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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

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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.

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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

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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:

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“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

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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

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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

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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

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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’,

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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

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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

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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

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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.