Full Judgment Text
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CASE NO.:
Appeal (civil) 3134 of 2002
PETITIONER:
Hindustan Zinc Ltd
RESPONDENT:
Friends Coal Carbonisation
DATE OF JUDGMENT: 04/04/2006
BENCH:
Arun Kumar & R V Raveendran
JUDGMENT:
J U D G M E N T
RAVEENDRAN, J.
This appeal by special leave is against the judgment
dated 17.8.2001 of the Rajasthan High Court in Civil Misc.
Appeal No. (SB) 227/1997.
2. In pursuance of a tender invitation dated 14.10.1991
issued by the appellant for supply of Metallurgical coke (for
short ’coke’), the respondent submitted its offer dated
8.11.1991. The appellant accepted the said offer and placed a
purchase order dated 16/18.12.1991 on the respondent for
supply of 15,000 MT of coke, to be supplied to its Vizag Unit
and Tundoo Unit. Clause (2) of the purchase order contained
the specifications for the supply of coke and Clause (3) related
to price. The price agreed, exclusive of taxes and duties, was
Rs.2,231/- per MT of coke. The loading charges was Rs.32 per
MT. The transportation charges were Rs.950 per MT for
delivery at Vizag Unit and Rs.120 per MT for delivery at
Tundoo Unit. Therefore, the FOR price was Rs.3,213 per MT
for Vizag Unit and Rs.2,383 per MT for Tundoo Unit. Clause 5
provided for price variation. Sub-clause (i) thereof provided for
variation in prices of coke and sub-clause (ii) provided for
variation in transportation cost. As we are concerned with the
variation in price of coke, Clause 5(i) is extracted below :-
"Price Variation :
(i) For Metallurgical Coke : The Metallurgical coke
price specified in para 3 above is based on the coal
price ruling as on 8.11.1991 (The date of
submission of the offer). In case there is any
increase in the coal price by the Coal Companies
w.e.f. 9.11.1991 and during the currency of contract
period, you will be paid Rs. 1.65 per MT of Met.
Coke for each Re.1/- per MT increase in coal
(coking coal washery) price from the price ruling as
on 8.11.1991 on production of documentary
evidence."
Clause 13 provided for settlement of disputes by arbitration.
3. Coke is the processed product of coal obtained by
carbonization, that is heating coal without air. When burnt,
Coke generates a higher temperature, than coal and produces
very little smoke or ash and is used in blast furnaces. The
coking coal used for manufacturing coke is graded as Steel
Grade I, Steel Grade II, Washery Grade I, Grade II, Grade III
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and Grade IV depending upon the ash content/impurities. The
lesser the ash content/impurities, the higher the grade of coal.
The contract terms (the purchase order) gave only the
specifications of coke to be supplied, that is Fixed Carbon 71%
+/- 2%; Ash 27% +/- 2%; Moisture : 3% maximum; and VM :
1% maximum. The porosity required was 45% +/- 2% and size
4" to 6". The contract did not specify the use of any particular
quality of coal for producing coke of the required specification.
4. The respondent claimed that it used Washery Grade II
for the supplies made between the period 18.12.1991 and
13.7.1992; that it found that Washery Grade II coal was not
suitable for producing the Metallurgical Coke of the
specifications required by the appellant; and that therefore it
switched over to the use of Washery Grade I coal from
14.7.1992 and used the said higher quality coal up to 27.7.1994
when the last supply was made.
5. The appellant granted escalations in price of coke from
time to time by increasing the basic price of coke (Rs.2,231 per
MT) and made payments accordingly. The appellant, however,
granted escalations only on the basis of price variation of
Washery Grade II coal (that is difference between base price of
Washery Grade II coal as on 8.11.1991 and the prevalent price
of Washery Grade II coal) and not with reference to Washery
Grade I coal.
