LexUNION OF INDIA versus A. L. RALLIA RAM
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
. . . 164 SUPREME COURT REPORTS [1964]VOL. 196J accordance with law. There would be no order as Clllllr•I Bo.k •f l•diis Ltd, •• P. S. · Rajogopalan Gajmdratatkat J, 1969 .dpil 19. to costs. Appeals allowed. Cases remanded. UNION OF INDIA v. A. L. RALLIA RAM (B. P. SINHA C. J., J.C. SHAH and . N. RAJAGOPALA AYYANGAR JJ.) Arbitration-Tender for purchase of goods-Acceptance of -0.lause for reference to arbitration-If binding on Government -Reference of specific question of law-Arbitrator framing $1$Ues-Parties agreeing to iasuea being decided-If amounts to •· reference of specific question of law-Setting aside of award- Brror on the face of the award-Government of India Act, 1935, (<ho. 5 Oh. 2.), a.175 (3). . In 1946, the Chief Director of Purchases (Disposals), Food Department, Government .of India, invited tenders for purc!iasing war surplus Amedcan Cigarettes. The respondent submitted a tender offering to purchase the entire stock. This tender was accepted by a letter with which was enclosed a Form containing the general conditions of contract including a clause for arbitration. The respondent took delivery of29,93, 597 packets and paid Rs. 17,78,573/6/4 for them. On inspection some of the cigarettes were found to be mildewed and unfit for use. Ultimately, the Government decided to cancel the contract with respect to the undelivered cigarettes and. offered to take back from the respondent cigarettes which "wei:e in their original packing and could be identified, subject to the condition that no claim will be made by the respondent in respect of freight, storage, rents, charges or any other expenses incurred by him in respect of the cigarettes taken back.". The respondent accepted this offer reserving his right to claim incidental expenses. He returned 24,13,500 packets and Government refunded Rs. 14,54,215/7/- to him. Thereafter, each party, in accordance with the arbitration clause, appointed an arbitrator ~ • 3 S.C.R. SUPREME COURT REPORTS 165 and the arbitrators entered upon the reference. The parties filed their statements of claim and written state- ments. Issues were framed and the parties ogreed that the di;pute between them be tried on those issues. As the arbitra· tors were unable to agree upon the decision they appointed an umpire. The umpire gave an award awarding to the rc,pon- dent Rs. 1,32,417/10/· for loss suffered in respect of cigarettes not returned, Rs. 1,25,000/· for incidental expenses and Rs. 68,833/12/3 as interest. The respondent applied to the Subordinate Judge for filing the award and the appellant applied for setting aside the award. The Judge ordered that a decree be issued in terms of the award. In appeal the High Court confirmed the order. The appellant contended that there was no arbitration agreement as the contract was not executed in accordance with s. 175 (3) of the Government of India Act, 1955, and that there was error of law apparent on the face of the award. The respondent contended that the agreeing by the parties to a trial of the issues raised amounted to a reference of specific questions and the a ward on such reference could not be set aside even if there was error apparent on the face thereof. Held that there was a binding arbitration agreement between the parties and the arbitrators had jurisdiction to enter upon the reference. The letter of acceptance of the tender signed by the Dfrector of Purchases fulfilled all the requirements of s. 175 (3)· of the Government of India Act. Section 175 (3) did not require the execution of any formal document nor was there any such direction by the Governor-General in respect of sale of disposals goo.ds. The goods offered to be sold belonged to the Government oflndia and all the action in respect thereof wa., taken by the Government and in the name of the Government. There was thus a binding contract between the . parties which contained an arbitration clause, Further, the appellant was not precluded from challenging the existence of a binding arbitration agreement on account of its h.1ving submitted to the jurisdfctbn of the arbitrators and on account ,,fits not having raised the objection before t.hem, •s the jurisdic· tion of the arbitrators depended upon the existence of such an agreement. Seth Bikhraj Jaipuria v. Union of India, (1962] 2 S.C.R. 880, referred to. Held further, that agreeing to a trial of the dispute on th
Excerpt shown. Read the full judgment & AI analysis in Lexace.