NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.8918 OF 2015
(@ Special Leave Petition (Civil) No.15187 of 2010)
M/s. Chebrolu Enterprises
Rep. by its Proprietor Smt. Ch. Lakshmi Sesha Kumari
….Appellant
VERSUS
Andhra Pradesh Backward Class Cooperative
Finance Corporation Ltd. …..Respondent
WITH
C.A.No.8919/2015 @ SLP© No.15408/2010
C.A.No.8920/2015 @ SLP© No.15719/2010
C.A.No.8921/2015 @ SLP© No.15734/2010
AND
C.A.No.8922/2015 @ SLP© No.18290/2010
J U D G M E N T
ANIL R. DAVE, J.
1. Leave granted.
2. In all these appeals validity of a common judgment delivered in Civil
Misc. Appeal Nos. 973-995 of 2005 and 539, 674 and 675 of 2006 dated 14th
December, 2009 has been challenged.
3. The aforestated Civil Miscellaneous Appeals had been filed in the
High Court of Judicature, Andhra Pradesh at Hyderabad under Section 37 of
the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the
Act’) against a common order dated 14.03.2005 passed in different original
petitions, by the XIV Additional Chief Judge, City Civil Court (FTC),
Hyderabad, dismissing the original petitions. The High Court vide its
common judgment dated 14.12.2009 dismissed the aforestated appeals.
4. Being aggrieved by the said common judgment, the appellants have
approached this Court by way of these appeals.
5. The circumstances which gave rise to the present litigation in a nut-
shell are as under:-
The Government of Andhra Pradesh had launched a scheme named
‘ADARANA’ under which certain tools of trade necessary for Blacksmiths,
Carpenters, Dhobis etc. were to be supplied to the rural artisans. The
Government was to purchase the tools through A.P. Backward Classes
Cooperative Financial Corporation Limited, a corporation set up for welfare
of the persons belonging to downtrodden classes, controlled by the
Government and the ‘State’ within the meaning of Article 12 of the
Constitution of India. The Respondent-Corporation had invited quotations
for supplying iron boxes, iron ring used for placing the iron; boxes,
buckets and bannas required in the process of washing clothes etc. The
present appellants had agreed to supply the “Razaka tools” at a particular
rate. We do not go into the details as to how the rates were finalized
after several meetings held among the suppliers of the tools and the
officers of the Respondent-Corporation. Suffice is to state at this stage
that the suppliers, after several meetings and bargaining on both the sides
had agreed to supply the tools at the rate of Rs.165 per kg in six coastal
districts of Andhra Pradesh namely, Srikakulam, Vizianagaram,
Visakhapatnam, East Godavari, West Godavari and Krishna, whereas for the
other remaining districts, the rate had been fixed at Rs.189.75 per kg and
the above rates were exclusive of sales tax.
6. It is pertinent to note that when the agreement had been entered into
with regard to supply of the tools by the appellants to the Respondent-
Corporation, it was also agreed among the parties that the rate at which
the tools were offered was the lowest rate at which the suppliers were
selling the tools of the same specification in the State of Andhra Pradesh.
7. Each appellant (who has been referred to hereinafter as ‘the
supplier’) had also filed an undertaking stating that the prices quoted for
supply of the tools were the lowest possible prices and that nowhere in
Andhra Pradesh, the supplier was selling those products at prices lower
than the price quoted. They had also undertaken to refund the difference of
amount arising on account of any price difference in the price quoted by
them and lower price offered by them in the open market in Andhra Pradesh
in respect of the tools. One such undertaking dated 22.04.1999 given by
one of the suppliers is reproduced herein below:
“UNDERTAKING
“…..I, Smt. CHEBROLU LAKSHMI SESHA KUMARI Proprietor of M/s. CHEBROLU
ENTERPRISES, hereby declare that the prices quoted for the supply of our
Products under ADARANA Project being implemented by Andhra Pradesh Backward
Classes Cooperative Finance Corporation are the lowest possible prices and
nowhere in Andhra Pradesh, we are selling our products with the same
specifications at prices lower than the prices we have quoted under the
said project.
