ASHIM KUMAR BANERJEE, J. - (1.) The defendant no. 1 is a spinning mill situated at Bhubaneshwar. It was passing through acute financial stringency. The defendant no. I entered into an agrement with the plaintiff for conversion of cotton in to yarn. It was agreed by and between the parties that the plaintiff would lend and advance from time to time diverse sums of money to the defendant no. 1 which would be adjusted against conversion charges. By virtue of the agreement the plaintiff supplied cotton as well as paid diverse sums of money to the defendant no. 1 and in turn the defendant no. 1 was to convert the said cotton into cotton yam and supply to the plaintiff. By virtue of such arrangement a sum of Rs. 1,81,05.974.33 became due and payable by the defendant no. 1 to the plaintiff as on the date of filling of the suit According to the plaintiff the defendant no. 2 guaranteed repayments of the sums. lent and advanced by the plaintiff as well as the value of the cotton as the defendant no. 1 committed breach of contract. The plaintiff filed a suit as against the defendant no. I and 2 lor recovery of the said sume of Rs. 1.81.05.974.33 together with interest @ 24% per annum
(2.) The said agreement stipulated an arbitration clause. Clause 18 being relevant herein is quoted below : 18(i) that the parties shall mutually co-operate for implementation of this agreement smoothly and successfully and settle all the disputes amicably. However, if any issue/matter remains unnesolved the parties shall refer the matter to the arbitrator as may he mutually agreed by the parties and the decision of such arbitrator shall be binding on both the parties. (ii) That, the arbitration proceeding shall be conducted as per the provisions of Arbitration and Conciliation Act. 1996. Irrespective of the place of signing, this agreement shall "be construed to be executed at Bhubaneswar and all disputes arising out of the agreement shall be subject to the jurisdiction of the courts of Bhubaneswar under the control of the High Court of Orissa."
(3.) It further reveals from the records that the defendant no. 1 was declared a sick company under the provisions of Sick Industrial Companies (Special Provision) Act, 1985 (hereinafter referred to as the "said Act. 1985). After a prolonged deliberation the said company being the defendant no. 1 was recommended for winding up under Section 20 of the said Act, 1985. Such recommendation is now pending before the Orissa High Court for passing fomal order of winding up.;