Omkar Arvind patil
Roll M2231
Law case
Oil and Natural Gas Corporation Ltd vs Saw Pipes Ltd case come under the concept of the Indian Contract Act, 1872
The Oil & Natural gas Corp. Ltd. advertised a tender for the supply of casing pipes. This tender was replied by Saw Pipes Ltd. through a letter dated 27.12.1995.
The letter contains the terms and conditions under which the SAW Pipes Ltd. supply the specified size of pipes which will be delivered by 14.11.1996.
The Contract Deed contains that if there was any failure in the supply of the pipes then the appellant i.e. ONGC in the present case would be without prejudice to any rights or remedy. It also contains that the appellant will be entitled to recover from the respondent as agreed through liquidated damages and not through penalty.
Both parties already decided or agreed to the estimate of damages upon. The parties also agreed it that payment of damages will be from the bill for payment of the cost of material which is sent by the respondent.
It was in the year 1996 that there was a general strike by mill workers which almost affected the whole of Italy from where respondents supplied the requisite raw materials as they could not deliver the materials on time. Respondent takes an extension of 45 days to deliver the goods as agreed in the contract.
The appellant granted the extension but with a condition that amount equal to liquidated damages will be recovered from the respondent. The goods were delivered to the appellant, and the appellant makes the payment but kept an amount of US Dollars 3,04,970.20 and Rs. 15,75,559. This amount of deduction was disputed according to the respondent. Hence dispute was referred to Arbitration Tribunal under Arbitration and Conciliation Act, 1996 to seek relief and resolve the dispute During September and October of the year 1996 there was a general strike by the mill workers. This strike was in almost whole of the Europe which affected Italy from where the respondent supplied the requisite raw materials, they were not able to deliver the materials on time. This compelled the respondent to ask the appellant for extension of 45 days from the agreed date of execution of order mentioned in the contract. The appellant granted the extension but with a condition that the amount equal to the liquidated damages will be recovered from the respondent.
The analysis of the judgement of the ONGC v. SAW Pipes Ltd. case has made it clear that the principles governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the court must in consonance with public conscience. and in keeping with public good and public interest declare such practice to be opposed to public policy.