Arbitration and Fall Clause in the agreement to reduce price
On 3.12.2015, the revised tender offer of the respondent for supply of bio-diesel was accepted on “free on rail / road on Destination basis and for all inclusive rate of Rs.44,000/- per KL. Thus, freight was to be borne by Emami.
The Purchase Order of the Central Railway for supply of 3,335 KL out of 4,100 KL contract was given. The Fall Clause was that in case other Railway has finalized the tender on same firm at lower rate for bio-diesel, that lower rate will be applicable for this Purchase Order. However, such lower price will be applicable from the date of such reduction.
Thereafter, Eastern Railway had given another Purchase Order dated 2.2.2016 for supply of 500 KL bio-diesel at Jamalpur, Bihar, at Rs.42,100/- and additional freight charges.
This had led the Central Railway to reduce the price from Rs.44,000 to Rs.42,100/-. Emami submitted that the Fall Clause was not attracted at all.
The Central Railway had withheld Rs.48,75,400/-. Moreover, the Central Railway invoked the right to enhance supply for additional 1,230 KL at Rs.42,100 per KL.
In the arbitration invoked by the claimant Emami, the Award dated 1.2.2020 was passed in its favour and against the Central Railway.
The price for Central Railway was FOR on Destination plus taxes, while, the price for Eastern Railway was “Base price plus freight plus taxes”.
HELD that two price points of Central and Eastern Railways are not comparable for invoking Fall Clause.
Judgment dated 28.2.2025 of the High Court of Bombay in Arbitration Petition No.458 of 2021 (OS) of Union of India through Central Railway Vs. Emami Agrotech Ltd with connected matter
