JUDGMENT M. Katju, J.
1. This appeal has been filed against the impugned judgment and order of the District Judge, Jhansi dated 24.1.1998 in Misc. Case No. 242 of 1995.
2. Heard learned counsel for the parties.
3. The dispute relates to the payment of price variation of 6 running contracts of supply of Dissolved Acetylene (D.A.) Gas claimed by the appellant from the respondent Railways. The facts of the case are that the Deputy Controller of Stores, Central Railway Workshop, Jhansi gave tenders for supply of D.A. gas to the claimant. In response to the same the claimant made an offer dated 29.9.1986 for supply of the gas. In the contract entered into between the parties there was a price variation clause which stated that the price of D.A. gas will decrease/increase by Rs. 6 cubic metre for every decrease/ increase of Rs. 15 per metric ton in the average cost of procurement of calcium carbide. Any decrease in rate of D.A. gas will be refunded by the appellant within 15 days of finalisation of its accounts and any increase in the rate of D.A. gas shall be paid to the appellant within 15 days from the date of submission of its bill. The offer was based on Rs. 8,600 per cubic metre on cost of procurement of calcium carbide.
4. The Deputy Controller Stores accepted the offer and the claimant supplied the D.A. gas within the time prescribed in all the running six contracts. The gas was accepted by the respondents and the appellant submitted its bill for the supply of the gas as mentioned in the purchase order leaving the supplementary bills on the basis of the price variation clause which were to be submitted after obtaining the certificate from the Chartered Accountant for average cost of procurement of calcium carbide for each quarter after finalisation of account. Thereafter the claimant (appellant) submitted the supplementary bills in respect of the price variation vide letter dated 2.5.1988 to the Chief Workshop Manager, Central Railway Workshop, Jhansi with the certificate of the Chartered Accountant as per price variation clause along with calculation as per the said clause, and requested payment within 15 days from submissions of the bills otherwise interest @ 18% per annum would be chargeable as provided in the agreement.
5. The Spot Purchase Committee had approved the decrease/increase in the price of Rs. 15 per metric ton in the average cost of procurement of calcium carbide.
6. Subsequently the claimant was informed that the price variation clause quoted in the tender is tentative and unworkable and cannot be accepted and it is treated to be withdrawn. Since the Railways did not make the payment as demanded by the claimant the claimant (appellant) invoked the arbitration clause and the matter went to the arbitrator.
7. The respondent Railways filed a counter-statement before the arbitrator inter alia alleging that the contract for supply of stores by the Ministry of Railways are governed by the Indian Railway Standard Conditions of Contract and hence the claimant was bound by the said Indian Railway Standard Conditions No. 300 of the Indian Railway since the Standard Conditions of Contract will be applicable in the present case. It was further averred that due to mistake and by oversight the figure Rs. 6 per cubic metre has been mentioned in the agreement instead of Rs. 6 per 100 cubic metres. It was alleged that the Deputy Controller Stores has withdrawn the price variation clause as it was found unworkable, unrealistic, null and void.
8. The claimant appellant replied to the said objection stating that the terms and conditions mentioned in the Indian Railways Standard Conditions of Contract have no application and the matter is governed by the price variation clause in the agreement between the parties.
9. An arbitration award was given on 2.7.1995 by the sole arbitrator A. K. Khare whereby in the six supply contracts the arbitrator has given an award of Rs. 2,30,68,832.25 paise towards the amount adjusted for the price, Rs. 1,26,35,399.43 paise towards the amount of interest, i.e., total Rs. 3,57,04,231.68 paise and further interest on 6% per annum on the principal amount besides cost. Thus, the total award is for about Rs. 4 crores.
