| A contract was entered into between
the Appellant and the Respondents on 29-5-1995. On 4-9-1986,
the Government of India, Ministry of Defence made an amendment
in the general conditions of the contract whereby the Arbitrator
was required to give a reasoned award if the claim exceeded
Rs. 1 lakh. Disputes arose between the parties and on 31-5-1991
an Arbitrator was appointed in terms of the arbitration agreement.
The Arbitrator allowed the Appellant’s claim to the
extent of Rs.80,000/- only and rejected the counter-claim
of the Respondent.
The question which arose for consideration before the Supreme
Court was whether the amendment dt.4-9-1986 made to the general
conditions of the contract casts an obligation on the Arbitrator
to give a reasoned award. The Appellant’s contention
was that the amendment dt.4-9-1986 applied only to the contracts
entered into on and after that date and in any case the Respondents
could not have amended the general conditions of contract
all by themselves without their consent and therefore the
arbitration clause as contained in the general conditions
of contract as on 29-5-1985, i.e. the date of contract was
only applicable. The Respondent took the plea that the acceptance
letter signed by the Appellant should be read and interpreted
as the Appellant having authorised the Respondents to amend
the general conditions of the contract and also as the Appellant
having agreed to bind itself by the general conditions of
the contract as modified from time to time and therefore the
award given by the Arbitrator in breach of the arbitration
clause as amended should be held as void.
The Supreme Court rejected the plea of the Respondent stating
that there is nothing contained in the acceptance letter of
the Appellant, either expressly or by necessary implication,
to spell out the Appellant having authorised the Respondents
to carry out modifications in the terms and conditions of
the contract otherwise than by mutual agreement, and to hold
the Appellant bound by such modifications though not consented
to by him and though not even brought to his knowledge.
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