Bharat Sanchar Nigam Ltd. vs M/S Bwl Ltd.
- Court
- Delhi High Court
$~J
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 10.03.2026
Judgment pronounced on: 01.07.2026
+ O.M.P. (COMM) 43/2020
BHARAT SANCHAR NIGAM LTD. .....Petitioner
Through: Mr. Satvik Rai, Mr. Vineesh Tyagi,
and Mr. Kartik Rai, Advs.
versus
M/S BWL LTD. .....Respondent
Through: Mr. Ramesh Singh,Sr. Adv., Ms.
Monisha Handa, Mr. Arnav
Chaudhary, Advs.
+ O.M.P. (COMM) 63/2020
BHARAT SANCHAR NIGAM LTD. .....Petitioner
Through: Mr. Satvik Rai, Mr. Vineesh Tyagi,
and Mr. Kartik Rai, Advs.
versus
M/S BWL LTD. .....Respondent
Through: Mr. Ramesh Singh, Sr. Adv., Ms.
Monisha Handa, Mr. Arnav
Chaudhary, Advs.
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
J U D G M E N T
1. These are petitions filed under section 34 of the Arbitration and
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By:SAHAJ PREET KAUR
Signing Date:01.07.2026
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O.M.P. (COMM) 43/2020 & O.M.P. (COMM) 63/2020 Page 1 of 52
Conciliation Act, 1996 (“the Act”) seeking to challenge two Arbitral
Awards dated 03.04.2008 (“impugned Awards”), passed by the
learned Sole Arbitrator (“Arbitrator”) in the matters of Arbitration
between M/s BWL ltd. v. Union of India & Anr.
2. The present petitions bearing O.M.P. (COMM) Nos. 43/2020 and
63/2020 challenges the Arbitral Awards passed in AA Nos. 302/03
and AA No. 301/03 respectively.
3. M/s BWL Ltd. (“BWL”) was the Claimant in both the Arbitral
proceedings and Bharat Sanchar Nigam Ltd. (“BSNL”) was the
respondent in both the proceedings.
4. BSNL is the successor in interest of the Department of
Telecommunications (“DOT”).
5. DOT was converted to a public sector undertaking namely, BSNL and
all its operations and assets stood transferred to BSNL by virtue of
notification dated 30.09.2000.
6. Hence, for the sake of brevity and intelligibility, hereinafter DOT and
BSNL, both are referred as BSNL.
FACTUAL BACKGROUND
O.M.P. (COMM) 43/2020 (arising out of A.A. No. 302/03)
7. On 27.09.1996, the Union of India through its Department of
Telecommunication invited tenders for supplying of 6075 Kms of 12F
optical fibre cable and other accessories.
8. The bid submitted by BWL in pursuance of this tender was accepted
and a letter of acceptance dated 12.12.1996 was issued.
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Signing Date:01.07.2026
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O.M.P. (COMM) 43/2020 & O.M.P. (COMM) 63/2020 Page 2 of 52
9. Pursuant thereto, an advance purchase order dated 29.11.1996 and
purchase order date 24.12.1996 was issued for supply of 552 Kms of
12F Optical fibre along with accessories.
10. The delivery of the entire supply was to be made by 28.02.1997.
However, BWL supplied only 418 Kms out of total 552 Kms by the
fixed date of 28.02.1997, leaving a balance of 134 Kms.
11. As BWL failed to supply the requisite quantity by the time fixed, it
applied for seeking extension.
12. Accordingly, the first extension was granted on 06.03.1997 extending
up to 31.03.1997.
13. Second extension was also granted for a period starting from
19.06.1997 to 15.07.2997.
14. The last final extension was granted on 11.09.1997 (on ex post facto
basis) up to 22.08.1997.
15. Admittedly, these extensions were granted subject to levy of liquidated
damages and price reduction.
16. Consequently, BSNL levied liquidated damages and price reduction to
the tune of Rs. 4,00,185/- and Rs. 19,30,586/- respectively.
17. The imposition of the aforesaid liquidated damages and price reduction
was challenged by the BWL before the Arbitrator by invoking
arbitration mechanism contained under Clause No. 20 of the General
(Commercial) Conditions of Contract (“GCC”) vide letter dated
10.11.1999.
Impugned Award (A.A. No. 302/03)
18. The Arbitrator held that BSNL is entitled to recover liquidated damages
and accordingly recovered such damages. However, it is not entitled
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By:SAHAJ PREET KAUR
Signing Date:01.07.2026
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O.M.P. (COMM) 43/2020 & O.M.P. (COMM) 63/2020 Page 3 of 52
and liable to pay back Rs. 1930568/- recovered towards price
reduction.
19. BWL was also awarded pendente lite interest on the aforesaid amount
at the rate of 9% p.a. and post-award interest till the date of realization
on the principal amount at the rate 9% p.a. along with legal fees and
expenses to the tune of Rs. 200000/-.
O.M.P. (COMM) 63/2020 (arising out of A.A. No. 301/03)
20. A tender dated 20.02.1997 bearing No. MM/OF/021997/000092 was
floated by BSNL for the procurement of 2500 Kms of 24F optical fibre
cable along with other accessories.
21. BWL turned out to be the successful bidder and accordingly an
advance purchase order bearing No. CT/APO/017/97-98 dated
07.07.1997 for 610 Kms of 24F optical fibre cable was issued.
22. BWL unconditionally accepted the aforesaid advance purchase order
and also along with letter dated 26.08.1997 furnished a performance
bank guarantee for Rs. 23,13,000/-.
23. Upon such acceptance, a purchase order dated 16.09.1997 was placed
for supply of 610 Kms of 24F optical fibre cable with accessories,
within 4 months i.e., by 15.01.1998.
24. By the date fixed between the parties, BWL could only deliver 12Kms
of cable out of 610 kms, leaving a balance of 598 Kms.
25. Pursuant to this failure in fulfilling its obligation, BWL applied for
multiple extensions of time.
26. The first extension was granted on 26.02.1998 up to 19.03.1998,
followed by a second extension granted on 30.03.1998 up to
06.04.1998, followed by another extension granted on 06.04.1998 up to
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14.04.1998. Another final extension was also granted on 10.06.1998 up
to 09.08.1999.
27. The first three extensions were allowed subject to levy of liquidated
damages and the final one was allowed subject to price reduction also
in addition to liquidated damages.
28. BSNL levied liquidated damages amounting to Rs. 25,42,797/- upon
BWL and price reduction was quantified at Rs. 44,94,651/-.
29. BWL filed an Arbitration Petition bearing No. 301/2000, wherein the
Arbitrator was appointed in terms of the Order dated 12.07.2002.
Impugned Award (A.A. No. 301/03)
30. The Arbitrator held that BSNL was entitled to recover liquidated
damages but not price reduction and hence, the amount deducted on
account of price reduction i.e., Rs. 44,94,651/- was awarded to BWL
with pendente lite interest at the rate of 9% p.a. and post award interest
on the principal amount from the date of award till realization at the
same rate along with costs of Rs. 200000/-.
SUBMISSIONS ON BEHALF OF BSNL
31. Mr. Rai, learned counsel for BSNL, submits that the impugned Awards
suffer from patent illegality and are against the public policy of India
for the reason of being based on prima facie erroneous application of
propositions of law.
General Submissions (in O.M.P. (COMM) 43/2020 and O.M.P.
(COMM) 63/2020)
32. The Arbitrator has failed to appreciate the fact that the terms of the
original contract stood modified by consent of both the parties. The
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By:SAHAJ PREET KAUR
Signing Date:01.07.2026
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acceptance of BWL can be inferred from the conduct and performance
on its part to fulfil the obligations under the Contract.