6. The respondent was not satisfied with the price escalation
given by the appellant. There was some correspondence in that
behalf. The respondent ultimately sent a letter dated 16.12.1996
claiming that in regard to 7995.135 MT of Metallurgical Coke
supplied to Vizag Unit from 14.7.1992 onwards, the amount
due on account of escalation was Rs.19,89,977.37. It was
alleged that the Vizag Plant had refused to accept the claim of
the respondent that it were using washery grade I and continued
to give the difference on the basis of the price of washery grade
II. In regard to Tundoo Plant, it was alleged that though the
appellant agreed to the use of washery grade I, payment on
account of escalation was not made and Rs.21,18,355.92 was
due for the supplied made from 14.7.1992. Therefore, the
respondent sought reference to arbitration in regard to its said
claims. The dispute relating to said claims was referred to an
Arbitral Tribunal consisting of Ms. Justice Kanta Bhatnagar,
Mr. B.D. Sharma and Mr. T.S. Vardya as arbitrators.
7. The respondent submitted a claim statement dated
20.5.1997 before the Arbitrators, where the amount claimed
was slightly modified. Respondent claimed Rs.21,47,947.56 in
regard to supplies to Vizag Unit, and Rs.21,18,355.92 in regard
to supplies to Tundoo Unit, in all Rs.42,66,303.48. Respondent
also claimed interest at 21 per cent per annum from the due date
till date of award and from the date of award till the date of
payment. The appellant filed its statement of objections dated
11.7.1997 resisting the claim.
The Arbitral Tribunal passed a reasoned award dated 17.1.1998,
the operative portion of which is extracted below :
1. The claimant is entitled to the escalation in the supply
price of their Met. Coke, in accordance with the price
variation formula given in clause-5 of Annexure-1,
relating to change in price of Coking Coal-Washery
Grade-II upto 14.07.1992, and thereafter in the price of
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Coking Coal-Washery I. The base price for determining
escalation is the price of coking Coal Washery Grade II
ruling as on 8.11.1991. The escalation covers supply of
Met. Coke to both the units of the Respondents viz. Vizag
and Tundoo.
2. a) In regard to the amount of escalation, and the
corresponding quantities the Claimants has submitted
statements vide Schedules 1 and 2. However difference in
respect of certain bill-wise supplies have been pointed out
by the Respondents vide Schedule R-1 and R-2, enclosed
with their HZL/HO/CON/4(9)Arb/3 of 16.08.1997. The
Respondents have not disputed the rest of the figures in
Claimants Schedules 1 and 2. On the other hand, no
supporting evidence has been received from the claimants
to deny the specific variations submitted by the
Respondents which pertain to supplied quantities.
b) Based on the above, we Award the following total
escalation amounts, indicated alongside the accepted
supplies :-
For Vizag : 7987.597 MT. Rs.21,45,591.21
For Tundoo : 7248.040 MT. Rs.20,32,762.15
--------------------
TOTAL Rs.41,78,353.36
=============
3. The Claimant is entitled to receive interest at the rate of
21% per annum on the amount/s found due, from the date/s
they became due, till the date of this Award. The Claimants
is to receive interest at the rate of 18% per annum from the
date of award till realization.
4. Both parties will bear their own cost of Arbitration.
5. This Award is full and final settlement of all claims of the
claimants referred to us for our adjudication."
8. The appellant filed a petition under Section 34 of the
Arbitration and Conciliation Act, 1996 (for short the ’Act’)
numbered as Civil Suit No.2/1998 on the file of the Additional
District Judge (No.II), Udaipur, praying that the said award by
set aside. It contended that the award was contrary to the price
escalation clause contained in the contract. It also submitted
that the amount awarded had been arrived at arbitrarily without
disclosing how the said sum of Rs.41,78,353.36 was arrived at.
