- (1.) The appellant is aggrieved of the dismissal of the objections filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "1996 Act") seeking setting aside of the award dated 20.03.2006, as well as, of order dated 26.05.2004 vide which the jurisdiction of the Arbitrator, as per provisions of Section 16 of 1996 Act, has been challenged.
(2.) Mr. Akshay Bhan, learned Senior Counsel assisted by Mr.Gurinder Singh, Advocate submits, that in the year 2001, respondent No.1 floated an open tender for the purchase of LDPE Black Film through press for the requirement of black LDPE sheets of 5400 mm and 6600 mm thickness and 1200 guage +/-20% of virgin material LDPE of grade FA 002 or Equivalent Grade for the manufacture of poythene cover at the unit of Markfed at Anandpur Sahib. The tender of the appellant was accepted and supplementary order was placed. However, the dispute arose between the parties vis-a-vis the quality of material and the matter was referred to the Arbitrator. The Markfed filed a claim for a sum of Rs. 4,36,93,478/-including interest @ 18% per annum which was seriously disputed. The respondent lost right to seek arbitration, as alleged defect was cured by replacing covers, therefore, no cause of action arose to invoke the arbitration. Accordingly, application in this regard vis-a-vis jurisdiction of the Arbitrator was filed which has declined vide order dated 26.05.2004 and the said observations have also been challenged in the present appeal. The arbitration clause provides the limited scope for reference. Since agreement had fully been implemented and award is not legally sustainable in the eyes of law. Appellant only supplied polythene sheets and thereafter, the poythene rolls were converted by the claimant Markfed, HDPE Sacks, Anandpur Sahib into food grains covers was done in the absence of the representative of the appellant, in this regard, properties of the material cannot be expected to remain same, these facts have totally been ignored by the Arbitrator.
(3.) It is a matter of record that as during the manufacturing process the material was sent to Ahemdabad Laboratory by the representative of the respondent and the result/report (Annexure A-8) was found to be satisfactory. Even representative of the Markfed submitted his report on 23.04.2001 (Annexure A-9) with regard to the manufacturing of sheets in the premises of the firm, wherein, it was found that material used by the claimant was above specifications. The Arbitrator erroneously relied upon the report of Ram Institute for Industrial Research, Delhi and IDMA Laboratories Limited Panchkula without realizing the fact that sample sent to the laboratory had no identification mark. The appellant had agreed to replace the LDPE sheets free of costs and the replacement was done on weight to weight basis. The department did not release the payment. The evidence brought on record has not been appreciated by the Arbitrator, thus, the objections were falling within the parameters of Section 34 of 1996 Act.;