Statutory protection would be available only to a statutory tenant, namely, a tenant under the Act. The Punjab Act of 1953 read with the relevant provisions of the 1887 Act do not include a tenant whose lease has expired. Nevertheless, retention/continuance of possession after expiry of the duration of the lease with the consent of the landlord will continue to vest in the erstwhile tenant the same status on the principle of holding over. Such continuance even after expiry of the deemed period of the lease under Section 106 of the Transfer of Property Act, as in the present case, would clothe the occupant with the status of a tenant under the Act in view of Section 116 of the Transfer of Property Act which deals with the consequences of holding over. The operation of Section 116 of the Transfer of Property Act would confer legitimacy to the possession of the tenant even after the termination or expiration of the deemed period of the lease so as to confer on him a status akin to that of a statutory tenant and hence protection from eviction as envisaged by the provisions of the Act of 1953.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.4245 OF 2012


SHYAM LAL                                         ...APPELLANT

                            VERSUS

DEEPA DASS CHELA RAM
CHELA GARIB DASS                       ...RESPONDENT


                               J U D G M E N T


RANJAN GOGOI, J.


1.    This appeal is at the instance of the tenant who is  aggrieved  by  an
order of eviction affirmed by the High Court following the expiry of  period
of lease.
A two-Judge Bench of this  Court  in  Sukhdev  Singh  (Dead)  through  legal
representatives and Ors. V. Puran and Ors.[1] has  taken  the  view  that  a
tenant under Punjab Security of Land Tenure Act, 1953 (hereinafter  referred
to as  the ‘1953 Act’) ceases to be one on expiry of the fixed term  tenancy
under  the  contract  whereafter  he  is  not  entitled  to  the   statutory
protection from eviction as envisaged under the Act.  A  Co-ordinate  Bench,
for reasons indicated, could not agree with the aforesaid  view  in  Sukhdev
Singh (supra).  Hence this reference for an answer on a  question  that  may
be formulated as hereunder:
      Whether after the expiry of the fixed term tenancy in  respect  of  an
agricultural lease under the  Punjab  Security  of  Land  Tenure  Act,  1953
(hereinafter referred to as “the 1953 Act”) the tenancy  gets  automatically
terminated and the person occupying the  leased  premises  ceases  to  be  a
tenant?

2.    It will be useful to notice, at  this  stage,  some  of  the  relevant
provisions of the Statutes dealing with the issue. “Tenant”  is  defined  by
Section 2(6) of the 1953 Act in the following terms:
“Tenant” has the meaning assigned to it in  the  Punjab  Tenancy  Act,  1887
(Act XVI of 1998), and includes a sub-tenant, and  self-cultivating  lessee,
but shall not include a present holder, as  defined  in  section  2  of  the
Resettlement Act.”





3.    Section 4(5) of the Punjab Tenancy Act, 1887 (hereinafter referred  to
as “the 1887 Act”) defines “tenant” as under:
“4. Definitions- In this Act, unless there in  something  repugnant  in  the
subject or context,-

                       xxxx



(5) “tenant” means a person who holds land under another person, and  is  or
but for a special contract would be, liable to pay rent  for  that  land  to
that other person; but does not include -



(a) an inferior landowner, or



(b) a mortgagee of the rights of a landowner, or



(c), a person to whom a holding  has  been  transferred,  or  an  estate  or
holding has been let in farm under the Punjab Land Revenue  Act  1887  (XVII
of 1887), for the recovery of  an  arrear  of  land  revenue  or  of  a  sum
_recoverable as such an arrear or



(d) a person who takes from the Government a lease of  unoccupied  land  for
the purpose of subletting it.”



4.    The 1887 Act confers occupancy rights on the  occupants  of  land  who
fulfill the requirements spelt out  by  Section  5  thereof.   An  occupancy
tenant is liable for ejectment under the 1887 Act on the  grounds  specified
in Section 39(1), namely,
(a) that he has used the land comprised in the tenancy  in  a  manner  which
renders it unfit for the purpose for which he held it;
(b) where rent is payable in kind, that  he  has  without  sufficient  cause
failed to cultivate that land in the manner or to the  extent  customary  in
the locality in which the land is situate;
(c) when a decree for an arrear of rent in respect of his tenancy  has  been
passed against him and remains unsatisfied.

5.    On the other hand, under Section 40 of the  1887  Act,  a  tenant  who
does not have a right of occupancy but holds  the  land  for  a  fixed  term
under a contract is liable to be ejected from his tenancy on the  expiry  of
the term of the lease and before such expiration on the following grounds:
“(a)  that he has used the land comprised in the tenancy in a  manner  which
renders it unfit for the purposes for which he held it;



(b)  where rent is payable in kind, that he  has  without  sufficient  cause
failed to cultivate that land in the manner or to the  extent  customary  in
the locality in which the land is situate ;



(c) on any ground which would justify ejectment under  the  contract  decree
or order.”



6.    Section 9 of the 1953 Act which deals with the liability of  a  tenant
to be ejected is in the following terms:


“9.   Liability of the tenant to be ejected.—

(1) Notwithstanding anything contained in any other law for the  time  being
in force, no land-owner shall be competent to eject the tenant  except  when
such tenant –



(i) is a tenant on the area reserved under this Act or  is  a  tenant  of  a
small land-owner, or



(ii)  fails to pay rent regularly without sufficient cause, or



(iii) is in arrears of rent at the commencement of this Act, or



(iv)  has failed, or fails, without sufficient cause, to cultivate the  land
comprised in his tenancy in the manner or to the  extent  customary  in  the
locality in which the land is situate, or



(v)   has used, or uses, the land comprised  in  his  tenancy  in  a  manner
which has rendered, or renders it unfit for the purpose for which  he  holds
it, or



(vi)  has sublet the tenancy or a part thereof, provided that where  only  a
part of the tenancy has been sublet,  the  tenant  shall  be  liable  to  be
ejected only from such part, or



(vii) refuses to execute a Qabuliyat or a Patta, in the form prescribed,  in
respect of his tenancy on being  called  upon  to  do  so  by  an  Assistant
Collector on an application made to him for this purpose by the land owner



Explanation – For the purposes of clause (iii), a tenant shall be deemed  to
be in arrears of rent at the commencement of this Act, only if  the  payment
of arrears is not made by the tenant within a period of two months from  the
date of notice of execution of decree or order, directing him  to  pay  such
arrears of rent.



(2)] Notwithstanding anything contained hereinbefore a tenant shall also  be
liable to be ejected from any area which he holds in any  capacity  whatever
in excess of the permissible area;



      Provided that the portion of the tenancy from which  such  tenant  can
be ejected shall be determined at his option if  the  area  of  his  tenancy
under the land-owner concerned is in excess of the area from  which  he  can
be ejected by the said land owner;



      Provided further that if the tenant holds land of several  land-owners
and more than one land-owner seeks his ejectment,  the  right  to  ejectment
shall be exercised in the order in which the applications have been made  or
suits have  been  filed  by  the  land-owners  concerned,  and  in  case  of
simultaneous  applications  or  suits  the  priority  for  ejectment   shall
commence serially from the smallest land-owner.



Explanation.- Where a tenant holds land jointly  with  other  tenants,  only
his share in the joint tenancy shall be taken into account in computing  the
area held by him.”


7.    It will be necessary at this stage to take note of Section 14A of  the
1953 Act which deals with the procedure for ejectment:
“14-A. Notwithstanding anything to the contrary contained in any  other  law
for the time being in force, and subject to the provisions of section 9-A.-


a land owner desiring to eject a  tenant  under  this  Act  shall  apply  in
writing to the Assistant Collector  First  Grade  having  jurisdiction,  who
shall thereafter proceed as provided for in sub-section (2)  of  sub-section
10 of this Act, and the provisions of sub-section (3) of  the  said  section
shall also apply in relation to such application, provided that the  tenants
rights to compensation and acquisition of occupancy  rights,  if  any  under
the Punjab Tenancy Act, 1887 ( XVI of 1887), shall not be affected;


Provided that if the tenant makes payment of arrears of rent  and  interest,
to be calculated by the Assistant  Collector,  First  Grade,  at  eight  per
centum  per  annum  on  such  arrears  together  with  such  costs  of   the
application, if any, as may be allowed by Assistant Collector, First  Grade,
either on the day of first hearing or within fifteen days from the  date  of
such hearing, he shall not be ejected