9. The trial court by judgment dated 3.2.1999 allowed the
petition in part. The operative portion of the trial court’s
judgment (translation) is extracted below :
"It is, therefore, ordered that Friends Coal Carbonisation is
entitled to get increase in price from Hindustan Zinc Ltd.
on the basis of price increase considering basic price of
washery grade I after 14.7.92 under clause 5. The
difference in the price of washery grade I and washery
grade II on 14.7.92 cannot be considered as price increase
of washery grade I. The price of washery grade I on 8.11.91
shall be considered as base price for increase in price.
The amount payable to Friends Coke Carbonisation by
Hindustan Zinc Ltd. is determined as under :
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1. Vizag Unit 7,987.597 MT Rs. 4,77,806.10
2. Tundoo Unit 7248.040 MT Rs. 6,64,397.80
--------------------
Total Rs.11,42,203.90
=============
M/s Friends Coal Carbonisation will be entitled to get
according to terms of Contract, interest at 21% per annum
on the above mentioned amount from the date on which the
amount is due till date of award and will be entitled to get
interest at 18% per annum on the above mentioned amount
from date of award till realization."
10. The appellant accepted the said decision and paid
Rs.24,17,646/- to the respondent on 6.2.1999 calculated as
follows :
i)
Amount due (to the extent upheld by
the court)
Rs.11,42,203.90
ii)
Interest thereon at 21% P.A. from due
date till date of award
Rs.10,59,143.00
iii)
Interest at 18% P.A. from date of award
till date of payment
Rs. 2,16,299.00
Total
Rs.24,17,646.00
The respondent, however, was not satisfied with the Judgment
of the trial court. It filed an appeal before the Rajasthan High
Court under Section 37 of the Act. A learned Single Judge
allowed the said appeal by judgment dated 17.8.2001, and set
aside the judgment dated 3.2.1999 of the trial court. The award
dated 17.1.1998 was upheld in entirety. The learned Single
Judge held that having regard to the scope of interference under
Section 34(2)(b) of the Act, the trial court could not have
examined the terms of the contract nor interpret them for the
purpose of deciding whether the claims were covered by the
terms of the contract. The High Court held that where the
dispute regarding escalation was specifically referred to the
Arbitral Tribunal for decision, the court could not interfere on
the ground that the award was beyond the terms of the contract.
Reliance was placed by the High Court on the decisions of this
Court in Konkan Railway Corporation Ltd. v. Mehul
Construction Co. [AIR 2000 SC 2821], P.V. Subba Naidu v.
Government of Andhra Pradesh [1998 (9) SCC 407] and Indu
Engineering & Textiles Ltd. v. Delhi Development Authority
[2001 (5) SCC 691].
11. The said judgment of the High Court is challenged in this
appeal. Having accepted the decision of the trial court and paid
the amount due as per the said decision, the only ground urged
in this appeal is that for calculating the price escalation, the
difference should be with reference to base price of the washery
coal used and not with reference to base price of a lower quality
of washery coal.
12. This Court in Oil & Natural Gas Corporation Ltd. v.
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Saw Pipes Ltd. [2003 (5) SCC 705] held that an award contrary
to substantive provisions of law or the provisions of the
Arbitration and Conciliation Act, 1996 or against the terms of
the contract, would be patently illegal, and if it affects the rights
of the parties, open to interference by court under Section 34(2)
of the Act. This Court observed :
"The question, therefore, which requires consideration is \026
whether the award could be set aside, if the Arbitral
Tribunal has not followed the mandatory procedure
prescribed under Sections 24, 28 or 31(3), which affects the
rights of the parties. Under sub-section (1)(a) of Section 28
there is a mandate to the Arbitral Tribunal to decide the
dispute in accordance with the substantive law for the time
being in force in India. Admittedly, substantive law would
include the Indian Contract Act, the Transfer of Property
Act and other such laws in force. Suppose, if the award is
passed in violation of the provisions of the Transfer of
Property Act or in violation of the Indian Contract Act, the
question would be \026 whether such award could be set aside.
