TaxTMI 
TaxTMI 
2003 (10) TMI 384
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....pursuant to a notice inviting global tender dated 2-5-1989. In terms of the said notice inviting tender, the respondent herein was to take supply of Helium gas, which is one of the rare gases being not chemically produced and is mainly extracted from the natural gas wells in mineral form. The said gas is ordinarily imported from U.S.A. Algeria, Poland and Russia. In terms of the said notice inviting tender, three different categories of rates were to be quoted by the tenderers both foreign and Indian. Whereas the foreign tenderers were to quote their prices in foreign currency, the Indian bidders could indicate the nature of payment, i.e., if a part thereof was recoverable having foreign exchange component. Pursuant to or in furtherance of the said notice inviting tenders, the tenderers submitted their technical bids. The bidding was to be in two stages; in terms whereof the technical bids were to be opened first whereafter only final bids were to be considered. The appellant's bid was found to be the lowest in that the appellant had bid a price of Rs. 150 per cubic meter out of which US$ 5 was to be the foreign exchange component. The said bid of the appellant having been found to....
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.... dismissed the said petition and directed the award to be made a rule of the Court by an order dated 13-10-1995. 6. Aggrieved by and dissatisfied therewith the respondent preferred an appeal thereagainst which by reason for the impugned judgment has been allowed. The appellant is, thus, in appeal before us. Submissions : 7. Mr. Dipankar P. Gupta, learned Senior Counsel appearing on behalf of the appellant, would contend that the Division Bench of the High Court committed a manifest error insofar as it proceeded to determine the dispute on the premise that the claim could not have been preferred under any clause of the contract. The learned counsel would contend that the arbitrators had, having regard to the scope and purport of the arbitration agreement entered into by and between the parties were entitled to go into the question of the construction of contract and they, thus, having the requisite jurisdiction therefor, the High Court could not have independently construe the same. 8. Drawing our attention to various clauses of the contract as also the claim petition, the learned counsel would contend that the arbitrator had analyzed he terms and conditions of the contr....
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....ntitled to any escalation in the price and, thus, in the event, the contention of the appellant is accepted, the same would run counter to the clause in the contract prohibiting escalation in the price of the goods. 13. Mr. Rohtagi would contend that disclosure of the foreign exchange component in the price to be paid in Indian currency was sought for only for the purpose of evaluation of bids. He would urge that for all intent and purport, the foreign exchange component had nothing to do with the payment of the price for supply of Helium gas to the appellant. In support of his contention, Mr. Rohtagi relied upon Rajasthan State Mines & Minerals Ltd. v. Eastern Engg. Enterprises [1999] 9 SCC 283^1. 14. The learned counsel would further argue that the notifications issued by the Reserve Bank of India do not constitute 'any change in law' in terms of the provision of section 40 of the Reserve Bank of India Act or otherwise. Relevant Clauses in the contract : "1.16 Prices: 1.16-1 In cases where payments are required in Indian Rupees, the bidder should clearly indicate if it shall need any foreign exchange for completing the supplies/services that may be ordered on him. ....
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....the purpose of relative compensation of such domestic bids. Domestic bidders are required to quote the prices in the price schedule and indicate the import content in their offer. If there is no import content in the offer then it should be specifically stated as NIL". '12. (i )Commission shall pay for Helium at the rate of Rs. 149 per M3 all inclusive for offshore supply as indicated in Annexure II. (ii)The invoice with the following support documents, should be submitted in triplicate immediately after receipt of material by Commission to DGM (F&A) 712 B, Vasudhara Bhavan, Bandra (E), Bombay-400 051. (a)The quantity of gas received duly certified by Commission's representative. (b)The computer analysis of the gas chromatograph showing the purity of the gas.' '21. Arbitration If any dispute, difference or question shall at any time arise between the parties herein or their respective representative or assignees in respect of these present or concerning anything hereto contained or arising out of these present or as to the rights liabilities or duties of the said parties hereunder which cannot be mutually resolved by the parties, the same shall be referred to arbi....
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....n Govt. or public body becomes effective after the date as advised by the Commission for submissions of final price bid for this Contract and which results in any decrees in the cost of the project through reduced liability of taxes, (other than personnel taxes) duties, the Contractor shall pass on the benefits of such reduced costs, taxes or duties to the Commission. Notwithstanding the above-mentioned provisions, Company shall not bear any liability in respect of: (1)Personnel taxes, customs, duty and corporate tax.' Relevant Paragraphs of statement of claim of the appellant : 15. In its statement of claim, the appellant, inter alia, contended : "...The claimant has reason to believe that the Bombay Regional Office of the respondent had recommended that the respondent be made such payments as they rightly believed that such payments were legitimately due to the claimant under the terms of contract. That apart from the reason that the said amounts were due to the claimant under the contract terms itself, the same is also supported by virtue of a notification of the Government of India setting out internal guidelines as contained in Notification No. D-19011/7/87-O....
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....ndia under section 40 of the Reserve Bank of India Act, 1934 and upon directions given by the Government of India has the complete force of law. That being the position, any change arising therefrom is clearly covered under clause 23 of the Tender Document, Being so, the respondent is bound under the contract to compensate the claimant as to such increased costs arising out of such exchange rate fluctuations. It is further submitted that refusal on the part of the respondent to compensate the claimant without disclosing any reasons itself is arbitrary. 8....Any interpretation of the contract wherein foreign suppliers would be paid in foreign currency at the current rate while Indian suppliers would be paid at the rate of exchange prevailing on the date of the submission of the Price Bid would discriminate against the Indian suppliers inasmuch as any increase in the value of the dollar against the Indian rupee would destroy the costing of the Indian suppliers. The claimant states that this interpretation of the contract is discriminatory against the Indian suppliers, violative of public policy and against stated government guidelines, objectives andintentions." Issues before t....
