Holding

The supply order’s clause requiring the respondent to pass the MODVAT credit to the appellant is binding, and the respondent must restore the credit, rendering the arbitrator’s award illegal.

Summary

The Security Printing and Minting Corporation of India (the appellant) floated a tender for gumming and super‑calendaring of stamp base paper, which was awarded to Gandhi Industrial Corporation (the respondent). The supply order dated 31 May 1995 incorporated a clause that any MODVAT credit availed by the respondent would be passed on to the appellant, a term the respondent protested but nevertheless performed the contract. After the work was completed, a dispute arose over the entitlement to the MODVAT credit; the respondent claimed the credit as the manufacturer, while the appellant sought to retain it under the contract clause. An arbitrator awarded the credit to the respondent, a decision affirmed by the High Court. The Supreme Court held that the final supply order, not the original tender advertisement, governed the parties, and that the respondent was bound by the contract to return the MODVAT credit to the appellant. Consequently, the Court set aside the arbitrator’s award and allowed the appeal.

Issues considered

Whether the terms of the final supply order supersede the tender advertisement in determining the parties' rights regarding MODVAT credit.
Whether MODVAT credit, which is a credit available only to the manufacturer, can be passed on to the purchaser under a contractual clause.
Whether the arbitrator’s award can be set aside on the ground of being perverse and contrary to the contract.
Whether the principle of sub silentio applies to the interpretation of the contract terms.

Legislation cited

Arbitration and Conciliation Act, 1996s. Section 11, s. Section 34
Central Excise Rules, 1944s. Rule 57A

Subjects

MODVAT creditcontract interpretationtender vs. contractarbitration awardsub silentiogovernment contractCentral ExciseSupreme Court

Judgment

A THE SECURITY PRINTING AND MINTING CORPORATION
OF INDIA LIMITED AND ANR.
v.
MIS. GANDHI INDUSTRIAL CORPORATION

B OCTOBER 12, 2007

[A.K. MATHUR AND D.K. JAIN, JJ.]
)-

Contract: Terms of contract vis-a-vis terms of tender/
'r
c advertisement-Binding effect of-Held: Once contract comes into
existence between parties they are bound by it and not by terms of
tender/advertisement-On facts, tender not containing clause
regarding non-availability of modvat credit to claimant-
manufacturer-While placing order, appellant added term that modvat
D credit availed by claimant would be passed on to it-Claimant
protested but continued with contract-Hence, claimant bound by
contract and has to restore modvat credit received by it to the
appellant-Terms of contract were very clear and understood by --\
claimant-Principle ofsub silentio not applicable. ! ~
E Central Excise Rules, 1944: Rule 57A-Modvat credit-
Entitlement for-Held: Appellant issued gate passes and documentary
evidence for payment ofexcise duty on which claimant claimed benefit
~
of modvat credit-Hence appellant is entitled to benefit of modvat
credit as it had paid excise duty.
F
On 2.6.1994, the appellant floated tenders for gumming and
super calendaring work. The claimant received the order, The ,_
r·
appellant while placing orders on 31.5.1994 added a terr~ that the "!
modvat credit if any, availed by the claimant would be passed on to
G the appellant. The claimant by its letter dated 5.6.~995 agreed to
accept the order subject to withdrawal of the term refating to passing
of modvat credit to the appellant.

