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Heavy Engineering Corporation Ltd. Vs. Crompton Greaves Ltd. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKolkata High Court
Decided On
Case NumberAward No. 13 of 1969
Judge
Reported inAIR1972Cal217
ActsContract Act, 1872 - Section 7
AppellantHeavy Engineering Corporation Ltd.
RespondentCrompton Greaves Ltd.
DispositionPetition allowed
Cases ReferredJyoti Brothers v. Shree Durga Mining Co..
Excerpt:
- .....thereto, such dispute or difference of opinion shall be referred to the sole arbitration of the chairman. heavy engineering corporation and his decision shall be final, conclusive and binding on the par-ties.'5. according to the petitioner be-cause of the aforesaid arbitration agreement between the parties which is valid and subsisting this suit must be stayed inasmuch as the subject-matter of the suit concerns matters agreed to be referred under the said arbitration agreement. 6. mr. bhaskar gupta appearing on behalf of the respondent submits that in the instant case, general conditions as per the letter of acceptance formed parti of the contract. according to the definition of the word 'chairman' in clause 1 (v) of the said general conditions the word 'chairman' means the chairman.....
Judgment:
ORDER

S.C. Ghose, J.

1. This is an application made by Heavy Engineering Corp. Ltd. inter alia for stay of the Suit No. 2388 of 1968 (Crompton Greaves Ltd. v. Heavy Engineering Corporation Ltd.) and all proceedings thereunder. On or about 4th October, 1963, the applicant issued a notice bearing No. 4/FF/63 inviting tender for the supply of a Transformer. Switch-gear, Circuit Breaker. Isolator. Sele-nium Rectifier Panel etc. It is alleged that pursuant to the said invitation to tender the respondent's predecessor, one Greaves Cotton Crompton Parkinson Ltd. submitted a tender bearing No. AQ/P7210/ SED for the supply of a Transformer. The said tender was accepted. It is alleged by the respondent that the said invitation to tender contained a pamphlet which contained certain special conditions. The respondent alleges that the respondent's predecessor submitted the said tender subject to the said special conditions. The said tender, however, was accepted by the petitioner by a letter dated 24th September, 1964, bearing No. PUR/FFP/35426/ EL/64/217. The relevant parts of the Invitation to tender are set out below :

'Sealed item rate tenders are invited from reputed and experienced suppliers for the supply of machinery and equipment including all accessories for the Foundary Forge, Hatia. Ranchi. in respect of the following categories :

The suppliers will be required to give a performance guarantee of the rated capacity of the equipment offered by them and also guarantee for functional output tests on the completion of the erection of the equipment. Tender forms, conditions and specifications of the tender are obtainable from the office of the General Manager, Foundry Forge, Heavy Engineering Corporation Ltd. P. O. Hatia, Ranchi, on any working day during the usual working hours from 12th August, 1963 to 31st August, 1963 (both days inclusive) on payment of the followingtender fee in cash (non-refundable) :

*****

2. The relevant portion of the Acceptance of tender submitted by the letter dated 24th September. 1964. are set out below :

'Your offer for the following items has been accepted as per details Rivenbelow :

*****

This contract will be governed by our general terms and conditions specified by HEC Ltd, which can be had on payment of Rs. 0.50 np.'

3. The said letter contains terms as to price, sales tax. delivery, despatch instructions, insurance, inspection, payment tests and guarantee.

4. The respondent supplied the said Transformer without one Drain Valve and 6850 Litres of Transformer oil of the value of Rs. 10,375/-. On account of the aforesaid the petitioner deducted the said sum of Rs. 10,375.50 P. from the bill for the Transformer as submitted by the respondent. On 22nd September, 1968. the respondent filed a suit in this court being Suit No, 2388 of 1968 (CromptonGreaves Ltd. v. Heavy Engineering Corporation Ltd.) for the recovery of a sum of Rs, 14,951.70 P. from the petitioner. The general conditions of contract mentioned in the said letter of acceptance contains an arbitration clause to the. following effect :

'15. In the event of any dispute on difference of opinion between the Heavy Engineering Corporation and the contractors as to the respective rights and obligations of the parties hereafter or as to the true intent and meaning of these presents and the many articles or conditions thereto, such dispute or difference of opinion shall be referred to the sole arbitration of the Chairman. Heavy Engineering Corporation and his decision shall be final, conclusive and binding on the par-ties.'

5. According to the petitioner be-cause of the aforesaid arbitration agreement between the parties which is valid and subsisting this suit must be stayed inasmuch as the subject-matter of the suit concerns matters agreed to be referred under the said arbitration agreement.