(ii)  a land-owner desiring to recover arrears of rent from a  tenant  shall
apply  in  writing  to  the  Assistant  Collector   Second   Grade,   having
jurisdiction, who shall thereupon send a notice in the  form  prescribed  to
the tenant either to deposit the rent or value thereof , if payable in  kind
or give proof of having paid it or of the fact that he is not liable to  pay
the whole or part of the rent or of the fact of  the  landlords  refusal  to
receive the same or to give a receipt, within the period  specified  in  the
notice. Where, after summary determination, as provided for  in  sub-section
(2) of Section 10 of this  Act,  the  Assistant  Collector  finds  that  the
tenant has not paid  or  deposited  the  rent  he  shall  eject  the  tenant
summarily and put the landowner in possession of the land concerned;

(iii) (a)  if a landlord refuses to accept rent from his tenant  or  demands
rent in excess of what he is entitled to under this Act, or refuses to  give
a receipt, the tenant may in writing inform the Assistant  Collector  second
Grade, having jurisdiction of the fact;

(b) on receiving such  application,  the  Assistant  Collector  shall  by  a
written  notice  require  the  landlord  to  accept  the  rent  payable   in
accordance with this Act, or to give a receipt, as the case maybe, or  both,
within 60 days of the receipt of the notice“

8.    Before proceeding any further it  must  be  clarified  that  both  the
enactments i.e. the 1887 Act and the 1953 Act are in force and  continue  to
operate  in  their  respective  fields.  Insofar  as  common   spheres   are
concerned, the 1953 Act  by  virtue  of  the  non  obstante  clause  in  the
relevant provisions prevail over the pari materia  provisions  of  the  1887
Act. Section 40 of the 1887  Act  dealing  with  ejectment  of  tenants  and
Section 9 of the 1953 Act is one instance where such  an  interplay  between
the provisions of the two Acts occur.
9.    The arguments advanced on behalf of the  rival  parties  relate  to  a
true and proper construction of the provisions of Section 9 and 14-A of  the
1953 Act in the light of the definition of “tenant” under both the Acts  and
also the provisions of Section 39 and 40 of the  1887  Act.   It  is  argued
that the appellant herein is a self-cultivating  lessee  and,  therefore,  a
tenant under Section 2(6) of the 1953 Act entitling him to protection  under
Section 9 of the Act. A person who is a tenant under the  1953  Act  can  be
ejected only on any of the grounds enumerated in Section 9 of the 1953  Act.
Such protection does not cease merely on the expiry of period of tenancy  in
view of the  statutory  protection  granted  under  the  Act.  In  fact  the
contractual tenancy loses all relevance in case of a lessee who is a  tenant
under either of the statutes in question. Though under  Section  40  of  the
1887 Act eviction of a tenant on  completion  of  the  period  of  lease  is
contemplated, there is no such provision in the 1953 Act. The  non  obstante
clause in Section 9 gives the said provision of the 1953 Act  an  overriding
effect over the aforesaid provisions of the 1887 Act. Sub-section (viii)  of
Section 9 of the Act of 1953, introduced by Punjab Act 17 of 2011 (not  made
applicable to the State of Haryana) has also been placed before  the  Court.
Besides, the procedure for ejectment/eviction must  necessarily  conform  to
what is spelt out in Section 14-A  of  the  1953  Act  and  proceedings  for
eviction must be before the Revenue  authority  and  not  the  Civil  Court.
These are the broad propositions that have been advanced on  behalf  of  the
appellant to answer the question arising.
10.   In reply, it is contended that statutory protection to a tenant  would
be available  after  the  expiry  of  the  fixed  term  lease  only  if  the
definition of tenant under the Act is  broad  enough  to  include  a  person
whose contractual period of  tenancy  is  over.  No  such  provision  exists
either under the 1887 Act or the 1953 Act.   The  definition  of  tenant  in
either of the Statutes does not include a tenant whose period of tenancy  is
over. In the absence of any such provision, a person whose period  of  lease
is over ceases to be a  tenant  and,  therefore,  is  not  entitled  to  the
protection under the 1953 Act. A self- cultivating lessee would be a  tenant
under the Act only for the duration of the lease. On expiry  of  the  period
of the lease he would cease to be a tenant unless the  statute  specifically
provides for such a status which is not so provided for  by  either  of  the
Acts i.e. Act of 1953 and of 1887.
11.   In the present case, admittedly, eviction of the tenant had  not  been
sought on any of the grounds enumerated in Section 9 of the 1953 Act and  by
following the procedure under Section 14-A of the 1953 Act. In fact,  it  is
the appellant before this Court who had filed a suit for injunction  seeking
a restraint on his ouster and it is in the said suit that the  respondent  –
landlord, as the defendant, had filed a  cross-objection  seeking  mandatory
injunction for the vacation of the premises by the appellant-tenant  on  the
ground that he had ceased to be a tenant on expiry of the period of lease.
12.   Having noticed the elaborate  arguments  advanced  on  behalf  of  the
parties, we may now proceed to deal with the specific question  referred  to
us, as noticed above,  and  in  this  regard  take  note  of  the  questions
formulated by the High Court for an answer in the second  appeal  before  it
which is in the following terms-
(i)   Whether a tenant/lessee of agricultural land  can  be  ordered  to  be
evicted by way of suit for mandatory injunction or the only remedy with  the
landlord is to seek eviction under the provisions of the Punjab Security  of
Land Tenures Act, 1953
(ii)  Whether the lease deed  of  an  agricultural  land  is  admissible  in
evidence in the absence of registered instrument as required  under  Section
107  of  the  Transfer  of  Property  Act,  1882  and  Section  17  of   the
Registration Act, 1908.
 13.  The Transfer of Property Act, 1882, as evident from opening  provision
thereof, makes it clear that it is not to be  applicable  to  the  State  of
Punjab (including the present State of Haryana which  was  included  in  the
erstwhile State of Punjab).  However, by a Gazette Notification  dated  26th
March, 1955  (No.1605-R(CH)-55/589)  published in the Punjab  Govt.  Gazette
dated 1st April, 1955 (Part I, page 372) the provisions of Sections 54,  107
and 123 of the Transfer of Property Act, 1882 were  extended to  the  entire
State of Punjab with effect from 1st April, 1955. The  Gazette  Notification
in question reads as follows:
“The 26th March,  1955  No.1605-R(CH)-55/589.  In  exercise  of  the  powers
conferred by section 1 of the Transfer of Property Act, IV of 1882, and  all
other powers enabling him in this behalf, the Governor of Punjab is  pleased
to extend the provisions of sections 54, 107 and 123 of the  said  Act  with
effect from the 1st April, 1955 to the entire State of  Punjab.  The  Punjab
Government notification No.183-ST dated the 27the  April,  1935,  is  hereby
cancelled.”

14.   Sections 54, 107 and 123 of the Transfer of Property  Act,  1882  were
applied to the PEPSU area of that State with effect from 15th May,  1957  by
Notification dated  15th  May,  1957  published  in  the  Punjab  Government
Gazette (Extraordinary) (at page 633 dated 15th May, 1957), which is in  the
following terms:
                         “Punjab Government Gazette
                                Extraordinary
                           Published by Authority
                     Chandigarh, Wednesday, May 15, 1957
                             Revenue Department
                                Notification
                             The 15th May, 1957

No.305-ST-57/2166.- In exercise of the powers conferred by section 1 of  the
Transfer of Property Act, 1882 (Central Act  IV  of  1882),  and  all  other
powers enabling him in this behalf, the Governor of  Punjab  is  pleased  to
extend the provisions of Sections 54, 107 and 123 of the  said  Act  to  the
territories  which,  immediately  before  the  1st  November,   1956,   were
comprised in the State of Patiala and East Punjab States Union, with  effect
from the date of publication of this notification in the official Gazette.”

15.   Section 107 of the Transfer of Property Act, 1882 which has been  made
applicable  to  the  State  of  Punjab  (including  Haryana)  by  the  above
notifications require annual leases of immovable property to be  made  by  a
registered instrument.  Though Section 117 of the Transfer of Property  Act,
1882 makes  the  provisions  of  Chapter  V,  which  includes  Section  107,
inapplicable  to  agricultural  leases,  Section  117  has  not  been   made
applicable to the State of Punjab by the notifications  referred  to  above.
Therefore, the provisions of Section 107 of the Transfer  of  Property  Act,
1882 would apply with full force  and  vigor  to  all  leases  of  immovable
property including agricultural leases in the  State  of  Punjab  (including
Haryana).