The appellant did not respond but fonvarded base paper to the ~

H 86

r
I

-+
· SECURITYPRINTINGANDMINTINGCORPN.OFINDIA 87
LTD. v. GANDHIINDUSTRIALCORPN.
;..__
Claimant to carry out the work of gumming and super-calendaring A
of base paper. The finished goods were delivered by the claimant
along with necessary documents including the gate passes for
endorsement by the appellant. The claimant had been reminding
them from time to time that the modvat credit is only available to
the manufacturer i.e. the claimant. By letter dated 30.12.1995, the B
appellant informed that the modvat credit availed by the claimant
-f would have to be transferred to the appellant. Though the claimant
did not accept the same but the view of the appellant remained
""'!" unchanged. Finally on 25. 7.1996, the appellant informed the claimant
that the modvat credit availed by the claimant after 1996 would be c
adjusted by deduction of the amounts payable to the claimant.
Accordingly, the modvat credit availed by the claimant was deducted.
Matter was referred to arbitration. Arbitrator decided in favour of
claimant and awarded Rs. 50 lakhs. Single Judge of High Court and
Division Bench of High Court affirmed the view of the arbitrator. D
Hence the present appeal.
';..
/
Allowing the appeal, the Court
)_ HELD: 1. The view taken by the Arbitrator and affirmed by
the Single Judge and the Division Bench of the High Court cannot E
be sustained. Firstly, when the terms and conditions had been
reduced in the supply order dated 31.5.1995, the condition of modvat
credit was incorporated. The contract had come into existence and
the supply had been started on the basis of that supply order. Though
the claimant had protested with regard to this clause but the appellant
F
did not accede to the request for deleting that clause and the
.,. appellant had informed the claimant on 31.12.1995 that there was
.,,. no change in the conditions of the supply order, still claimant
continued to supply the goods as per the order. Therefore, on the
face of this condition there is no going back from that. In case the
G
claimant was not inclined to accept this clause, it could have very
well withdrawn from the contract. But it did not do so and continued
'> with the contract. Therefore,.on the basis of the clear terms of the
contract, the claimant is bound by it and it has to restore whatever
the modvat credit received by it to the appellant. [Para 8] [97-B-E]
H
\

88 SUPREME €0URT REPORTS [2007] 11 S.C.R. +-
A 2. The view taken by the Arbitrator that since it was not the A
condition when the tender was floated is not correct as after the
complete contract having come into existence, there is no purpose
to refer to the terms of tender. What is binding is the completed
contract and not the terms of offer of the advertisement. There is
B no two opinion in the matter in the present case that the terms and
conditions of the supply order dated 31.5.1995 were complete.
[Para 8)(97-E-G]
r
3. It is true that normally the Courts are very slow in interfering
with the finding and interpretation given by the Arbitrator. But the -y
c fact remains that if any perverse order is passed, then the Courts
are not powerless to interfere with the matter.
[Para 8] (97-G-H~ 98-A]
4. There is no question of principle of sub silentio involved. The
D terms and conditions of the contract are very clear and it was clearly
understood by the claimant as it protested that the condition with
regard to Modvat credit should not be allowed to continue in the
-{
terms and conditions of the contract and the same may be deleted
which is evident from the communication dated 5.6.1995 and ..>.__

E 20.6.1995. Therefore, there was no misunderstanding. More so, the
modvat credit is available in order to avoid double taxation on the
papers which were imported by the appellant after paying the excise
duty and therefore, the claimant claimed the benefit of excise duty
paid by the appellant. The appellant had issued gate passes and
documentary evidence for the payment of excise duty on which the
F
claimant claimed the benefit of modvat credit. Therefore, on that
count also the benefit could legitimately be claimed by the appellants
r
as they have paid the excise duty also. [Para 9] (98-C-F] ""!"

Oil & Natural Gas C01poration Ltd. v. Saw Pipes Ltd., (2003] 5
G SCC 705; Centrotrade Minerals & Metals Inc. v. Hindustan Copper
Ltd., (2006] 11SCC245, held inapplicable.
Ramji Dayawala & Sons (P) Ltd. v. Invest Import, (1981} 1 SCC
<
80, referred to.

