DDA vs Cement Corporation of India

Shiv Narayan Dhingra, J.—By this order, I shall dispose of the objections filed by DDA/objector against an award dated 12th October, 1993 passed by the sole arbitrator.

DDA had entered into a contract with respondent (Cement Corp. of India) on 23rd December 1989. As per this contract, the supply was to be made within six months from the 10th day of issuance of the contract. Two qualities of cement, viz. Pozolana Portland Cement and Ordinary Portland Cement were to be supplied by Cement Corporation of India to DDA at the rates of Rs. 1293 and Rs. 1305 PMT respectively. The price was inclusive of packaging charges and current taxes. However, if subsequent to date of contract the taxes increased or decreased affecting the price, the same was the liability of DDA and the price was to rise or fall accordingly. Respondent did not supply the agreed quantity and the petitioner filed a claim against respondent before the arbitrator in view of the arbitration clause that all disputes between the parties were to be resolved through arbitration. The first claim was in respect of levy of compensation of Rs. 26,04,000/-. The second claim was regarding risk purchase whereby DDA had claimed Rs. 60 lac as difference in costs of material to be procured at the risk and costs of respondent. The third claim was for Rs. 20,000/- for expenditure incurred for recalling the tender under R/P clause. The learned arbitrator allowed the first claim of Rs. 26,04,900/- which was the compensation levied by DDA under Clause 2 of the agreement. However, the learned arbitrator disallowed the second and third claim on the ground that the claimant could have done risk purchase only within the stipulated period and claimed the rate difference prevalent during the supply period. The learned arbitrator observed that DDA entered into an agreement with other party much after the supply period and not at the market rate prevalent during the supply period therefore the claimant was not entitled to the claim.

It is submitted by counsel for DDA that the claim No. 1 was covered under the excepted matter and the arbitrator passed this award in favour of claimant DDA without jurisdiction and therefore the DDA had filed a suit for this amount. Even otherwise, I do not find alleged Clause 2 in the agreement under which DDA could levy penalty in case of non delivery of cement. Since counsel for DDA has stated that this part of award was covered under the excepted matter, and DDA was not asking claim No. 1 to be made rule of law, this claim though allowed by the arbitrator shall not form part of the award.

As far as claim No. 2 is concerned, I find nothing wrong with the award. The delivery period as stated in the contract between the parties was only two months and the first supply was to start within seven days of the issuance. In case the delivery was not received within two months, DDA would have procured cement from the market within this period at the price prevalent during this period. The quotations on which reliance is placed by DDA are not of this period. The delivery period ended in June, 1990. The supply were stopped by CCI much prior to delivery period and the quotations relied upon by the DDA were of February, 1991. The cement price used to fluctuate during this period. DDA could have made purchase of cement only during the supply period or immediately after the expiry of the supply period in order to claim the price difference.

I also find that there is no clause in the contract between the parties entitling DDA to do risk purchase at the cost of respondent and to claim price difference. Rather the offer submitted by respondent specifically provides that respondent was a wholly owned government enterprises and was entitled to price preference of 10%. It was also specifically provided that the risk purchase would not be applicable to respondent. The contract was entered into between the parties in view of this offer of respondent. I consider that the arbitrator rightly rejected the claims 2 and 3 raised by DDA.

Claim No. 4 is in respect of cost of proceedings and interest. Since no amount is payable under the award to DDA, DDA would not have been entitled to costs of proceedings and interest. I, therefore, find no infirmity in the award. The award except in respect of claim No. 1, which comes under excepted items, is hereby made a rule of the Court. The suit stands disposed of.