer lapses and a new offer comes into place. It should be without condition and the terms of the offer cannot be altered nor there can be addition. In the case of Suraj Besan & Rice Mills Vs. Food Corporation of India, AIR 1988 Del 224, the plaintiff had quoted for the purchase of 13,576.884 MT of damaged paddy. The defendant however, placed an order by telegram for 6176.790 MT. It was held that the acceptance was neither absolute nor unconditional OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.28 of 39 because the defendant accepted only part of the offer of the plaintiff by placing an order for 6176.790 MT and thus, there was no binding contract between the parties. This implies that if negotiations go between the parties, an agreement cannot be said to have formed unless a consenses has been achieved. In the case of Perala Krishnayyan Chettiv Vs. G. Padmanathan Chettiar, 37 Ind Cas 792, the defendant had written to the plaintiff on 17.10.1909 to send 15 or 20 bags of areca nuts at once. The offeree wrote back that he would send the goods within 10-15 days. The defendant did not reply to the plaintiff. 20 bags of nuts were finally sent by the plaintiff on 01.12.1909. The defendant refused to take delivery of the same. The plaintiff filed a suit for breach of contract. The Court held that the acceptance was not absolute and unqualified. It was an order for immediate supply but the plaintiff understood that time was of the essence of the contract, because he wrote back to say that he would send the goods in 15-20 days. He made a counter proposal, which was not accepted by the defendant. Hence, there was no legal contract in place. If the proposal prescribes the manner and the acceptance is not made in that manner, the promisor may require acceptance in the manner prescribed, but if he does not to do so, he will be held to have accepted the acceptance in the manner that it was made.
30. It is thus settled that the acceptance should be made in OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.29 of 39 full with respect to the terms of the contract. An offeree can't just accept certain terms favourable to him and ignore the others. An agreement will only be formed, when there is acceptance of the whole offer.
31. In the case of M/s Padia Timber Company Pvt Ltd (supra), the question involved was whether acceptance of a conditional offer with a further condition results in a concluded contract, irrespective of whether the offerer accepts the further condition proposed by the acceptor. Sections 4 & 7 of the Indian Contract were discussed and it was held that it is a cardinal principle of law of Contract Act that the offer and acceptance of an offer must be absolute. The offer and acceptance must be based on three components (i) certainty, (ii) commitment and (iii) communication. However, when the acceptor puts in a new condition while accepting the contract already signed by the proposor, the contract is not complete until the project proposer accepts that condition. An acceptance with a variation is no acceptance. It is, in effect and substance simply a counter proposal which must be accepted fully by the original proposor, before a contract is made. If the acceptance is conditional, offer can be withdrawn at any moment until absolute acceptance had taken place.
32. Now adverting to the facts, in the instant case, the tender OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.30 of 39 inviting bids for the purchase of wheels was an 'invitation to offer' because an invitation to offer is not an offer but an indication of a person's willingness to negotiate a contract. The petitioner had submitted its bid quoting its price of specified goods. This can be treated as an 'offer' given by the petitioner to the respondent. In this offer, the petitioner had quoted the prices in USD currency. Vide letter dated 23.11.2009, the respondent considering the offer of the petitioner made a 'counter offer', which contained the price of the specified goods as acceptable to the respondent duly quoted in two currencies (Euros & USD). This counter proposal also contained a stipulation that petitioner will provide a composite performance and warranty guarantee. As per law of contract, this letter of the respondent was the material alteration of the price and the process and thus it was a 'counter offer'. Vide letter dated 25.11.2009, the petitioner responded to the counter offer dated 23.11.2009 signifying its broad consent but proposed two changes, one that the price be fixed in single currency and secondly at this stage, only performance guarantee be taken. It also requested the respondent to freeze the currency in Euros to make it equitable with the other offers as issued. This a 'conditional acceptance', which as per law is another 'counter offer' made by the petitioner, although, giving consent to the other terms but limited to some alterations. On 17.12.2009, the respondent communicated its acceptance to the changes signifying that the OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.31 of 39 request to issue the contract in single currency and submit separate bank guarantees for performance and warranty obligations have been agreed to and it has been decided that the contract shall now be placed in the quoted currency i.e. at unit FOB rate of US $ 533.12.
