LEGAL ASPECTS OF BUSINESS

Case Study


Name:- Akshay Pillai

Roll no:- 013100

Div:- MBA CORE E



JCL INTERNATIONAL Ltd
V/S
BHARAT PETROLEUM CORPORATION Ltd
Petitioner: M/s JCL International Ltd.

Respondent: Bharat Petroleum Corporation Ltd.

Appeal :- October 2006

Judgement :- September 2009


Company Background

JCL provides solutions for supply & distribution of LPG as
domestic, industrial and automotive fuel. They carry out LPG
bottling for Shell, Bharat Petroleum and Hindustan Petroleum
Corporation.

Bharat Petroleum Corporation Limited (BPCL) is one of the
largest public sector, oil marketing company in India.
Section 9 of Sales of Goods Act
1. The price in a contract of sale may be fixed by the
contract or may be left to be fixed in manner thereby
agreed or may be determined by the course of dealing
between the parties.

2. Where the price is not determined in accordance with
the foregoing provisions, the buyer shall pay the seller a
reasonable price. What is a reasonable price is a
question of fact dependent on the circumstances of
each particular case.
Sequence of Events
In May 1999, JCL entered into a contract with BPCL for
supply of LPG Cylinders at Rs 679.67
In July 1999, BPCL issued amendment to the Purchase
Order which was signed by both parties fixing the price of
cylinder at Rs. 702.98. The cylinders were delivered and the
contract ended.
In March 2000, Both the parties enter into a fresh
contract for supply of cylinders during the financial year 2000-
2001 at Rs 702.98
In October 2000, BPCL communicates the revised price of the
cylinder supplied during the previous year, from Rs. 702.98 to
the provisional price of Rs. 645.
BPCL alleged to have unlawfully deducted about Rs. 28.69
lakhs from the amount payable.
In June 2001, petitioner asks to appoint an Arbitrator under
Arbitration Clause Arbitrator was appointed.
In October 2006, the arbitrator dismissed the claim of the
Petitioner (JCL).
Petitioner challenged the decision, Petition allowed and new
Arbitrator was appointed.

The Judgement
o A Letter dated 30th July by Respondent clearly mentioned to
the Petitioner that the price of cylinder was provisional and
will be revised on the basis of the pricing set by MOP & NG
contents of this letter are not in dispute and are crucial to the
case.

o Section 9 of the 1930 Act allows the parties not to fix the price
at the time of the transfer and to leave the determination of
the amount of consideration to a later date

o Thus, considering the provisions of Sale of Goods Act and the
Contract Act, the fixation of provisional price cannot be stated
to be impermissible and creates no rights in favour of JCLs
claims


Thank You!