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CASE NO.: Appeal (civil)  3134 of 2002

PETITIONER: Hindustan Zinc Ltd

RESPONDENT: Friends Coal Carbonisation

DATE OF JUDGMENT: 04/04/2006

BENCH: Arun Kumar & R V Raveendran

JUDGMENT: J U D G M E N T

RAVEENDRAN, J.

       This appeal by special leave is against the judgment  dated 17.8.2001 of the Rajasthan High Court in Civil Misc.  Appeal No. (SB) 227/1997.  

2.      In pursuance of a tender invitation dated 14.10.1991  issued by the appellant for supply of Metallurgical coke (for  short ’coke’), the respondent submitted its offer dated  8.11.1991. The appellant accepted the said offer and placed a  purchase order dated 16/18.12.1991 on the respondent for  supply of 15,000 MT of coke, to be supplied to its Vizag Unit  and  Tundoo Unit. Clause (2) of the purchase order contained  the specifications for the supply of coke and Clause (3) related  to price. The price agreed, exclusive of taxes and duties, was  Rs.2,231/- per MT of coke. The loading charges was Rs.32 per  MT. The transportation charges were Rs.950 per MT for  delivery at Vizag Unit and Rs.120 per MT for delivery at  Tundoo Unit. Therefore, the FOR price was Rs.3,213 per MT  for Vizag Unit and Rs.2,383 per MT for Tundoo Unit. Clause 5  provided for price variation. Sub-clause (i) thereof provided for  variation in prices of coke and sub-clause (ii) provided for  variation in transportation cost. As we are concerned with the  variation in price of coke, Clause 5(i) is extracted below :- "Price Variation :

(i) For Metallurgical Coke : The Metallurgical coke  price specified in para 3 above is based on the coal  price ruling as on 8.11.1991 (The date of  submission of the offer). In case there is any  increase in the coal price by the Coal Companies  w.e.f. 9.11.1991 and during the currency of contract  period, you will be paid Rs. 1.65 per MT of Met.  Coke for each Re.1/- per MT increase in coal  (coking coal washery) price from the price ruling as  on 8.11.1991 on production of documentary  evidence."

Clause 13 provided for settlement of disputes by arbitration. 3.      Coke is the processed product of coal obtained by  carbonization, that is heating coal without air. When burnt,   Coke generates a higher temperature, than coal and produces  very little smoke or ash and is used in blast furnaces. The  coking coal used for manufacturing coke is graded as Steel  Grade I, Steel Grade II, Washery Grade I, Grade II, Grade III

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and Grade IV depending upon the ash content/impurities. The  lesser the ash content/impurities, the higher the grade of coal.  The contract terms (the purchase order) gave only the  specifications of coke to be supplied, that is Fixed Carbon 71%    +/- 2%; Ash 27% +/- 2%; Moisture : 3% maximum; and VM :  1% maximum. The porosity required was 45% +/- 2% and size  4" to 6". The contract did not specify the use of any particular  quality of coal for producing coke of the required specification.

4.      The respondent claimed that it used Washery Grade II   for the supplies made between the period 18.12.1991 and  13.7.1992; that it found that Washery Grade II coal was not  suitable for producing the Metallurgical Coke of the  specifications required by the appellant; and that therefore it  switched over to the use of Washery Grade I coal from  14.7.1992 and used the said higher quality coal up to 27.7.1994  when the last supply was made.  

5.      The appellant granted escalations in price of coke from  time to time by increasing the basic price of coke (Rs.2,231 per  MT) and made payments accordingly. The appellant, however,  granted escalations only on the basis of price variation of  Washery Grade II coal (that is difference between base price of  Washery Grade II coal as on 8.11.1991 and the prevalent price  of Washery Grade II coal) and not with reference to Washery  Grade I coal.  