33. He also submits that the factual matrix of the present case is similar to
controversy already decided in the judgment of Bharat Sanchar Nigam
1
Limited v. Himachal Futuristic Communications Limited , wherein this
Court while holding the decision of arbitrator to be contrary to Section
62 of the Indian Contract Act, 1872 (“the Contract Act”) and Bhagwati
2
Prasad Pawan Kumar v. Union of India observed that the
communication between parties modified the original contract with
respect to time and price.
34. BWL was aware of the conditions attached to extensions for making
the requisite supply, having accepted them, subsequently BWL was
estopped from challenging such terms and conditions.
35. The impugned Awards are patently illegal inasmuch as they are passed
without taking into consideration and applying Section 9 of the Sales of
Goods Act, 1930 (“the 1930 Act”) . According to Section 9 of the 1930
Act, the prices decided in a contract are only for a limited/specified
period and not for the supplies made thereafter.
36. All extension letters issued by BSNL stated that the price for supplies
made in the extension period to be the prevailing market rates. BWL
raised no objection to this condition and rather supplied goods without
protest.
37. Correspondences for request of non-reduction of prices by BWL
cannot form the basis of awarding claim in favour of BWL, it is the
1
2012 SCC OnLine Del 3178.
2
(2006) 5 SCC 311.
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overall conduct which should have been taken into consideration,
whereby BWL continued to supply and acceded to the change of
conditions by its conduct.
38. The Arbitrator has taken an implausible view in interpreting Clause No.
12(ii)(a) and not taking into consideration the fact that Clause No.
12(ii)(a) was superseded by the amended conditions.
39. The Arbitrator in passing the impugned Awards has exceeded the
confines of jurisdiction by overlooking Section 62 of the Contract Act
which provides for effect of novation.
40. BWL by supplying the goods after grant of extensions has accepted the
terms and conditions for grant of extensions including price reduction,
by implication. Also, it cannot accept the benefit without accepting the
condition attached to it. Reliance is placed on Section 8 of the Contract
3
Act, BSNL v. BPL Mobile Cellular Ltd . and Amrit Banspati Co. Ltd. v.
4
Union of India .
41. It is on this ground of non-consideration of the BSNL’s case, the
impugned Awards are submitted to be in violation of public policy.
5
Reliance is also placed ONGC v. Saw pipes Ltd.
42. In O.M.P. (COMM) 43/2020, no other specific submissions have been
raised by BSNL.
Specific Submissions (in O.M.P. (COMM) 63/2020)
43. It is submitted qua impugned Award, that the extensions were granted
vide various letters which contained stipulation to this effect that the
3
(2008) 13 SCC 597.
4
1964 SCC OnLine All 356.
5
(2003) 5 SCC 705.
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extension granted would be subject to imposition of liquidated damages
and price reduction.
44. BWL has out of its free will and own volition accepted the terms and
conditions of the extensions and thereafter supplied the goods. It is
settled position of law that if extension are granted, the party at whose
instances extension are given cannot choose to accept some conditions
of it while rejecting the others, it has to be accepted or rejected as a
whole.
45. The Arbitrator has failed to consider the reply of BSNL in the arbitral
proceedings wherein the fact of novation of contract by virtue of
extensions granted, is clearly stated.
46. The Arbitrator has failed to take into consideration the fact that the
terms of the original contract stood novated after extension and thus,
clause Nos. 11, 12(1)(ii)(b), and 13 of the GCC would not be
applicable.
47. BWL was allowed to supply the goods only on the condition of
imposition of liquidated damages and price reduction as per provisional
rates. Thus, the impugned Award holding price reduction to be illegal
is in violation of law. Reliance is placed on Himachal Futuristic
(Supra) , Bhagwati Prasad Pawan Kumar (Supra) , and Amrit Banspati
(Supra) .
SUBMISSIONS ON BEHALF OF BWL
48. At the outset, Mr. Singh, learned senior advocate for BWL, states that
the present petitions are barred by limitation for the reason that the
BSNL has filed these petitions after expiry of the statutory period of 3
months and has not furnished any proof to this effect that it actually
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received the impugned Award No. 302/03 on 31.04.2008 (O.M.P.
(COMM) 43/2020) and impugned Award No. 301/03 on 21.04.2008
(O.M.P. (COMM) 63/2020).
49. He also states that BSNL by way of present petition has merely
reiterated its contentions already raised before the Arbitrator and is
seeking a review of merits, which is beyond the jurisdiction conferred
by Section 34 of the Act on this Court. Reliance is placed on
6
Connaught Plaza Restaurant Pvt. Ltd. v. Niamat Kaur and MSK
7
Projects v. State of Rajasthan .
50. He states that the contentions raised are in the nature of questions of
fact and it is a settled position of law that the view of Arbitrator is final
8
on these questions. Reliance is placed on Associate Builders v. D.D.A.
51. The primary issue before the Arbitrator was that whether the conditions
of Contract allowed BSNL to unilaterally reduce the price of goods
supplied during the extended period and to levy liquidated damages for
the delay in performance.
52. The findings of the Arbitrator are based on interpretation of terms of
Contract which is the domain of Arbitrator and the same is beyond the
scope of Section 34 of the Act.
53. The Arbitrator has arrived at rational conclusions in the impugned
Awards after elaborately discussing the evidence in detail.
54. The findings of the Arbitrator qua price reduction are based on reasons
and documents on record. Thus, the no grounds as enumerated under
6
2013 SCC OnLine Del 2320.
7
(2011) 10 SCC 573.
8
(2015) 3 SCC 49.
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Section 34 of the Act warranting interference by this Court are
established by BSNL in the present case.
ANALYSIS AND FINDINGS
55. I have heard the learned counsels for the parties and perused the
documents placed on record.
PRELIMINARY OBJECTION OF LIMITATION
56. BWL has raised a preliminary objection that the petitions are time
barred for the reason of being filed after the expiration of 3 months
limitation period as contemplated under Section 34 of the Act. Section
34(3) of the Act reads as under:
“34. Application for setting aside arbitral award.—
(1)…
(2)…
(3) An application for setting aside may not be made after
three months have elapsed from the date on which the party
making that application had received the arbitral award or,
if a request had been made under section 33, from the date
on which that request had been disposed of by the arbitral
tribunal:
Provided that if the Court is satisfied that the applicant was
prevented by sufficient cause from making the application
within the said period of three months it may entertain the
application within a further period of thirty days, but not
thereafter.”
57. It is the case of BWL that BSNL has not furnished any documentary
proof in support of its averment that the it actually received the
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By:SAHAJ PREET KAUR
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O.M.P. (COMM) 43/2020 & O.M.P. (COMM) 63/2020 Page 10 of 52
impugned Award No. 302/03 on 31.04.2008 (O.M.P. (COMM)
43/2020) and impugned Award No. 301/03 on 21.04.2008 (O.M.P.
(COMM) 63/2020).
58. The preliminary objection of limitation against the present petitions is
misconceived as documents placed on record in the Arbitral records
shows endorsement that the signed copies of the impugned Awards
were received by the BSNL on 21.04.2008, which are reproduced as
under:
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Digitally Signed
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59. Thus, the present petitions which were filed on 18.07.2008 are filed
within the prescribed limitation period.
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60. In this view, the preliminary objection raised by BWL to oppose the
maintainability of the present petitions stands rejected.
SCOPE OF INTERFERENCE UNDER SECTION 34 OF THE ACT
61. The scope of interference under Section 34 of the Act is now clearly
established. The Court is not required to sit in appeal as an Appellate
Court over the Award, and it can neither reappreciate the evidence nor
reinterpret the terms of the contract, when the view already taken by the
arbitrator is a probable and possible one. Judicial intervention by Court
with the Award is permissible only on limited and specific grounds, as
encapsulated under Section 34 of the Act. The Court is not
required/empowered to reappreciate evidence or substitute its own view
with that of the Arbitral Tribunal. It is a settled position of law that
Section 34 of the Act, embodies the principle of minimal judicial
interference, thereby preserving the foundational precept of the Act, the
finality and efficacy of Arbitral Awards. The Hon’ble Supreme Court
has recently observed this scope of interference in the judgment of
Consolidated Construction Consortium Ltd. v. Software Technology
9
Parks of India , the relevant paragraphs of which reads as under:
“46. Scope of Section 34 of the 1996 Act is now well
crystallised by a plethora of judgments of this Court.
