Decided on August 29,1997

USHA BRECO LTD. Respondents


SURINDER SARUP,J. - (1.)THE plaintiff -petitioner, i.e., Asia Resorts Ltd., has filed the present petition under Section 20 of the Indian Arbitration Act (hereinafter called 'the Act') on the pleadings that it has its registered office at Timber Trail Resorts Datyar (Parwanoo) Distt. Solan, H.P. It is a body corporation incorporated under the Companies Act, 1956. Shri Ramesh Kumar Garg is the Managing Director of the Company and it is through him that the present petition has been filed.
(2.)IT has been submitted that in the year 1984, the petitioner -company initiated the process of installation of a passengers ropeway system between its existing resorts known as Timber Trail Resort Datyar, and its new resort, Timber Trail Heights at Banssar. In pursuance of the same, it entered into an agreement with the defendant -Company i.e., Usha Breco Ltd. Chitranjan Avenue, Calcutta on 10 -4 -1986, a copy of this agreement has been filed with the petition. In pursuance thereof, the defendant -Company undertook to supply mechanical and electrical items including structures of the passengers ropeway system required by the petitioner. The parameters of the work to be undertaken by the defendant were defined in Annexure A to that agreement. According to the same, the system to be supplied by the defendant was to have a capacity of carrying 150 passengers per hour between Datyar and Banssar. This was to be on the basis of eight hourly shift, as per the details given below :
(i) Total number of trips per hour : 9 Nos. (ii) Total passenger per hour : 150 (each way). It was also stipulated in the agreement that within the eight hourly operation, the total capacity of the passengers ropeway system would be 1200 passengers per day.

According to the petitioner, based on the aforementioned representations, assurances and agreement, it invested huge amounts in the project, but from its very inception, it was repeatedly brought to the notice of the defendant that the working capacity of the system supplied by it and as stipulated and incorporated in the agreement, had never been achieved. As a matter of act, the petitioner, on account of the restrictions imposed by the Inspector of Ropeways, Himachal Pradesh, had accepted a shortfall of two persons. Despite the shortfall of two passengers that had been accepted by the petitioner, the defendant could not still bring the system to meet the shortfall. The system installed by the defendant could not carry the number of passengers promised nor make the requisite number of nine trips per hour between the two stations. In fact, it has not been possible for the system to achieve and attain more than six and half trips per hour. Consequently, the system has not been able to carry more than 100 passengers per hour i.e., 800 passengers per day. Therefore, on account of deficiency in service, the plaintiff suffered maximum financial loss and the entire financial viability of the project has been thrown out of gear. The plaintiff continues to incur financial loss and has not been able to meet its financial commitments by way of servicing its loans etc.

(3.)THE plaintiff got a legal demand notice dated 16 -6 -1993 served on the defendant but it was of no avail. The latter appears to be evading the demands raised by the plaintiff -petitioner. Consequently, as per the contents of the notice, the plaintiff was forced to rescind the contract and it has called upon the defendant to remove the system. It further informed the defendant that it would install a new ropeway system at the expenses and cost of the defendant besides claiming damages on account of harassment, mental tension and financial losses etc. Therefore, serious disputes have arisen between the parties.

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