6.      The respondent was not satisfied with the price escalation  given by the appellant. There was some correspondence in that  behalf. The respondent ultimately sent a letter dated 16.12.1996  claiming that in regard to 7995.135 MT of Metallurgical Coke  supplied to Vizag Unit from 14.7.1992 onwards, the amount  due on account of escalation was Rs.19,89,977.37. It was  alleged that the Vizag Plant had refused to accept the claim of  the respondent that it were using washery grade I and continued  to give the difference on the basis of the price of washery grade  II. In regard to Tundoo Plant, it was alleged that though the  appellant agreed to the use of washery grade I, payment on  account of escalation was not made and Rs.21,18,355.92 was  due for the supplied made from 14.7.1992. Therefore, the  respondent sought reference to arbitration in regard to its said  claims. The dispute relating to said claims was referred to an  Arbitral Tribunal consisting of Ms. Justice Kanta Bhatnagar,  Mr. B.D. Sharma and Mr. T.S. Vardya as arbitrators.       

7.      The respondent submitted a claim statement dated  20.5.1997 before the Arbitrators, where the amount claimed  was slightly modified. Respondent claimed Rs.21,47,947.56 in  regard to supplies to Vizag Unit,  and Rs.21,18,355.92 in regard  to supplies to Tundoo Unit, in all Rs.42,66,303.48. Respondent  also claimed interest at 21 per cent per annum from the due date  till date of award and from the date of award till the date of  payment. The appellant filed its statement of objections dated  11.7.1997 resisting the claim.  

The Arbitral Tribunal passed a reasoned award dated 17.1.1998,  the operative portion of which is extracted below :

1.      The claimant is entitled to the escalation in the supply  price of their Met. Coke, in accordance with the price  variation formula given in clause-5 of Annexure-1,  relating to change in price of Coking Coal-Washery  Grade-II upto 14.07.1992, and thereafter in the price of

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Coking Coal-Washery I. The base price for determining  escalation is the price of coking Coal Washery Grade II  ruling as on 8.11.1991. The escalation covers supply of  Met. Coke to both the units of the Respondents viz. Vizag  and Tundoo.

2.      a) In regard to the amount of escalation, and the  corresponding quantities the Claimants has submitted  statements vide Schedules 1 and 2. However difference in  respect of certain bill-wise supplies have been pointed out  by the Respondents vide Schedule R-1 and R-2, enclosed  with their HZL/HO/CON/4(9)Arb/3 of 16.08.1997. The  Respondents have not disputed the rest of  the figures in  Claimants Schedules 1 and 2. On the other hand, no  supporting evidence has been received from the claimants  to deny the specific variations submitted by the  Respondents which pertain to supplied quantities.

b) Based on the above, we Award the following total  escalation amounts, indicated alongside the accepted  supplies :-

For Vizag       :       7987.597 MT.    Rs.21,45,591.21

For Tundoo      :       7248.040 MT.    Rs.20,32,762.15                                         --------------------                 TOTAL           Rs.41,78,353.36                                         =============

3.      The Claimant is entitled to receive interest at the rate of  21% per annum on the amount/s found due, from the date/s  they became due, till the date of this Award. The Claimants  is to receive interest at the rate of 18% per annum from the  date of award till realization.

4.      Both parties will bear their own cost of Arbitration. 5.      This Award is full and final settlement of all claims of the  claimants referred to us for our adjudication."

8.      The appellant filed a petition under Section 34 of the  Arbitration and Conciliation Act, 1996 (for short the ’Act’)  numbered as Civil Suit No.2/1998 on the file of the Additional  District Judge (No.II), Udaipur, praying that the said award by  set aside. It contended that the award was contrary to the price  escalation clause contained in the contract. It also submitted  that the amount awarded had been arrived at arbitrarily without  disclosing how the said sum of Rs.41,78,353.36 was arrived at.

