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Chebrolu Enterprises v. Andhra Pradesh Backward Classes Co-operative Finance Corporation Ltd.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 8918 of 2015)Decided 28 Oct 2015
Civil Appeal No. 8918 of 2015
Justice Anil R. Dave · Justice Vikramajit Sen

Background

A state-controlled cooperative corporation contracted with several suppliers to provide iron washing and smithing tools for a rural artisans' scheme in Andhra Pradesh. Each supplier signed an undertaking that its price was the lowest it charged for the same product anywhere in the State, and promised to refund any excess. When the corporation found the suppliers had sold identical tools more cheaply elsewhere, it withheld part of the payment and the dispute went to an arbitral tribunal.

Decision Breakdown

The Supreme Court dismissed the suppliers' appeals and held the High Court's judgment "just and proper." The tribunal's decision that the correct price was Rs 115 per kg was a finding of fact, which a higher court will not disturb unless it is perverse, and the Court found no such perversity. The Court held that charging a higher contract price than the market price is not, by itself, fraud, and that the undertakings gave the corporation the right to pay the lower rate. It also rejected the argument that the tribunal had exceeded its jurisdiction in fixing the price under those undertakings.

Lesson Learnt

If a contract includes a "lowest price" promise, the buyer may be entitled to pay the lower rate when the seller has charged more for the same goods elsewhere. Courts rarely re-examine an arbitrator's factual findings, so a party bound by an arbitration clause should expect the award to stand unless it is clearly unreasonable.

Official source (sci.gov.in)View Judgment (PDF)

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