H CIVIL APPET,LATE JURISDICTION : Civil Appeal No. 4857 of
~
+
I

SECURITY PRINTING AND MINTING CORPN. OF INDIA 89
LTD. v. GANDHIINDUSTRIALCORPN. [A.K.MATHUR,J.]
.J....
2007. A
From the Judgment and final Order dated 22.9.2006 of the High
Court of Judicature at Bombay in Appeal No. 671 of2006 in Arbitration
Petition No. 36of2005.
B. Dutta, ASG., K. Radhakrishnan, Kiran Bharadwaj and P. B
Parmeswaran for the Appellants.
-{
Dhruv Mehta, Vipin Nair and P.B. Suresh (for Temple Law Firm)
for the Respondent.
y

The Judgment of the Court was delivered by c
A.K.MATHUR, J. I. Leave granted.
2. This appeal is directed against the order passed by the Division
Bench of the Bombay High Court whereby the arbitration award given
by the sole arbitratcr was affirmed by learned Single Judge of the High D
Court and in appeal affim1ed by the Division Bench by its order dated
/
22.9.2006. Hence the present appeal by the appellant- Security Printing
and Minting Corporation oflndia Limited and ano~her.
1
3. Brief facts which are necessary for disposal of this appeal are
E
that the appellant No. 2 is the General Manager of India Security Pr~ss
which is a Government oflndia Undertaking functioning under the Ministry
of Finance. M/s.Gandhi Industrial Corporation (hereinafter to be referred
to as 'the claimant') is a partnership firm. Prior to 1966, the appellant
No. 2 before us (hereinafter to be referred to as. 'the security press') was
imp01iing its entire requirement of gummed stan1p paper from foreign F
..,.. countries. From 1967 onwards the security press commenced purchasing
"Y
of Ashoka Pillar water mark stamp base paper from Paper manufacturing
. mills. The base paper was thereafter gummed and super-calendared by
the contractor on a job work. In 1967 the claimant established a pilot
plant for purpose of manufacturing gummed stamp paper at the instance G
of appellant- security press: The claimant set up the factory at Umbergaon
in Thane district and the plant was commissioned in 1969. The claimant
received orders for gumming and super-calendaring of stamp based
papers. In the year 1976 the appellant for the first tin1e floated tender for
H
\

+
\

90 SUPREME COURT REPORTS [2007] 11 S.C.R.

_;..,
A gwnming and super-calendaring work. Again in 1989 the Security press
floated tender and the claimant questioned the action of the security press
by filing writ petition before the High Court but did not succeed. The
tender was again floated in 1996 and the grievance of the claimant was
that though the offer made by it was the lowest and the claimant further
B reduced the rates in view of the agreement reached between the parties,
which agreement has been described as memorandum of understanding,
for offering the work exclusively to the claimant for a period of 10 years
'r
so as to enable the claimant to optimally utilize the capacity of its plant.
Then certain orders were given to other persons which was protested by 'r