9.      The trial court by judgment dated 3.2.1999 allowed the  petition in part. The operative portion of the trial court’s  judgment (translation) is extracted below :

"It is, therefore, ordered that Friends Coal Carbonisation is  entitled to get increase in price from Hindustan Zinc Ltd.  on the basis of price increase considering basic price of  washery grade I after 14.7.92 under clause 5. The  difference in the price of washery grade I and washery  grade II on 14.7.92 cannot be considered as price increase  of washery grade I. The price of washery grade I on 8.11.91  shall be considered as base price for increase in price.

The amount payable to Friends Coke Carbonisation by  Hindustan Zinc Ltd. is determined as under :

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1. Vizag Unit 7,987.597 MT      Rs. 4,77,806.10 2. Tundoo Unit 7248.040 MT      Rs. 6,64,397.80                                            --------------------                 Total                   Rs.11,42,203.90                                         ============= M/s Friends Coal Carbonisation will be entitled to get  according to terms of Contract, interest at 21% per annum   on the above mentioned amount from the date on which the  amount is due till date of award and will be entitled to get  interest at 18% per annum on the above mentioned amount  from date of  award till realization."

10.     The appellant accepted the said decision and paid  Rs.24,17,646/- to the respondent on 6.2.1999 calculated as  follows : i) Amount due (to the extent upheld by  the court)  Rs.11,42,203.90 ii) Interest thereon at 21% P.A. from due  date till date of award Rs.10,59,143.00 iii) Interest at 18% P.A. from date of award  till date of payment

Rs. 2,16,299.00

Total Rs.24,17,646.00

The respondent, however, was not satisfied with the Judgment  of the trial court. It filed an appeal before the Rajasthan High  Court under Section 37 of the Act. A learned Single Judge   allowed the said appeal by judgment dated 17.8.2001, and set  aside the judgment dated 3.2.1999 of the trial court. The award  dated 17.1.1998 was upheld in entirety. The learned Single  Judge held that having regard to the scope of interference under  Section 34(2)(b) of the Act, the trial court could not have  examined the terms of the contract nor interpret them for the  purpose of deciding whether the claims were covered by the  terms of the contract. The High Court held that where the  dispute regarding escalation was specifically referred to the  Arbitral Tribunal for decision, the court could not interfere on  the ground that the award was beyond the terms of the contract.  Reliance was placed by the High Court on the decisions of this  Court in Konkan Railway Corporation Ltd. v. Mehul  Construction Co. [AIR 2000 SC 2821], P.V. Subba Naidu v.  Government of Andhra Pradesh [1998 (9) SCC 407] and Indu  Engineering & Textiles Ltd. v. Delhi Development Authority  [2001 (5) SCC 691].  

11.     The said judgment of the High Court is challenged in this  appeal. Having accepted the decision of the trial court and paid  the amount due as per the said decision, the only ground urged  in this appeal is that for calculating the price escalation, the  difference should be with reference to base price of the washery  coal used and not with reference to base price of a lower quality  of washery coal.  

12.     This Court in  Oil & Natural Gas Corporation Ltd. v.

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Saw Pipes Ltd. [2003 (5) SCC 705] held that an award contrary  to substantive provisions of law or the provisions of the  Arbitration and Conciliation Act, 1996 or against the terms of  the contract, would be patently illegal, and if it affects the rights  of the parties, open to interference by court under Section 34(2)  of the Act. This Court observed :