16.   The above is inextricably connected to the issue of  determination  of
the primary question arising, namely, whether the lease between the  parties
is a fixed term lease or not, a question that would depend  for  its  answer
on the terms of the  lease  deed  between  the  parties.  Unfortunately  and
regrettably the Gazette Notifications referred to above were not brought  to
the notice of the High Court leading the High Court to answer  the  question
framed by holding that Section 117 of the Transfer  of  Property  Act  makes
the provisions of Section 107 inapplicable  to  an  agricultural  lease  and
therefore the terms of the lease can be looked into for a  determination  of
the above question.

17.   It is not in dispute that in the present  case  the  appellant  tenant
remained in possession of the land for  the  fixed  term  envisaged  in  the
lease agreement i.e. from  29th  May,  1996  to  28th  May,  2005  and  even
thereafter.  As the lease in question was not a  registered  instrument  and
as Section 117 of the Transfer of Property Act has  no  application  to  the
State of Haryana, in view of the provisions of Sections 17  and  49  of  the
Registration Act read with Section 107 of  the  Transfer  of  Property  Act,
1882 the terms of the lease deed would not be admissible  in  evidence  and,
therefore, cannot  be  looked  into  for  the  purpose  of  determining  the
duration of the lease.  Though in Anthony v. K.C. Ittoop &  Sons  &  Ors.[2]
it was held that in such a situation a oral lease  not  exceeding  one  year
can be presumed it must not be lost sight that in Anthony (supra) the  lease
in question was one under the Kerala  Buildings  (Lease  and  Rent  Control)
Act, 1965, namely, a non-agricultural  lease.   In  the  present  case,  the
lease being admittedly an agricultural lease the same can be  deemed  to  be
from year to year in view of the provisions of Section 106 of  the  Transfer
of Property Act.

18.   If the lease in the instant case has to be deemed to be a  lease  from
year to year and the terms thereof cannot be looked into  to  determine  the
total duration thereof what would follow is  that  the  tenant  remained  in
possession beyond the legally presumptive period of  the  lease  (one  year)
with the implied consent of the landlord.  In the present case such  consent
ceased to exist only upon institution of the cross  objection  in  the  suit
filed by the tenant, as mentioned earlier.  The tenant, therefore,  acquired
the status of a tenant holding over or a tenant at will, which would  confer
on him protection under the 1953 Act requiring  the  landlord  to  establish
proof of any of the conditions specified  in  Section  9  of  the  1953  Act
before being entitled to a decree of eviction.   From  the  above  it  would
necessarily follow that to be entitled to  protection  from  eviction  under
the 1953 Act any person claiming such protection  has  to  come  within  the
fold of the expression “tenant” under the 1953 Act read  with  the  relevant
provisions of the 1887 Act.  Statutory protection would  be  available  only
to a statutory tenant, namely, a tenant under the Act.  The  Punjab  Act  of
1953 read with the relevant provisions of the 1887  Act  do  not  include  a
tenant whose  lease  has  expired.  Nevertheless,  retention/continuance  of
possession after expiry of the duration of the lease  with  the  consent  of
the landlord will continue to vest in the erstwhile tenant the  same  status
on the principle of holding over. Such continuance even after expiry of  the
deemed period of the lease under Section 106 of  the  Transfer  of  Property
Act, as in the present case, would clothe the occupant with the status of  a
tenant under the Act in view of Section 116 of the Transfer of Property  Act
which deals with  the  consequences  of  holding  over.   The  operation  of
Section 116 of the Transfer of Property Act would confer legitimacy  to  the
possession of the tenant even after the termination  or  expiration  of  the
deemed period of the lease so as to confer on him a status akin to  that  of
a statutory tenant and hence protection from eviction as  envisaged  by  the
provisions of the Act of 1953.
19.   We accordingly answer the question referred in the  above  terms,  and
allow this appeal and further set aside the order of the  High  Court  under
challenge.

                                 ........................................,J.
                                        (RANJAN GOGOI)


                     ......................................,J.
             (ARUN MISHRA)


                                 ......... ..............................,J.
                                       (PRAFULLA C. PANT)
NEW DELHI;
JULY 05, 2016.
-----------------------
[1]     (2015) 12 SCC 344
[2]    (2000) 6 SCC 394

Cases involving blacklisting or imposition of penal consequences on a tenderer/ contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.”[Para 21]- Respondent No.1 before us has clearly violated the strict terms of the tender condition on every occasion and hence cannot be given relief. And, secondly, we already find that due to litigation the present tender has not taken off for over one year. In the absence of malafides, and indeed the High Court judgment has found that malafides did not vitiate the calculation of minimum wage by the Labour Department, we cannot accept Shri Divan’s submission that the figure of Rs.2,91,00,000/- was tailor made to suit the bid offered by the Appellant herein. We, therefore, set aside the decision of the Gujarat High Court and allow the Government to proceed further in finalizing the tender in favour of the Appellant herein. The appeal is, accordingly, allowed with no order as to costs.

                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO.  6978 of 2016
                (ARISING OUT OF SLP (CIVIL) NO.5695 OF 2016)


BAKSHI SECURITY AND PERSONNEL
SERVICES PVT. LTD.                           …APPELLANT

                             VERSUS

DEVKISHAN COMPUTED PVT. LTD.
AND ORS.                                     …RESPONDENTS



                           J  U  D  G  M  E  N  T

R.F. Nariman, J.

1.    Leave granted.

2.    On 20.11.2014, the Commissioner of Transport, Government  of  Gujarat,
floated a tender seeking  bids  for  services  inter  alia  of  supervisors,
computer programmers, data entry operators, and electrician staff at 11  RTO
check-posts.  A few material clauses of the tender are set out hereinbelow:-




      “2.5.5 Commercials

      The Commercial Bids should strictly conform to  the  formats  provided
in Annexure 2 of this tender document.



2.5.6 Fixed Price

      Prices quoted by the Bidder shall be fixed and no  variation  will  be
allowed under any circumstances during the entire  period  of  the  project.
No open-ended Bid shall  be  entertained  and  the  same  is  liable  to  be
rejected straightaway.



2.8.3 Rejection of Bid

      The hard-bound copy of Technical Bid Document shall  be  submitted  in
the form of printed document.  Bids submitted by Telex, fax or  email  shall
not be entertained.  Any bid not  secured  in  accordance  with  Clause  2.8
mentioned  above,  shall  be   rejected   by   COT   without   any   further
correspondence, as non-responsive.  A  bid  that  does  not  meet  all  pre-
qualification criteria or is not  responsive  or  not  fulfilling  technical
evaluation shall be rejected by  COT,  and  may  not  subsequently  be  made
responsive by correction or withdrawal of the  non-conforming  deviation  or
reservation by the Bidder.

      3.4.5

      It shall  be  the  responsibility  of  the  Bidder  to  abide  by  the
provisions of the labour welfare legislations, like  The  Payment  of  Wages
Act, 1936, The Payment of Bonus Act, 1965, The Minimum Wages Act, 1948,  The
Equal Remuneration Act,  1976,  The  Payment  of  Gratuity  Act,  1972,  The
Employees’  State  Insurance  Act,  1948,  Contract  Labor  Act,  1970,  The
Workmen’s Compensation Act, 1923 and other similar legislations, rules,  and
orders as issued from time to time.



Annexure – 2 (Financial Bid)

Format for Financial Bid

Price Bid: (Financial/Commercial Bid submitted in  physical  form  shall  be
liable  for  rejection.    It   should   be   submitted   online   only   at
https://www.nprocure.com)

Please provide price  bid  for  supply  of  Man  Power  to  be  deployed  at
different Check-posts/CMC.

|Sr. No.  |Particulars      |Qty      |Cost per     |Total cost for |
|         |                 |         |person per   |24 months      |
|         |                 |         |month without|without tax    |
|         |                 |         |tax          |               |
|1        |Data Entry       |120      |             |               |
|         |operator         |         |             |               |
|2        |Computer Engineer|02       |             |               |
|3        |Electrician      |12       |             |               |
|4        |Supervisor       |12       |             |               |
|         |Total            |         |             |               |
|Additional Service Tax      |%        |             |               |
|Grand Total                                         |               |


Salary paid to the deployed manpower should not be  less  than  the  minimum
wages published as  per  the  notification  issued  by  state  govt.  labour
department or other statutory benefits applicable. In case  of  revision  of
minimum wages/DA by the labour department, agency would be entitled  to  get
the revised rates from Commissioner of transport.

2.    Break-up of salary for each category of employee  should  be  provided
indicating clearly the wages, DA, other mandatory statutory benefits  &  the
service charges.

If the component of salary quoted is less than the minimum wages  prescribed
or the components of mandatory statutory benefits are not  included  in  the
break-up, the bid is liable to be rejected.