c the claimant and it filed a: writ petition on the original side of the High
Court of Bombay. The claimant also filed arbitration application under
Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter to
be referred to as 'the Act'). The High Court of Bombay with the consent
of parties nominated Justice Shri M.L.Pendse (retired) as the sole
. ar]?itrator to adjudicate the disputes and differences between the parties
D
by its order dated 7.12.2001. The claimant thereafter informed the High
Court that Writ Petition No. 3980 of 1996 be withdrawn and the issues
raised therein may also be referred to arbitration. We are not concerned --<.
with other issues. We are only concerned with one issue which has been .I.,
raised before us for our consideration i.e. point No. 4 and the order of
E the Arbitrator pertaining to claim No. 3. It related to the value of modvat.
The claimant sought a sum of Rs. 2,95, 99,673/- on the basis that the
value of the modvat was to the extent of Rs. 51,48,468/- to which
compound interest at the rate of25.50 per cent per annum was payable
by the security press to the claimant. The claimant submitted that in March,
F 1994 the claimant's unit was covered by Rule 57A of the Central Excise
Rules, 1994 (hereinafter·to be referred to as 'the Rules') and thereby y
the Modvat scheme became·applicable. The claim for modvat credit can ~
be made only by the manufacturer. After the claimant was covered under
the Modvat scheme the security press issued necessary gate passes to
G enable the claimant to avail of the modvat credit. The security press floated
tenders on 2.5.1994 and the tender documents nowhere suggested that
the modvat credit will not be available to the manufacturer for the work
J
of gumming and super-calendaring of stamp paper and the same shall be
available to the security press. As against this,it was alleged by the Security
H
SECURITY PRINTING AND MINTING CORPN. OF INDIA 91
LTD. v. GANDHIINDUSTRIALCORPN. [A.K.MATHUR,J.]
Press that the offer document specifically recited that the claimant would A
be entitled to receive the modvat credit and the security press shall issue
necessary documents including the gate passes to enable the claimant
availing modvat credit. The security press while placing the orders on
31.5.1994 added a term that the modvat credit if any, availed by the
claimant will have to be passed on to the security press. The claimant by B
its letter dated 5.6.1995 agreed to accept the order subject to withdrawal
of the term relating to passing of modvat credit to the security press. The
y
claimant stated that only on confirmation/ modification of this condition
that it would proceed with the execution of the contract. The security press
did not respond but forwarded base paper to the claimant to carry out c
the work of gumming and super-calendaring of base paper. The finished ·
goods were delivered by the claimant along with necessruy documents
including the gate passes for endorsement by the security press. The
claimant used to remind them from time to time that the modvat credit is
only available to the manufacturer i.e. the claimant. It appears that no D
positive response was given to the claimant. On 16.10.1995 the appellant-
security press for the first time infonned that the matter would be examined
and the decision would be communicated. By letter dated 30.12.1995
the appellant - security press infonned that the modvat credit availed by
the claimant would have to be transferred to the security press. Though E
the claimant did not accept the same but the view of the security press
remained unchanged. Though a lot of negotiation took place on this issue
but without any result. Finally on 25. 7.1996 the security press inf01med
the claimant that the modvat credit availed by the claimant after 1996 will
be adjusted by deduction of the amounts payable to the claimant.
Accordingly, the modvat credit availed by the claimant was deducted by F
the security press. Therefore, this issue was raised in arbitration that the
modvat credit cannot be claimed by the security press and the same was
only available to the manufacturer i.e. the claimant. The Arbitrator after
considering the matter came to the conclusion that this claim of the security
press cannot be accepted and the arbitrator decided the issue in favour G
of the claimant and answered the point No.4 that the claimant was entitled
to a sum of Rs.50,64,155/-. Other issues were also decided by the
Arbitrator by his award dated 4.10 .2004. Thereafter, application under
Section 34 of the Act was filed before the learned Single Judge and
H
92 SUPREME COURT REPORTS (2007] 11 S.C.R.

A learned Single Judge affirmed the finding of the arbitrator by its order dated
13.3.2006 and aggrieved against that order, an appeal was preferred
before the Division Bench of the High Court. The Division Bertch affirmed
the view taken by learned Single Judge and hence the appellants are before
this Court in the present appeal.
B
4. We have heard learned counsel for the parties and perused the
record. The basic question before us is whether the appellant- security
press was entitled to get the benefit of modvat credit or not. In order to
appreciate the controversy it will be profitable to first reproduce the y

relevant clause of the supply order which relates to credit of modvat to
C the security press. The clause reads as under: -
"2. TAXES/CED: No sales Tax at present. This will be paid extra,
if & when applicable, on presentation of documentary evidence.
Excise Duty is payable as per rules and Modvat Credit, if any,
D availed by the Firm against element of Excise Duty included in the
Base Paper, is to be passed on to the India Security Press. Octroi
-{
Exemption Certificates will be issued, as per requirement."
This was one of the terms and conditions of the purchase order. It >-
is true that when the advertisement was issued there was no such
E condition but when the purchase order was is$ued it clearly stipulated this
condition and it was accepted by the claimant, though it protested which
is evident from the communication dated 5.6,1995 which reads as under

F " GANDHI INDUSTRIAL CORPORATION
SPEED POST
GIC/ISP/S.0.291/95/079/95-96 5.06.1995

The General Manager,
G India Security Press,
Nashik Road, C.Rly.

Dear Sir,
Reg: Your S.O. No.PR-30(Adh)/291/95 dt.31.5.95 For
H
1-
1

SECURITY PRINTING AND MINTING CORPN. OF INDIA 9'.3
LTD. v. GANDHIINDUSTRIALCORPN. [A.K.MATHUR,J.]