"The question, therefore, which requires consideration is \026  whether the award could be set aside, if the Arbitral  Tribunal has not followed the mandatory procedure  prescribed under Sections 24, 28 or 31(3), which affects the  rights of the parties. Under sub-section (1)(a) of Section 28  there is a mandate to the Arbitral Tribunal to decide the  dispute in accordance with the substantive law for the time  being in force in India. Admittedly, substantive law would  include the Indian Contract Act, the Transfer of Property  Act and other such laws in force. Suppose, if the award is  passed in violation of the provisions of the Transfer of  Property Act or in violation of the Indian Contract Act, the  question would be \026 whether such award could be set aside.  Similarly, under sub-section (3), the Arbitral Tribunal is  directed to decide the dispute in accordance with the terms  of the contract and also after taking into account the usage  of the trade applicable to the transaction. If the Arbitral  Tribunal ignores the terms of the contract or usage of the  trade applicable to the transaction, whether the said award  could be interfered. Similarly, if the award is a non- speaking one and is in violation of Section 31(3), can such  award be set aside? In our view, reading Section 34  conjointly with other provisions of the Act, it appears that  the legislative intent could not be that if the award is in  contravention of the provisions of the Act, still however, it  couldn’t be set aside by the court. If it is held that such  award could not be interfered, it would be contrary to the  basic concept of justice. If the Arbitral Tribunal has not  followed the mandatory procedure prescribed under the  Act, it would mean that it has acted beyond its jurisdiction  and thereby the award would be patently illegal which  could be set aside under Section 34."

"\005\005\005.., in our view, the phrase "public policy of India"  used in Section 34 in context is required to be given a wider  meaning. It can be stated that the concept of public policy  connotes some matter which concerns public good and the  public interest. What is for public good or in public interest  or what would be injurious or harmful to the public good or  public interest has varied from time to time. However, the  award which is, on the face of it, patently in violation of  statutory provisions cannot be said to be in public interest.  Such award/judgment/decision is likely to adversely affect  the administration of justice. Hence, in our view in addition  to narrower meaning given to the term "public policy" in  Renusagar case it is required to be held that the award  could be set aside if it is patently illegal. The result would  be \026 award could be set aside if it is contrary to:  

(a)     fundamental policy of Indian law; or (b)     the interest of India; or (c)     justice or morality, or (d)     in addition, if it is patently illegal.

Illegality must go to the root of the matter and if the  illegality is of trivial nature it cannot be held that award is  against the public policy. Award could also be set aside if it  is so unfair and unreasonable that it shocks the conscience

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of the court. Such award is opposed to public policy and is  required to be adjudged void."   

13.     The High Court did not have the benefit of the principles  laid down in Saw Pipes (supra), and had proceeded on the  assumption that award cannot be interfered, even if it was  contrary to the terms of the contract. It went to the extent of  holding that contract terms cannot even be looked into for  examining the correctness of the award. This Court in Saw  Pipes (supra), has made it clear that it is open to the court to  consider whether the award is against the specific terms of  contract and if so, interfere with it on the ground that it is  patently illegal and opposed to the public policy of India.  

14.     After the matter was argued at some length, both counsel  on instructions submitted that they agreed in principle on the  following aspects :

a)      the respondent is entitled to escalation in price, calculated  as per the escalation clause (clause 5 of the purchase order)  on the basis of the price difference between the actual price  paid for the coal used and the base price of such coal on  8.11.1991.

b)      The respondent had used washery grade II in regard to the  supplies from 18.12.1991 to 13.7.1992. Therefore, in regard  to  supplies during the said period, the price escalation, if  any, had to be calculated with reference to base price and  actual price of Washery Grade II.  

c)      The respondent had used washery grade I in regard to the  supplies from 14.7.1992. Therefore, in regard to supplies  between 14.7.1992 till 20.7.1994 (date of last supply),      the price escalation had to be calculated with reference to  the difference between the base price and the actual price at  which the respondent purchased washery grade I coal.    d)      The award of the Arbitral Tribunal was only in regard to the  supplies made between 14.7.1992 to 20.7.1994 when the  respondent used washery grade I.  

e)      The interest payable on the amount found due shall be 21  per cent per annum from the date when the amount became  due till the date of the award, and 18% per annum from the  date of award till the date of payment.  

On 21.3.2006, we recorded briefly the aforesaid agreed position  and granted time to the parties to file calculations of the amount  due on that basis.