Section 34 is not in the nature of an appellate provision. It
provides for setting aside an arbitral award that too only
on very limited grounds i.e. as those contained in sub-
sections (2) and (2-A) of Section 34. It is the only remedy
9
(2025) 7 SCC 757.
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for setting aside an arbitral award. An arbitral award is
not liable to be interfered with only on the ground that the
award is illegal or is erroneous in law which would
require re-appraisal of the evidence adduced before the
Arbitral Tribunal. If two views are possible, there is no
scope for the court to re-appraise the evidence and to take
the view other than the one taken by the arbitrator. The
view taken by the Arbitral Tribunal is ordinarily to be
accepted and allowed to prevail. Thus, the scope of
interference in arbitral matters is only confined to the
extent envisaged under Section 34 of the Act. The court
exercising powers under Section 34 has per force to limit
its jurisdiction within the four corners of Section 34. It
cannot travel beyond Section 34. Thus, proceedings under
Section 34 are summary in nature and not like a full-
fledged civil suit or a civil appeal. The award as such
cannot be touched unless it is contrary to the substantive
provisions of law or Section 34 of the 1996 Act or the
terms of the agreement. ”
62. At the outset, Mr. Singh, learned Senior Counsel for BWL, states that
the petitions are sans merit , as BSNL has failed to establish and prove
any specific ground of scrutiny under Section 34 of the Act. The
impugned Awards are detailed Awards substantiated by the
evidence/documents available on record passed after taking into
consideration the contentions of the parties and the same does not
suffer from any vices as enumerated under Section 34 of the Act
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warranting interference by this Court. The findings of the Arbitrator
are plausible and therefore cannot be interfered with under the Section
34 jurisdiction.
63. With the above scope of Section 34 of the 1996 Act in mind, I shall
now deal with the rival contentions.
PRICE REDUCTION
64. The core challenge of BSNL in the present petitions is based on the
premise that BSNL is entitled to impose price reduction by virtue of the
conditional extensions granted to BWL, which has, in effect, novated
the original contract.
65. The contentions and controversy surrounding both the impugned
Awards are the same i.e., the issue of price reduction in view of the
extensions granted.
66. BSNL has assailed the findings of the Arbitrator in both the impugned
Awards for being perverse and against public policy on three fold
grounds, which needs to be analysed for the purpose of resolving this
controversy:
i. The original Contract between the parties stood novated by
consent of both the parties and thus, Section 62 of the Contract
Act applied.
ii. BWL by supplying the goods after extensions has by its conduct
accepted the conditions/terms on which extensions were granted
within the meaning of Section 8 of the Contract Act.
iii. The Arbitrator failed to appreciate and apply Section 9 of the
1930 Act in the light of the factual scenario of the present case.
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67. For the sake of intelligibility, I shall now test both the impugned
Awards on the touchstone of Section 34 of the Act in view of the
general and specific submissions made by BSNL.
O.M.P. (COMM) 43/2020 (Arising out of A.A. No. 302/03)
68. As summarised above, the case of BSNL is based on a very specific
point that the extensions granted to BWL coupled with condition of
levy of liquidated damages and price reduction has novated the original
contract by virtue of which the Arbitrator has erred in ruling that BSNL
was not entitled to impose price reduction.
69. The Arbitrator qua this issue of price reduction in the Award,
commenced his adjudication by examining Clause No. 13 of GCC, the
Arbitrator then perused Clause Nos. 11.3 and 12 of GCC along with
Clause Nos. 3 and 5 of advance purchase order and Clause No. 7 of the
purchase order, while also considering the submissions of both the
parties with respect to interpretation of these clauses. The Arbitrator
further took into consideration the reliance placed by BSNL on Exhibit
RW1/11 and on Section 9 of the 1930 Act. Upon a comprehensive
consideration of the aforesaid terms of the Contract, evidentiary
material and applicable statutory provisions, and in light of evidence of
constant resistance to price reduction, the Arbitrator returned a
categorical finding that BWL never agreed to this unilateral amendment
to the Contract relating to price and the same is beyond the terms of the
Contract. The relevant portions of the Award reads as under:
“Coming to the question of price reduction, as already noticed
above, the main question is as to whether the Respondent could,
in terms of the contract, reduce the price on account of non-
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delivery of the equipment in time. It may be noted that the total
price reduction comes to Rs.19,30,568/-.
Before I proceed to come into grip with this question a few
clauses in the contract need to be noticed. The first such clause is
Clause No. 13 in the General (commercial) Conditions of
Contract. It runs as under: (page-47)
Clause 13: CHANGES IN PURCHASE ORDER:
Clause 13.1:- The purchaser may, at any time, by a written
order given to the Supplier, make changes within the
general scope of the contract in any one or more of the
following:
(a) Drawings, designs or specifications, where Goods to be
furnished under the Contract are to be specifically
manufactured for the purchaser;
(b) The method of transportation or packing;
(c) The place of delivery;or
(d) The services to be provided by the Supplier.
Clause 13.2: If any such change causes an increase or
decrease in the cost of, or the time required for the
execution of the contract an equitable adjustment shall be
made in the Contract Price or delivery schedule, or both,
and the Contract shall accordingly be amended. Any
proposal by the Supplier for adjustment under this clause
must be made within thirty days from the date of the receipt
of the change in order.
Before referring to other relevant clauses I may mention that it
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was contended by the learned Counsel for the Claimant that
under the above mentioned Clause 13, no right was vested with
the Respondent to change the Purchase Order as far as the
question of price is concerned.
Since, during arguments reference was also made to Clause 11.3
and so also to Clause 12 of the said General Conditions, I may
as well as deal with them at this very stage. Clause 11.3 which
finds mention under the sub-head payment terms provides as
under:-
Clause 11.3:- "Any increase in taxes and other statutory
duties/levies after the expiry of the delivery date shall be to
the contractor's account. However benefit of any decrease
in these taxes/duties shall be passed on to the Purchaser by
the supplier".
It was argued on behalf of the Claimant that even under this
clause only taxes and other statutory duties/levies after of
the expiry of the delivery date could effect the pocket of the
contractor.
Coming to Clause 12.1 which is under the sub-head "prices" it is
provided as under:
Clause 12: PRICES…
….
On the basis of the above said Clause 12 it was argued by Mr.
Malhotra that price once fixed was to remain valid till the period
of delivery and that where the supply was delayed and made after
delivery period only the advantage of reduction of tax / duty
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could be enjoyed by the purchaser and further that no benefit of
increase in price was permitted to the supplier even in a case of
increase in tax/duty. In short thus it was argued that even under
Clause 12 the Respondent had no power or authority to reduce
the price. However, on the other hand, Mr. Sameer Aggarwal
relying upon the above-quoted Clause 12(ii)(a) and Clauses 3
and 5 of the Advance Purchase Order and Clause (7) of the
Purchase Order, contended that the price which had been fixed
was to remain valid only for the period of delivery and that this
being the position there was no bar to reducing the same after
the period of delivery. Clauses 3 and 5 of the Advance Purchase
Order and Clause 7 of the Purchase Order run as under:-
Clause 3:- Any increase in taxes and other statutory duties /
levies after the expiry of delivery date shall be to
contractors account. However, benefit of any decrease in
these taxes/ duties shall be passed on to the purchaser by
the supplier.
Clause 5: Delivery Schedule: The supply of goods shall
commence immediately on placement of Purchase Order
and be completed by 28.2.97. Delivery Schedule indicated
herein shall be firm and not subjected to any change.