Gumming & Supercalendaring of all over Ashoka Pillar A
Watennarked Stamp Base Paper Reels and Cutting into Reels
& Sheets.

We acknowledge the receipt of your above referred Supply Order
dt.31.5.95 and have to infonn you that since there was considerable B
delay in its finalization, our entire costing has gone awary as our
plant and labour, all tailor made only for doing your above said
job have remained idle for the last 5 months, putting us to a great
loss. Our capacity utilization during 1994-95 was utilized. Such
under utilization of our capacity is going on since last 5-6 years, C
causing us great hardship. You are aware that we have put up our,
plant only for you and that there is no such huge demand for such
a job from the general market. We do not mind even if you give
us little lesser rate but it is our humble request to you to kindly
utilize our capacity optimally.
D
Under such circumstances, we agree to accept your aforesaid order
with a request that for future, a durable long tenn arrangement be
worked out on mutually acceptable tenns so that l.S.P. regularly
and at reasonable rates and our plant and labour remain optimally
utilized all round the year. We have also to request you to: E
(i) Kindly withdraw the clause relating to the Modvat Credit to be
passed on to I.S.P. since it is extraneous to the tender conditions.
Xx xx xx."
F
Therefore, the supply order which had the aforesaid condition was
protested by the claimant-respondent herein. On 5.6.1995 however, it
had protested for withdrawal of the clause relating to Modvat credit since
it was extraneous to the tender conditions. Thereafter, on 20.6.1995 the
respondent herein again explained to the General Manager, Security Press
that the Modvat credit was available only to manufacturer and that too G
.from the payment of excise duty as per Rule 57H of the Central Excise
Rules and it was not a cash benefit, it is only a book credit and hence it
was not refundable. TI1erefore, this modvat credit was not legally available
to the Security Press. As such it requested that this condition be deleted.
H
94 SUPREME COURT REPORTS [2007] 11 S.C.R.

A On 16.10.1995 a communication was sent by the Security Press to the
claimant that the issue of modvat credit was being examined and further \-
communication in this regard would follow in due course of time. Thereafter,
on 30.12.1995 a clear reply was sent to the claimant infonning that it was
not possible to accede to the request of the claimant for waiving the
B condition of modvat credit. It was clearly informed to the claimant that
since the Modvat credit was directly linked with the payment of Excise
duty indicated in the terms and conditions of the tender as well as the
referred order, the benefits, if any, will have to be invariably passed on to
the India Security Press and this cannot be waived under any circumstances.
c The aforesaid communication dated 30.12.1995 is reproduced as under

"GOVERNMENT OF INDIA
From
D The General Manager,
India Security Press,
NASIK ROAD-422101 ·~

Reference No.15858/PR-30(ADH) Dated 30/12/1995 .I>,

E To
Mis Gandhi Industrial Corporation,
20, Ajmal Road, Opp. Malaviya Road,
Vile Parle (East)
BOMBAY-400057
F Sub: ISP Order No.PR-30(ADH)/291/95/ dated 311511995
Sir,
..,
...,
Further to this office letter No.10866/PR-30 dated 16/10/
1995, it is to inform you that since the Modvat Credit is directly
G linked with the payment of Excise duty indicated in the terms and
conditions of the tender as well as the referred order, the benefits,
if any, will have to be invariably passed on to the India Security J
Press and this cannot be waived under any circumstances.
H 2. Hence, you are advised in your own interest to arrange to pass
\:
..,,-
.-
.,.-·· .. - SECURITY PRINTING AND MINTING CORPN. OF INDIA 95
LTD. v. GANDHIINDUSTRIALCORPN. [A.K.MATHUR,J.]
• on all the benefit availed against Modvat Credit immediately. A