10. An objection was filed under Section 30/33 of the Arbitration Act for setting aside the award on the ground that the arbitrator has misconducted himself inasmuch as he committed certain apparent errors e.g., that he did not direct the opposite party to produce the documents giving the stock position of calcium carbide from 1.4.1986 to 31.3.1987, month wise average cost of procurement and details regarding the sale fate of D.A. Gas to other parties, and the valuation of purchases made by the opposite party of raw material of calcium carbide ; that the arbitrator had failed to draw adverse inference for suppression for non-production of account books, sale and purchase and stock register of raw material; that the price of the supplied articles had not been said to have increased 100 times from the original supply quoted price and the arbitrator had not appreciated the value. It was also alleged that the arbitrator has misconducted himself in ignoring active concealment of the fact that the price variation was Rs. 6 per hundred cubic metre and not Rs. 6 per cubic metre on every increase of Rs. 15 in value ; that the arbitrator has misconducted in not appreciating that the parties were under mutual mistake about the price variation clause and on account of mutual mistake the price variation clause was ab initio void. It was also alleged that the arbitrator misconducted himself in not understanding that it was Rs. 6 per hundred cubic metre for every increase of Rs. 15 per metric ton ; that the price of 100 cubic metres acetylene will vary; that the arbitrator has misconducted himself in not appreciating the fraud committed by the opposite party in not claiming increased price along with the bills for supply and it also misconducted in not appreciating Rule 300 of the Indian Railway Standard Conditions of Contract binding on the parties which authorised the Railway to withdraw and terminate the contract in case the price is higher than the usual market price. It was further alleged that the arbitrator has misconducted in ignoring condition No. 300 of Indian Railways Standard Conditions of Contract which provides that the price of stores supplied shall in no way exceed the lowest price at which the Contractor sells the stores to any other persons and had also misconducted himself in awarding the interest for the period prior to arbitration proceedings as also for the period pendentelite interest.
11. The opposite party (appellant in the present appeal) in his reply submitted that the award was given on 2.7.1995 after the appellant had tiled an application under Section 14/17 of the Arbitration Act for filing and making the award rule of the Court and the objections cannot be entertained. It was submitted that there was no misconduct on the part of the arbitrator, that the registers of stock, etc. could not be searched on account of lapse of 10 years ; that the Chartered Accountants certificate as required under the contract in respect of price variation was filed and given to the opposite party the offer under contract was based on calcium carbide price of Rs. 8,600 per metric ton ; that the objector did not challenge the same and hence no adverse inference could be drawn against the opposite party. It was also alleged that the objection in respect of price variation was incorrect; there was no question of increase by 100 times of original supply price. Only approximately 9 times increase has been allowed towards price and interest. There was no concealment or fraud of the opposite party, and the award was on the basis of the evidence on record. The technical aspect for production of 100 cubic metres acetylene from 262.7 kgs. calcium carbide was raised before the Arbitrator and cannot be raised now, that the amount was required to be paid within 15 days from the presentation of the bills of price variation clause, but the same had not been paid. It was also alleged that the arbitrator has given his finding in respect of Indian Railway Standard Conditions of Contract and the same cannot be challenged in these proceedings, as they do not amount to misconduct on the part of the arbitrator.
12. The court below allowed the objection under Section 30/33 by the impugned order dated 24.1.1998 and has set aside the arbitration award dated 2.7.1995. The findings of the court below on merits are contained in paragraphs 5 and 6 of the Impugned order wherein if has been held that the arbitrator had misconducted himself.
13. In paragraph 5 of the impugned order it is stated that from a perusal of the record it is apparent that the arbitrator has given his award on the basis of the price variation clause and the price increase is roughly 10 times of the quoted price. It has further been stated in paragraph 5 of the order that it was not the case of the claimant before the arbitrator that the price of calcium carbide which is needed for producing acetylene gas after pouring water has undergone an increase of 10 times or more from Rs. 8,600 per metric ton to Rs. 86,000 per metric ton.