Similarly, under sub-section (3), the Arbitral Tribunal is
directed to decide the dispute in accordance with the terms
of the contract and also after taking into account the usage
of the trade applicable to the transaction. If the Arbitral
Tribunal ignores the terms of the contract or usage of the
trade applicable to the transaction, whether the said award
could be interfered. Similarly, if the award is a non-
speaking one and is in violation of Section 31(3), can such
award be set aside? In our view, reading Section 34
conjointly with other provisions of the Act, it appears that
the legislative intent could not be that if the award is in
contravention of the provisions of the Act, still however, it
couldn’t be set aside by the court. If it is held that such
award could not be interfered, it would be contrary to the
basic concept of justice. If the Arbitral Tribunal has not
followed the mandatory procedure prescribed under the
Act, it would mean that it has acted beyond its jurisdiction
and thereby the award would be patently illegal which
could be set aside under Section 34."
"\005\005\005.., in our view, the phrase "public policy of India"
used in Section 34 in context is required to be given a wider
meaning. It can be stated that the concept of public policy
connotes some matter which concerns public good and the
public interest. What is for public good or in public interest
or what would be injurious or harmful to the public good or
public interest has varied from time to time. However, the
award which is, on the face of it, patently in violation of
statutory provisions cannot be said to be in public interest.
Such award/judgment/decision is likely to adversely affect
the administration of justice. Hence, in our view in addition
to narrower meaning given to the term "public policy" in
Renusagar case it is required to be held that the award
could be set aside if it is patently illegal. The result would
be \026 award could be set aside if it is contrary to:
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality, or
(d) in addition, if it is patently illegal.
Illegality must go to the root of the matter and if the
illegality is of trivial nature it cannot be held that award is
against the public policy. Award could also be set aside if it
is so unfair and unreasonable that it shocks the conscience
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of the court. Such award is opposed to public policy and is
required to be adjudged void."
13. The High Court did not have the benefit of the principles
laid down in Saw Pipes (supra), and had proceeded on the
assumption that award cannot be interfered, even if it was
contrary to the terms of the contract. It went to the extent of
holding that contract terms cannot even be looked into for
examining the correctness of the award. This Court in Saw
Pipes (supra), has made it clear that it is open to the court to
consider whether the award is against the specific terms of
contract and if so, interfere with it on the ground that it is
patently illegal and opposed to the public policy of India.
14. After the matter was argued at some length, both counsel
on instructions submitted that they agreed in principle on the
following aspects :
a) the respondent is entitled to escalation in price, calculated
as per the escalation clause (clause 5 of the purchase order)
on the basis of the price difference between the actual price
paid for the coal used and the base price of such coal on
8.11.1991.
b) The respondent had used washery grade II in regard to the
supplies from 18.12.1991 to 13.7.1992. Therefore, in regard
to supplies during the said period, the price escalation, if
any, had to be calculated with reference to base price and
actual price of Washery Grade II.
c) The respondent had used washery grade I in regard to the
supplies from 14.7.1992. Therefore, in regard to supplies
between 14.7.1992 till 20.7.1994 (date of last supply),
the price escalation had to be calculated with reference to
the difference between the base price and the actual price at
which the respondent purchased washery grade I coal.
d) The award of the Arbitral Tribunal was only in regard to the
supplies made between 14.7.1992 to 20.7.1994 when the
respondent used washery grade I.
e) The interest payable on the amount found due shall be 21
per cent per annum from the date when the amount became
due till the date of the award, and 18% per annum from the
date of award till the date of payment.
On 21.3.2006, we recorded briefly the aforesaid agreed position
and granted time to the parties to file calculations of the amount
due on that basis.