I also undertake to refund/authorizes Andhra Pradesh Backward Classes
Cooperative Finance Corporation to deduct excess amount paid to us on
account of any price differential between higher prices quoted by us under
ADARANA Project and lower prices offered in open markets in Andhra
Pradesh……”
8. Ultimately, the tools had been supplied by the suppliers to the
respondent-Corporation but it was found that the rates which had been
charged by the suppliers were neither reasonable nor were the lowest at
which the suppliers had sold their products similar to the one which they
had supplied to the Respondent-Corporation and therefore, a dispute had
arisen among the parties and the dispute had been referred to an Arbitral
Tribunal, as agreed upon by the parties in the agreement dated 22.04.1999.
The aforestated facts are not in dispute.
9. The learned Arbitral Tribunal ultimately came to the conclusion that
the amount charged by the suppliers was excessive and therefore, made an
Award dated 11.03.2002 in favour of the Respondent-Corporation to the
effect that the suppliers were entitled to only Rs.115 per kg towards price
of the tools supplied by them and the claim exceeding the said amount had
been rejected. It was also provided in the Award that the amount be paid
with interest @ 6% per annum with effect from the date of claim petition
i.e. 26th April, 2001 till the date of the payment.
10. The suppliers, being aggrieved by the Award, challenged the validity
of the Award by filing original petitions before the Court of XIV
Additional Chief Judge, City Civil Court (Fast Track Court), Hyderabad
under the provisions of Section 34 of the Act. After hearing the concerned
parties, the said original petitions were dismissed and therefore, the
suppliers approached the High Court with the above referred Civil
Miscellaneous Appeals. The said appeals have also been dismissed and
therefore, the present appeals have been filed by the suppliers before this
Court.
11. The issues that fall for determination in these appeals are whether
the suppliers had committed any fraud or fraudulent misrepresentation upon
the Respondent-Corporation and whether any breach of contract had been
committed either by the suppliers or by the respondent-Corporation and
further, whether the price fixed by the Arbitral Tribunal was reasonable or
whether it was open to the Arbitral Tribunal to determine the price of the
tools which had been supplied by the suppliers to the respondent-
Corporation.
12. We have heard the learned counsel appearing for the parties at
length. Upon hearing the learned counsel, looking at the facts of the case
and upon perusal of the relevant documents, including the agreement entered
into between the suppliers and the respondent-Corporation and the
undertakings given by the suppliers in relation to supply of tools at the
lowest price in the State, we are of the view that the impugned judgment
delivered by the High Court is just and proper.
13. The price at which the tools had to be supplied had been fixed after
negotiations and efforts were made to bargain on the subject of price by
both the sides. Ultimately, a particular price had been determined as a
result of the negotiations and the agreements with different parties had
been entered into by the respondent-Corporation for purchase of the tools.
14. The most important factor to be considered is the undertaking
executed by each supplier to the effect that the tools which the said
supplier had agreed to supply to the respondent-Corporation was to be
charged at the lowest rate at which the said supplier had sold his tools in
the State of Andhra Pradesh. In other words, the supplier had not sold
tools to anybody at a price lower than the price offered by the supplier to
the respondent-Corporation.
15. A copy of the undertaking executed by each supplier has been
reproduced hereinabove. By virtue of the said undertaking, the suppliers
had assured the respondent-Corporation that the prices quoted for supply of
the tools under ADARANA project were the lowest prices and that nowhere in
Andhra Pradesh, they had sold their tools with the same specifications at
prices lower than the prices which had been quoted by them for supply of
the tools to the respondent-Corporation for ADARANA project.
16. The effect of the undertaking was that if the rate which had been
quoted by the suppliers in their agreement was more than the rate at which
the said tools were sold by them in the State of Andhra Pradesh, the
suppliers would refund the excess of price charged by them to the
respondent-Corporation.
