Sabyasachi Mukherji, J. - (1.) THIS is an application under Section 20 read with Section 41 of Arbitration Act, 1940. The petitioner which is a company incorporated under the Companies Act, 1956 is the owner of a business called Calcutta Spun Pipes and Industries. The petitioner in this application asks for an order of injunction restraining the defendant Corporation of Calcutta from opening or accepting any tender or entering into arty contract with any third party pursuant to a public press notice inviting tenders issued on the 24th January, 1974. The petitioner further asks for an injunction restraining the Corporation of Calcutta from inviting any tender from the public with regard to the supply of any portion of the said 170 pieces of the pipes and collars or from entering into any fresh contract with any third party and for certain other incidental reliefs.
(2.) IN order to appreciate the controversy it would be necessary to refer briefly to the facts in this case. The plaintiff being the petitioner herein submitted to the defendants rates for the supply of R. C. C. Spun Pipes and Collars of N. P. 2 Class as per ISS 458 of 1956. On the 17th May, 1973 the defendant requested the plaintiff for the execution of the agreement after deposit of 5% security money. The plaintiff on the 19th May. 1973 wrote to the defendant recording that the contract papers had not yet been sent by the defendant and as such the security money could not be deposited, but offers were made for delivery immediately because stocks were ready. Thereafter there was a request for deposit of security of Rs. 6020/- on the 21st May. 1973 by the defendant to the plaintiff. On 7th June, 1973 there was an indent for stores from the defendant to the plaintiff requesting supply and delivery of the pipes and collars at site as directed by the defendant. On the 26th June. 1973 the plaintiff wrote to the defendant recording delivery of 70 pipes and stating that another lot was ready for delivery but nobody was receiving the same on behalf of the defendant. On the same day the defendant wrote to the plaintiff in continuation of the earlier letter dated 16th July, 1973 directing removal of rejected pipes within a week. It was stated that the pipes were rejected because of alleged cracks and damages and not being properly cast. The plaintiff on 30th July, 1973 replied stating that the goods had been manufactured as per ISS 458 of 1956 specification and the plaintiff was ready to replace the damaged pipes and collars but before doing so a joint inspection was asked for. On 1st August, 1973 the plaintiff again wrote to the defendant stating that the entire lot of 170 sets of pipes had already been, manufactured and ready for delivery, and the defendant should arrange for inspection of the materials at the plaintiff's factory so that delivery might commence. The defendant had also asked to intimate the date of joint inspection of the materials already supplied at the site. On 7th August, 1973 the defendant wrote to the plaintiff reiterating rejection of the goods and requesting removal thereof within a week. IN default, it was stated, that purchase would be made at the risk and cost of the plaintiff. This was according to the defendant in terms of the contract that is to say, if the goods were not according to specification or were damaged then the defendant was entitled to make purchases of those materials at the costs and risk of the plaintiff. On 22nd August 1973 a reply was received from the defendant reiterating that the goods had been rejected and as such could not be accepted. It was stated that no further supply would be accepted from the plaintiff until the rejected pipes had been removed. IN the meantime there was further correspondence between 27th August, 1973 and 19th September 1973 reiterating each other's stand about rejection and removal of the goods. On the 15th October, 1973 the plaintiff wrote to the defendant requesting for joint inspection and recording that the entire goods had been manufactured. It was stated by the defendant on the 17th October, 1973 that the pipes had been inspected and had been rejected and as such the question of joint inspection did not arise. On the 24th October. 1973 it was arranged that the joint inspection would take place on the 29th October 1973 at Garden Reach. Thereafter there was a joint inspection and it was alleged that the record of joint inspection dated 30th October, 1973 indicated that only a few pieces had been rejected and the rest had been accepted. After some further correspondence on the 8th December 1973 the plaintiff sent a bill to the defendant for the sum of Rs. 49,573/-. The defendant on 12th December 1973 wrote to the plaintiff intimating that the rejected pipes could not be accepted and the same should be removed within 10 days. The defendant also intimated thereafter that as the pipes bad been rejected the bills had been returned. On the 7th January 1974 defendant again asked the plaintiff to remove the rejected pipes and intimated that if this was not done within 7 days and replaced, purchases would be made at the risk and costs of the plaintiff. On 15th January 1974 the plaintiff appointed its Arbitrator and forwarded its claim to the said Arbitrator. It is stated that on 24th January 1974 there was an advertisement in the press by the defendant calling for tenders for supply of 70 pipes on or before 5th February, 1974. Thereupon on 25th January 1974 the plaintiff gave notice to the defendant under Section 9 (b) of the Arbitration Act, 1940 regarding the appointment of the sole Arbitrator on or before 5th February 1974, and on 30th