6. Mr. Bhaskar Gupta appearing on behalf of the respondent submits that in the instant case, general conditions as per the letter of acceptance formed parti of the contract. According to the definition of the word 'Chairman' in Clause 1 (v) of the said general conditions the word 'Chairman' means the Chairman of the Board of Directors of the Heavy Engineering Corporation Limited and includes the Executive Director, the Controller of Stores and Purchase, the Deputy Controller of Purchase and every other officer authorised to execute contracts relating to purchase and supply of stores on behalf of the Corporation. Thus Mr. Gupta contends that the Arbitrator named in Clause 15 of the General Conditions of the Contract may mean any of the officers meant by and included in the term 'Chairman', in Clause 1 (v) of the said general conditions of contract. Thus it is not certain as to who is the named arbitrator and so the said arbitration agreement is uncertain and void. It may be lawfully contended by one party that Chairman of the Heavy Engineering Corporation is the Arbitrator while the other party may contend that not the Chairman of the Company but the Executive Director is the named arbitrator. It may also be contended that any of the officers mentioned in Clause 1 (v) is the named arbitrator. Thus the said clause is void for uncertainty. In support of his contention Mr. Gupta relied on the case of Karanjl and Co. v. Indo-China Trading Co. Ltd., (1952) 56 Cal WN 763 where agreement was to refer the disputes to a Chamber of Commerce in Calcutta. There being many Chambers of Commerce in Calcuttait was not certain as to which Chamber of Commerce was the named arbitrator and thus the agreement was held to be void for uncertainty. Mr. Gupta also relied on the case of Laxmi Chand Baiinath V. Kishanlal Sohanlal. : AIR1955Cal588 , where the arbitrators were X or Y and thus the arbitration agreement was also held to be void. Shree Bhawani Cotton Mill's case. : AIR1966Cal588 and Teamco Private Ltd. v. T. M. S. Mani. : AIR1967Cal168 relied on by Mr. Gupta also lay down the same principle.

7. From a perusal of the different clauses of the general conditions of contract it appears that only in Clause 5 the words 'The Chairman. Heavy Engineering Corporation Ltd.' have been used. In Clause 15 the words 'The Chairman, Heavy Engineering Corporation' have been used. Clause 5 deals with deposit of security by endorsing G. P. Note in favour of the Chairman. Heavy Engineering Corporation Ltd. Clause 15 of course deals with arbitration. In Clause 6 the word 'Chairman' has been used twice; in Clause 7 it has been used thrice while in Clause 9 it has been used 5 times. In Clause 11 as well the said word 'Chairman' has been used twice. Thus it appears that the parties used the word 'Chairman' in cases where the parties intended that the 'Chairman' shall mean and include the Chairman of the Company as well as other officers mentioned in the definition Clause 1 (v) of the said general conditions. But in cases where the parties intended to refer and mean the Chairman of the Heavy Engineering Corporation Ltd.. they have used the expression 'The Chairman, Heavy Engineering Corporation Ltd.' or 'the Chairman, Heavy Engineering Corporation.' In any event the definition clause defines the word 'Chairman'. It does not define or seek to explain the meaning of the words 'Chairman. Heavy Engineering Corporation Ltd.' or the expression 'Chairman. Heavy Engineering Corporation'. The distinctive choice of meaning of the words 'Chairman, Heavy Engineering Corporation Ltd.' or 'The Chairman, Heavy Engineering Corporation with meticulous care has been done only to give meaning to the different clauses. The expression 'Chairman, Heavy Engineering Corporation' in Clause 15 only means the Chairman himself and not any other officer of the said Corporation. The parties by agreeing to Clause 15, agreed that the disputes should be adjudicated upon by an officer of the highest category only to ensure iustice and impartiality to stranger contractors. Thus disputes with the Corporation itself have to be decided by the Chairman of the Corporation. Mr. Gupta contends that since a contractor may be a company the words Heavy Engineering Corporation hasbeen added after the word Chairman in Clause 15 to mean only the Chairman of the Heavy Engineering Corporation and not of the contractor where contractor is a company and it does not in any other way distinguish the words from the word 'Chairman' as defined in Clause 1 (v).

8. For the reasons stated above I am unable to accept the said contentions of Mr. Gupta.

9. Mr. Gupta then contends that the respondent was invited to submit tender subject to the special conditions of contract which were sent to the respondent together with the notice to tender. The respondent submitted the tender subject to the said special conditions. The said conditions are also applicable to this contract inasmuch as the word 'contract' under general conditions means according to the definition clause 'The notice to tender, instruction to tender, the tender, acceptance of tender, -- 'Particulars' defined in the said conditions of contract and those general and special conditions that may be added.' Thus according to Mr. Gupta the definition clause in the general conditions of contract which certainly is applicable to the contract also attracts and makes applicable the said special conditions of the contract in the instant case. The said special conditions of contract also contains an arbitration clause to the following effect :

