Contractual price cap and customs duty variation claims require proof; plausible arbitral interpretation left undisturbed.

A contractual price fixed in the purchase order could not be unilaterally reduced merely because the imported components were said to be below the maximum CIF value; that cap governed reimbursement for customs duty variation, and the arbitral view treating the withholding as unjustified was a plausible interpretation not open to interference under Section 34. A counter claim for customs duty variation also failed because no cogent evidence proved any actual reduction in duty or the quantum claimed, and the rejection was supportable on the record. The award and the refusal to interfere were sustained.

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Issues: (i) Whether the withholding of Rs.60,93,323/- was justified on the ground that the imported components were of lower value than the maximum CIF value mentioned in the contract; (ii) Whether the rejection of the counter claim relating to customs duty variation was unsustainable for want of separate reasoning.

Issue (i): Whether the withholding of Rs.60,93,323/- was justified on the ground that the imported components were of lower value than the maximum CIF value mentioned in the contract?

Analysis: The contract made the purchase order price firm and fixed, subject only to statutory variations in customs duty. The reference to a maximum CIF value operated as a cap on reimbursement in the event of customs duty variation and did not permit a unilateral deduction merely because the actual import content was stated to be lower than the contractual figure. The arbitral interpretation that the amount could not be withheld on that basis was a plausible construction of the contractual terms and did not warrant interference under Section 34 of the Arbitration and Conciliation Act, 1996.

Conclusion: The withholding was unjustified and the challenge to the allowance of the first claim failed.

Issue (ii): Whether the rejection of the counter claim relating to customs duty variation was unsustainable for want of separate reasoning?

Analysis: The counter claim was partly based on the very amount already withheld and partly on an asserted reduction in customs duty. The claimant did not lead evidence to establish any actual reduction in customs duty or the quantum claimed. A counter claim for variation in duty could not be allowed on hypothesis or general assertion in the absence of documentary proof. The rejection of the counter claim was therefore supportable on the record.

Conclusion: The rejection of the counter claim was upheld.

Final Conclusion: The award and the order refusing interference under Section 34 were sustained, and no ground for appellate interference was made out.

Ratio Decidendi: An arbitral award based on a plausible interpretation of the contract will not be interfered with under Section 34, and a counter claim for customs duty variation must be proved by cogent evidence and cannot rest on conjecture.

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