The quantity of manpower required may vary and the supplier may be asked  to
supply upto 25% extra manpower at the rate quoted above.

L1 will be decided on grand total.

Signature:                                   Date:
Designation:                                       Seal:”

3.    The  financial  bids  were  opened  on  10.12.2014.   9  bidders  gave
financial bids of which only three were qualified.  The Appellant bid for  a
total amount of Rs.2,92,93,944/-; Respondent No.1 bid for  Rs.2,77,68,000/-,
and one Airan Consultants Pvt. Ltd. made a bid for Rs.3,03,83,184/-.

4.    On 26.2.2015, the Technical Evaluation Committee,  after  taking  into
account the opinion of the Labour Department,  arrived  at  a  minimum  wage
figure of Rs.3,00,92,346/-.  Inasmuch as  both  the  Appellant  as  well  as
Respondent No.1 gave bids  which  were  below  this  figure,  (which  would,
therefore,   be  less  than  the  amount  required  as  minimum  wages,   in
accordance with the tender conditions read with  the  Annexure  2  thereof),
both the Appellant as well as Respondent No.1 were held  to  be  ineligible.
A decision was, therefore, taken to award the tender to  the  third  bidder,
namely, M/s Airan Consultants Pvt.  Ltd.   Respondent  No.1  approached  the
Gujarat High Court in a writ petition challenging  the  aforesaid  decision.
By its judgment dated 11.8.2015, the  High  Court  ultimately  came  to  the
conclusion that the tender in favour of  M/s  Airan  Consultants  Pvt.  Ltd.
ought to be quashed and set  aside  with  the  further  direction  that  the
Government of Gujarat shall give an opportunity to all  three  tenderers  to
resubmit their bids after being appraised of the minimum wage  figure  given
by the Labour Department.  This was done  as  the  High  Court  was  of  the
opinion that all the bidders ought to have  been  given  an  opportunity  to
revise their bills subsequent to the minimum wage calculated by  the  Labour
Department.

5.    In pursuance of the aforesaid judgment, the  Transport  Department  of
the Government of Gujarat furnished to all the competing bidders the  Labour
Department’s calculation that minimum  wages  plus  bonus  payable  for  the
contract was Rs.3,00,92,346/-.

6.    In  response  to  the  above,  the  Appellant  wrote  a  letter  dated
2.11.2015 sticking to the  original  bid  figure  of  Rs.2,92,93,944/-.   On
3.9.2015,  Respondent  No.1,  in  response  to  the  minimum   wage   figure
disclosed, wrote to the Government of Gujarat, as follows:-

“(6.3)      Thus, it can be seen that according to the calculation,  Minimum
Wages and other statutory benefits payable to the employees for 730 days  [2
years of contract] comes  to  Rs.3,00,92,346  [without  service  tax].   The
price at which I am ready to work is Rs.2,77,68,000 [without  service  tax].
Thus,  against  payment   of   wages   and   all   statutory   benefits   of
Rs.3,00,92,346/- and service tax thereon, am ready  and  willing  to  accept
Rs.2,77,68,000 [plus service tax] from the Government.   This  would  enable
the Government to save Rs.23,24,346.00 and  service  tax  thereon,  and  the
ultimate beneficiary would be public exchequer.

(6.4) I have undertaken in past in writing that I am ready to incur loss  as
well.  The price I have offered  shall  have  no  impediment  on  wages  and
statutory benefits to  be  paid  to  the  employees  as  calculated  by  the
Technical Evaluation Committee based on the report/ opinion  of  the  Labour
Commissioner.  The tender document itself binds the contractor to  abide  by
all labour welfare legislation, and  therefore,  there  is  no  question  of
resiling from performing that part of contract from my end.

(6.5) Even in my previous letters also,  I  have  undertaken  that  I  shall
conform  to  all  labour   welfare   legislations   even   after   accepting
Rs.2,77,68,000 + Service Tax from the Government.  I  have  also  undertaken
that I shall bear the burden of loss  incurred  on  account  of  the  margin
between my bid and the  amount  of  minimum  wages  and  statutory  benefits
payable to my employees.  The margin between the two shall not be  hindrance
in quality of services I would offer through my employees  on  these  check-
posts.

(6.6) Without prejudice to above, I am to state that I am  ready  to  accept
even Rs.3,00,92,346.00 + Service Tax, being the bare minimum  wages  payable
to the employees during the life of the  contract  from  the  Government  as
calculated by the Technical Evaluation Committee based on the report of  the
Labour Commissioner, such  offer  will  result  into  ‘No  Profit  No  Loss’
business for me, but  at  the  same  time,  it  would  create  a  burden  of
Rs.23,24,346.00 on the State Funds.”



7.    On 12.10.2015, the  Labour  Department  gave  a  second  opinion  that
though Data Entry  Operators  are  ordinarily  to  be  treated  as  “skilled
workers”, for the purpose of the present tender they should  be  treated  as
“semi skilled workers”.  In  view  of  this  decision,  the  Government,  on
30.10.2015, arrived at a decision that the actual minimum  wage  plus  bonus
worked out to Rs.2,91,00,000/-, and thus revised  their  earlier  figure  of
Rs.3,00,92,346/-.  In the judgment under appeal, the High Court has  stated,
and it is not controverted before us, that this figure was not disclosed  to
either party.

8.    On 2.11.2015, Respondent No.1 again knocked at the doors of  the  High
Court in a second writ petition filed  by  it.   By  the  impugned  judgment
dated 22.2.2016, the High Court allowed Respondent no.1’s  petition  in  the
following terms:-

“8.   Under the circumstances, the decision of the authorities to  shortlist
respondent No.3 for awarding the contract is set aside.  The  offer  of  the
petitioner shall be treated  as  matching  with  the  revised  minimum  wage
calculation.  The petitioner shall give such  offer  in  clear  writing  and
undertaking  to  the  authorities  latest  by  25.2.2016.   The   respondent
authorities, unless there is any other disqualification  of  the  petitioner
to carry out the contract, being the lower, shall accept the same.

9.    Petition is disposed of.”



9.    Being aggrieved by the aforesaid judgment,  the  Appellant  is  before
us.

10.   Shri Harin Raval, learned senior advocate appearing on behalf  of  the
Appellant, has pointedly referred to the tender conditions  and  has  argued
before us that Respondent No.1’s writ petition was not at  all  maintainable
in view of the fact that Respondent No.1  stuck  to  its  earlier  offer  of
Rs.2,77,68,000/- which was lower than  the  figure  of  Rs.3,00,92,346/-  as
well as the figure of Rs.2,91,00,000/- fixed by the Government  upon  advice
given by the Labour Department, of minimum wage plus  bonus.   According  to
him, the without prejudice offer of Rs.3,00,92,346/- flew  in  the  face  of
the  tender  conditions  and,  therefore,  the  writ  petition   being   not
maintainable, ought to have  been dismissed both  on  the  ground  that  the
figure quoted by Respondent No.1 was below the minimum wage  fixed  as  also
on the ground that no open ended  bid  is  liable  to  be  entertained.   He
further argued that the Court cannot make a contract between the parties  by
treating the offer of the  Respondent  No.1  as  matched  with  the  revised
minimum wage calculation.  He further  argued  that  a  Mandamus  cannot  be
issued to straightaway award the tender to a person who does not conform  to
the essential conditions of the tender.

11.    Countering  these  submissions,  Shri  Shyam  Divan,  learned  senior
counsel appearing on behalf of Respondent No.1, has argued  that  it  is  an
admitted fact that the revised figure of minimum wage  was  never  disclosed
to either of the parties and this being so, the  judgment  under  appeal  is
correct.  He also stated that though the High Court did not find  malafides,
yet it went out of its way to comment on the  secret  manner  in  which  the
Labour Department re-fixed the minimum wage at  Rs.2,91,00,000/-,  which  is
only one lakh above the Appellant’s figure  of  Rs.2,92,00,000/-  and  that,
therefore, the said non-transparent process rendered  the  decision  of  the
Government to award the tender to the Appellant as bad in law.   He  further
argued that if the offer of the Respondent  No.1  was  treated  as  matching
with the revised minimum wage calculation, the  State  will  benefit  by  an
amount of Rs.1 lakh and that this was well  within  the  discretion  of  the
High  Court  while  exercising  jurisdiction  under  Article  226   of   the
Constitution.

 12.  Having heard learned counsel for  the  parties,  we  agree  with  Shri
Raval’s contention that Respondent No.1’s bid was contrary to the  terms  of
the tender.

