IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction Original Side A.P.No.1268 of 2013 Bharat Sanchar Nigam Limited versus M/S.Star Battery Limited For the petitioners:- Mr.Debabrata Saha Roy Mr.Pingal Bhattacharjee …Advocates For the Respondents:- Ms.Noelle Banerjee Mr.Dipak Dey Mr.Dipanjan Dey …Advocates Judgement On: - 31st August, 2017 I.P.MUKERJI, J.
This is an application under Section 34 of the Arbitration and Conciliation Act, 1996.
The award dated 19th August, 2013 passed by a former judge of the subordinate judiciary is under challenge.
A very interesting point is involved.
On 21st October, 2008 the petitioner Bharat Sanchar Nigam Limited concluded a contract with the respondent Star Battery Limited.
The respondent was to supply 542 items of battery described as SMF VRLA600AH to the petitioner at or for the gross consideration including duties and taxes, of Rs.10,40,23,149.46.
The delivery schedule was four months from the date of issuance of the purchase order and also according to the monthly delivery date mentioned in the contract document.
It was also provided that any extension of supply beyond the scheduled date of delivery would attract clauses 12 and 24 of the bid document.
Clause 24 is important.
The whole determination of the arbitral reference depends on interpretation of this clause.
It is set out below: “24.
Fall Clause 24.1.
the prices once fixed will remain valid during the scheduled delivery period except for the provisions in clause 12.1 of Section-III.
Further, if at any time during the contract.
(a) it comes to the notice of the purchaser regarding reduction of price for the same or similar equipment/service; And/or (b) the prices received in a new tender for the same or similar equipment/service are less than the prices chargeable under the contract, the purchaser, for the purpose of delivery period extension, if any will determine and intimate the new price, taking into account various related aspects such as quantity, geographical location etc.and the date of its effect for the balance quantity/service to the vendor.
In case the vendor does not accept the new price to be made applicable during the extended delivery period and the date of its effect, the purchaser shall have the right to terminate the contract without accepting any further supplies.
This termination of the contract shall be at the risk and responsibility of the supplier and the purchaser reserves the right to purchase the balance unsupplied quantity/service at the risk and cost of the defaulting vendor besides considering the forfeiture of his performance security.
24.2 (a) the vendor while applying for extension of time of delivery equipment/services, if any, shall have to provide an undertaking as “we have not reduced the sale price, and/or offered to sell the same or similar equipment/service to any person/organisation including Department of Central/State government or any Central/State PSU at a price lower than the price chargeable under the contract for schedule delivery period.
(b) In case undertaking as in Clause 24.2 (a) is not applicable, the vendor will give the details of prices, the name (s) of purchaser, quantity etc.to the purchaser while applying extension of delivery period.” Although the price was fixed in the contract document, clause-24 provided that if the market price got reduced during the execution of the contract or that the price received in a subsequent tender for the same product was less, the purchaser (Bharat Sanchar Nigam Limited) at the time of extension of time to complete the contract would have to determine the new price and intimate the same to the vendor.
Although the delivery period had expired on 20th February, 2009 the respondent could not complete the supply under the contract.
They continued to deliver battery units to the petitioner which were accepted.
In total 388 units were supplied by the petitioner and accepted by the respondent.
Then matters needed to be regularised.
It appears from the records that on 19th July, 2010 a committee of the petitioner held a meeting for the purpose of deciding the rates at which the delivery date could be extended, in application of clause-24 or the “fall Clause”.
The deliberations at the meeting were duly minuted.
The rates for the item excluding cenvatable duties and taxes were substantially reduced to 1,43,642.19 for the period 1st September, 2009 to 13th October, 2009 Rs.1,03,503.08 from 14th October, 2009 to 17th December, 2009, Rs.93,474.58 from 18th December, 2009 to January, 2010.
On 1st August, 2010 the petitioner granted “post facto extension” of delivery date to the petitioner.
By that time the supply of 388 units of battery was long over.
The submission of Ms.Neolle Banerjee for the respondent was plain and simple.
On an interpretation of Clause-24, the petitioner had to fiRs.determine and then intimate the respondent before extension of the delivery period the “fall” in the price of the subject iteMs.The price after the “fall” had to be indicated to the supplier.
If he did not accept the term he could consider himself discharged from the contract.
This “fall” in the contract price could not be applied in the case of post facto extension of the delivery date because by that time delivery of the goods for an anterior period had already been made.
The delivery was made by the supplier on the footing that the price remained unchanged.
Now, if at the time of post facto extension of time the price was sought to be reduced it would work great injustice to the supplier.
If he knew that this would be done he may never have supplied the goods and terminated the contract.
Learned counsel for the petitioner says that this clause was very wellknown to the petitioner.
During the extended delivery period there was no contract.
The respondent accepted the extension of contract with retrospective effect.
They took the decision to supply the goods, aware of the possible application of the fall clause.
It is clear from clause-24 that there had to be an agreement between the parties prior to the supply.
The present situation was not foreseen at the time of execution of the agreement.
Therefore, I accept the respondent’s contention that they were supplying the goods with the notion that the contract price applied, since nothing contrary thereto had been indicated to them by the petitioner.
The petitioner very well knew the difficulty in the application of this clause if there was “post facto approval” as the goods had already been delivered.
To reduce the price at that point of time was unjust, unfair and wrongful.
I could have understood if at the time the petitioner was taking the decision to accept the goods beyond the contract period, the respondent was told that they could be paid a lower price, for the extended period if the fall clause was applied, which the respondent could accept or not accept.
But after the supply was over, reducing the price is plainly not acceptable.
To put it in other words in this situation, Clause-24 did not apply.
The arbitrator has taken the correct view by directing payment of the full price by the petitioner to the respondent in respect of 388 battery units supplied by them and has provided the correct reasons.
In any case the arbitrator has taken a very reasonable and plausible view.
In such a case the court should refrain itself from touching the award.
In those circumstances, the award dated 19th August, 2013 is upheld.
This application is dismissed.
Certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(I.P.MUKERJI, J.)