15.     The appellant accordingly filed a detailed calculation  sheet, the abstract of which is extracted below :-  

Supply Period

Quantity  (in MT) Escalated price  (Per MT) Price already  paid (Per MT)

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Difference in  price (per  MT) Total  Amount Re : Tundoo Unit

14.7.1992 to 16.1.1994 5326.98 2469.52 2603.37 2661.71 2428.34 2569.19 2620.53 41.18 219365.04

17.1.1994 to 20.7.1994 1921.06 2852.19 2927.69 2620.53 2696.03 231.66 445032.76 Total  7248.04

Total 660397.80 Re : Vizag Unit   16.7.1992 to 28.1.1993 6421.492 2469.52 2428.34 41.18 264437.04

12.3.1993 to 1.5.1993 416.735 2603.37 2428.34 175.03 72941.13 28.10.1993 to 27.12.93 953.81 2661.71 2587.93 73.78 70372.10 7.2.1994 to 26.2.1994 195.56 2852.19 2587.93 264.26 51678.68 Total  7987.597

459428.95

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CST  18377.15

Total  477806.10 Price Escalation: Rs.664397.80 + 477806.10 = Rs.11,42,203.90 Interest  up to date of payment (6.2.99) :        = Rs.12,75,442.00                                Total :                                   Rs.24,17,645.90

The appellant submitted that the said amount of Rs.24,17,646/-  was paid in full on 6.2.1999 itself after the trial court judgment  and nothing more requires to be paid.

16.    On the other hand, the respondent submitted a note stating  that a sum of Rs. 43,09,075/- was due, with interest from  17.1.1998, and even after adjusting Rs.24,17646/- paid by  appellant on 6.2.1999 and Rs.30,36,149/- (amount deposited by  appellant as a condition for stay granted by this Court and  withdrawn by respondent on 1.1.2003) a sum of  Rs.122,88,796/- is due as on 31.3.2006. The respondent has not  filed any calculation-sheet showing the break-up of the said  sum of Rs.43,09,075/-. As there was no agreement, we heard  further arguments in the matter.      

17.     The following facts are not in dispute :  

(i)     The respondent supplied in all 19,033.84 MT of  metallurgical coke to the appellant as detailed below :

S.No. Unit Name Supplied upto  14.7.2002 Supplied after  14.7.2002

1. Tundoo 1761.69 MT 7248.040 MT 2. Vizag 2036.513 MT 7987.597 MT

Total 3798.203 MT  15235.597 MT

(ii)    The contract price for supply of metallurgical coke was  Rs.2231/MT. If there was any increase in the price of  coal used for producing the met. coke, the respondent  was entitled to a price increase of Rs.1.65 per MT for  every Rs. 1/- per increase in the price per MT of such

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coal over and above the base price of such coal (price as  on 8.11.1991).

(iii)   The price as on 8.11.1991 was Rs. 540.02 per MT for  washery grade II coal and Rs. 654.42 per MT for  washery grade I coal.   

(iv)    The respondent purchased and used washery grade II  coal for the supplies of coke made between 18.12.1991 to  13.7.1992; and purchased and used washery grade I coal  for the supplies of coke made after 14.7.1992 up to  20.7.1994.

(v)     The Award of the Arbitral Tribunal grants the escalation  only for the supplies between 14.7.1992 to 20.7.1994,  when the respondent used washery grade I coal.

(vi)    The price of coal was Rs.659.62 per MT in regard to  washery grade II and Rs.798.98 per MT in regard to  washery grade I coal as on 14.7.1992 and the said price  went up further thereafter from time to time.

(vii)   The appellant had, in fact, already admitted escalation in  the price of coke supplied, worked out on the basis of  increases in price of washery grade II coal, and paid the  increased prices, as follows (the rates are per MT) :  

For supplies to Tundoo Unit : a)      Rs. 2428.34 (14.7.1992 to 16.2.1993). b)      Rs.2562.19 (17.2.1993 and 18.6.1993). c)      Rs. 2620.53 (19.6.1993 to 16.6.1994).  d)      Rs.2696.03 (17.6.1994 to 20.7.1994).