15. The appellant accordingly filed a detailed calculation
sheet, the abstract of which is extracted below :-
Supply Period
Quantity
(in MT)
Escalated price
(Per MT)
Price already
paid (Per MT)
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Difference in
price (per
MT)
Total
Amount
Re : Tundoo Unit
14.7.1992 to 16.1.1994
5326.98
2469.52
2603.37
2661.71
2428.34
2569.19
2620.53
41.18
219365.04
17.1.1994 to 20.7.1994
1921.06
2852.19
2927.69
2620.53
2696.03
231.66
445032.76
Total
7248.04
Total
660397.80
Re : Vizag Unit
16.7.1992 to 28.1.1993
6421.492
2469.52
2428.34
41.18
264437.04
12.3.1993 to 1.5.1993
416.735
2603.37
2428.34
175.03
72941.13
28.10.1993 to 27.12.93
953.81
2661.71
2587.93
73.78
70372.10
7.2.1994 to 26.2.1994
195.56
2852.19
2587.93
264.26
51678.68
Total
7987.597
459428.95
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CST
18377.15
Total
477806.10
Price Escalation: Rs.664397.80 + 477806.10 = Rs.11,42,203.90
Interest up to date of payment (6.2.99) : = Rs.12,75,442.00
Total : Rs.24,17,645.90
The appellant submitted that the said amount of Rs.24,17,646/-
was paid in full on 6.2.1999 itself after the trial court judgment
and nothing more requires to be paid.
16. On the other hand, the respondent submitted a note stating
that a sum of Rs. 43,09,075/- was due, with interest from
17.1.1998, and even after adjusting Rs.24,17646/- paid by
appellant on 6.2.1999 and Rs.30,36,149/- (amount deposited by
appellant as a condition for stay granted by this Court and
withdrawn by respondent on 1.1.2003) a sum of
Rs.122,88,796/- is due as on 31.3.2006. The respondent has not
filed any calculation-sheet showing the break-up of the said
sum of Rs.43,09,075/-. As there was no agreement, we heard
further arguments in the matter.
17. The following facts are not in dispute :
(i) The respondent supplied in all 19,033.84 MT of
metallurgical coke to the appellant as detailed below :
S.No.
Unit Name
Supplied upto
14.7.2002
Supplied after
14.7.2002
1.
Tundoo
1761.69 MT
7248.040 MT
2.
Vizag
2036.513 MT
7987.597 MT
Total
3798.203 MT
15235.597 MT
(ii) The contract price for supply of metallurgical coke was
Rs.2231/MT. If there was any increase in the price of
coal used for producing the met. coke, the respondent
was entitled to a price increase of Rs.1.65 per MT for
every Rs. 1/- per increase in the price per MT of such
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coal over and above the base price of such coal (price as
on 8.11.1991).
(iii) The price as on 8.11.1991 was Rs. 540.02 per MT for
washery grade II coal and Rs. 654.42 per MT for
washery grade I coal.
(iv) The respondent purchased and used washery grade II
coal for the supplies of coke made between 18.12.1991 to
13.7.1992; and purchased and used washery grade I coal
for the supplies of coke made after 14.7.1992 up to
20.7.1994.
(v) The Award of the Arbitral Tribunal grants the escalation
only for the supplies between 14.7.1992 to 20.7.1994,
when the respondent used washery grade I coal.
(vi) The price of coal was Rs.659.62 per MT in regard to
washery grade II and Rs.798.98 per MT in regard to
washery grade I coal as on 14.7.1992 and the said price
went up further thereafter from time to time.
(vii) The appellant had, in fact, already admitted escalation in
the price of coke supplied, worked out on the basis of
increases in price of washery grade II coal, and paid the
increased prices, as follows (the rates are per MT) :
For supplies to Tundoo Unit :
a) Rs. 2428.34 (14.7.1992 to 16.2.1993).
b) Rs.2562.19 (17.2.1993 and 18.6.1993).
c) Rs. 2620.53 (19.6.1993 to 16.6.1994).
d) Rs.2696.03 (17.6.1994 to 20.7.1994).
For supplies to Vizag Unit :
e) Rs.2428.34 (16.7.1992 to 1.5.1993).
f) Rs.2587.93 (28.10.1993 to 26.2.1994).