13.   First and foremost, under  tender  condition  2.5.5,  commercial  bids
have to strictly conform to the format provided in Annexure 2 of the  tender
document.  Annexure 2 which contains the format for the price bid  makes  it
clear that the salary paid to deployed manpower should not be less than  the
minimum wage.  It further goes on to state in paragraph 3  thereof  that  if
the component of salary quoted is less than  the  minimum  wage  prescribed,
the bid is liable to be rejected.  On this ground alone,  Respondent  No.1‘s
bid is liable to be rejected inasmuch as, vide its  letter  dated  3.9.2015,
Respondent No.1 stuck to its original figure of  Rs.2,77,68,000/-  which  is
way below the minimum wage fixed by the Government. Secondly, Shri Raval  is
also right in stating that the without prejudice offer  of  Rs.3,00,92,346/-
is an offer which is not fixed, but open ended.   This  is  clear  from  the
fact that it was up to the Government then to pick up either figure  by  way
of acceptance.  This is clearly interdicted by clause 2.5.6  of  the  tender
which states that prices quoted by the bidder have to be fixed, and no  open
ended bid  can  be  entertained,  the  same  being  liable  to  be  rejected
straightaway. Such condition is obviously  an  essential  condition  of  the
tender which goes to the eligibility of persons who make  offers  under  the
tender.

14.   Unfortunately, even though the  High  Court  noticed  the  open  ended
nature of Respondent No.1’s bid, it  went  on  to  add  that  the  offer  of
Respondent No.1 shall be treated as matching with the revised  minimum  wage
calculation and that it is nowhere envisaged by the tender  conditions  that
rejection of an offer which may have the potential of causing  loss  to  the
tenderer is present.  It is not for the High Court to revisit  a   condition
contained in Annexure 2  read  with  2.5.5  of  the  tender  in  the  manner
aforesaid.  Once the tender condition states that the tender  must  strictly
conform to the format provided  in  Annexure  2,  and  Annexure  2  in  turn
clearly states that if the component of  salary  quoted  is  less  than  the
minimum wage prescribed, the bid is liable to  be  rejected,  and  the  High
Court  cannot  hold  otherwise.   The  High  Court’s  further  finding  that
Respondent No.1’s offer was “clear” is wholly incorrect.  It was  a  without
prejudice offer which muddied the waters and rendered the  price  quoted  by
the bidder as variable and not fixed.

15.   The law is settled that an essential condition of a tender has  to  be
strictly complied with. In Poddar Steel Corpn. v. Ganesh Engineering  Works,
(1991) 3 SCC 273, this Court held as under:-

“…  The  requirements  in  a  tender  notice  can  be  classified  into  two
categories — those which lay down the essential  conditions  of  eligibility
and the others which are  merely  ancillary  or  subsidiary  with  the  main
object to be achieved by the condition. In  the  first  case  the  authority
issuing the tender may be required to enforce them  rigidly.  In  the  other
cases it must be open to the authority to deviate from  and  not  to  insist
upon the strict literal compliance of the condition in appropriate  cases….”
[para 6]



16.   Similarly in B.S.N. Joshi & Sons Ltd.  v.  Nair  Coal  Services  Ltd.,
(2006) 11 SCC 548, this Court held as under:-

“…(i) if there are essential conditions, the same must be adhered to;

(ii) if there is no power of general relaxation, ordinarily the  same  shall
not be exercised and the principle of strict  compliance  would  be  applied
where it is possible for all the parties to comply with all such  conditions
fully;

(iii) if, however, a deviation is made in relation to  all  the  parties  in
regard to any of such conditions, ordinarily again  a  power  of  relaxation
may be held to be existing;

(iv) the parties who have taken the benefit of such  relaxation  should  not
ordinarily be allowed to take a different stand in  relation  to  compliance
with another part of tender contract, particularly when the was also not  in
a position to comply with all the conditions of  tender  fully,  unless  the
court otherwise finds relaxation of a condition  which  being  essential  in
nature could not be relaxed  and  thus  the  same  was  wholly  illegal  and
without jurisdiction;

(v) when  a  decision  is  taken  by  the  appropriate  authority  upon  due
consideration of the tender document  submitted  by  all  the  tenderers  on
their own merits and if it is ultimately found that successful  bidders  had
in fact substantially  complied  with  the  purport  and  object  for  which
essential conditions  were  laid  down,  the  same  may  not  ordinarily  be
interfered with; …” [para 66]

17.   We also agree  with  the  contention  of  Shri  Raval  that  the  writ
jurisdiction cannot be utilized to make a fresh bargain between parties.

18. In General Assurance Society Ltd. V. Chandmull Jain, (1996) 3  SCR  500,
this Court, in a slightly different context, stated:
“In other respects there is no difference between a  contract  of  insurance
and any other contract except that in a contract of  insurance  there  is  a
requirement of uberrima fides i.e. good faith on the  part  of  the  assured
and the contract  is  likely  to  be  construed contra  proferentem that  is
against the company in case of ambiguity or  doubt.  A  contract  is  formed
when there is an unqualified acceptance of the proposal. Acceptance  may  be
expressed in writing or it may even be implied if the  insurer  accepts  the
premium and retains it. In the case of the assured, a positive  act  on  his
part by which he recognises or seeks to enforce the  policy  amounts  to  an
affirmation of it. This position  was  clearly  recognised  by  the  assured
himself, because he wrote, close upon the expiry of the time  of  the  cover
notes that either a policy should be issued to him before  that  period  had
expired or the  cover  note  extended  in  time. In  interpreting  documents
relating to a contract of insurance, the duty of the court is  to  interpret
the words in which the contract is expressed by the parties, because  it  is
not for the court to  make  a  new  contract,  however  reasonable,  if  the
parties have not made it themselves. Looking at the proposal, the letter  of
acceptance and the cover notes, it is clear that  a  contract  of  insurance
under the standard policy for fire and  extended  to  cover  flood,  cyclone
etc. had come into being.”


19.   In the light of  the  aforesaid  judgment,  the  High  Court  was  not
correct in treating Respondent No.1’s offer as  matching  with  the  revised
minimum wage calculation, as that would make  a  new  contract  between  the
parties that the parties have not made themselves.

 20.  It is also well to remember the admonition  given  by  this  Court  in
Michigan Rubber (India) Limited v. State of Karnataka and Others,  (2012)  8
SCC 216 in cases like the present, as under:-

 “In Jagdish Mandal v. State of Orissa, [(2007) 14 SCC 517],  the  following
conclusion is relevant:

 “22. Judicial review  of  administrative  action  is  intended  to  prevent
arbitrariness, irrationality, unreasonableness, bias  and  mala  fides.  Its
purpose is to check whether choice or decision is made  ‘lawfully’  and  not
to check whether choice or decision is ‘sound’. When the power  of  judicial
review is invoked in matters relating to  tenders  or  award  of  contracts,
certain  special  features  should  be  borne  in  mind.  A  contract  is  a
commercial  transaction.  Evaluating  tenders  and  awarding  contracts  are
essentially commercial functions. Principles of equity and  natural  justice
stay at a distance. If the decision relating to award of  contract  is  bona
fide and is in public interest, courts will not, in  exercise  of  power  of
judicial review, interfere even if  a  procedural  aberration  or  error  in
assessment or prejudice to a tenderer, is made out. The  power  of  judicial
review will not be permitted to be invoked to protect  private  interest  at
the cost  of  public  interest,  or  to  decide  contractual  disputes.  The
tenderer or contractor with a grievance can always seek damages in  a  civil
court.  Attempts  by  unsuccessful  tenderers  with  imaginary   grievances,
wounded pride and business rivalry, to make mountains out  of  molehills  of
some technical/procedural violation or some prejudice to self, and  persuade
courts to interfere by  exercising  power  of  judicial  review,  should  be
resisted. Such interferences, either interim or final, may  hold  up  public
works for years, or delay relief and succour to thousands and  millions  and
may  increase  the  project  cost  manifold.  Therefore,  a   court   before
interfering in tender  or  contractual  matters  in  exercise  of  power  of
judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the  authority  is  mala
fide or intended to favour someone;
                                     OR
Whether the process adopted or decision made is so arbitrary and  irrational
that the court can say: ‘the decision is such that no responsible  authority
acting reasonably and in accordance with relevant law could have reached’;
(ii) Whether public interest is affected.