For supplies to Vizag Unit : e)      Rs.2428.34 (16.7.1992 to  1.5.1993). f)      Rs.2587.93 (28.10.1993 to 26.2.1994).             18.     The dispute arose on account of the fact the respondent  who was earlier using Washery Grade II coal [in regard to the  supplies upto 13.7.1992] started using washery grade I coal  from 14.7.1992, on the ground that it found it difficult to  produce the coke of the required specifications, by using  washery grade II coal. The appellant initially contended that as  respondent was earlier using washery grade II coal, it will  escalate the price only with reference to the price increase of  washery grade II coal and not washery grade I coal. On the  other hand, the respondent contended that as washery grade I  coal was used, which was costlier, they should be paid  escalation with reference the price of washery grade I coal and  not with reference to washery grade II coal. The arbitrators, as  notice above, made an award which in principle, was correct.  They held that the respondent was entitled to escalation in the  price of metallurgical coke, by applying the price variation  formula contained in clause (5) of the Purchase Order relating  to the Washery Grade I, with effect from 14.7.1992. They  rejected the contention of the appellant that the escalation  should be worked out only with reference to the prevailing price  of washery grade II coal, even if Washery Grade I was used.  They also rightly stated that the difference in price for purposes  of escalation should be worked out with reference to the base  price of coal on 8.11.1991. Where they apparently committed a  mistake is in stating that escalation should be worked out with  reference to the base price of washery grade II, even when  respondent was using washery grade I.

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19.     Having regard to clause (5) of the Purchase Order, the  escalations have to be worked out with reference to the increase  in price of coal. If washery grade II coal was used, the  difference between the prevailing price of washery grade II and  the base price of washery grade II on 8.11.1991, multiplied by a  factor of 1.65 was to be the escalation. Similarly, if washery  grade I coal was used, the difference between the prevailing  price of washery grade I coal and the base price of washery  grade I coal on 8.11.1991 multiplied by a factor of 1.65, was  the escalation. This meant that if the base price of washery  grade II was ’A’ (as on 8.11.1991) and base price of washery  grade I was ’B’ (as on 8.11.1991), and the actual price paid was   X for washery grade II and ’Y’ for washery grade I, then the  escalation would be [Y-B] x 1.65 in regard to supplies between  14.7.1992 to 20.7.1994. But what the respondent did while  submitting the calculations before the arbitrators was to take the  prevailing market price of washery grade I coal and deduct the  base price of washery grade II as on 8.11.1991 and multiply the  difference by a factor of 1.65, that is claim [Y-A] x 1.65.  

20.     The award of the Arbitral Tribunal, as noticed above,  holds that the respondent is entitled to price increase only in  regard to 7248.040 MT of coke supplied to Tundoo Unit and  7,987.597 MT of coke supplied to Vizag Unit. These quantities  indicate that escalation was granted by the Arbitral Tribunal  only in respect of supplies from 14.7.1992 when respondent  started using washery grade I coal. Washery grade I is a  superior variety of coal when compared to washery grade II  coad and the price of washery grade I coal was Rs. 654.42 on  8.11.1991 whereas the price of washery grade II coal was only  Rs.540.02 as on 8.11.1991. If respondent had to be given  escalation from 14.7.1992 in regard to washery grade I coal,  necessarily the escalation had to be worked out with reference  to the base price of washery grade I coal on 8.11.1991. By no  stretch of imagination the price increase can be worked out in  respect of supplies from 14.7.1992, by taking the difference  between the prevailing price of washery grade I and the base  price of washery grade II coal as on 8.11.1991. Let us   demonstrate this position with reference to an actual price   example. From 14.7.1992, the respondent used washery grade I  coal. Admittedly, the price of washery grade I coal on  14.7.1992 was Rs.798.98. Having regard to the escalation  clause, price escalation had to be worked out by taking the  difference between the price of washery grade I coal on  14.7.1992 (Rs.798.98) and the base price of washery grade I on  8.11.1991 (Rs.654.42) that is Rs. 144.56 and multiply it by a  factor of 1.65 which works out to Rs.238.52. But what the  respondent claimed was by calculating the difference between  the market price of washery grade I coal on 14.7.1992 (798.98)  and the base price of washery grade II coal on 8.11.1991  (540.02) that is Rs.258.96 multiplied by the factor of 1.65 and  arrive at the escalation as Rs.427.28 per MT. This is in clear  violation of the provisions of Clause 5 of the purchase order  relating to price variation.