Clause 7:
Prices: Total value of the order shall be Rs. 4,10,97,797.76
as per annexure "A". The unit prices given in the annexure
"A" are inclusive of ED, ST & other statutory duties / levies
etc and Packing & Forwarding charges, Freight &
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Insurance charges.
Any increase in taxes and other statutory duties / levies after
the expiry of delivery date shall be to the contractors
account. However benefit of any decrease in these taxes
/duties shall be passed on to the purchaser by the supplier.
My attention was also drawn to the affidavit of Sh. Razi Ahmad
th
dated 28 November, 2003 in which it is stated that the Claimant
itself had demanded payment with regard to the stores supplied
after original delivery period as per the provisional prices
intimated by the deponent, and to the letter of the Claimant itself
which was produced by Sh. Razi Ahmad through his affidavit and
which is marked at RW 1/11. The perusal of the RW 1/11 (page-
56 with the affidavit of Sh. Razi Ahmad) would go to show that
the whole of the letter has not been produced and only what is
purported to be para 2 of the letter has been produced. However
the relevant portion of said para 2 of the letter is as under:
"The bills against remaining material which has been
delivered after original D.P. may please also be passed as
per provisional prices intimated by D.O.T.".
I will be dealing in some detail with this letter also at a later
stage.
th
The provisional prices were intimated by D.O. T. on 6 March,
th
1997 (page-70) and on 11 September, 1997 (pages 89 and 90).
My attention was also drawn to the letter of the Claimant dated
th
5 June, 1997 Exhibit RW 1/9 (page-52 & 53 with affidavit of Sh.
Razi Ahmad) and more particularly to the following appearing in
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Signing Date:01.07.2026
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the letter:
“The supplies made within the original delivery schedule
should not attract all the provisional price which infact was
given be the extended delivery schedule with 1.D charges
vide DOT's letter dated 6.3.97”.
It was argued by Mr. Aggarwal that by this letter the Claimant
admitted that there could be reduction in price of the supplies
made after original delivery schedule. It may however be noticed
that in the cross-examination of Mr. Razi Ahmad while stating
that reduction in price could be due to reduction in taxes and/or
reduction in market price, he has proceeded to state that there
were three periods in the supply of the material. In the case of
first supply there was no reduction but in the second period
reduction was on account of reduction in taxes and that in the
third period only reduction was due to lower rate in new tender
opened during that period. He has further proceeded to state that
st nd
the second period was from 1 March, 1997 to 22 April, 1997.
In other words as per Mr. Razi Ahmad for the supplies made
st nd
during the period 1 March, 1997 to 22 April, 1997 the
reduction in price was only on account of reduction in taxes. If
the argument of Mr Aggarwal that delivery to the Respondent
and not to the carrier would amount to actual delivery is
accepted and which I do accept, then, is that case, there was no
st nd
supply daring period of 1 March, 1997 to 22 April, 1997. If
rd
that be so then the supplies made from 23 April, 1997 onwards
only would attract the third period and from the recorded
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Signing Date:01.07.2026
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nd
appears that after 22 April, 1997, as per the Respondent, the
following deliveries were made as stated in para 2.7 page-8 of
the Statement of Claim.
Para 2.7 The Claimant submits that the quantity of 134 Kms.,
for which the delivery extension was sought by the Claimant,
was also manufactured by Claimant before February 28, 1997
and was offered for inspection within the extended schedule.
The Respondents however, agreed to do the inspection only
around end of March 1997. Out of the total quantity of 134
Kms., 41.180 Kms. and 27.884 Kms. were cleared on March
29, 1997 and March 31, 1997 respectively and balance 64.943
Kms. was cleared on April 3, 1997 and therefore, the entire lot
was dispatched by the Claimant on or before April 3. 1997.
The details with respect to the dispatch of last lot of 134 Kms.
of 12F. Cables are given as under:
Qty. Offered Our Offr. Ltr.No. Inspe. Cert. Date of Date of Mtrl.
Date Desp Rechd at
41.80 Kms. 078, 28/3/97 TC/SGI/96-97/78. 29/3/97 29/3/97 Hassan on
23/04/1997
27.884 Kms. 083. 30/3/97 TC/SGI/96-97 83.31/3/97 31/3/97 Hassan on
23/4/97
64.943 Kms. 084. 31/3/97 TC/SGI/97-98/1,3/4/97 3/4/97 Bangalore on
25/4/97,7/5/9
7, & 22/8/97",
Digitally Signed
By:SAHAJ PREET KAUR
Signing Date:01.07.2026
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Mr. Aggarwal drew my attention to the Purchase Order dated
14th August, 1997 pertaining to the Claimant itself (page-44)
which, according to him, shows that as per the Claimant itself the
price quoted was Rs. 56764.60/- with effect from 23rd April,
1999. As per Mr. Aggarwal this has to be treated as the market
price prevailing at that time and that this was the price which
was paid to the Claimant on 11th September, 1997. Мr.
Aggarwal also drew my attention to Section 9 of the Sales and
Goods Act, 1930 and pointed out that the price fixed in the
contract being only for the specified period and not for supplies
made thereafter, therefore, under Section 9 of the said Act the
price could be as determined during the course of dealings
between the parties. It was contended that as in every letter of
extension of time the Respondent had made clear that the price
for the supplies made during the extended period would be the
prevailing market price and as the Claimant raised no objection
to it and rather made supplies without any protest to that
condition, it must be taken that the price with regard to the
supplies made during the extended period, was taken to be that
which was the market price at the relevant time. In support he
again referred to RW 1/11, a letter to which reference has
already been made by me above.
The contentions raised by Mr. Aggarwal need to be looked into
in some detail. Undoubtedly, sub-section(2) of the section 9 of
the Sale of Goods Act, 1930 (hereinafter referred to as the Act)
as the price in this case was fixed as would be borne out from the
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contract documents already referred to above. The contract did
not leave the price open to further negotiations. Clause 12(ii)(a)
makes it clear that the price once fixed will remain valid for the
period of delivery and that increase and decrease of taxes and
other statutory duties will not affect the price during the period
of delivery. It was argued by Mr. Aggarwal, and as noticed
above, that the price so fixed was to remain valid "for the period
of delivery" only and not thereafter. But then, to my mind, this
clause cannot be read in isolation. Significantly clause 12(1)(a)
debars the supplier from claiming price "higher from the prices
quoted by the supplier in his Bid". Though it could but it does not
invest the purchaser with the right to reduce the price already
agreed. Clause 12.1 (1)(b) does give the right to the purchaser to
ask for reduction in price but only in case of "revision of
statutory Levies/Taxes" and not otherwise. Though Clause
12.1(1)(b) uses the expression "supply period" and not "period of
delivery" as used in 12(1)(ii)(a) or "delivery period" as used in
12(1)(i)(b) since "supply" means act of supplying, furnishing,
providing or distributing, I am inclined to hold that it refers only
to the delivery period as fixed in the contract and not to the
extended period more so because the extended period is
specifically taken care of in Clause 12(1)(ii)(b)
Right to reduce the price is when there is "revision of statutory
levies / taxes during the supply period. In case of "delayed
supplies" made "after delivery period" the contract gives no right
to the purchaser to ask for reduction in the prices. Under Clause
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12.1(ii)(b) the only thing provided is that in case of delayed
supplies "after the delivery period" the "advantage of reduction
of tax/duty" would be passed on to the purchaser "and that "no
benefit of increase in price will be permitted to the supplier if
there is any increase in tax/duty". The clause goes no further.
Does it not show that in case of "delayed supplies" made "after
delivery period" also the price fixed would stand with the only
concession that the "advantage" of reduction of tax/duty would
be passed on to the purchaser? To my mind if Clauses 11.3 and
12 and Clause 3 of the Advance Purchase Order read with
Clause 7 are read together what would emerge out is as under:
"The price fixed…
…
… of the purchaser".
But then this does not finish the matter here. It may be recalled
that it was also the contention of Mr. Aggarwal that the
Respondent had agreed to reduction in price with regard to the
delayed deliveries.