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.... 18. The Division Bench of the High Court set aside the award holding that the same was without jurisdiction wherefor two questions were framed. (a)Whether a claim of the nature preferred by the respondent is specifically barred under the contract? (b)Whether there is any clause in the contract, under which such a claim could be preferred? Our conclusion : 19. The questions framed are self-contradictory and inconsistent. Whereas in framing question (a) a right approach had been adopted by the Division Bench, a wrong one had been adopted in framing question (b). It is not in dispute that there were three different nature of bids; which were required to be made in terms of the notice inviting tenders; (i) by foreign bidders; (ii) by Indian bidders quoting Indian price with the foreign exchange component therefor as import was required to be made; (iii)payable only in Indian rupee without foreign exchange component. 20. Before the arbitrators apart from construction of the contract agreement, the questions which, inter alia, arose were : (a) the effect and purport of circular letter dated 25-9-1989 issued by the Central Government: (b) the conduct of the respondent i....
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....r their consideration. Such a question of law, it is trite, is also arbitrable and was specifically raised by the appellant. The learned arbitrators were further entitled to consider the question as to whether the appellant had been discriminated against insofar as similar claims have been allowed by the respondent. Case laws on the point : 26. In State of U.P. v. Allied Constructions [2003] (6) SCALE 265, this Court held : "...Interpretation of a contract, it is trite, is a matter for arbitrator to determine (see M/s. Sudarsan Trading Co. v. Government of Kerala AIR 1989 SC 890). Section 30 of the Arbitration Act, 1940 providing for setting aside an award is restrictive in its operation. Unless one or the other condition contained in section 30 is satisfied, an award cannot be set aside. The arbitrator is a Judge chosen by the parties and his decision is final. The Court is precluded from reappraising the evidence. Even in a case where the award contains reasons, the interference therewith would still be not available within the jurisdiction of the Court unless, of course, the reasons are totally perverse or the judgment is based on a wrong proposition of law. As error ap....
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....Upon taking into consideration a large number of decisions and referring to K.R. Raveendranathan's case (supra), this Court held that the court would not be justified in construing the contract in a different manner and then to set aside the award by observing that the arbitrator had exceeded the jurisdiction in making the award, when the arbitrator is required to construe a contract, only because another view is possible. It was stated : "26. In order to determine whether the arbitrator has acted in excess of jurisdiction what has to be seen is whether the claimant could raise a particular dispute or claim before an arbitrator. If the answer is in the affirmative then it is clear that the arbitrator would have the jurisdiction to deal with such a claim. On the other hand if the arbitration clause or a specific term in the contract or the law does not permit or give the arbitrator the power to decide or to adjudicate on a dispute raised by the claimant or there is a specific bar to the raising of a particular dispute or claim then any decision given by the arbitrator in respect thereof would clearly be in excess of jurisdiction. In order to find whether the arbitrator has acted ....
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....In a case where specific question of law touching upon the jurisdiction of the arbitrator was referred for the decision of the arbitrator by the parties, then the finding of the arbitrator on the said question between the parties may be binding. (e )In a case of non-speaking award, the jurisdiction of the Court is limited. The award can be set aside if the arbitrator acts beyond his jurisdiction. (f )To find out whether the arbitrator has travelled beyond his jurisdiction, it would be necessary to consider the agreement between the parties containing the arbitration clause. Arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the award. (g )In order to determine whether arbitrator has acted in excess of his jurisdiction what has to be seen is whether the claimant could raise a particular claim before the arbitrator. If there is a specific term in the contract or the law which does not permit or give the arbitrator the power to decide the dispute raised by the claimant or there is a specific bar in the contract to the raising of the particular claim then the award passed by the arbitrator in respect thereof would be in exces....
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....the court in interfering with a non-speaking award is limited. 34. The upshot of the above decisions is that if the claim of the claimant is not arbitrable having regard to the bar/prohibition created under the contract, the Court can set aside the award but unless such a prohibition/bar is found out, the Court cannot exercise its jurisdiction under section 30 of the Act. The High Court, therefore, misdirected itself in law in posing a wrong question. It is true that where such prohibition exists, the court will not hesitate to set aside the award. 35. In the instant case, the appellant did not ask for any enhancement in the price. It only asked for the difference in price occurred owing to fluctuation in the rate of dollar. 36. It is true that by taking recourse to the interpretation of documents, the appellant did not become entitled to claim a higher amount than Rs.149 but, thereby the appellant had not unjustly enriched itself. Had the price of the dollar fallen, the respondent would have become entitled to claim the difference therefor. 37. The appellant quoted the foreign exchange competent in its bids in terms of the notice inviting tenders. The same was asked fo....
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....he decision to include the said term would mean that the same shall be incorporated in the contracts which were to be executed in future. 41. It is further not dispute that the respondent is bound by the directives issued by the Union of India. In fact from the letter dated 21-5-1990 it is evident that even for the purpose of entering into the contract approval of the Central Government was sought for and granted. Such a directive of the Central Government was not required to be made by way of a notification nor the same was required to have the force of law as the matter involved a contract between the parties. 42. Mr. Rohtagi is not correct in his contention that such condition was required to be incorporated in the NIT inasmuch as from a plain reading of the said letter, it is evident that such a clause was to be incorporated in the notice inviting tenders ex majori cautela. 43. As regard the contention as to whether the notification issued under section 40 of the Reserve Bank of India would be rules or regulations having an impact in the cost factor is concerned, the arbitrator had jurisdiction to decide the same, subject of course to application of correct principles ....