M/S. CHEBROLU ENTERPRISES Vs A.P.BACKWARD CLASSES CO-OP FIN.CORP.LTD
Bench: ANIL R. DAVE,VIKRAMAJIT SEN
Case number: C.A. No.-008918-008918 / 2015
Diary number: 11904 / 2010
Advocates: R. CHANDRACHUD Vs
G. N. REDDY
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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.