In support, and as already noted above, reference was made to
letter Exhibit RW-1/11. It need again be mentioned that page-1 of
the letter has not been placed on the record. It is only page-2
which has been produced. Though page-2 is not disputed by the
other side but during arguments it was submitted by Mr.
Malhotra that the first page of RW-1/11 had been intentionally
kept back and that what is stated in the page which has been
produced given a picture which is not complete. It was argued
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that the Claimant had consistently been taking the plea that the
price originally fixed was firm and called for no variation and
the Claimant had asked for release of money in Exhibit RW-1/11
"as per provisional prices without giving up its stand" and that
as such asking for payment as per provisional prices pertaining
to material delivered after the original delivery period must be
taken to be not a categorically agreement to accept those
provisional rates. In this regard my attention was also drawn to
th
the statement affidavit of Mr. Sunil Khetawat dated 9 of
February, 2004 be states that the Claimant was "forced" to ask
for passing of bills as per provisional prices "as otherwise the
Respondent would not have made any payments to the Claimant".
An incomplete letter, under the circumstances, would not inspire
confidence. More so in view of the affidavit of Mr. Sunil
Khetawat as referred to above. More so when we have on the
record number of letters from the Claimant consistently taking
the stand that the prices fixed were firm and not subject to
variation. That the Claimant had never categorical agreed to the
unilateral reduction of price is clearly borne out from its letter
June 28, 1991 (Exhibit-CW-1/25) in whit the Claimant asserted:-
On going through the contract, we understand that for any
delay L/D would be calculated as per terms and conditions
as mentioned in the contract. But no where it is mentioned
that the prices would accordingly change for aforesaid
reason, if the material is despatched within the extended
delivery schedule
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By:SAHAJ PREET KAUR
Signing Date:01.07.2026
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As per Clause 12 of the General Conditions of the Contract
it is very clearly mentioned that (Quote “the prices once
fixed shall remain valid for the paid of delivery. Any
increase and decrease of taxes and other statutory duties
will un affect the price during this period.
In case of delayed supplies after delivery period the
advantage of reduction of duty, would be passed on to the
purchaser and no benefit of increase in price will be
permitted to the supplier if there is any increase in tax/duty"
unquote)
From the above we understand that only on account of
decrease tax/duty that the prices would tend to change.
Therefore, the fixation of price w.e.f. 23.04.97 onwards as
per Annexure- AA-1 does not seem to be applicable on us as
material was despatched with in the extended delivery
schedule.
Reference may also be made to letter of the Claimant dated
August 14, 1997 which first make reference to the revision made
in prices and to the stand of the Claimant that even that revision
would apply certain supplies and then to the actual stand taken
by the Claimant. And it is taken in following words:-
On going through the contract, we understand that for any
delay L/D would be calculated as per terms and conditions
so mentioned in the contract. But no where it is mentioned
that the prices would also accordingly change for aforesaid
reason, if the material is despatched within the extended
Digitally Signed
By:SAHAJ PREET KAUR
Signing Date:01.07.2026
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delivery schedule.
As per Clause 12 of the General Conditions of the Contract
it is very clearly mentioned the (Quote “the prices once
fixed shall remain valid for the period of delivery. Any
increase and decrease of taxes and other statutory duties
will not affect the price during this period.
In case of delayed supplies after delivery period the
advantage of reduction of tax/duty would be passed on to
the purchaser and no benefit of increase in price will be
permitted to the supplier if there is any increase in tax/duty"
unquote).
From the above we understand that only on account of
decrease in tax/duty that the prices would tend to change.
Therefore, the fixation of price w.e.f. 23.04.97 onwards as
per Annexure- AA-I does not seem to be applicable on us as
material was despatched with in the extended delivery
schedule.
We find the same stand…
….
…terms of the contract.
I may lastly also refer to the Advance Purchase Order which
shows that the contract was on a fixed price and there could be a
variation in this fixed price only on account of marginal changes
taking place “due to engineering of roots”. Thus, in short, under
the contract the Respondent had no power or authority to reduce
the price merely on the ground that the time for delivery had
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been extended on account of delay in honouring the delivery
schedule. Reference, in this connection, may also be made to
Clauses 15 and 16 of the General Commercial) Conditions of
Contract also. While clause 15 deals with delays in the supplier’s
performance, clause 16 relates to liquidated damages. Clauses
15 and 16 run as under:-
15. DELAYS IN THE SUPPLIER'S PERFORMANCE
15.1 Delivery of the Goods and performance of services
shall be made by the Supplier in accordance with the time
schedule specified by the purchaser in its Purchase Order.
In case the supply is not completed in the stipulated delivery
period, as indicated in the Purchase Order, purchaser
reserves the right either to short close/cancel this purchase
order and/or recover liquidated damages charges. The
cancellation/short closing of the order shall be at the risk
and responsibility of the supplier and purchaser reserves
the right to purchase balance unsupplied item at the risk
and cost of the defaulting vendors
15.2 Delay by the supplier in the performance of its
delivery obligations shall render the supplier liable to any
or all of the following sanctions, forfeiture of its
performance security, imposition of liquidated damages
and/or termination of the contract for default.
15.3 If at any time during performance of the Contract,
the Supplier or subcontractor(s) encounters conditions
impending timely delivery of the goods and performance of
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service, the Supplier shall promptly notify the Purchaser in
writing of the fact of the delay, its likely duration and its
causes(s). As soon as practicable after receipt of the
Supplier's notice, the Purchaser shall evaluate the situation
and may at its discretion extend the period for performance
of the contract after mutual discussion with the supplier
Clause-16: LIQUIDATED DAMAGES
16.1 The date of delivery of the stores stipulated in the
acceptance of tender should be deemed to be the essence of
the contract and delivery must be completed not later than
the dates specified therein. Extension will not be given
except in exceptional circumstances. Should, however,
deliveries be made after expiry of the contract delivery
period without prior concurrence of the Purchaser, and be
accepted by the consignee, such deliveries will not deprive
the Purchases of his right to recover liquidated damages
under clause 16.2 below. However, when supply is made
within 21 days of the contracted original delivery period,
the consignee may accept the stores and in such cases the
provision of clause 16.2 will not apply
16.2 Should the tenderer fail to deliver the stores or any
consignment thereof within the period prescribed for
delivery the Purchaser shall be entitled to recover ½ % of
the value of the delayed supply Re each week of delay or
part thereof, subject to maximum of 5% of the value of the
delayed supply, provided that delayed portion of the supply
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does not in any way hamper the commissioning of the other
systems. Where the delayed portion of the supply materially
hampers installation and commissioning of the other
systems, L/D charges shall be levied as above on the total
value of the Purchaser Order. Quantum of liquidated
damages assessed and levied by the purchaser shall be final
and not challengeable by the supplier.
A bare perusal of Clause 15 would go to show that in case of
delay in the supplier's performance the purchaser had the right
either to short close/cancel the Purchase Order and/or recover
liquidated damages charges and further that in case of delay by
the supplier in the performance of its delivery, the supplier was
to be liable to any or all of the following sanctions:
(i) Forfeiture of its performance security
(ii) Imposition of liquidated damages and or
(iii) Termination of contract of default.
As noticed above Clause 16 which deals with liquidated
damages, provides that where the delivery is not made within the
prescribed period the purchaser shall be entitled to liquidated
damages Significantly, neither Clause 15 or Clause 16 invests
the purchaser with any right to reduce the price in case of delay
in performance of the contract
I may mention that during arguments reference was made by Shri
Sameer Aggarwal Advocate to O.N.G.C. Ltd. v. Saw Pipes Ltd.