33. The moot point herein raised was since the petitioner in its letter dated 25.11.2009 had insisted for a single currency (it contends that it means Euro) but because the respondent offered the price in the letter dated 17.12.2009 in USD, it was not an acceptance but a counter offer.
34. This point has to be seen in the totality of the circumstances of the case. The objection of single currency was raised by the petitioner in its letter dated 25.11.2009. Its perusal shows that though, in the first part of the letter, it has mentioned that the price be quoted in Euros but after explaining the reasoning of difficulty in obtaining inter-currency prices and also difficulty of showing prices to the authorities, the petitioner in the concluded paragraph of the letter has mentioned the word 'single currency' leaving it to the respondent whether it is Euro or USD. This is further seen from the fact that the petitioner in its original bid dated 14.10.2009 had quoted the prices in USD, meaning thereby that it had expressed its willingness in USD also because the entire OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.32 of 39 negotiation began on that document. In case, Euro was the only currency, in which the petitioner was willing to enter into contract, then the prices would not have been quoted in USD. In the counter offer / conditional acceptance letter dated 25.11.2009, the petitioner has desired single currency only. Subsequently, it cannot permitted to turn around and say that it meant Euro, thus, there was fresh offer. This contention will not vitiate the arbitral award to an extent, which could be hit by the requirements of Section 34 of the Act as discussed above. It is relevant to mention that the petitioner pursuant to the counter offer / acceptance dated 25.11.2009, vide letter dated 03.12.2009, had submitted the tentative inspection schedule for the contract for the first quarter and requested RITES Limited to nominate Inspectors for inspection within the above tentative schedule. On 04.12.2009, it had written to the respondent enclosing the copy of the letter dated 03.12.2009 and requested the respondent to issue necessary instructions to the Inspecting Authority to carry out inspection as per the schedule given, to avoid any implication from the supply of the material.
35. The letter of the respondent dated 17.12.2009 clearly shows that it had accepted the request of the petitioner to issue the contract in single currency and submit separate bank guarantee for the performance and warranty obligations stating that the contract shall now be placed in USD i.e. quoted OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.33 of 39 currency of the petitioner. This was the unqualified and unconditional acceptance on the part of the respondent and in no terms it can be said that it was a counter offer of the respondent for which, acceptance from the petitioner was required. The respondent after the letter dated 17.12.2009 had requested the petitioner to furnish the requisite performance bank guarantee but the petitioner despite reminders did not furnish the bank guarantee and vide letter dated 10.02.2010, it requested the respondent to cancel giving a colour to the 'acceptance' communicated by the respondent vide letter dated 17.12.2009 as a 'counter offer' and return the bid bond.
36. It is well settled law that the contract gets concluded when there is unqualified and unconditional offer and acceptance. The very letter dated 10.02.2010 sent by the respondent amounts 'retraction' from the contractual obligation. The respondent was thus within its right to forfeit the earnest money / bid guarantee submitted by the petitioner. In the instant case, the respondent had not put a new condition while accepting the contract as alleged, it had rather unconditionally accepted the condition. It is no doubt true that once there is change in the offer, it becomes the counter offer and if the offeree rejects the original offer and makes a counter offer, the offeree can no longer accept the original offer. In the present case, there was an offer, counter offer again a counter offer and OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.34 of 39 then acceptance of the counter offer. Therefore, the contract got concluded with the acceptance of the counter offer vide letter dated 17.12.2009.
37. In the impugned award the Arbitrator has referred all these letters and held that the conditions of acceptance was fulfilled by the respondent and thus the acceptance became an unqualified acceptance and the agreement got concluded between the parties. He has held that the petitioner in its letter dated 25.11.2009 had confirmed the acceptance of counter offer albeit, which certain modifications therein relating to ordering in single currency and submission of separate bank guarantee, which the respondent had agreed by modifying the currency of the counter offer in USD, which was the currency in which the petitioner had originally submitted the bid. He has held that the respondent's act of asking for 10% performance bank guarantee was a resultant action in line with clause 6.6. of the Instructions to Tenderer, which the petitioner failed. Clause 6.6 clearly provided that "if the successful tenderer fails to furnish a contract performance guarantee, as specified in clause 20 of the general conditions of contract and fails to return the formal contract duly signed within 15 days of the receipt of the formal contract, then the earnest money shall be liable to be forfeited by the purchaser".
OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.35 of 39
38. The Arbitrator has also referred the letter dated 09.02.2010 sent by the petitioner, wherein, it had stated that the prices of raw materials have increased by more than 35-60% since December 2009, hence, they are unable to accept the counter offer. He has held that the said action of the petitioner was in deviation to its earlier letter dated 25.11.2009 and it would be considered as an act of not honouring its own words of acceptance communicated earlier vide letter dated 25.11.2009. The Arbitrator has held that in this case, an agreement between the parties was already concluded. Therefore, default by the petitioner in non submission of PBG led to the respondent forfeit the petitioner's bid guarantee, which action was in line with the terms & conditions of the tender and not unlawful. He has considered the contention of the petitioner that amendment to counter offer was another counter offer or a fresh counter offer, which was not accepted by the petitioner. He held that the two modifications in counter offer were driven by the petitioner's conditional acceptance and thus amendments made in the counter offer were with a view to align the same with two modifications sought in its conditional acceptance and to make the acceptance as an 'unconditional acceptance'. The Arbitrator has also considered the contention of the petitioner that while accepting the counter offer, it had put condition to issue contract in a single currency i.e. in Euro. He has also considered the contention of the respondent that the OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.36 of 39 petitioner in its letter dated 25.11.2009 had requested to issue the contract in single currency without any variation and its original offer was in USD, so with a view to have no inter currency exchange variation, the contract was issued in US dollars, which was the currency in which the petitioner had originally given its bid. The Arbitrator found force in the contention of the respondent and held that the condition put forth by the petitioner in its letter dated 25.11.2009 was fulfilled by the respondent.
39. In the impugned award, the Arbitrator has examined all the aspects of the matter and the correspondences made by the parties. He has remained inside the parameters and construed the provisions giving a logical & reasonable interpretation. It is settled law that an interpretation placed on a contract is a matter within the jurisdiction of the arbitral tribunal and even if an error exists, this is an error of fact within jurisdiction, which cannot be reappreciated by the Court under Section 34 of the Act. Legal position is no more res integra that the Arbitrator having been made the final Arbiter of resolution of dispute between the parties, the award is not open to challenge on the ground that the Arbitrator has reached at a wrong conclusion. If we were to start analyzing the contract between the parties and interpreting the terms and conditions thereof and which will necessarily have to be in the light of the contemporaneous OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.37 of 39 conduct of the parties, it will be nothing else than sitting in appeal over the arbitral award and which is not permissible. The ambit of Section 34 of the Act, which provides for intervention into arbitral award is a very limited manner. The philosophy of the provision is to minimise the intervention for courts for faster disposal of cases and also to ensure that the award granted is legitimate and is serving the ends of justice.
40. In the instant case, there is nothing on record to show that the impugned award on the face of it is against the public policy or the Arbitrator acted arbitrarily or lacked in judicial approach or the award is against the fundamental policy of India. All the relevant provisions of the contract were considered. I am of the view that the interpretation of the contract as provided by the Arbitrator was reasonable and cannot be said to be perverse that no reasonable person could have reached the same conclusion.
Conclusion:
41. Having examined the various contentions of the parties on the touchstone of the parameters of interference as explicitly laid down by the Supreme Court in several judgments referred to above, I am of the view that the impugned Award does not suffer from any infirmity or error apparent on the face of record. It is not for this Court to sit in appraisal of the evidence led before the learned Arbitrator and this Court will not open OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.38 of 39 itself to the task of being a judge on the evidence placed before the Arbitrator which was subject matter of dispute. In the present case, the Arbitrator has deliberated on the issues under reference which were within his competence and as per the agreement entered into between the parties. There are no allegations against the Arbitrator of misconduct nor of having misconducted the proceedings which have either been specifically alleged by the parties or established. The Arbitrator has duly explained the reasons for arriving at his decisions. There is nothing to indicate that award is in conflict with the basic notions of justice and the fair play or fundamental policy of Indian law or in contravention of the terms of the agreement or it lacks reasoning as pleaded in the objections.
42. For the aforesaid discussions, the impugned award does not call for interference. The petition is dismissed with no orders as to costs.
43. File be consigned to record room.
Announced in open court today i.e. 31st March 2022 (SANJIV JAIN) District Judge (Commercial - 03) Patiala House Courts, New Delhi OMP Comm No. 32/2018 KLW Wheelco SA Vs. Ministry of Railways Page No.39 of 39