'(i) All questions, disputes or differences of any kind whatsoever arising out of or in connection with the contract at any time whether during the currency of the contract or thereafter its completion and during the guarantee period, other than the satisfactory period of completion of the functional or output test of the machinery and equipment and/or their performance during the guarantee period in respect of which the decision of the employer shall be final and binding (hereinafter referred to as 'accepted matters') shall be submitted in writing by the supplier to the employer and the employer shall within a reasonable time after the submission of the same make and notify his decision thereon in writing;

(ii) If the supplier is dissatisfied with the decision of the employer or if the employer fails to make a decision within a reasonable time then and in any such case but not including any of the accepted matters, the supplier may demand in writing that such matter in question, dispute or difference be referred to arbitration;

(iii) All such matters to be submitted to arbitration as aforesaid shall be referred for decision to two Arbitrators, one to be nominated by the employer and the other by the supplier. In the event of the two arbitrators being divided inopinion, the matter under dispute shall be referred for decision to an umpire to be appointed by the two arbitrators.

(iv) Unless otherwise agreed upon by the parties the venue of the arbitration proceedings shall be at Ranchi in the State of Bihar, India;

(v) Subject as aforesaid provisions of the Arbitration Act 1940. or any statutory modifications or re-enactment thereof and o.f the Rules made thereunder for the time being in force shall apply to all arbitration proceedings under this clause.'

10. The arbitration clause in general conditions being contrary to the terms of arbitration clause contained in the special conditions it is not certain as to which clause shall prevail and thus both the arbitration clauses are void for uncertainty.

11. Mr. Gupta then contends that the special conditions of contract must prevail over the general conditions and therefore, arbitration clause contained in the special conditions must prevail. The said arbitration clause only confers right upon the respondent to refer the matters to arbitration in certain circumstances mentioned in the said clause. The respondent having instituted the said suit has given a go-by to his right to exercise the option to refer to arbitration and thus this suit must be continued.

12. The arbitration clause in the special conditions although confers the option upon the respondent only, is according to Mr. Gupta. a valid arbitration clause and is binding upon both the parties. Mr. Gupta. in support of his contention, relies on the case of Kedarnath Atma Ram v Kesoram Cotton Mills Ltd., ILR (1950) 1 Cal 550 (553). Mr. Gupta also relies on Jyoti Brothers v. Shree Durga Mining Co.. : AIR1956Cal280 .

13. Mr. Pal. appearing on the other side, contends that the arbitration clause contained in special conditions is void for want of mutuality.

14. The aforesaid contentions of the parties seems to me to be notnecessary to be decided for decision in the instant application for the reasons stated hereinafter. From the relevant portion of the tender notice, a copy whereof has been annexed to the affidavit in opposition filed on behalf of the respondent, it appears that the conditions governing the tender have to be obtained from the office of the General Manager. Foundry Forge, Heavy Engineering Corporation Ltd. at Ranchi. The contract in the instant case was a contract of category 'C' as will appear from the tender notice itself. Thus it is evident that only those conditions which shall be obtained from the office of the said General Manager applic-able to this kind of contract will be the conditions applicable to this contract. No such conditions has been stated to have been obtained by or relied upon by the respondent in the instant application.

15. The definition clause of the contract will apply to the contract between the parties -- 'unless the context otherwise requires the word 'defined' shall mean' as has been laid down in the definition clause. The definition of the word 'contract' lays down that only those general and special conditions that may be added to the contract shall apply to the contract between the parties. No special condition was added to or Incorporated in the contract between the parties. But by express words, the general conditions were added to and incorporated in the letter of acceptance of tender. The respondent acted upon the said acceptance of tender and or the said letter and on the terms and conditions mentioned therein. In any event the acceptance of the tender submitted by the respondent having been made only on the terms and conditions contained in the letter of acceptance, the said letter was a counter offer and the respondent having acted upon the said letter of acceptance on the terms contained therein, accepted the said counter offer. Thus even if the tender was submitted subject to the special conditions the said special conditions never became part of the contract between the parties. The said special conditions never applied to the contract between the parties.

16. Thus in any view of the matter the special conditions of the contract are not applicable to the contract in the instant case and there cannot be any contradiction between the arbitration clause contained in the general conditions of contract and the arbitration clause contained in the special conditions of the contract. There is only one arbitration clause applicable to the said contract i. e. Clause 15 of the general conditions of contract.

17. Thus in my opinion there is a valid and subsisting arbitration agreement in the shape of Clause 15 of the said general conditions between the parties.

18. There cannot be any doubt that the subject-matter of the suit involves matters agreed to be referred by the said arbitration agreement. The petitioner was ready and willing to do everything for the proper conduct of the arbitration and has not taken any step in the proceedings. There is no reason whatsoever as to why the stay would not be granted in the instant case.

19. For the reasons stated above this application must succeed. The suit being Suit No. 2388 of 1968 is stayed.

20. Costs of and incidental to this application shall abide by the result of the arbitration proceedings.


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