21.     The contract only mentioned the specifications of  metallurgical coke and did not specify the quality of coal to be  used for producing the metallurgical coke. It was open to the  respondent to use any grade of coal, provided it supplied the  coke of the quality specified. The purchaser was concerned with  the specifications of the product it purchased, namely,  metallurgical coke. It was not concerned with the quality of the  raw material (that is coal) used for producing the metallurgical  coal. The price of metallurgical coke was not linked to or based  on the basic price of any particular quality of washery coal.

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Therefore, neither the respondent nor the Arbitral Tribunal  could assume that the contract price of Rs.2231/- was based on  the base price of washery grade II as on 8.11.1991. Having  regard to the escalation clause, the price increase should be with  reference to the coal that is used. It cannot be worked out by  taking the difference between the higher cost of superior quality  coal and lower base price of inferior quality of coal.  

22.     In the operative portion, the Arbitrators having correctly  stated that the respondent will be entitled to price increase as  per the escalation clause and that from 14.7.1992, the price  escalation will be with reference to change in the price of  washery grade I coal, acted in violation of the specific terms of  the contract by stating that - "The base price for determining  escalation is the price of coking coal washery grade II coal  ruling as on 8.11.1991." This sentence should have actually  been as follows: "The base price for determining escalation is  the price of  washery grade I coal ruling as on 8.11.1991, for  determining escalation for supplies from 14.7.1992." A reading  of the award shows that what was intended to be given was  escalation in terms of an escalation clause in the purchase order.  But on account of apparent error in the Award, the calculation  of escalation has been done with reference to the prevailing  price of superior quality of coal (washery grade I) and the base  price of inferior quality of coal (washery grade II) instead of  calculating escalation with reference to the prevailing price of  the superior quality of coal (washery grade I) and the base price  of superior quality of coal (washery grade I). In fact, when  queries by us, the learned counsel for respondent could not  explain with reference to contrary terms, how the base price of  washery grade II coal could be applied to calculate the  escalation in coke price produced by using washery grade I  coal.  

23.     The appellant has given calculation fully and correctly  which shows that the escalation was only 11,42,203.90. This  was what was awarded by the trial court and this amount had  been paid with interest of Rs.12,75,442 in all Rs.24,17,646 on  6.2.1999. In spite of our directions on 21.3.2006, the respondent   has not given the actual calculations but has furnished only the  final figure of claim. The respondent’s memo  makes it clear  that the respondent wants the escalation to be calculated for  supplies from 14.7.1992 with reference to the base price of  washery grade II coal and not with reference to washery grade I  coal. This is impermissible. The order of the Division Bench is  unsustainable as it failed to interfere with the portion of the  award which is opposed to the specific terms of the contract.  On the other hand, the trial court had correctly decided the  matter.

24.     Therefore, we allow this appeal, set aside the judgment of  the High Court and restore the judgment of the trial court.  Parties to bear their respective costs.  

25.     On 11.11.2002, this Court had directed the appellant to  deposit a sum of Rs.30,36,149.46 and permitted the respondent  to withdraw the same by furnishing bank guarantee. The  respondent has accordingly withdrawn the said amount on  1.1.2003. As the appellant has succeeded in full, the respondent  shall refund the said sum of Rs.30,36,149.46 to the appellant  with interest @ 18% per annum from 1.1.2003 to date of  payment. If the payment is made in full within a period of sixty  days from today, the interest shall be at a concessional rate of  12% P.A. from 1.1.2003 to date of payment.