Name: Harshita Shrivastava

Section: E
Roll No.: BD22022

ASSIGNMENT 1

Thyssen Stahlunion Gmbh vs The Steel Authority Of India

Q1. What were the main points of dispute between the parties?

Below mentioned are the five major points of dispute,

1. The definition and significance of the term "Prime" is central to the entire dispute
between the parties. There was a dispute regarding the material's description, which was
listed in the contract as Prime cold-rolled, mild steel sheets in rolls. The phrase PRIME in
particular was in question. According to TSU, "prime" refers to Class I material, whereas
according to SAIL, the term simply indicates that the material has been prepared to the
highest standard.
2. Another dispute is the ‘Disputed’ contract as no supplies were made against the contract.
According to SAIL, no agreement between the parties was reached regarding this deal, so
no material was supplied. 
3. Another area of contention is the arbitrator's methodology for determining the extent of
the Thyssen Stahlunion's losses.
4. Not enough opportunities were provided for TSU's designated inspecting agency, "SGS,"
to conduct inspections during and after production.
5. TSU alleged that SAIL did not provide the material in accordance with the contract dated
12 May 1994, which was amended to take effect on 4 March 1994. Thyssen Stahlunion
Gmbh disputed the material's quality in relation to SAIL's first batch of 10,000MT of
CRC steel in coils.

Q2. Cite relevant portions of statutes determining the cause of action?

Section 73 of the Indian Contract Act, 1872: 

When a contract has been broken, the party who suffers by such breach is entitled to receive,
from the party who has broken the contract, compensation for any loss or damage caused to him
thereby, which naturally arose in the usual course of things from such breach, or which the
parties knew, when they made the contract, to be likely to result from the breach of it.

Section 30 of the Arbitration Act:

The Court may not re-evaluate the evidence (of an arbitral award) and that any procedures
governed by this section are not subject to the Court's right to do so. However, the Court
acknowledged the rule taking precedence from the ruling of the Supreme Court in the State of
Rajasthan case.
Q3. What precedents were cited by the parties before the Court?

Dr. Singhvi cited the Supreme Court's observations in Trivenibai and Anr. v. Lilabai 1959 SC
620 in support of his argument that courts should not ascribe redundancy and surplusage to a
contract or any statute and should instead give each word its complete meaning.
"In construing documents, the usefulness of precedents is typically of a limited character. Courts
must, after all, consider the material and relevant terms of the document with which they are
concerned, and it is on a fair and reasonable construction of the said terms that the nature and
character of the transaction evidenced by it must be determined."

Q4. What was the final judgment?

The use of the word "prime" in a contract was a deliberate attempt to bypass or avoid certain
terms of the agreement & was unnecessary and redundant in the context of the contract terms.
Thus, the arbitrator engaged in serious misconduct by allowing this language to be included in
the contract, both legally and factually, and this has had negative consequences for the parties
involved.

TSU was unable to back up any losses it had incurred or the recompense TSG sought from it in
exchange for non-performance. A party is not entitled to damages or compensation unless and
until it can demonstrate the real losses it has incurred as a result of the seller's breach of contract
or the compensation it has paid to a third party. Regarding the second lot, it is not true that the
TSU was forced to buy the goods on the open market in order to give them to the TSG, nor has
the TSG brought any legal action against the TSU for nonperformance of contract breach.

J.D. Kapoor, J. finds that the arbitrator's findings suffer from irreparable flaws on both the
factual matrix and legal principles after considering the case from all angles. The learned
Arbitrator has gone beyond his authority and the terms of the agreement as well. He has
attempted to introduce his own meaning and perspective rather than interpreting the terms of the
documents and the agreement from the correct angle. As a result of the aforementioned debate,
the award is thrown out because it contains serious flaws in the law, the facts, and the
methodology.

Q5. What was your takeaway from the case?

The takeaways from the case are listed below,

 Every word in the contract should be defined, there should be no ambiguity in the
meaning it holds and the meaning perceived by the parties coming into a contract.
 The simple making of an offer does not give rise to a claim for damages for a breach of
contract that has occurred as a result of the offer's acceptance.
 A party is not entitled to damages or compensation until and unless it can demonstrate the
real losses it sustained or the compensation it paid to a third party as a result of the
seller's breach of contract.
 A party who suffers from a breach of a contract is entitled to compensation from the party
responsible for the breach for any loss or damage that results from the breach that
naturally occurred in the normal run of events or that the parties knew would likely occur
when they made the contract.
 A specialist offers testimony, not judgment. In order to allow the judge to form his own
independent judgment by applying those criteria to the facts proven in evidence, it is his
responsibility to provide the judge with the required scientific criteria for testing the
accuracy of the conclusion. Therefore, the court should move cautiously, delve into the
reasoning, weigh all other pertinent evidence, and then ultimately decide whether to
accept or reject it.
 In construing documents, the use of precedents is typical of a limited character. Courts
must, after all, consider the material and relevant terms of the document with which they
are concerned, and it is on a fair and reasonable construction of the said terms that the
nature and character of the transaction evidenced by it must be determined.