If the answers are in the negative, there should be  no  interference  under
Article  226.  Cases  involving  blacklisting   or   imposition   of   penal
consequences on a tenderer/ contractor or  distribution  of  State  largesse
(allotment of sites/shops, grant of licences,  dealerships  and  franchises)
stand on a different  footing  as  they  may  require  a  higher  degree  of
fairness in action.”[Para 21]



21.   We have seen that the present tender has not  gotten  off  the  ground
since May 2015, and  one  year’s  precious  time  has  been  wasted  due  to
litigation between the parties.  We must hasten to add that  the  Government
of Gujarat is partly to blame for this inasmuch as it arrived at  a  minimum
wage figure and did not disclose the same to the  tendering  parties  twice.
Even in the second round of litigation, the Government did not disclose  the
newly arrived at minimum wage figure of Rs.2,91,00,000/- to the two  persons
in the fray before us.  Ordinarily,  therefore,  we  would  have  asked  the
Government to disclose the second figure of minimum  wage  and  restart  the
tendering process.  However, we do not think that the justice  of  the  case
requires us to do so, for two reasons.  First and foremost, Respondent  No.1
before us has clearly violated the strict terms of the tender  condition  on
every occasion and hence cannot be given relief.  And, secondly, we  already
find that due to litigation the present tender has not taken  off  for  over
one year.  In the absence of malafides, and indeed the High  Court  judgment
has found that malafides did not vitiate the calculation of minimum wage  by
the Labour Department, we cannot accept Shri  Divan’s  submission  that  the
figure of Rs.2,91,00,000/- was tailor made to suit the bid  offered  by  the
Appellant herein.  We, therefore, set aside  the  decision  of  the  Gujarat
High Court and allow the Government to proceed  further  in  finalizing  the
tender in favour of  the  Appellant  herein.  The  appeal  is,  accordingly,
allowed with no order as to costs.



                                        ……………………J.

                                        (Dipak Misra)





                                        ……………………J.

New Delhi;                              (R.F. Nariman)

July 26, 2016

Section 11(5) read with Section 11(9) of the Arbitration and Conciliation Act, 1996, the petitioner prays for the appointment of a sole arbitrator for adjudication of disputes that have arisen between the parties in relation to ‘Buyers Agreement’ dated 18.10.2012 executed between them.= The petitioner filed a petition before the Commercial Court in Lille to seize all the bank accounts of the respondent with the banks Caisse d’ Epargne, GCE Trade and HSBC bank alongwith all money, values and/or bonds held by these banks on behalf of the respondent. The court’s bailiffs seized a total amount of Euro 48000 in HSBC bank on 11.10.2013 and Caisse d’ Epargne on 14.10.2013 in compliance to order of Appellate Court, Douai, France dated 25.09.2014. The petitioner filed a claim before the Tribunal-DE-COMMERCIAL DE LILLE METROPOLIS, France for recovery of debt amounting to Euro 393916.95, the Tribunal however dismissed the claim of the petitioner vide its order dated 30.01.2014. Petitioner then filed an Appeal No. Minute:14/389/RG 14/01147 before the Appellate Court, Douai, France against the order dated 30.01.2014 passed by the President of the Commercial Court of LILLE, which also came to be dismissed by its judgment dated 25.09.2014. The appellate court declared the appeal inadmissible on the issue of jurisdiction in view of the arbitration agreement and also held that there was no emergency to approach the court instead of seeking remedy under the Arbitration Agreement. According to the petitioner, the aforesaid disputes and differences have arisen in India, are covered by the terms and conditions of the ‘Buyers Agreement’ and are to be resolved by the arbitrator in view of the arbitration clause 14 of the ‘Buyers Agreement’. Hence, the petitioner has filed this petition invoking the arbitration clause 14 of the ‘Buyers Agreement’ for appointment of a sole arbitrator in terms of ‘Buyers Agreement’ dated 18.10.2012 qua recovery of Euro 393916.95 payable to the petitioner alongwith interest at the rate of 24% per annum.= Whether the respondent is bound to pay Euro 393916.95 alongwith interest at the rate of 24% per annum; whether the respondent has committed breach of Clause 2.2 of the agreement in cancelling the orders; whether the respondent is liable to compensate for cancelling the orders and reimburse the cost and damages incurred by the petitioner; whether the respondent acted in violation of Clause 4.1 of ‘Buyers Agreement’ dated 18.10.2012 by diverting the orders to another agency and, if so, whether the respondent is liable to compensate the petitioner and such other incidental questions can be examined only by the arbitrator. When an arbitration agreement exists between the parties, the present petition under Section 11 (5) read with Section 11 (9) of the Arbitration and Conciliation Act, 1996, shall have to be allowed with appropriate directions. In the result, we allow this petition and appoint Mr. Justice Kailash Gambhir, a Former Judge, Delhi High Court as a Sole Arbitrator for adjudication of the disputes that have arisen between the parties in relation to the ‘Buyers Agreement’ dated 18.10.2012 executed between them. We leave it open for the parties to make their claims and counter claims in relation to the agreement aforementioned before the Arbitrator. All contentions otherwise open to the parties on facts and in law shall be open to be urged before the arbitrator. The arbitrator shall fix his own fee. The petition, is accordingly, allowed with the above directions leaving the parties to bear their own costs. Parties are directed to appear before the arbitrator on 14.09.2016.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                         CIVIL ORIGINAL JURISDICTION

                ARBITRATION APPLICATION (CIVIL) NO. 4 OF 2015

ETOILE CREATIONS                                             …Petitioner
                                   Versus