January 1974 the defendant nominated its Arbitrator. On 5th February 1974 two applications were made, one under Section 20 of the Arbitration Act, 1940 and another under Section 41 of the said Act and the second application has come up for hearing before me. It is further stated that on the application under Section 41 of the Arbitration Act, 1940 an ad interim order was made whereby it was directed that the defendant would be entitled to receive the tender pursuant to the advertisement but would not take any further steps in respect thereof. I have already mentioned the reliefs that have been asked for by the applicant plaintiff in this application. On behalf of the respondent it was contended, firstly, that this application was misconceived. It was urged that the parties having proceeded under Chapter II of the Arbitration Act, 1940 Chapter in of the said Act was inappropriate and inapplicable and as such an application under Section 20 of the Arbitration Act, 1940 was misconceived. In the premises it was submitted that the application under Section 41 for the interim relief was also not maintainable. It was argued that Section 20 of the Arbitration Act gave an option to the parties of either proceeding under Chapter II of the Arbitration Act, 1940 or under Chapter III of the Arbitration Act and the applicant-plaintiff having chosen to proceed under Chapter II by appointment of the Arbitrator and reference to him had no right to apply under Section 20 of the Arbitration Act. 1940 and as such this application for relief pending the application under Section 20 of the Act was therefore, not maintainable. It was further urged that there had in any event been suppression of material facts by the applicant in this application and as such the applicant was disentitled to any relief by way of injunction or any other relief by way of interim order. It is true that the plaintiff and indeed the parties have proceeded to accept the arbitration agreement and make the appointment of the Arbitrators in accordance with the arbitration agreement. I am told that the Arbitrators have entered into the reference on 19th February 1974. The question, therefore, is whether in such a situation the applicant is entitled to maintain this application. It is not necessary to set out the provisions of Section 20 of the Arbitration Act, 1940. It is true that where there is an arbitration agreement, the Arbitration Act, 1940 provides an alternative to the parties either to proceed with the arbitration as contemplated by the agreement and proceed to nominate arbitrators as indicated in the agreement or in the alternative to come to Court to have the arbitration agreement filed and ask for certain consequential orders as to the further prosecution of the arbitration reference. Sub-section (1) of Section 20 clearly gives that option to the parties. But Sub-section (1) of Section 20 of the Arbitration Act, 1940, in my opinion, does not exclude operation of the other provisions of Section 20 in so far as these are applicable even in a case where parties have chosen to make a reference and proceed with arbitration under Chapter II of the Arbitration Act, 1940. Subsection (4) of Section 20, in my opinion, is clear indication of the fact that where arbitration agreement is filed the Court can and has a right to make either an order directing the arbitration to proceed in accordance with the arbitration agreement by the parties or appoint an arbitrator directly which is a consequential order following from the filing of the arbitration agreement. Chapter II of the Arbitration Act, 1940 does not deal with filing of arbitration agreement. Therefore, in so far as Section 20 in its substantive provision deals with rights of the parties for filing of arbitration agreement, there is no parallel provision in Chapter II of the Arbitration Act, 1940. In such a situation, no question of having exercised option by the parties in my opinion arises. Indeed, in my opinion, support of this view may be obtained from the observations of the Supreme Court in the case of Dhanrajamal Gobindaram v. Shamji Kalidas and Co.,
(3.) THERE is, furthermore, another aspect of the matter. Under Section 41 of the Arbitration Act, the Court has power to make order for interim protection even in a case where there is no application under Section 20 of the Arbitration Act or where proceedings under Chapter III of the Arbitration Act, 1940, have not been taken. Clause (b) of Section 41 of the Act indicates that, in that view of the matter, even if it be assumed, which I do not hold as I indicated before, that the application under Section 20 was misconceived in this case under Section 41 the Court has right to pass orders if the facts and circumstances of the case so justify. It was then contended by counsel for the respondent that this application was not under Section 41 as such, but this was an application interlinked with Section 20 in the application filed under Section 20. As I find necessary averments for an order under Section 41 are there, I am of the opinion that to sustain this objection of counsel for the respondent would be to uphold a mere technicality for which I find no justification in the scheme of the Arbitration Act, 1940. It was then urged, as mentioned before, that the application suffers from suppression of material facts. Reading the application as a whole, I do not think there was such non-statement of facts which were material or germane which would disentitle the applicant to the reliefs asked for. In the aforesaid view of the matter, this objection raised on behalf of the respondent is therefore rejected.;