Yours faithfully
Sd/- xx
(B.S.LALCHANDANI)
DY.GENERAL MANAGER'' B
Then, again on 12.1.1996 the claimant tried to argue with the appellant
-<· that the modvat credit is only available to the manufacturer i.e. the claimant
and it is not allowed in cash but it is a book entry.
5. Now, in the background of these communication, the Arbitrator
took the view that since the modvat credit is only available to the
c
manufacturer on account of book credit and the claimant was the
manufacturer, therefore, the appellant cannot get that benefit. It was also
observed that the unilateral decision taken by the appellant is entirely
against the Modvat scheme and contrary to tender notice issued and on
the basis o~ which offer was made by the claimant. It is not permissible .D
to alter the terms and condition of the offer letter to the detriment of
/"
contractor who has been awarded the tender contract and certainly not
j by unilateral decision.
6. Learned counsel for the appellants submitted that in fact the E
complete contract has come into existence after the supply order dated
31.5.1995 and it was accepted by the claimant and the terms and
conditions which were mentioned in the supply order are binding and not
the adve11isement which was floated where these terms and conditions
were not mentioned. Learned counsel further submitted that once the F
contract has come into existence between the parties the terms of the
l contract shall govern and not the earlier so called conditions when the
y
tenders were floated inviting tenderers to file their response to the offer.
Whatever may be the tern1s and conditions of the advertisement which
were floated, that is not binding and what is binding is the terms and
G
conditions of the contract. Therefore, as per the terms and conditions of
clause (i) of the supply order, the claimant has to refund the modvat credit
to the security press. Learned counsel also submitted that modvat credit
is available on the excise duty paid by the party and in this case the papers
on which the excise duty was paid by the appellant- security press. Thus
H
96 SUPREME COURT REPORTS [2007] 11 S.C.R.

A the gate passes were given to the claimant to claim the benefit of modvat
credit and on the basis of excise duty paid on the paper by the security
press, the benefit was drawn by the claimant by producing the gate passes
and the benefit of modvat credit was claimed by the claimant on that basis.
Therefore, it was submitted that the security press is entitled to the benefit
B of modvat credit. As against this, learned counsel for the respondent
submits that since the modvat credit is only available to the manufacturer
and it was clearly understood that this will go to the claimant. Therefore,
the view taken by the Arbitrator, affirmed by learned Single Judge and
y
the Division Bench of the High Court is correct and in support tl1ereof,
c invited our attention to a decision of this Court in Ramji Dayawala &
Sons (P) Ltd v. Invest Import, (1981] 1 SCC 80. This case was decided
on the question-of fact only. In the present case as mentioned above, the
·tenns and conditions were very clear and despite the protest by the
claimant for deletion of the modvat credit benefit, it supplied the goods
D and it was informed that change in the supply order cannot be acceded
to. Therefore, there is no question of any principle of sub silentio. There
is no ambiguity or any tacit understanding. Learned counsel further
submitted that the finding of the Arbitrator should not be interfered with
because the Arbitrator is the best judge and the Courts should not interfere
E with the finding of the Arbitrator or the interpretation given by the
Arbitrator. In support of his contention, learned counsel invited our
attention to the decisions of this Court in Oil & Natural Gas Corporation
Ltd. v. Saw Pipes Ltd., [2003] 5 SCC 705 and in Centrotrade Minerals
& Metals Inc. v. Hindustan Copper Ltd., [2006] 1lSCC245. In ONGC
F Ltd (supra) this Court has laid down certain parameters that in certain
cases, the Court can set aside the award if it is contrary to fundamental
policy oflndian law, or the interest oflndia; or justice or morality; or is
patently illegal; or is so unfair and unreasonable that it shocks the
conscience of the CoUl1. In the present case on the face of the terms of
the contract, the award, in our opinion, appears to be patently illegal as
G the terms and conditions of the supply order would govern and not the
terms of the tender. Therefore, this case does not help the claimant in any
manner. In Centrotrade Minerals & Metals Inc (supra) there was
difference of opinion between brother Judges and it was referred to a
larger Bench. Therefore, that case also does not help the respondent herein.
H
SECURITY PRINTING AND MINTING CORPN. OF INDIA 97
LTD. v. GANDHIINDUSTRIALCORPN. [A.K.MATHUR,J.]
7. Learned counsel for the claimant also submitted that at the time A
when the tender was floated, there was no condition incorporated therein
that the Modvat credit will be claimed by the appellant- security press.
Therefore, the view taken by the Arbitrator as well as learned Single Judge
and the Division Bench of the High Court is correct.
B
8. After hearing learned counsel for the parties and perusing the
record we are of opinion that the view taken by the Arbitrator and affirmed
by the learned Single Judge and the Division Bench of the High Court
cannot be sustained. Firstly, when the terms and conditions have been
reduced in the supply order dated 31.5.1995, therein the condition of
modvat credit was incorporated and it was accepted by the claimant. The C
contract had come into existence and the supply had been started on the
basis of that supply order. Though the claimant had protested with regard
to this clause but the appellant did not accede to the request of the
respondent for deleting that clause and the appellant had infonned the
claimant on 31.12.1995 that there was no change in the conditions of the D
supply order still claimant continued to supply the goods as per the order.
Therefore, on the face of this condition there is no going back from that'.
In case the claimant was not inclined to accept this clause he could have
very well withdrawn from the contract. But it did not do so and continued
with the contract. Therefore, on the basis of the clear terms of the contract, E
the claimant is bound by it and it has to restore whatever the modvat credit
received by it to the appellant - security press. The view taken by the
Arbitrator that since it was not the condition when the tender was floated
is not correct as after the complete contract having come into existence,
there is no purpose to refer to the terms of tender. What is binding is the F
completed contract and not the terms of offer of the advertisement.
Whatever may be the offers in the advertisement, once the completed
contract has come into existence, this is binding. There is no two opinion
in the matter in the present case that the terms and conditions of the supply
order dated 31.5.1995 were complete. Therefore, what is binding is the G
terms of the contract and not the terms in the offer of advertisement.
Therefore, under these circumstances the view taken by the Arbitrator
as well as learned Single Judge and the Division Bench of the High Court
is ex facie illegal. It is true that nomlally the Courts are very slow in
interfering with the finding and interpretation given by the Arbitrator. So H
\
t-
98 SUPREME COURT REPORTS [2007] 11 S.C.R.