SARL DANSET DECO                                     ...Respondent



                               J U D G M E N T


R. BANUMATHI, J.



            In this petition under Section 11(5) read with Section 11(9)  of
the Arbitration and Conciliation Act, 1996, the  petitioner  prays  for  the
appointment of a sole arbitrator for  adjudication  of  disputes  that  have
arisen  between  the  parties  in  relation  to  ‘Buyers  Agreement’   dated
18.10.2012 executed between them.
2.          Briefly stated case of the petitioner is as  under:-  Petitioner
is a proprietorship firm having its registered office at  C-291,  Suraj  Mal
Vihar, Delhi.  The petitioner is engaged in the  business  of  manufacturing
of products relating to home furnishing  and  upholstery  etc.,  exclusively
for the respondent  since  2000.   The  respondent-SARL  DANSET  DECO  is  a
concern having its office at 240 Rue De La Lys 59250, Halluin, France  which
is engaged in the business of purchase and sale of the product  relating  to
home  furnishing  and  upholstery  and  is  the  buyer   of   the   products
manufactured by  the  petitioner.  Accordingly,  a  ‘Buyers  Agreement’  was
executed  on  18.10.2012  at  New  Delhi  between  the  petitioner  and  the
respondent.  As  per  the  aforesaid  agreement,  the  petitioner  has  been
selling/supplying  its  aforesaid  products  and  the  respondent  has  been
buying/purchasing the products for resale/sale in the territory  of  France.
There was a long business relationship since 2000, even prior  to  execution
of the agreement and the petitioner was regularly supplying the products  to
the respondent.  At the time of execution of  the  aforesaid  agreement,  it
was acknowledged that the respondent owes a total amount of  Euro  367814.80
as the outstanding amount. The details of the  outstanding  dues  have  been
mentioned in Schedule-I  of  the  ‘Buyers  Agreement’.  The  petitioner  has
alleged that as per the terms  and  conditions  of  the  ‘Buyers  Agreement’
dated 18.10.2012, the  respondent  did  not  release  the  said  outstanding
amount within seven days of the agreement.  Despite numerous  reminders  for
the payment of dues through e-mails,  SMS  messages  exchanged  between  the
parties during November 2012 to April  2013  and  subsequent  legal  notices
sent to the respondent, the respondent failed to pay the  admitted  dues  of
the petitioner.
3.          Clause 2.2 of the ‘Buyers Agreement’ imposed a restriction  upon
the petitioner from supplying  its  product  to  any  other  person/firm  or
company, in the territory of France.  On  the  other  hand,  the  respondent
agreed and assured that the products ordered during each year  of  the  term
shall not fall short of the target  provided  in  Schedule-II  of  the  said
agreement.  In the event of the failure to meet such target,  the  agreement
stipulated termination  of  restriction  so  imposed  upon  the  petitioner.
Petitioner supplied various materials to the respondent at different  points
of time against various orders.  The respondent cancelled a  few  orders  to
the tune of Euro 272368.25.  The respondent committed breach  of  the  terms
and conditions of the ‘Buyers Agreement’ because cancelled orders  were  not
restored. Thus, the respondent is liable to compensate  the  petitioner  for
cancelling orders and reimburse for cost and damages incurred  in  procuring
material worth Euro 272368.25, just prior to the date of shipment  and  also
for preparing samples as per the request of the respondent dated  25.05.2012
and 26.07.2012. As per Clause 4.1 of the ‘Buyers Agreement’, the  respondent
shall not purchase/obtain/ deal with the products or any goods that  compete
with them, for sale from any person, firm or company  in  India  other  than
the petitioner.  The respondent not only cancelled the orders, but  also  in
violation  of  Clause  4.1  of  the  ‘Buyers  Agreement’  dated  18.10.2012,
purchased the same  products  worth  approximately  Euro  700000  from  M/s.
Chahat Exports, 148-A, Basement,  Deep  Complex,  Near  Maharani  Bagh,  New
Delhi and Dhruv Overseas, 4502, Dau Bazar, Cloth Market, Fateh Puri,  Delhi.
 Placing such orders  with  other  firms,  according  to  petitioner,  is  a
violation of terms and conditions of the terms  of  the  ‘Buyers  Agreement’
which stipulates commitment between the parties for five years  to  maintain
the business relations; but the respondent  by  diverting  those  orders  to
another agency  has  clearly  breached  the  terms  and  conditions  of  the
agreement. Petitioner sent legal notices dated  08.05.2013,  04.07.2013  and
06.07.2013 calling upon the respondent to pay unpaid invoices  to  the  tune
of Euro 393916.95 and also unpaid invoices to the tune of Euro 209580.63  of
M/s Creative International (another  partnership  firm  of  the  petitioner)
alongwith interest at the rate of 24% per annum.
4.          As the respondent did not make the payment of the invoices,  the
petitioner invoked arbitration clause agreed in Clause  14  of  the  ‘Buyers
Agreement’ for the appointment of three arbitrators, one to be nominated  by
each party and the third to be appointed by the two  appointed  arbitrators.
As per Clause 14 of the ‘Buyers Agreement’, the petitioner sent a  statutory
notice dated 14.08.2013, nominating on his behalf Mr. Subhash Chandra,  LLM,
Higher Judicial Services (V.R.S.), Member Judicial, Railway Claims  Tribunal
(Retd.) as an arbitrator. Petitioner requested the  respondent  to  nominate
its arbitrator so as to enable these arbitrators nominated  by  the  parties
to further nominate the presiding  arbitrator  and  constitute  an  arbitral
tribunal.
5.          The petitioner filed a petition before the Commercial  Court  in
Lille to seize all the bank  accounts  of  the  respondent  with  the  banks
Caisse d’ Epargne, GCE Trade and  HSBC  bank  alongwith  all  money,  values
and/or bonds held by these banks on behalf of the respondent.   The  court’s
bailiffs seized a total amount of Euro 48000 in HSBC bank on 11.10.2013  and
Caisse d’ Epargne on 14.10.2013 in compliance to order of  Appellate  Court,
Douai, France dated 25.09.2014. The petitioner  filed  a  claim  before  the
Tribunal-DE-COMMERCIAL DE LILLE METROPOLIS,  France  for  recovery  of  debt
amounting to Euro 393916.95, the Tribunal however  dismissed  the  claim  of
the petitioner vide its order dated 30.01.2014.  Petitioner  then  filed  an
Appeal No. Minute:14/389/RG 14/01147  before  the  Appellate  Court,  Douai,
France against the order dated 30.01.2014 passed by  the  President  of  the
Commercial Court of LILLE,  which also came to be dismissed by its  judgment
dated 25.09.2014.  The appellate court declared the appeal  inadmissible  on
the issue of jurisdiction in view of  the  arbitration  agreement  and  also
held that there was no emergency to approach the court  instead  of  seeking
remedy under the Arbitration Agreement.  According to  the  petitioner,  the
aforesaid disputes and differences have arisen in India, are covered by  the
terms and conditions of the ‘Buyers Agreement’ and are  to  be  resolved  by
the arbitrator  in  view  of  the  arbitration  clause  14  of  the  ‘Buyers
Agreement’.  Hence, the petitioner has  filed  this  petition  invoking  the
arbitration clause 14 of the ‘Buyers Agreement’ for appointment  of  a  sole
arbitrator in terms of ‘Buyers Agreement’ dated 18.10.2012 qua  recovery  of
Euro 393916.95 payable to the petitioner alongwith interest at the  rate  of
24% per annum.
6.          As per the Office  Report  dated  06.04.2016,  counsel  for  the
petitioner has on 23.02.2016 filed an affidavit of dasti  service  alongwith
proof of service on respondent and proposed respondents and the  service  of
notice is complete.
7.          We have heard the learned counsel for the  petitioner   at  some
length.  Despite service of notice, respondent has  chosen  not  to  appear.
The material facts are not in dispute that ‘Buyers Agreement’  was  executed
between the  parties  on  18.10.2012.   Clause  14  of  the  said  agreement
provides for settlement of dispute in relation to the agreement  by  way  of
arbitration.  Clause 14 reads as under:-
      “14. Arbitration

14.1  Any dispute, difference,  controversy  or  claim  (“Dispute”)  arising
between the Parties out of or in relation to  or  in  connection  with  this
Agreement, or the breach, termination, effect, validity,  interpretation  or
application of this Agreement or as to their rights, duties  or  liabilities
hereunder, shall be settled  by  the  Parties  by  mutual  negotiations  and
agreement.  If, for any reason, such Dispute cannot be resolved amicably  by
the  parties,  the  same  shall  be  referred  to  and  settled  by  way  of
arbitration proceedings by three arbitrators, one to be  nominated  by  each
Party and the third to be appointed by the two appointed  arbitrators.   The
arbitration proceedings shall be held in  accordance  with  the  Arbitration
and Conciliation  Act,  1996,  or  any  subsequent  enactment  or  amendment
thereto (the “Arbitration Act”) by a sole arbitrator appointed by the  First
Party. The decision of the arbitrator shall be final and  binding  upon  the
Parties.   The  venue  of  arbitration  proceedings  shall  be  Delhi.   The
language of the arbitration and the award shall be English.”

8.          As is evident from the averments in the petition, disputes  have
actually arisen between the parties in relation  to  the  agreement  and  in
view  of  clause  14  such  disputes  could  be  resolved  only  by  way  of
arbitration.   Whether  the  respondent  is  bound  to  pay  Euro  393916.95
alongwith interest at the rate of 24% per annum; whether the respondent  has
committed breach of Clause 2.2 of the agreement in  cancelling  the  orders;
whether the respondent is liable to compensate  for  cancelling  the  orders
and reimburse the cost and damages incurred by the petitioner;  whether  the
respondent acted in violation of Clause  4.1  of  ‘Buyers  Agreement’  dated
18.10.2012 by diverting the orders to another agency  and,  if  so,  whether
the respondent is  liable  to  compensate  the  petitioner  and  such  other
incidental questions can  be  examined  only  by  the  arbitrator.  When  an
arbitration agreement exists  between  the  parties,  the  present  petition
under Section 11 (5) read  with  Section  11  (9)  of  the  Arbitration  and
Conciliation  Act,  1996,  shall  have  to  be  allowed   with   appropriate
directions.
9.          In the result, we allow this petition  and  appoint          Mr.
Justice Kailash Gambhir,  a  Former  Judge,  Delhi  High  Court  as  a  Sole
Arbitrator for adjudication of the disputes that  have  arisen  between  the
parties in relation to the  ‘Buyers  Agreement’  dated  18.10.2012  executed
between them. We leave it open for the parties  to  make  their  claims  and
counter claims in  relation  to  the  agreement  aforementioned  before  the
Arbitrator. All contentions otherwise open to the parties on  facts  and  in
law shall be open to be urged before the arbitrator.  The  arbitrator  shall
fix his own fee.  The petition,  is  accordingly,  allowed  with  the  above
directions leaving the  parties  to  bear  their  own  costs.   Parties  are
directed to appear before the arbitrator on 14.09.2016.