14. In paragraph 5 of the impugned order it is observed :
"The original price which has been quoted and which price had been paid also was Rs. 25.85,567.74 p. Besides the above payment the arbitrator has awarded Rs. 2,30,68,832.35 p. Thus, according to arbitrator the price of acetylene gas supplied comes to Rs. 2,56,54,400.09 p. This figure is approximately 10 times of earlier original price. It had not been the case of the claimant before the arbitrator that the price of calcium carbide, which is needed for producing acetylene gas after pouring water, has undergone an increase of 10 times or more from Rs. 8,600 per metric ton to Rs. 86,000 per metric ton or more. The average increase in price of calcium carbide as per opposite party's Chartered Accountant Certificate for October, 1986 to March, 1987 is Rs. 1210.12 p. per metric ton. It may be noted at the outset that as per price variation clause the supplier gets an increase of Rs. 6 only when there is an increase of Rs. 15 in the price which means the price of calcium carbide should have gone up many times more to enable the supplier to claim an increase in the price of acetylene gas at the price which has been awarded to him by the arbitrator. As with an increase of roughly Rs. 1210.12 p. at a ratio of 6 : 15 the contractor gets increase in the price of calcium carbide by Rs. 484.80 p. and gets only marginal increase in the price of acetylene. It may also be noted here that there is little or no evidence in this respect. The only evidence, which can be said to be, is the certificate of Chartered Accountant in which increase noted in the price of calcium carbide is Rs. 1096.60 p., Rs. 858.98 p., Rs. 1326.82 p., Rs. 1326.82 p., Rs. 1326.82 p. and Rs. 1326.82 p. Obviously with such increase when the price variation is only Rs. 6 for every Rs. 15 by no stretch of imagination the price of gas supplied could have increased to 10 times. But for some jugglery or mistake on the part of the arbitrator amounting to misconduct, the price of acetylene gas supplied could not have undergone an increase of approximately 10 times from the original quoted price."
15. In paragraph 5 of its order the court below further went on to observe :
"It will not be out of place to mention here that the price of calcium carbide has not been constant. There are six supply orders of different dates. When on a subsequent date the supplier has quoted lower price than prevailing market price as would be seen from Chartered Accountant's Certificate filed by opposite party itself, they cannot be allowed to claim increase in the same manner as in its first supply order because in that event it would amount to misrepresentation and active concealment of fact amounting to fraud on the part of supplier to the Railways. It may also be quoted here that objectors in their objection have submitted that increase in price of acetylene of Rs. 6 for every increase of Rs. 15 in the price of calcium carbide per metric ton was for per 100 cubic metres and not per cubic metre. It has been said that the parties to the contract had known that it was for per hundred cubic metres. The typing of Rs. 6 per cubic metre instead of per hundred cubic metres is inadvertent unnoticed mutual mistake."
16. The court, below went on to say that it was a case of a typographical mistake, and the parties had clearly known that it is a case of Rs. 6 per hundred cubic metres, for every increase of Rs. 15 per cubic metre but the arbitrator has not considered this aspect. Hence he held that it is a case of non-application of mind of the arbitrator, which invalidates the award.
17. In paragraph 6 of the impugned order it has been observed that the arbitrator did not call for the relevant documents e.g., stock register of calcium carbide month wise maintained by the claimant for the period 1.4.1986 to 31.3.1997 with average cost of procurement, documents showing sale of D.A. gases to different purchasers during the period month wise, copies of purchase orders placed on claimant by other purchasers, I.T.C.C. for the period 1986-87, etc. The court below has observed that it is surprising that the Company dealing with supplies and making big claims as in this case would not maintain record for stock of calcium carbide for the period in question and other registers with regard to sale of D.A. gases to different purchasers and copies of purchase orders placed on it. It was observed that the claimant is a registered Company and deals in several gases and it is inconceivable that it did not maintain registers. The court below has held that the documents which were required to be produced were material and it was inconceivable that the claimant had not maintained the records. The Court held that the documents were necessary for reaching any just conclusion in respect of enhancement of price and it is inconceivable that the Chartered Accountant would issue a certificate without seeing the documents. Hence the certificate of the Chartered Accountant could not be relied upon. Non-production of such documents was a legal misconduct on the part of the arbitrator."
