STEEL AUTHORITY OF INDIA LTD. versus GUPTA BROTHER STEEL TUBES LTD.

Citation: [2009] 14 S.C.R. 253 · Decided: 09-09-2009 · Supreme Court of India · Bench: TARUN CHATTERJEE · Disposal: Dismissed
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Judgment (excerpt)

.J:., 
[2009) 14 (ADDL.) S.C.R. 253 
,'"''r 
STEEL AUTHORITY OF INDIA LTD. 
A 
v . 
..., 
GUPTA BROTHER STEEL TUBES LTD. 
(Civil Appeal No. 5241 of 2002) 
SEPTEMBER 9, 2009 
B 
[TARUN CHAlTERJEE AND R. M. LODHA, JJ.] 
I 
A, 
Arbitration Act, 1940: 
{ 
s. 30 - Application for setting aside of award passed by c 
• 
arbitrator - On ground of error of jurisdiction and legal 
misconduct by arbitrator - Legal position discussed - HELD: 
Where a provision of liquidated damages for specific 
~ 
breaches only is made, such clause cannot be read as 
covering all types of breaches - In the instant case, Clause 
D 
7.2 of agreement specifying the compensation for failure to 
supply or delayed supply of material cannot be said to cover 
refusal to supply the material - Thus, the claim of damages 
made by claimant for breaches committed by SAIL was 
entirely different from breaches contemplated by Clause 7.2 
E. 
- The view of the arbitrator that s. 7 4 of Contract Act had no 
,.-.A 
application to the case and that the breach due to refusal on 
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part of SAIL to supply materials in respect of the quarter July-
September, 1988 did not fall within ambit of the terms 
contained in compensation Clause .7.2 is a possible view and 
F 
having not been found to be perverse or unreasonable by the 
three courts below, no case for setting the award within the four 
comers of s.30 is made out warranting interference in exercise 
of powers under Article 136 of the Constitution - Constitution 
of India, 1950 - Articles 136 - Contract Act, 1872 - s. 74. 
G 
-~ 
Constitution of India, 1950: 
Article 136 - Scope of:.... Application for setting aside the 
253 
H 
254 
SUPREME COURT REPORTS [2009] 14 (ADDL.) S.C.R. 
A award passed by arbitrator - Plea not raised before High 
~-
Court - HELD: There has to be some sanctity and finality to 
the decision of arbitrator and new plea, which was not raised 
before High Court cannotbe allowed to be raised in appeal 
under Article 136 - Even otherwise, in considering the claims 
B as quantified by application dated 12.9.1991, arbitrator has 
not exceeded the jurisdiction - Arbitration Act, 1940 - s.30. · 
~ 
The appellant-SAIL formulated a Scheme entitled 
"Full Requirement Supply Scheme" for meeting the full 
c requirements of HR CoilslSkolps to the customers. Those 
who wanted to avail the said material as per the Scheme 
were required to register their requirements with SAIL. 
The Scheme was in operation in respect of two quarters, 
namely, (i) July to September, 1988 and (ii) October to 
~ 
D December, 1988. The respondents indented 1500 metric 
tonnes of imported material for the first quarter (July to 
September, 1988). On September 15, 1988 SAIL informed 
the respondents, of their inability to arrange for the 
import. The respondents thereafter indented for supply 
E of 1500 metric tonnes of imported material for the second 
quarter (October to December, 1988). The respondents 
were delivered the goods and payments were made. 
.... ... 
Thereafter dispute 2.rose between the parties and the 
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. respondents made a claim of Rs.1,75,41,359 before the 
F 
Arbitrator who passed an award on September 7, 1993. 
As regards .Clause 7.2 of the agreement specifying the 
I 
compensation to the contractor and providing for 
maximum cap for liquidated damages for failure to supply 
and delayed supply of the material, the arbitrator held that 
G 
Clause 7 .2 was not applicable as it was not a case of 
delayed supply but refusal to supply. The objections filed 
¥-
by SAIL to the award were overruled by the Sub-Judge 
and the award was made rule of the court. The appeal 
filed by the SAIL was dismissed by the District Judge. 
..; 
The revision petition filed by the appellant-SAIL was 
H 
. ,.-.. 
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STEEL AUTHORITY OF INDIA LTD. v. GUPTA 
255 
BROTHER STEEL TUBES LTD. 
1..-c, 
A 
dismissed by the High Court . 
. 
In the instant appeal by SAIL, the plea relating to time 
( 
barred claim raised before the High Court was not 
pressed and the only question for consideration before 
the Court was: whether the breaches alleged by the B 
respondents were covered by the stipulations contained 
' 
-"' 
in Clause 7.2 of the contract? 
Dismissing the appeal, the Court 
HELD: 1. The legal position that emerges from the c 
; 
decisions of this Court can be summarised thus: (i) In a 
case where an arbitrator travels beyond the contract, the 
award would be without jurisdiction and would amount 
to legal misconduct and because of w
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