AIR 2003 SC. 2629, Union of India v. M/s Free India Dry
Accumulators Ltd. 1993 (25) DRJ 354, V/O
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"TVAZHPROMEXPORT" v. Mukand Limited 2005 (3)
Arbitration Law Reporter 406, Suchita Steel (India) v. Union of
India 114 (2004) DLT. 351, Maharashtra Sute Electricity Board
v. Sterlite Industries (India) &Anr. 2002 (1) Cur L. J. (CCR) 477,
Chaudhary Construction Company v. D.D.A 1998 (44) D.R.J.
524, The Divisional Controller, KSRTC v Mahadeva Shetty
&Anr. 2004 (1) U.J. 44 (SC). There cannot possibly any general
with the proposition of law laid down in those judgments but then
this case been distinguishable on fact I have been examined the
same is the light of its own facts to keeping in view the
propositions of law so will established the judgments referred to
above.
For the reasons recorded above I hold that the Respondent was
not justified in resorting to price reduction. The amount deducted
on account of price reduction is Rs. 1930568=00. I also hold that
the Respondent would have been entitled to recover liquidated
damages on the delayed supplies at the rate of 5% of the original
price of the delayed supplies. So calculated the amount of
damages for delayed supply would come to Rs. 496720=00. The
Respondent however actually deducted a sum of Rs. 400192=00
towards liquidated damages calculated at reduced price.
However, there is no claim by the Respondent to recover the
outstanding amount calculated at original price nor such claim
was put up during arguments. The Respondent is thus liable to
payback to the Claimant a sum of Rs. 1930568=00 recovered on
account of price reduction. I therefore pass an Award in favour
Digitally Signed
By:SAHAJ PREET KAUR
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of the Claimant and against the Respondent for the recovery of
the said sum of Rs. 1930568=00. Keeping in view the complexity
of the issues involved and the facts and circumstances of the
case. The Claimant shall be entitled only to pendentelite interest
on the said amount at the rate of 9% per annum besides interest
on the principal amount at the rate of 9% per annum from the
date of the Award till realization. No account has been given
with regard to legal fee and the other expenses. However,
keeping in view the effective sittings the Claimant is also allowed
a sum of Rs. 2,00,000/- towards cost.”
(Emphasis Supplied)
70. The effect of Novation of Contract is governed by Section 62 of the
Contract Act, which reads as under:
“62. Effect of novation, rescission, and alteration of
contract.— If the parties to a contract agree to substitute a
new contract for it, or to rescind or alter it, the original
contract, need not be performed.”
71. The term Novation has been defined in the judgment of Benjamin
10
Scarf v. Jardine , and quoted with approval by the Hon’ble Supreme
Court in Sasan Power Ltd. v. North American Coal Corpn. (India) (P)
11
Ltd. , the relevant paragraph of Sasan Power (Supra) reads as under:
“23. In law, “novation” means—
“… there being a contract in existence, some new contract
is substituted for it, either between the same parties (for that
10
[L.R.] 7 App. Cas. 345.
11
(2016) 10 SCC 813.
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might be) or between different parties, the consideration
mutually being the discharge of the old contract”. [ Lord
Selborne, L.C. in Benjamin Scarf v. Jardine, (1882) LR 7
AC 345 at p. 351.]”
72. From a conspectus of the aforesaid, it is clear that the most crucial
element for effecting a novation of a contract is mutual agreement
between the parties, no such novation/alteration can be effected unless
the parties to an agreement are at consesnsus ad idem.
73. Thus, in the present matter, the original Contract would only have been
novated when the parties would have mutually agreed to discharge the
old contract and accept the new one. No unilateral novation by
imposing any condition can possibly be done by any party to bind the
other.
74. In this view, the question of fact, whether BWL agreed to accept the
condition of price reduction imposed by grant of extension, has already
been determined by the Arbitrator.
75. The Arbitrator in his findings examined Clause No. 13 of the GCC, and
turned on to an important Clause No. 12 which relates to prices and
then while considering the submission of BSNL with respect to Section
9 of the 1930 Act, categorically returned the findings that the Contract
between the parties was firm and did not contain any scope for
renegotiation. The Arbitrator read Clause No. 12.1 (ii)(a) with Clause
No. 12.1(i)(a) to hold that these clauses restricts the supplier from
claiming price higher from the quoted price but it does not confer any
power upon the purchaser to reduce the price agreed between the
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parties. Although Clause 12.1(i)(b) of the GCC vests the right of
reducing the prices with the purchaser but it is only limited to cases
where there is revision of statutory levies/taxes. Clause 12 reads as
under:
“Clause 12: PRICES:
Clause 12.1:-(i)(a) Prices charged by the Supplier for
Goods delivered and services .. performed under the
Contract shall not to be higher from the prices quoted by
the Supplier in his Bid.
(b) In the case of revision of Statutory Levies/ Taxes during
the supply period the Purchaser reserves the right to ask for
reduction in the prices.
(ii)(a) Price once fixed will remain valid for the period of
delivery Increase and decrease of taxes and other statutory
duties will not , affect the price during this period.
(b) In case of delayed supplies after delivery period the
advantage of reduction of tax/duty would be passed on to
the purchaser and no benefit of increase in price will be
permitted to the supplier if there is any increase in
tax/duty.”
76. The Arbitrator then made a categorical finding that the right to reduce
the price is only available in case of revision of statutory levies/taxes
during the period of supply, and there is no such right to reduce price in
absence of such revision of taxes after the delivery period. The
Arbitrator read Clause Nos. 11.3, 12, 13 of GCC along with Clause No.
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3 of advance purchase order and Clause 7 of purchase order to
summarise the position of contractual terms in the following words:
“The price fixed would remain firm though it may be
reduced in case of revision of statutory Levies/Tax during
the supply (delivery) period and where the delivery is after
the “delivery period" as fixed in the contract, only the
"advantage" of reduction of tax/duty would be passed on to
the purchaser. The contract provides for nothing less
nothing more. And, this being the position no right vests
with the purchaser to reduce the price only on the ground
that market price has gone down. And this being the
contractual obligation, section 9 of the Sale of Goods Act
does not come to the rescue of the purchaser.”
(Emphasis Supplied)
77. Qua the findings of the Arbitrator with respect to Clause No. 12, it is
the case of BSNL that the Arbitrator has not taken a plausible view as
the prices in accordance with that clause were not to be changed during
the period of delivery but afterwards it could have changed because the
original Contract stood amended by virtue of the conditional extensions
granted. The Clause No. 12 more particularly Clause No. 12(ii)(a) stood
superseded by the new conditions which had been accepted by the
BWL.
78. These contentions of the BSNL again revert us back to the core of the
controversy that is whether BWL has accepted the condition of price
reduction contained in extensions granted, resulting in novation of the
original contract.
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79. I find it crucial to state that by way of the present petitions, BSNL has
fleetingly raised several contentions which have already been
adjudicated by the Arbitrator with detailed findings. These petitions are
in the nature of seeking reappreciation of evidence which would require
this Court to travel beyond the jurisdiction conferred upon itby Section
34 of the Act.
