2017 (4) TMI 1155 - SC - Indian Laws

Arbitral dispute - claiming payment/consideration on account of non-lifting of the minimum quantum of gases, by Diesel Locomotive Works - Held that - Having perused the documents furnished by the appellant, at the asking of the Diesel Locomotive Works, and having perused the findings recorded with reference to the statement made by Shri A.N. Jha, before the Arbitrator (extracted above), we are satisfied, that on each occasion, before the shortfall of the gases were blown off, the appellant duly informed the Diesel Locomotive Works, and in that view of the matter, it is not possible for us to concur with the findings recorded by the High Court, that due intimation was not furnished by the appellant Kamrup Industrial Gases Ltd., to the respondent - Diesel Locomotive Works, before carrying on the exercise of emptying their cylinders, by blowing off the unlifted gases. It is also relevant in this behalf to make a reference to the determination recorded by the Arbitrator, again based on the statement of the aforesaid Shri A.N. Jha, that on different occasion, relevant bills were raised by the appellant Kamrup Industrial Gases Ltd., indicating payments claimable by the appellant. The bills raised also denoted the amounts deducted on account of the sale proceeds of the gases which the appellant could sell in the open market. For the reasons recorded above, we are satisfied, that the impugned order passed by the High Court deserves to be set aside. The same is accordingly set aside. We hereby affirm the determination recorded by the Arbitrator in his award, dated 18.4.2004. The civil appeal is allowed, in the above terms.

Issues Involved:
1. Non-lifting of minimum quantum of gases by Diesel Locomotive Works.
2. Production and submission of vital documents before the arbitrator.
3. Entitlement of appellant to payment for short-lifting of gases.
4. Intimation to Diesel Locomotive Works before blowing off the unlifted gases.
5. Affirmation of arbitral award and interest on awarded amount.

Issue-wise Detailed Analysis:

1. Non-lifting of Minimum Quantum of Gases by Diesel Locomotive Works:
The agreement dated 21.04.1965 between Kamrup Industrial Gases Ltd. and Diesel Locomotive Works stipulated that Diesel Locomotive Works must lift a minimum of 18,000 cubic meters of Oxygen gas and 2,500 cubic meters of Acetylene gas per month. If the minimum quantity was not lifted, Diesel Locomotive Works was still liable to make payment for the stipulated minimum quantity. Kamrup Industrial Gases Ltd. claimed payment for the non-lifting of the minimum quantum, leading to the arbitration proceedings.

2. Production and Submission of Vital Documents Before the Arbitrator:
The Division Bench of the High Court accepted the appeal by Diesel Locomotive Works, citing that vital documents were not produced by Kamrup Industrial Gases Ltd. However, it was demonstrated that the required documents were indeed produced before the arbitrator on 16.08.1989 and handed over to the Central Government Advocate. The Supreme Court found substance in this contention and set aside the High Court's finding that the documents were not produced or provided.

3. Entitlement of Appellant to Payment for Short-lifting of Gases:
The appellant was entitled to payment for short-lifting only if it could be shown that the minimum quantum of gases was produced and the shortfall was not sold in the open market. The payment would be due if the shortfall was blown off after due intimation to Diesel Locomotive Works. The Supreme Court noted that the evidence, particularly the testimony of Shri A.N. Jha, supported the appellant's claim that the gases were blown off after informing Diesel Locomotive Works.

4. Intimation to Diesel Locomotive Works Before Blowing Off the Unlifted Gases:
The High Court found that there was no pleading in the appellant's statement of facts regarding the blowing off of gases. However, the Supreme Court, based on the arbitrator's findings and the unshaken testimony of Shri A.N. Jha, concluded that the appellant had duly informed Diesel Locomotive Works before blowing off the gases. The bills raised for the blown-off gases were also served on Diesel Locomotive Works, with no rebuttal from the respondent.

5. Affirmation of Arbitral Award and Interest on Awarded Amount:
The Supreme Court affirmed the arbitral award dated 18.04.2004 and set aside the High Court's order. The appellant was awarded post-decretal interest at the rate of 9% on the awarded amount from 1.9.2006, the date when the Calcutta High Court decreed the arbitral award.

Conclusion:
The Supreme Court allowed the civil appeal, affirming the arbitrator's award and granting post-decretal interest to the appellant. The findings that the required documents were produced and due intimation was given to Diesel Locomotive Works were crucial in overturning the High Court's decision.

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