RAJASTHAN STATE ROAD TRANSPORT CORPN. vs INDAG RUBBER LTD.

The Supreme Court upheld the arbitration award in favor of the Rajasthan State Road Transport Corporation, confirming that Indag Rubber Limited breached the warranty clause (Clause 5) of their agreement by failing to provide retreaded tyres that met the guaranteed performance of 46,000 KMs. The Court emphasized that the Corporation's claims for damages were valid due to the company's failure to supply adequate retreading material as per Clause 3, which was essential for the performance of the tyres. The judgment reinforced the binding nature of arbitration agreements under the Arbitration and Conciliation Act, 1996, and affirmed the lower court's decision to issue a decree in terms of the arbitration award.