18. In our opinion when there was a specific contract between the parties it is the terms of that contract which will govern the legal relationship between the parties. Their relationship will not be governed by any standard conditions of contract, which the Railways may have unilaterally framed. When the parties with open eyes enter into a contract which is signed voluntarily by the parties then none of the parties can subsequently deny the legal implications flowing out of that contract by alleging that the terms of the contract are inconsistent with any standard conditions of contract fixed unilaterally by one of the parties. The price variation clause having been accepted by the Railways, the Railways cannot be allowed to wriggle out of the contract solemnly entered into by it on the pretext that the terms of the contract were inconsistent with standard conditions of contract unilaterally framed by the Railways. The standard conditions of contract do not amount to a contract. They are only unilateral broad guidelines fixed for its own guidance by the Railways. A contract by its very nature is a bipartite or multilateral document and is not a unilateral document. Unless two or more parties come together and enter into an agreement, there is no contract. Hence, the Railways cannot rely on its own unilateral standard conditions of contract to get over the contract solemnly entered into with the appellant.
19. Section 91 of the Evidence Act states :
"91. Evidence of terms of contracts, grants and other dispositions of property reduced to form of document.--When the terms of a contract, or of a grant, or of any other disposition of property, have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained."
20. Section 92 of the Evidence Act excludes any oral agreement or statement varying the terms of a written contract.
21. A contract between the parties can be assailed only on the grounds mentioned in the Indian Contract Act such as fraud, undue influence, and misrepresentation. There is no plea or evidence of any fraud, undue influence, and misrepresentation, etc. in this case. The plea taken by the Railways that the contract was unenforceable and bad as unworkable, unrealistic, etc. is merely ipse dixit and is hardly tenable. In fact these grounds have not been specifically pleaded in the counter-statement before the arbitrator to avoid the price variation terms. The existence of the price variation clause has not been disputed by the Railways.
22. In our opinion the plea taken by the Railways that the price variation clause was accepted due to mistake or oversight is not tenable in law. If this is accepted, no contract can ever be enforced. This is not a case of a pardanasheen lady or a person suffering from some disabilities who alleged that due to some disability he did not understand the terms of the contract, which he had signed. There was as many as six contracts signed by senior officers of the Railway, and it is inconceivable that there were six contracts on different dates having mistakes in all of them due to oversight. If this plea of the respondents is accepted, no contract can ever be binding between the parties. Moreover, Condition No. 600 of the Standard Conditions of Contract mentions : "special conditions where they differ from standard conditions override the latter."
23. As regards the averments in paragraphs 5 and 6 of the impugned order that the arbitrator has misconducted himself, in our opinion there is no substance in these objections.
24. Regarding certain records, which were not submitted by the appellant, it was the specific plea of the appellant that these records were not traceable due to lapse of ten years. There is nothing unbelievable in the version of the appellant. The appellant submitted the certificate of the Chartered Accountant along with the bills and this was the condition in the contract. Apart from this the papers, which the Court below has referred to were not given to the appellant. We fail to see how they are relevant to this case. The Railways did not apply before the Arbitrator for summoning these documents from the appellant. Under the price variation clause, only the copy of the Chartered Accountant's Certificate regarding the average cost of procurement of calcium carbide for the respective quarters was required to be furnished, and that was actually furnished by the appellant. The Railways raised no objection to this. In our opinion there was no question of drawing any adverse inference because for non-production of documents, as these documents were not sought to be summoned by the Railways through the arbitrator.
25. As regards the allegation of fraud, in our opinion the plea is not tenable, as no particular of fraud has been mentioned by the Railways in the counter-statement filed before the arbitrator or in the affidavit filed by Shri S. K. Rai, Deputy Controller of Stores.
26. In our opinion the court below has acted as a court of appeal sitting in appeal over the award of the arbitrator which it could not legally do while deciding the application under Section 30/33 of the Arbitration Act. There is no dispute in this case that separate agreements on different dates were entered into between the parties. No particulars of any fraud have been pleaded by the respondents (the objectors). The observation of the court below that there was a typographical error is wholly untenable. With open eyes the parties have entered into the contract and it cannot be believed that they had not looked into the agreement before signing it. Senior Railway Officers signed the contract. There was no evidence by the objectors that the price of raw material as alleged by the claimant had not increased.
