Commercial Transactions Case Study: British Paints (India) Ltd. Vs Union Of India (UOI)

The Union of India invited tenders for the supply of paints of the description compound re colouring Olive Green Scamic 314 for faded tents to Specification Ind32/7037. The Ratanlal offered a tender. The laboratory did not consider the sample to be up to the mark, but the higher authorities of the Defence Department accepted this tender, and placed an order with the plaintiff‘ for supply of 500 Cwt. of this article and the price was fixed at Rs. 250/- F. O. R. Jodhpur per Cwt. According to the contract the goods were to be inspected by the Inspector at Jodhpur and if he was satisfied that these were up to the mark, then the same could be dispatched by the plaintlff on receipt of the lnspection notes. The original date of delivery was fixed on 15th of October, 2004 but Ratanlal stated that it might not be in a position to do so as it had to indent some of the ingredients from USA and on their successive applications for extension of time: time for supply was finally extended up to the 30th of April, 2005. 9 Cwt. of this article was inspected on the l6th October, 2004 and accepted and dispatched on the 5th December, 2004.

The second lot consisting of 59 1/2Cwt. was inspected on the 16th March, 2003, and was rejected on the 22nd April, 2003 and again offered after some reconditioning on the 30th April, 2003 and rejected on the 19th May, 2003. The third lot of 150 Cwt. was inspected on the 30th March, 2003 and accepted and dispatched on the l7th April, 2003. The fourth lot consisting of 188 Cwt. was inspected on the l3th April, 2003 and was rejected on the 7th May, 2003. The last lot consisting of 931/2 Cwt. together with 591/2 Cwt. constituting the second lot, were inspected on the 30th April, 2003 and rejected on the 19th May, 2003. Therefore, the defendant had accepted 159 Cwt. , and the balance of 341 Cwt. constitutes the disputed item. The defendant that the delivery was not made by the 30th 2003. Before the receipt of this letter, Mr. plaintiff company went over to Kanpur to terminated this contract on the ground April by its letter dated the lst of May Jaidéep the technical Director of the find out how the test was carried on there and he was given every opportunity to see that on the lst of May, 2003. On his coming back, the letter of cancellation of the The plaintiff requested the Kanpur authorities where contract was gone into, and the tests were to be done, to enable its chemist Mr. Dube to come and see for himse lf why the goods were rejected. Mr. Dube came there in the third week of May, 2003 and With the help of Drs. Ranganathan and Balakrishanan he saw how the test was carried on.

The reconditioned sample which he had brought was tested by the authorities at Kanpur, at the request of the plaintiff by its latter the 22nd May,2003on the 30th May the Kanpur authorities wrote to the Inspector in Jodhpur with copy to the plaintiff, that his reconditioned sample was ”found to conform to the quoted particulars in all respects and is therefore acceptable. ” There was further correspondence between the plaintiff and the defendant re: the acceptance of the goods but the defendant by its letter dated the 30th September, 2003 intimated that its decision as conveyed by its letter dated the lst of May, 2003 was final and cannot ’be altered and further that the stores offered by the plaintiff "were not in accordance with the terms of the Contract for quality. " Thereafter the plaintiff served the usual notices on the defendant and the matter had also been referred to arbitration. The Arbitrators however found that under the terms of the contract, the Inspector's decision was to be final and binding on the parties, and, as such, held that they had no jurisdiction to enter into this question of the rejection of the supplies on the ground that this did not conform to the required specification. The main ground of +4 Of is that the test made by the Kanpur authorities was not in accordance with the agreement inasmuch as they "were carrying out the tct by comparing the supplied material with a tinted slip prepared some months ago with the paint from the said sample No. 30/100” and not in the same manner and at the same time as provided for in the Agreement. It was further alleged that the Inspector carried out the inspection capriciously and not in accordance with the said specification.

The plaintiff further alleged that the materials were specially manufactured for the purpose of this tender and could not be resold in the market and claimed a sum inclusive of storing charges on the basis of the of Rupees 88,496/- as damages price at which the plaintiff agreed to supply together with a sum of Rs. 5, 228/- by way of interest. The total claim was thus laid at Rs. 93, 724/-. The Union of India contested the suit alleging that time was of the essence of the contact and further that the tests at Kanpur were carried on in accordance with the rules, and that the inspector's reports were not at all arbitrary, and that the supplies were not accepted as the same were not of the requisite quality. The learned Subordinate Judge at Jodhpur held in favour of the defendant on all the points involved and dismissed the suit.