- (1.) THIS arbitration application under section 11(6) of the Arbitration and Conciliation Act, 1996 (in short "the Act of 1996 ") arising out of the two agreements issued with reference to the Notice Inviting Tenders issued by the Non applicants for the financial year 2012 13 for supply of different items, which contained Arbitration Clause 8.
(2.) THE facts stated in the arbitration application are as follows: 2(a) The Applicant a company registered under the Companies Act, 1956, is carrying on the business of manufacturing and selling of pharmaceutical and FMCG products (medicines). A tender bearing No.F.01(01)/RMSCL/Procurement/2012/01 for the year 2012 13 was floated by the Non applicants. The Applicant submitted its tender on 23.2.2012 and the same was accepted with the stipulation that different purchase orders would be issued to the Applicant from time to time, which should be followed by written agreements between the Applicant and the Non applicants. In terms and conditions of the purchase orders, the Applicant entered into two Agreements (Anx.3 and 4) against PO No.1059 and 1344 with the Non applicants. The Applicant had sent the original agreement along with the Conditional Bank Guarantee covering 5% of the purchase order amount, duly signed in respect of P.O.No.1059 but did not send the Conditional Bank Guarantee for P.O.No.1344 because of the illegal withholding of the amount of the Applicant Company, for its earlier agreements for tender of the year 2011 2012 without assessing any reasons. In para 7, the Applicant has submitted that the Non applicants tried to compel the Applicant to execute the agreement even without making payment of the earlier due amount which was not possible for the Applicant. 2(b) That by the conduct of the Non applicants, a dispute arose between the parties which is directly related with the agreement executed between them and the agreement having Clause No.8 for settling it in accordance with the Act of 1996. The Applicant by invoking Clause 8 of the agreement, served a notice on 20.7.2012 (Anx.6) for appointment of the Arbitrator in terms of the tender for the year 2012. Despite receiving the notice no reply was given therefore, a reminder letter cum name of the Arbitrator so appointed by the Applicant at its own end in terms of Clause 8 of the Agreement was communicated through registered letter dated 6.8.2012 (Anx.7). The Non applicants did not reply to the letter and the notice nor appointed the Arbitrator in terms of Clause 8 and tried to invoke the bank guarantee. When nothing was heard in this respect from the Non applicants, the present arbitration application has been filed by the Applicant that the Non applicants have failed to act as per the procedure given in Clause 8 of the agreement executed between the parties, therefore, they have forfeited their right to appoint another Arbitrator and an independent Arbitral Tribunal may be constituted by this Court for resolving the dispute between the parties. The Non applicants have filed reply to the arbitration application stating therein that the arbitration application is barred by limitation and further in reply to para 6, submitted that the Applicant did neither submit the security deposit nor supplied the medicines. As the Applicant had committed defaults in supply of drugs against the contract for the year 2012 13, its pending payments against the previous supplies were withheld. The withheld amount was to be adjusted against the security amount which the Applicant had failed to deposit against the agreement for the year 2012 13. The other pending amounts were also to be adjusted for recovering the difference amount of risk purchase by the Non applicants from other suppliers at higher at higher rates. It is further submitted by the Non applicant that no supply against the tender of 2012 13 has been made by the Applicant. It is also submitted that the Applicant firm has itself admitted in para 7 that the amount of the Applicant company already lying with the Non applicant, which could have been adjusted in that case there is no dispute whatsoever between the Applicant and the Non applicant on this count but there is no such admission in para 7 of the arbitration application wherein the averments are that the Non applicants tried to compel the Applicant to execute the agreement even without making payment of the earlier due amount which was not possible for the Applicant.
(3.) SUBMISSION of counsel for the Applicant is that a perusal of the arbitration application as well as reply clearly reveal that there is a dispute with regard to the release of the due payment and further, invoking the bank guarantee for which the first notice was given on 20.7.2012 (Anx.6) calling upon the Non applicants to nominate their Arbitrator within fifteen days of the receipt of the notice and thereafter,the Arbitrator was nominated by the Applicants vide letter dated 6.8.2012 (Anx.7) but no Arbitrator was appointed by the Non applicants within the said period and till the date of filing the present arbitration application i.e. 28.9.2012, therefore, the agreed procedure prescribed under Clause 8 of the arbitration agreement has not been followed by the Non applicants and the Non applicants have forfeited their right to appoint another Arbitrator and this Court has to invoke its power u/s 11(6) of the Act of 1996 to appoint an independent Arbitral Tribunal.;