18. The dispute arose on account of the fact the respondent
who was earlier using Washery Grade II coal [in regard to the
supplies upto 13.7.1992] started using washery grade I coal
from 14.7.1992, on the ground that it found it difficult to
produce the coke of the required specifications, by using
washery grade II coal. The appellant initially contended that as
respondent was earlier using washery grade II coal, it will
escalate the price only with reference to the price increase of
washery grade II coal and not washery grade I coal. On the
other hand, the respondent contended that as washery grade I
coal was used, which was costlier, they should be paid
escalation with reference the price of washery grade I coal and
not with reference to washery grade II coal. The arbitrators, as
notice above, made an award which in principle, was correct.
They held that the respondent was entitled to escalation in the
price of metallurgical coke, by applying the price variation
formula contained in clause (5) of the Purchase Order relating
to the Washery Grade I, with effect from 14.7.1992. They
rejected the contention of the appellant that the escalation
should be worked out only with reference to the prevailing price
of washery grade II coal, even if Washery Grade I was used.
They also rightly stated that the difference in price for purposes
of escalation should be worked out with reference to the base
price of coal on 8.11.1991. Where they apparently committed a
mistake is in stating that escalation should be worked out with
reference to the base price of washery grade II, even when
respondent was using washery grade I.
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19. Having regard to clause (5) of the Purchase Order, the
escalations have to be worked out with reference to the increase
in price of coal. If washery grade II coal was used, the
difference between the prevailing price of washery grade II and
the base price of washery grade II on 8.11.1991, multiplied by a
factor of 1.65 was to be the escalation. Similarly, if washery
grade I coal was used, the difference between the prevailing
price of washery grade I coal and the base price of washery
grade I coal on 8.11.1991 multiplied by a factor of 1.65, was
the escalation. This meant that if the base price of washery
grade II was ’A’ (as on 8.11.1991) and base price of washery
grade I was ’B’ (as on 8.11.1991), and the actual price paid was
X for washery grade II and ’Y’ for washery grade I, then the
escalation would be [Y-B] x 1.65 in regard to supplies between
14.7.1992 to 20.7.1994. But what the respondent did while
submitting the calculations before the arbitrators was to take the
prevailing market price of washery grade I coal and deduct the
base price of washery grade II as on 8.11.1991 and multiply the
difference by a factor of 1.65, that is claim [Y-A] x 1.65.
20. The award of the Arbitral Tribunal, as noticed above,
holds that the respondent is entitled to price increase only in
regard to 7248.040 MT of coke supplied to Tundoo Unit and
7,987.597 MT of coke supplied to Vizag Unit. These quantities
indicate that escalation was granted by the Arbitral Tribunal
only in respect of supplies from 14.7.1992 when respondent
started using washery grade I coal. Washery grade I is a
superior variety of coal when compared to washery grade II
coad and the price of washery grade I coal was Rs. 654.42 on
8.11.1991 whereas the price of washery grade II coal was only
Rs.540.02 as on 8.11.1991. If respondent had to be given
escalation from 14.7.1992 in regard to washery grade I coal,
necessarily the escalation had to be worked out with reference
to the base price of washery grade I coal on 8.11.1991. By no
stretch of imagination the price increase can be worked out in
respect of supplies from 14.7.1992, by taking the difference
between the prevailing price of washery grade I and the base
price of washery grade II coal as on 8.11.1991. Let us
demonstrate this position with reference to an actual price
example. From 14.7.1992, the respondent used washery grade I
coal. Admittedly, the price of washery grade I coal on
14.7.1992 was Rs.798.98. Having regard to the escalation
clause, price escalation had to be worked out by taking the
difference between the price of washery grade I coal on
14.7.1992 (Rs.798.98) and the base price of washery grade I on
8.11.1991 (Rs.654.42) that is Rs. 144.56 and multiply it by a
factor of 1.65 which works out to Rs.238.52. But what the
respondent claimed was by calculating the difference between
the market price of washery grade I coal on 14.7.1992 (798.98)
and the base price of washery grade II coal on 8.11.1991
(540.02) that is Rs.258.96 multiplied by the factor of 1.65 and
arrive at the escalation as Rs.427.28 per MT. This is in clear
violation of the provisions of Clause 5 of the purchase order
relating to price variation.