80. The Arbitrator while dealing with this issue of acceptance of the
condition of extension, in particular appreciated multiple evidences
placed on record (letters dated 08.10.1997, 18.12.1997, 24.02.1998,
03.11.1998, 30.07.1999, 06.08.1999, 21.10.1999, 18.10.2000) of
consistent resistance and disapproval by BWL to the proposed price
reduction, and relying on these evidences concluded that in his view
BWL never agreed to this unilateral amendment/condition imposed
upon it with the extensions granted. Thus, the Arbitrator held price
reduction to be beyond the terms of the Contract. Relevant portions of
the Award reads as under:
“We find the same stand taken by the Claimant in its letter
dated October 8, 1997 (Exhibit- CW-1/28 and in letter of
December 18, 1997 (Exhibit-CW-1/29). Reference in this
respect take it made to letter of the Claimant dated
February 24, 1998 (Exhibit-CW-1/30) in which too the
Claimant has asserted that the prices once fixed would not
be subject to change. The same position was taken in the
letter of November 3, 1998 (Exhibit-CW-1/31 and to the
other letters of July 30, 1999 (Exhibit-CW-1/32), August 6,
1999 (Exhibit-CW-1/33). I am also in this connection
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referred to the letter of the Claimant dated October 21,
1999 (Exhibit-CW-1/37) which clearly points out that the
price reduction and deduction made on that account was
"totally illegal and unjustified" and that the price once fixed
were to remain firm except in the case of reduction in
custom duty/excise duty/taxes/levies. Lastly reference may
also be made to the legal notice on October 18, 2000 which
too was to the same effect. Thus keeping in view the
consistent stand taken by the Claimant and as referred to
above much cannot be allowed to be made out of the fact
that the Claimant had asked for payments at the reduced
provisional price. This is more so on account of the
explanation given by Mr. Khetawat. I may also mention that
in view of the material on record it does appear that the
Claimant never agreed to unilateral amendment in the
terms of the contract relating to price. Consequently and
there being no cogent evidence on the record to prove that
reduction it price was account of any reduction in taxes or
levies, I am inclined to hold that the Respondent had no
right to unilaterally reduce the price once fixed and that too
beyond the terms of the contract.”
(Emphasis Supplied)
81. Notably, from a perusal of the Award it is clear that the Arbitrator has
not ignored any relevant Clause or material document. The Arbitrator
has conducted a detailed analysis of all the Clauses and correspondence
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exchanged between the parties, and has marshalled these materials to
reach a reasoned conclusion by proper appreciation.
82. Under Section 34 of the Act, the scope of interference is very narrow
and in that jurisdiction this Court is neither required nor entitled to
reappreciate a finding of fact which essentially require evidentiary
assessment, when the finding of arbitrator is a plausible view and
substantiated on evidence available on record.
83. Thus, in view of this finding of the Arbitrator which deserves to be
upheld, I find, no reasons to infer that there was any mutual agreement
between the parties to discharge the original Contract resulting in
novation by virtue of grant of extensions.
84. BSNL has also stated that in the present case, the condition of
extensions i.e., the condition of price reduction was accepted by
conduct of the BWL in making the requisite supplies(performance of its
obligation under the Contract) as per Section 8 of the Contract Act.
Section 8 of the Contract reads as under:
“8. Acceptance by performing conditions, or receiving
consideration.—Performance of the conditions of a
proposal, or the acceptance of any consideration for a
reciprocal promise which may be offered with a proposal, is
an acceptance of the proposal.”
85. To substantiate the aforesaid submission, reliance is also placed on
Bhagwati Prasad Pawan Kumar (Supra) and more particularly
paragraph No. 19 to state that the Arbitrator has failed to appreciate the
fact that performance of condition (supply) by BWL is acceptance of
the conditional extension by conduct within the meaning of Section 8 of
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the Contract Act. Paragraph No.19 of the aforesaid judgment reads as
under:
"19. It is well settled that an offer may be accepted by
conduct. But conduct would only amount to acceptance if it
is clear (that the offeree did the act with the intention
(actual or apparent) of accepting the offer. The decisions
which we have noticed above also proceed on this principle.
Each case must rest on its own facts. The courts must
examine the evidence to find out whether in the facts and
circumstances of the case the conduct of the "offeree" was
such as amounted to an unequivocal acceptance of the
offer made. If the facts of the case disclose that there was
no reservation in signifying acceptance by conduct, it must
follow that the offer has been accepted by conduct. On the
other hand, if the evidence disclose that the "offeree" had
reservation in accepting the offer, his conduct may not
amount to acceptance of the offer in terms of Section 8 of
the Contract Act. "
(Emphasis Supplied)
86. From a conspectus of the judgment of the Hon’ble Supreme Court as
relied upon by the learned counsel for the BSNL itself, it is clear that
the application of Section 8 i.e., the decision on acceptance by conduct
is a question of fact which needs to be decided after due consideration
of the surrounding circumstances.
87. The judgment of Bhagwati Prasad Pawan Kumar (Supra ) emphasises
that for a conduct to be termed as acceptance it must be unequivocal
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and without reservation, as already categorically stated that while
making supplies under extensions granted, BWL has specifically
objected to the imposition of condition of price reduction.
88. Another limb of the aforesaid contention is that if an offer is made
coupled with a condition, then the offeree cannot accept the benefit
without accepting the said condition. This contention, to my mind, does
not support the case of the petitioner as in the present case, the
Arbitrator has returned categorical findings that the price reduction was
beyond the terms of the original Contract itself and the same was in fact
resisted to by the BWL, when extensions were granted. Hence, it is not
a case where BWL accepted the offer of BSNL unconditionally or
without reservations. The Arbitrator in the present case has interpreted
the terms of the Contract, and has taken a plausible view and the same
cannot be reappreciated under the Section 34 jurisdiction. Hence, the
reliance placed on judgments of BPL Mobile (Supra) and Amrit
Banspati (Supra) is misconceived.
89. It is also the case of BSNL that the Arbitrator has erred in not
appreciating and applying Section 9 of the 1930 Act while adjudicating
the controversy at hand. As per Section 9 of the 1930 Act, the prices
fixed in the contract are only for a fixed period and not for the supplies
made thereafter. Section 9 of the 1930 Act reads as under:
“9. Ascertainment of price.—(1) The price in a contract of
sale may be fixed by the contract or may be left to be fixed
in manner thereby agreed or may be determined by the
course of dealing between the parties.
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(2) Where the price is not determined in accordance with
the foregoing provisions, the buyer shall pay the seller a
reasonable price. What is a reasonable price is a question
of fact dependent on the circumstances of each particular
case.”
90. BSNL has reiterated the same contentions which were already raised
and categorically discussed by the Arbitrator in his Award (as
reproduced above). Thus, by way of fleetingly raising this contention
BSNL is only seeking reappreciation by this Court, which is not
permissible.
91. Additionally, the finding of the Arbitrator qua application of Section 9
is based on reasons and is a plausible conclusion drawn from the terms
of the Contract itself. The Arbitrator held that in the present case the
terms of Contract are such that they left no scope for further negotiation
on prices in terms of Section 9 of the 1930 Act. The relevant portion of
the Award is already reproduced in paragraph No. 73 of this judgment.
92. The Arbitrator has interpreted the terms of the contract, the provisions
of the Contract Act, and of the 1930 Act. To my mind, the views and
findings of the Arbitrator are reasonable and plausible, hence, within
the contours of Section 34 of the Act, they do not require any
interference.
93. Another contention of BSNL is that the Arbitrator has failed to
appreciate that BWL was conscious of the fact that the extensions
granted were conditional in nature and thus, by making the requisite
supplies pursuant thereto, it is estopped from challenging the terms and
conditions of the Contract thereafter.
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94. This contention of BSNL cannot be accepted, as estoppel being a rule
of evidence cannot, in its effect, operate to enforce a novation of
contract where consent/agreement is not there. The Arbitrator as
discussed above has categorically appreciated the correspondences and
found out that BWL consistently resisted the proposed price reduction
and never unequivocally accepted the condition even by its conduct.
Moreover, a party cannot be precluded from asserting its contractual
rights merely because it continued to perform the Contract, particularly
when with reservations/protest against the imposition of condition.
95. BSNL has also placed heavy reliance on the judgment of Himachal
Futuristics (Supra) to argue that in somewhat similar circumstances,
similar correspondences were held to modify the original Contract.
However, the reliance placed on the aforesaid judgment is
misconceived as the decision of the learned Single Judge in the said
judgment has already been set aside by the Hon’ble Division Bench in
its judgment dated 17.04.2015 passed in an appeal titled Himachal
12
futuristics communications ltd. v. Bharat Sanchar Nigam Ltd. , the
relevant paragraph of the judgment of Hon’ble Division Bench dated
17.04.2015 reads as under:
“36. Noting that during the extended period of supply price
reduction benefit on account of reduction in customs, duty
and excise has been granted by the learned Arbitrator in
favour of BSNL and simultaneously the action of BSNL to
recover liquidated damages at the contract price has been
12
FAO(OS) 391/2012, pronounced on 17.04.2015.
