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Basheshar Nath and Co. Vs. Union of India - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberSuit Appeal No. 250-A of 1969
Judge
Reported in1978RLR65
ActsArbitration Act, 1940 - Sections 16
AppellantBasheshar Nath and Co.
RespondentUnion of India
Advocates: D.C. Singhania,; M.K. Garg,; Shiv Khurana,;
Cases ReferredThe Upper Ganges Valley Electricity Supply Co. Ltd. v. The U. P. Electricity Board
Excerpt:
in the instant case, no evidence was present on record to show that the union of india had repurchased the full quantity of tents that were not supplied by the contractor - so, when the objection was that the award was not based on the evidence on record, it would become necessary for the court to look into the evidence in order to find out if there would be any evidence present - hence, it was held that under sections 16 and 30 of the arbitration act, 1940, the court could not go into the sufficiency of evidence - - - (2) clause 11 (3) of the conditions of contract giving the right to the union of india to recover the losses suffered by them on account of contractor's failure to supply the contracted goods came up for interpretation before prakash narain, j. tribhuwan das..........(3) the award shows that the claim put up by the union of india was on the basis of risk purchase loss. this loss was claimed admittedly for buying 9452 tents from various persons. there is no evidence on record to show that the union of india bought all these tents. on the other hand the statement of mr. m. n. krishnamurthy, deputy director of supplies, shows that in fact only 1163 numbers were purchased at the rate of rs. 217.00 each inclusive of packing charges etc. the only loss thus could be in respect of these 1163 tents in respect of which the government paid rs. 5.50p per tent more than the con- tracted price. there is thus no evidence on record to show that the government suffered any other loss on risk purchase. (4) it is true that it is not open to the court to.....
Judgment:

V.D. Misra, J.

(1) (PLAINTIFF on 4.1.63 contracted with defendant to supply 19,600 tents @ Rs. 22.625 Plaintiff made part supplies and then Sought extention of time for the rest. Deft. began recovering 2% P.M. from plaintiff's bills and rate was also agreed to reduction @Rs. 211.50. When there was further delay, contract was cancelled. He was still to supply 9450 tents. Deft. then bought 1163 tents @ Rs. 217 under the risk purchase clause. However it claimed Rs. 72,675.00 from plaintiff. Matter was referred to Arbitrator who gave an award for Rs. 36,000.00 Plaintiff Challenged this. One of the objections was that Deft's actual loss was much less than the sum awarded and that the award was based on no evidence on record. The issues were whether there was error of law apparent on the face and whether it was based on no evidence.) Judgment para 10 onwards is:-

(2) Clause 11 (3) of the Conditions of Contract giving the right to the Union of India to recover the losses suffered by them on account of contractor's failure to supply the contracted goods came up for interpretation before Prakash Narain, J. in Union of India v. M/s. Tribhuwan Das : AIR1971Delhi120 . The contention of the Union of India was that irrespective of whether the Government suffered any loss or not on account of the contractor's failure to supply the contracted goods, the Government was entitled to damages. After referring to a number of decisions of various High Courts and the decision of Privy Council in Erroll Mackav V. Maharaja Dhiraj Kameshwar Singh Air 1932 PC 190, it was observed that the measure of damages normally, in case of breach of contract is a difference between the contract price and the market price on the date of the breach. It was held that under clause 11 (3) of the Conditions of Contract on the failure of the contractor to deliver the stores or part of the stores, the Government becomes entitled at it option either to recover as liquidated damages a sum of 2% of the price of stores not supplied or if they are supplied late; or to purchase the stores not supplied or short supplied from anywhere else at the risk and expense of the contractor and claim any excess price paid by the Government or to cancel the contract. In case there is risk purchase or cancellation of contract the contractor is liable for any loss which the purchaser or the Government may sustain though the contractor would not be entitled to payment of any gain made by the Government on the repurchase. Thus the Government could recover only loss sustained by it and could not claim damages from the contractor if no loss was sustained.

(3) The award shows that the claim put up by the Union of India was on the basis of risk purchase loss. This loss was claimed admittedly for buying 9452 tents from various persons. There is no evidence on record to show that the Union of India bought all these tents. On the other hand the statement of Mr. M. N. Krishnamurthy, Deputy Director of Supplies, shows that in fact only 1163 numbers were purchased at the rate of Rs. 217.00 each inclusive of packing charges etc. The only loss thus could be in respect of these 1163 tents in respect of which the Government paid Rs. 5.50P per tent more than the con- tracted price. There is thus no evidence on record to show that the Government suffered any other loss on risk purchase.

(4) It is true that it is not open to the court to speculate or to go into evidence and try to find out as to what impelled the arbitrator to arrive at his conclusion or to trto probe the mental process by which the arbitrator reached his conclusion. But in case where the objection is that the award is not based on evidence on record, it becomes necessary for the court to look into the evidence to find out if the evidence exists. Of course, the court cannot go into the question of sufficiency of evidence. In the instant case it was alleged that there was no evidence on record to show that the Government had re-purchased the full quantity of tents not supplied by the contractor and so it was necessary to find out if any evidence was there on record about it.

(5) It has been contended on behalf of the Union of India that the award does not incorporate or make a reference to any contract and so the terms of the contract cannot be looked into. Reference is made to M/S. Allen Berry and Co., v. The Union of India : [1971]3SCR282 , as well as The Upper Ganges Valley Electricity Supply Co. Ltd. v. The U. P. Electricity Board AIR 1974 SC 683 The test laid down in Allen Berry's case is, 'Does the arbitrator come to a finding on the wording of the contract. If he does, he can be said to have impliedly incorporated the contract or a clause in it whichever be the case. But a mere general reference to the contract in the award is not to be held as incorporating it. The principle of reading contracts or the other documents into the award is not to be encouraged or extended.'

(6) In this award explicit reference has been made to the claim of the defendant on the basis of risk purchase loss under the contract. The arbitrator has thus incorporated in the award the risk purchase clause of the contract which can now be looked into by the court. Issues are, thereforee decided in plaintiffs favor. Award set aside.


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