                                                              ……………………….CJI.
                                        (T.S.THAKUR)


                                                              …………………………..J.
                                    (R.BANUMATHI)


                                                              ..…………………………J.
                                  (UDAY UMESH LALIT)
New Delhi;
July 25, 2016

Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’). = In the aforesaid facts and circumstances it did not lie in the mouth of the respondent contractor that the appellants had committed a default and had forfeited their right to appoint arbitrators as per terms of the agreement. The learned Judge failed to read the relevant clause of the agreement properly and therefore wrongly placed reliance upon judgment in the case of Datar Switchgears (supra). In that case this Court had extracted the relevant terms of agreement in paragraph 9 which showed that there was no stipulation of any time limit like that of 60 days in the present case. The terms of the Agreement bind the parties unless they have chosen to repudiate the same. Relevant terms, if provided, will be material for deciding when the right of a party to appoint the arbitrator will suffer forfeiture and when the other party would be entitled to give notice and on failure, move application under Section 11(6) of the Act. Such terms deserve respect of the parties and attention of the Court. In view of aforesaid discussions we find no option but to set aside the impugned order under appeal. We order accordingly. In case the respondent contractor is still desirous of pursuing its claim through arbitration in terms of the agreement, it is given the option to serve a fresh notice for arbitration within a month and on receipt of the same the appellants/railways shall be at liberty to send a panel of requisite number of names to the respondents within 60 days of receipt of the notice so that Arbitral Tribunal is constituted in terms of the Agreement. It goes without saying that if the Railways default in sending the panel within the stipulated time, the contractor will be at liberty to pursue its further remedies as per provisions of the Act and law. The appeal is allowed in aforesaid terms but without any order as to costs.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.6179 OF 2016
                 (Arising out of SLP (C) No. 28851 of 2014)


Union of India & Anr.                          …..Appellants

      Versus

Premco-DKSPL (JV) & Ors.                        .....Respondents


                               J U D G M E N T

SHIVA KIRTI SINGH, J.

The appellants have assailed the legality and  correctness  of  final  order
dated 25.02.2014 passed in Arbitration Petition No.14 of 2013 by an  Hon’ble
Judge of Gauhati High Court designated by the Chief Justice  of  that  Court
to decide respondents’ applications under Section 11 of the Arbitration  and
Conciliation Act, 1996 (hereinafter referred  to  as  ‘the  Act’).   By  the
impugned order the designated Judge allowed the  application  under  Section
11 of the Act and appointed a former Judge of that Court as  the  Arbitrator
after holding that the appellants  had  forfeited  their  right  to  appoint
railway officers as arbitrators in  terms  of  clause  64(3)(a)(ii)  of  the
agreement.
According to Ms. Kiran Suri, learned senior counsel for the  appellants  the
impugned order suffers from apparent error of fact on account of  misreading
or non-reading of  the  relevant  clause  of  the  Agreement,  i.e.,  clause
64(3)(a)(ii) which requires the  contractor/respondent  to  make  a  written
demand for arbitration and permits 60 days’ time to the  Railways  from  the
date of receipt of the demand, to send a panel of more than three  names  of
eligible gazetted railway officers so that the  contractor  may  suggest  to
General Manager at least two names out of that panel for appointment of  the
contractor’s nominee.  Such  suggestion  from  the  contractor  should  come
within 30 days from the dispatch of the request by Railways.   According  to
learned senior counsel, the relevant clause though indicated in paragraph  4
of the impugned order has been misread leading to an erroneous inference  in
the following words :

“…. This Clause permits the  respondents  to  nominate  a  railway  officer,
provided of course, the nomination is made within 30 days of receipt of  the
demand letter from the petitioner.  But since there  was  no  reaction  from
the railways side within the permissible 30 days and since in  the  meantime
the contractor has approached the High Court  under  Section  11(6)  of  the
Arbitration Act, having regard to the decision  in  Datar  Switchgears  Ltd.
(supra) it is apparent that the respondents have forfeited  their  right  to
appoint a railway officer as the arbitrator.”
It has been further contended on behalf of the appellants that the law  laid
down in the case of Datar Switchgears Ltd. v. Tata Finance  Ltd.  &  Anr.[1]
has not been correctly appreciated by the  learned  Judge  because  in  that
case failure to meet the demand to appoint an  arbitrator  was  apparent  on
account of expiry of the notice period of 30 days indicated in  the  demand.
Even then the Court held  that  since  the  application  was  under  Section
11(6)(a) of the Act and since that  Section  does  not  prescribe  any  time
limit rather  gives  an  unfettered  discretion  to  appoint  an  arbitrator
without any time limit, such power  will  stand  forfeited  only  after  the
party making the demand has moved the Court under  Section  11  and  not  on
mere expiry of the notice period of 30 days.  It is appellants’  stand  that
in view of stipulations in the relevant clause  providing  for  arbitration,
the respondent-contractor admittedly sent a notice demanding arbitration  on
12.06.2013 which was served on the appellants on  14.06.2013  and  hence  it
had to wait for 60 days for receipt of a panel of  more  than  three  names.
Thereafter the contractor had to suggest two names for  appointment  of  his
nominee arbitrator within 30 days.   The  cause  of  action  for  sending  a
notice of 30 days or any reasonable period, in view of clear  terms  in  the
Arbitration Agreement which has not been repudiated, can  arise  only  after
60 days.  Hence according to learned senior counsel for the appellants,  the
learned Judge erred in holding  that  the  appellants  had  forfeited  their
right to appoint arbitrators.  Instead, the finding should  have  been  that
the application under Section 11(6) of the Act was premature.
On behalf of appellants reliance has  been  placed  upon  judgment  of  this
Court  by  a  three  Judges  Bench  in  the   case   of   Northern   Railway
Administration,  Ministry  of  Railway   v.    Patel   Engineering   Company
Limited[2] in  support  of  the  proposition  that  in  the  appointment  of
arbitrator  by  court  under  Section  11(6),  the  Chief  Justice  or   the
designated person shall have “due regard to the two  conditions  in  Section
11(8)(a) and (b) relating to qualifications required for the  arbitrator  by
the agreement of the parties; and other considerations  relevant  to  secure
the appointment of an independent and impartial arbitrator”. Hence,  in  any
event appointment of a non-technical person, a former  judge  as  arbitrator
was unwarranted.
On behalf  of  respondent  contractor  the  relevant  facts  have  not  been
disputed and hence on facts it is beyond any doubt that  the  learned  Judge
has misread or omitted to read the relevant clause of  the  agreement  which
allows 60 days’ time to the  Railways  to  respond  to  the  demand  of  the
contractor by sending a panel containing more than three names out of  which
the contractor has to suggest at least two names to the Railways  which  has
to appoint one out of them as the contractor’s nominee.  The relevant  dates
are also not in dispute.  Since the notice for  appointment  of  arbitrators
dated 12.06.2013 was served on the railways on  14.06.2013,  the  contractor
had to respect the terms of the agreement  which  was  unrepudiated  and  to
wait for a period of at least 60 days before Section  11  application  could
have been filed.  Instead of waiting for 60 days  the  contractor/respondent
preferred such application prematurely on 23.07.2013. The  Railways  sent  a
panel of 4 names to the  respondent  on  30.07.2013,  well  within  60  days
limit.
In the aforesaid facts and circumstances it did not lie in the mouth of  the
respondent contractor that the appellants had committed a  default  and  had
forfeited their right to appoint arbitrators as per terms of the  agreement.
 The learned Judge failed to read  the  relevant  clause  of  the  agreement
properly and therefore wrongly placed reliance upon judgment in the case  of
Datar Switchgears (supra).  In  that  case  this  Court  had  extracted  the
relevant terms of agreement in paragraph 9 which showed that  there  was  no
stipulation of any time limit like that of 60  days  in  the  present  case.
The terms of the Agreement bind the  parties  unless  they  have  chosen  to
repudiate the same. Relevant  terms,  if  provided,  will  be  material  for
deciding when the right of a party to appoint  the  arbitrator  will  suffer
forfeiture and when the other party would be entitled to give notice and  on
failure, move application  under  Section  11(6)  of  the  Act.  Such  terms
deserve respect of the parties and attention of the Court.
In view of aforesaid discussions we find no option  but  to  set  aside  the
impugned order under appeal.  We order accordingly.  In case the  respondent
contractor is still desirous of pursuing its claim  through  arbitration  in
terms of the agreement, it is given the option to serve a fresh  notice  for
arbitration  within   a   month   and   on   receipt   of   the   same   the
appellants/railways shall be at liberty to send a panel of requisite  number
of names to the respondents within 60 days of receipt of the notice so  that
Arbitral Tribunal is  constituted  in  terms  of  the  Agreement.   It  goes
without saying that if the Railways default in sending the panel within  the
stipulated time, the contractor will be at liberty  to  pursue  its  further
remedies as per provisions of the Act and law.  The  appeal  is  allowed  in
aforesaid terms but without any order as to costs.


                       ………………………………..…….J.
                       [SHIVA KIRTI SINGH]



                       ………………………………….…..J.
                             [R. BANUMATHI]
New Delhi.
July 25, 2016.
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[1]    (2000) 8 SCC 151
[2]    (2008) 10 SCC 240

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