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upheld by the learned Arbitrator, we allow the appeal and
set aside the impugned decision dated May 30, 2012. OMP
No.427/2006 filed by BSNL is dismissed.”
96. This judgment of Hon’ble Division Bench has also attained finality as
the Hon’ble Supreme Court vide Order dated 10.07.2017 has dismissed
13
the Special Leave Petition preferred against the said judgment.
97. Thus, the said contention does not deserve consideration by this Court
and deserves to be rejected at the threshold itself.
98. It is clear in view of the aforesaid discussion that the interpretation of
terms of a Contract and findings of facts based on evidence is the
exclusive domain of the Arbitrator, this Court under Section 34
jurisdiction cannot interfere with such findings or interpretation when
the same is based on a plausible view and is substantiated by evidence
on record.
O.M.P. (COMM) 63/2020 (Arising out of A.A. NO. 301/03)
99. Major contentions raised by BSNL in this petition are identical to that
of in O.M.P. (COMM) 43/2020 (arising out of A.A. No. 302/03), and
are already discussed above on the identical principle issues of
novation, application of Section 8 of the Contract Act, and Section 9 of
the 1930 Act.
100. Notably, both the Awards were passed by the same Arbitrator on the
same date arising out of identical controversy between the same parties.
101. Since, the controversies in both the petitions are identical, I am not
inclined to burden this judgment by repeating the entire discussion or
13
SLP(C) No. 25894 / 2015.
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analysis in toto . Thus, for the purpose of this petition, I shall confine the
discussion to the impugned Award specific facts and to additional
contentions that survive for consideration, and to examine the findings
of the Arbitrator warranting interference under Section 34 of the Act.
102. The Arbitrator in the present impugned Award also took a similar view
as above and the relevant portions of the impugned Award reads as
under:
“I have already reproduced above Clause 12 dealing with
the question of price. It shows that firm price had been fixed
and the same was to remain valid for the period of delivery
and that price was to remain unaffected either by increase
or by decrease of other statutory duties. It was only in case
of delayed supplies after delivery period that the advantage
of reduction of tax/duty was to pass on to the purchaser.
This is what was the contract. And, as we know by now, the
price for the contracted 610 km quantity was Rs. 84,500/-
per km. What further needs to be noticed is that no
th
reduction in price was sought or claimed on 26 February,
th
1998 when extension was granted upto 19 March, 1998 or
th th
on 30 March, 1998 when extension granted was upto 6
th
April, 1998 or again when extension was granted upto 14
April, 1998. It was only the last extension upto August 9,
1999 that was subject to not only liquidated damages but to
price reduction also. But then this reduction in price was
not on account of any reduction of tax/duty. The price was
reduced on the ground that "prevailing prices" during the
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period were "comparatively less from the approved prices
quoted in the Purchase Order" [see para 19 of the
Statement of Defence]. Clearly thus reduction in price was
neither under Clause 11 nor under Clause 12. Was this
reduction sanctified under Clause 13.2? Surely not Clause
13.2 is subject to Clause 13.1. It is not even pleaded that the
decrease in price was prompted by any of the changes
referred to therein. The reduction in price was thus
unauthorised and rightly saw a prompt protest from the
Claimant. After all the reduction was not only unjustified it
also amounted to change in the terms and conditions of the
contract which could not be done unilaterally.
The Respondents have deducted from the bills a sum of Rs.
44,94,651/- towards price reduction.
For the reasons recorded above I hold that the Respondent
was not justified in resorting to price reduction. The amount
deducted on account of price reduction is Rs. 4494651=00.
I also hold that the Respondent was entitled to recover
liquidated damages on the delayed supplies only at the rate
of 5% of the value of the delayed supplies at original price.
So calculated the amount of damages for delayed supply
would come to Rs. 27,28,857=00. The Respondent however
actually deducted a sum of Rs. 25,42,797=00 by calculating
the price at reduced rate. However, there is no claim by the
Respondent that in case price reduction is taken as not valid
it should be allowed liquidated damages at original price
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nor was this plea taken during arguments. Thus no award
with regard to the difference of Rs. 186060=00 can be
passed in favour of the Respondent, there being no such
claim from its side. The Respondent is thus liable to
payback to the Claimant a sum of Rs. 44,94,651=00
recovered on account of price reduction. I therefore pass an
Award in favour of the Claimant and against the
Respondent for the recovery of the said sum of Rs.
44,94,651=00. Keeping in view the nature of the disputes
raised, their complexity and the facts of the case the
Claimant shall also be entitled to pendentelite interest on
the said amount at the rate of 9% per annum besides
interest on the principal amount at the rate of 9% per
annum from the date of the Award till realization. No
account has been given with regard to legal fee and the
other expenses. However, keeping in view the effective
sittings the Claimant is also allowed a sum of Rs. 200,000/-
towards cost.”
103. The Arbitrator after a perusal of the relevant clauses of the GCC
including Clause No. 12 while dealing with the issue of price reduction
returned categorical findings that it is only after the delivery period that
advantage of decrease in tax/duty was allowed to the purchaser. The
Arbitrator then noted that there was no price reduction condition
appended to the first three extensions granted on 16.02.1998,
30.03.1998, and 06.04.1998. It was only the final extension granted on
10.06.1998 which contained not only a condition for imposition of
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liquidated damages but also of price reduction based on prevailing
prices. The Arbitrator held this condition of price reduction to be
beyond the terms of the Contract and consequently, held it to be
unauthorized.
104. The Arbitrator also in his impugned Award stated a finding of fact that
BWL on 18.06.1998 has promptly expressed its reservation/protest
against the imposition of said condition for granting the last extension
dated 10.06.1998.
105. BWL continued to perform its obligation arising out of the Contract
under protest and the same is clearly visible from a perusal of the letter
dated 18.06.1998, which is reproduced as under:
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106. For the reasons as discussed in the above section of this judgment
(Paragraph Nos. 61 to 95), I am of the view, that the original Contract
in the present petition was not novated by virtue of the conditional
extension being given and for the same reasons as applicable above, in
the present case as well BWL cannot be said to have accepted the
condition of price reduction by its conduct of continued performance as
the same was done “under protest and without prejudice to its rights”.
107. In this view the findings of the Arbitrator not only are reasoned but also
substantiated on evidence on record. Thus, I find no grounds within the
confines of Section 34 of the Act to interfere with the findings of the
Arbitrator.
108. BSNL has also fleetingly raised a contention that the factum of
novation was averred in the reply filed before the Arbitrator but the
Arbitrator did not consider the same.
109. From a perusal of the reply to the statement of Claim filed by the BSNL
before the Arbitrator, it is clear that the whole reply was premised
around the argument that the extension was clearly granted with two
conditions i.e., imposition of liquidated damages and price reduction.
Since, BWL has performed its part of the obligation, it has agreed to the
condition of the extension. Nowhere in the reply, BSNL has averred the
factum of novation of Contract.
110. However, even if it would have been pleaded, it would have been of no
advantage to the case of BSNL because from a perusal of the aforesaid
letter dated 18.06.1998, it is clear that there was no unequivocal
acceptance of the revised extension terms, which could have been
interpreted as novation of the original Contract. Additionally, BWL
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performed its obligation arising out of the Contract “under protest and
without prejudice to its rights”.
CONCLUSION
111. For all the aforesaid reasons, and having found no ground within the
confines of Section 34 of the Act to interfere with the impugned
Awards and set aside the reasoned findings of the Arbitrator, I am of the
view that the impugned Awards do not suffer from perversity, patent
illegality or any other recognised vice warranting interference.
112. Accordingly, the petitions are dismissed in the aforesaid terms, along
with pending applications, if any.
JASMEET SINGH, J
JULY 01, 2026/SS
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