TMI Blog1968 (9) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... Union of India (hereinafter called the appellant) entered into a contract of purchase of 1.01.750 cubic feet of teak logs at ₹ 9/12/- cer c.ft. to be delivered F.O.R. Halisahaar and Lillooah. both in West Bengal near Calcutta. The consignee was the District Controller of Stores, Eastern Railway. The formal acceptance of tender confirming the savingram and containing the other terms of the contract was issued on 13th January, 1954. Besides the quantity of teak logs originally contracted to be supplied, the respondent firm subsequently supplied a quantity of 1676.95 c.ft. Burma teak squares at the same rate and the contract was accordingly amended on 13th December, 1957. It was provided in Clause 17(c) of the acceptance of tender that the respondent firm was to offer the timber for inspection at its own premises at Halisahaar and Lillooah. Although the delivery time was extended from time to time, upto 26th January, 1958. the respondent firm supplied only 77.211.89 cubic feet of timber and the contract in respect of the unsupplied quantity was cancelled on 20th June, 1958 and that the supplied quantify was repurchased by Government from third party at a loss of ₹ 1,54,54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the excess Quantity measuring 3,400 tons i.e. 1,70.000 cubic feet was still lying with the Lillooah consignee and 1,500 tons i.e. 75,000 cubic feet with the Halisahaar consignee and had not been returned despite repeated requests. The respondent firm claimed return of this quantity of timber and compensation for its deterioration. It was alternatively contended that in case the Government failed to return the whole or part of the excess timber, then payment for that quantity at the market rate should be made. The appellant in its reply denied the allegation relating to the delivery and retention of excess quantity. It was specifically denied that 4,900 tons or any quantity was due to be returned to the respondent firm or that it was entitled to recover ₹ 73,50,000 or any amount as claimed. It was contended that in terms of the contract the respondent firm H was to offer inspection of the store at its own premises at Lillooah and Halisahaar but instead done so. the respondent firm started to despatch the logs to the DCO's Lillooah and Halisahaar to be A inspected at the consignees' premises. This was done for its own convenience and at its own risk. The inspected st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing the cost of freight in such replacement without being entitled to any extra payment, or (b) buy the quantity of the stores rejected or others of a similar nature elsewhere at the risk and cost of the contractor without affecting the contractor's liability as regards supply of any further consignment due under the contract, or (c) terminate the contract and recover from the con- tractor the loss the purchaser thereby incurs . 5. On behalf of the appellant Dr. Seyid Mohammad presented the argument that the dispute regarding the respondent's claim in respect of the excess quantity of timber measuring 4,900 tons said to have been tendered but not inspected was not a dispute 'arising under the contract or 'in connection with the contract' and hence the arbitrators had no jurisdiction to adjudicate upon that claim. It was stated that the terms of contract did not require the respondent firm to tender for inspection any quantity in excess of the contacted quantity of timber and The alleged placing of unlimited stocks of timber at the disposal of the Government officials far in excess of the quantity ordered was beyond the scope of the con- trac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rformance, such differences should be regarded as differences which have arisen 'in respect of or with regard to , or under the contract, and an arbitration clause which uses these, or similar expressions should be construed accordingly . 6. In Stebbing v. Liverpool London and Globe Insurance Company Ltd., [1917] 2 K.B. 433 the policy of insurance contained a clause referring to the decision of an arbitrator all differences arising out of this policy . It also contained a recital that the assured had made a proposal and declaration as the basis of the contract, and a clause to the effect that compliance with the conditions indorsed upon the policy should be a condition precedent to any liability on the part of the insurers. One of the conditions provided that if any false declaration should be made or used in support of a claim all benefit under the policy should be forfeited. In answer to a claim by the assured, the insurers alleged that statements in the proposal and declaration were false. When the matter came before the arbitrator, the assured objected that this was not a difference in the arbitration and that the arbitrator had no power to determine whether the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een disclaimed only by the resolution of the company. The company made an application under Section 33 of the Indian Arbitration Act praying for a declaration that the reference to arbitration was illegal and the award if made by the arbitrator would not bind the company. It was contended on its behalf that the arbitration clause had ceased to be operative and the question as to the existence and validity of the arbitration agreement was triable by the court under Section 33 of the Arbitration Act and not by the arbitrator. The argument was rejected by this Court. It was held that the point on which the parties were in dispute was a difference arising out of the policy, because recourse to the contract by which both the parties were bound was necessary for the purpose of determining the matter in dispute between them. As there was no contention raised by either of the parties that there was no contract entered into at all or that it was void ab initio the arbitrator had jurisdiction to decide the matter referred to him. In our opinion, the principle applies to the present case and it follows that the dispute between the parties falls within the scope of the arbitration clause. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