27. The agreement between the parties was that if the price of raw material, i.e., calcium carbide which was at that time Rs. 8,600 per metric ton would increase or decrease by 15% then either will be entitled to have an increase or decrease of Rs. 6 per cubic metre. The contention of the objector was that the intention was that Rs. 6 would be charged not per cubic metre but per 100 cubic metres. This cannot be accepted because in the agreement it is mentioned that the price of D.A. gases will increase/ decrease by Rs. 6 per cubic metre for every increase or decrease of Rs. 15 per metric ton in the average cost of procurement of the calcium carbide. We have to go by what is mentioned in the agreement and not the ipse dixit of the objector (respondents in this appeal). Sections 91 and 92 of the Evidence Act prohibit variation of the terms of a written contract by oral evidence.
28. It may be mentioned that a civil court cannot vary the terms of a contract ; it can only interpret and enforce it. It is only the Labour Court or Industrial Tribunal which can vary the terms of a contract vide Bharat Bank Ltd. v. Its Employees, 1950 LLJ 921 (SC) and Western India Automobile Association v. Industrial Tribunal, 1949 LLJ 245 (FC), etc.
29. From a perusal of the award of the arbitrator, which has been annexed to the paper book, it appears that the arbitrator has applied his mind carefully to all the facts and arguments raised before him. The arbitrator was a retired District Judge with long experience of deciding cases.
30. In our opinion the arbitrator had not committed any misconduct and in fact it is the learned District Judge who has committed a gross error of law in re-appreciating the evidence as if he was a Court of appeal.
31. In U.P. State Electricity Board v. Searsole Chemicals Ltd., 2001 (2) AWC 1011 (SC) : AIR 2001 SC 1171, the Supreme Court has held that a Court cannot interfere with an arbitration award by re-appreciating the matter. In Indu Engineering and Textiles Ltd. v. Delhi Development Authority, AIR 2001 SC 2668 and in T. P. George v. State of Kerala and Anr., 2001 (1) AWC 842 (SC) ; AIR 2001 SC 816, the Supreme Court observed that any arbitration award is not to be lightly interfered with by the Court. The Supreme Court upheld the price escalation clause and held it to be legal and valid. In the present case the Spot Purchase Committee had in fact recommended the price variation clause and the Court cannot interfere with the same as that would be sitting as a court of appeal against the terms of the agreement and against the arbitration award.
32. In Hindustan Construction Co. Ltd. v. Governor of Orissa and Ors., AIR 1995 SC 2189, it was held that the award cannot be interfered with on the ground of error of law apparent on the face of the award. In Tarapore and Company v. Cochin Shipyard Ltd. and Anr., AIR 1984 SC 1072, it was held that the decision of the arbitrator even if erroneous cannot be interfered with. In Puri Construction Put. Ltd. v. Union of India, AIR 1989 SC 777, the Supreme Court held that when a Court is called upon to decide objections raised by the parties against an arbitration award the jurisdiction of the Court is limited and it has no jurisdiction to sit in appeal and examine the correctness of the award on merit.
33. In Hindustan Construction Co. Ltd. v. State of Jammu and Kashmir, AIR 1992.SC 2192, the Supreme Court held that an arbitrator is competent to award interest for a period commencing with the date of award to the date of the decree or date of realization whichever is earlier.
34. In the above decision it was also held that even if the award is a non-speaking one it cannot be set aside,
35. For the reasons given above we are of the opinion that the court below has illegally and arbitrarily interfered with the arbitration award.
36. The appeal is therefore allowed. The impugned judgment and decree dated 24.1.1998 is set aside. The respondents are directed to make payment to the appellant in accordance with the arbitration award within two months of production of copy of this order before the authority concerned.