17. The contract entered into by the suppliers on one hand and the
respondent-Corporation on the other was subject to the aforestated
undertaking given by the suppliers. So, if the price quoted in the
agreement is ‘X’ per kg. for the tools supplied by the suppliers but if the
tools of the same specifications were being sold by the suppliers in the
State of Andhra Pradesh for a price lower than ‘X’, say at price ‘Y’, the
respondent-Corporation was supposed to pay rate ‘Y’ and not ‘X’, which had
been agreed upon in the contract.
18. As there was a dispute with regard to the price and as the respondent-
Corporation had found out that rate quoted in the contract was higher than
the rate at which the tools of the same specifications had been supplied by
the suppliers in the State of Andhra Pradesh, the respondent-Corporation
had withheld the payment and in the circumstances the dispute had been
raised and the suppliers had made their claim before the Arbitral Tribunal
for payment of the remaining amount of price.
19. The learned Arbitral Tribunal considered all factors and the evidence
which was adduced before it and came to the conclusion that the price which
had been quoted by the suppliers and which had been agreed upon in the
contract was higher than the price at which tools of the same
specifications were sold by the suppliers in the State of Andhra Pradesh.
In the circumstances, the learned Arbitral Tribunal came to the conclusion
that the suppliers were entitled to the price of tools lesser than the one
which had been agreed upon in the contract because the same quality of
tools, which had been manufactured by the suppliers, were sold by them in
the State of Andhra Pradesh at a lower price.
20. Determination of price in the aforestated manner is a question of
fact. This Court or even the Appellate Court would not look into the
finding of facts unless they are perverse. In the instant case, neither the
City Civil Court in the proceedings filed before it under Section 34 of the
Act nor the High Court in the proceedings under Section 37 of the Act could
find anything wrong with the finding of facts arrived at by the Arbitral
Tribunal. This Court under Article 136 of the Constitution of India would
not like to interfere with the concurrent finding of facts, save in
exceptional circumstances or unless the finding is perverse.
21. For the aforestated reasons, in our opinion, the determination of
price by the Arbitral Tribunal cannot be faulted with.
22. The submission that the Arbitral Tribunal was not competent to
determine the price is also not well founded. It is a finding of fact by
the learned Arbitral Tribunal that the price quoted was more than the price
at which the same products/tools were supplied by the same supplier in
Andhra Pradesh and therefore, after considering the relevant evidence, the
Arbitral Tribunal determined a particular price i.e. Rs. 115 per kg. It
cannot be said that determination of said price by the Tribunal in the
aforestated circumstances was improper. The suppliers were bound as per
the undertakings executed by them and as they had not acted as per their
undertaking, it was open to the learned Tribunal to find out the correct
lower price at which the tools of the same specifications, which were
manufactured by the suppliers were available in the State of Andhra Pradesh
and if in the aforestated circumstances, the Arbitral Tribunal determines
the price, in our opinion, it cannot be said that the Arbitral Tribunal had
exceeded its jurisdiction.
23. In our considered opinion, no fraud had been committed as alleged. If
higher price had been charged by the suppliers in the contract than the
price at which their products were sold in the State of Andhra Pradesh, it
cannot be said that the suppliers had committed any fraud while entering
into the contract. The parties may determine the price in the manner
agreed upon by them. In the instant case, there was an undertaking in the
nature of a proviso that if the price fixed in the contract is more than
the price at which tools of same specifications manufactured by the same
supplier were available in the State, the supplier would be entitled to the
lesser rate.
24. In our opinion, the manner of price determination by the Arbitral
Tribunal, in the light of the undertakings executed by the suppliers,
cannot be said to be irrelevant, incorrect or beyond jurisdiction.
25. For the aforestated reasons, we do not find any substance in these
appeals and the same are dismissed with no order as to costs.
……..……………………J.
(ANIL R. DAVE)
……..…………………….J.
(VIKRAMAJIT SEN)
NEW DELHI;
OCTOBER 28, 2015.