A far as the principle of law is concerned, there is no two opinion and it
has to be accepted. But the fact remains that if any perverse order is
passed, then the Courts are not powerless to interfere with the matter.
As pointed out above, once the concluded contract has come into
existence, then in that case the offer of advertisement cannot override the
B terms and conditions of the completed contract. Therefore, in our opinion,
the view taken by the Arbitrator, as affirmed by learned Single Judge and
the Division Bench of the High Court on the face of it is illegal and against
the law.
y
9. Secondly, learned counsel has submitted that the principle of sub
C silentio applies in the present case. There is no question of principle of
sub silentio involved in the present case. The terms and conditions of the
contract are very clear and it was clearly understood by the claimant as
it protested that the condition with regard to Modvat credit should not
be allowed to continue in the terms and conditions of the contract and
D the same may be deleted which is evident from the communication dated
5.6.1995 and 20.6.1995. Therefore, there was no misunderstanding.
There was no question of applying the principle of sub silentio when the
terms and conditions were well known and clearly understood between
the parties. More so, the modvat credit is available in order to avoid
E double taxation on the papers which were imported by the appellant-
security press after paying the excise duty and therefore, the claimant
claimed the benefit of excise duty paid by the security press and the
security press had issued gate passes and documentary evidence for the
payment of excise duty on which the claimant claimed the benefit of
F modvat credit. Therefore, on that count also the benefit could legitimately
be claimed by the appellants as they have paid the excise duty also.
Therefore, under these circumstances, we are of opinion that the view
taken by the Arbitrator, as well as learned Single Judge and the Division
Bench of the High Court cannot be sustained and we accordingly, allow
G this appeal and set aside the order of the Arbitrator with regard to the
modvat credit and also the view taken by learned Single Judge and the
Division Bench of the High Court of Bombay to this extent. The appellants
will be entitled to retain the amount(s) equivalent to the Modvat credit as
claimed by the respondent. There would be no order as to costs.
_H D.G. Appeal allowed.