21. The contract only mentioned the specifications of
metallurgical coke and did not specify the quality of coal to be
used for producing the metallurgical coke. It was open to the
respondent to use any grade of coal, provided it supplied the
coke of the quality specified. The purchaser was concerned with
the specifications of the product it purchased, namely,
metallurgical coke. It was not concerned with the quality of the
raw material (that is coal) used for producing the metallurgical
coal. The price of metallurgical coke was not linked to or based
on the basic price of any particular quality of washery coal.
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Therefore, neither the respondent nor the Arbitral Tribunal
could assume that the contract price of Rs.2231/- was based on
the base price of washery grade II as on 8.11.1991. Having
regard to the escalation clause, the price increase should be with
reference to the coal that is used. It cannot be worked out by
taking the difference between the higher cost of superior quality
coal and lower base price of inferior quality of coal.
22. In the operative portion, the Arbitrators having correctly
stated that the respondent will be entitled to price increase as
per the escalation clause and that from 14.7.1992, the price
escalation will be with reference to change in the price of
washery grade I coal, acted in violation of the specific terms of
the contract by stating that - "The base price for determining
escalation is the price of coking coal washery grade II coal
ruling as on 8.11.1991." This sentence should have actually
been as follows: "The base price for determining escalation is
the price of washery grade I coal ruling as on 8.11.1991, for
determining escalation for supplies from 14.7.1992." A reading
of the award shows that what was intended to be given was
escalation in terms of an escalation clause in the purchase order.
But on account of apparent error in the Award, the calculation
of escalation has been done with reference to the prevailing
price of superior quality of coal (washery grade I) and the base
price of inferior quality of coal (washery grade II) instead of
calculating escalation with reference to the prevailing price of
the superior quality of coal (washery grade I) and the base price
of superior quality of coal (washery grade I). In fact, when
queries by us, the learned counsel for respondent could not
explain with reference to contrary terms, how the base price of
washery grade II coal could be applied to calculate the
escalation in coke price produced by using washery grade I
coal.
23. The appellant has given calculation fully and correctly
which shows that the escalation was only 11,42,203.90. This
was what was awarded by the trial court and this amount had
been paid with interest of Rs.12,75,442 in all Rs.24,17,646 on
6.2.1999. In spite of our directions on 21.3.2006, the respondent
has not given the actual calculations but has furnished only the
final figure of claim. The respondent’s memo makes it clear
that the respondent wants the escalation to be calculated for
supplies from 14.7.1992 with reference to the base price of
washery grade II coal and not with reference to washery grade I
coal. This is impermissible. The order of the Division Bench is
unsustainable as it failed to interfere with the portion of the
award which is opposed to the specific terms of the contract.
On the other hand, the trial court had correctly decided the
matter.
24. Therefore, we allow this appeal, set aside the judgment of
the High Court and restore the judgment of the trial court.
Parties to bear their respective costs.
25. On 11.11.2002, this Court had directed the appellant to
deposit a sum of Rs.30,36,149.46 and permitted the respondent
to withdraw the same by furnishing bank guarantee. The
respondent has accordingly withdrawn the said amount on
1.1.2003. As the appellant has succeeded in full, the respondent
shall refund the said sum of Rs.30,36,149.46 to the appellant
with interest @ 18% per annum from 1.1.2003 to date of
payment. If the payment is made in full within a period of sixty
days from today, the interest shall be at a concessional rate of
12% P.A. from 1.1.2003 to date of payment.