MOHAMMAD RAFIQ,J. - (1.) This application under section 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996 has been filed by petitioner praying for appointment of sole Arbitrator to adjudicate the dispute between the petitioner and respondent.
(2.) Mr. R.P. Singh, learned senior counsel for petitioner, submitted that the respondent floated a tender dated 07.05.2012 for procurement of kharif certified/notified variety seeds and invited parties to submit tender forms. The petitioner participated in the tender process and was declared as the lowest bidder. The respondent placed supply orders on the petitioner by issuing nine letters of intent for supply of various types of seeds. Consequent to the letters of intent, four agreements dated 06.06.2012, 06.06.2012, 13.06.2012 and 18.06.2012, respectively, were executed between the petitioner and the respondent for supply of seeds. The said agreements contained Clause 29 as arbitration clause. The petitioner effected delivery of seeds on the respondent on various dates including 10.06.2012, 11.06.2012, 12.06.2012, 13.06.2012, 14.06.2012, 15.06.2012 and 16.06.2012. The respondent did not raise any objection with regard to quality or quantity of the material supplied by the petitioner. The petitioner raised invoices on the respondent towards the aforesaid supplies made, for a total sum of Rs. 24,33,50,000/-, which were duly received and accepted by the respondent. The respondent failed to release the payment in respect of the said invoices. The petitioner sent reminders to the respondent to release the payment. The respondent released only part payment of Rs. 6,11,42,000/-. The petitioner continued to remind the respondent to release the remaining amount of Rs. 18,22,08,000/-, but the respondent did not pay any heed thereto. The petitioner, in addition to the said outstanding amount, is also entitled to receive the security deposit of Rs. 1,21,67,665/- lying with the respondent.
(3.) It is submitted that the respondent, vide letters dated 23.07.2013, 21.10.2013 and 15.01.2014, asked the petitioner to take back certain quantity of seeds, which was lying in its possession unused. The petitioner vide letters dated 04.08.2013 and 27.10.2013 communicated to the respondent that the stock of seeds sought to be returned after two years was of no utility to the petitioner in as much as the same had been rendered useless. However, the respondent insisted that the petitioner should have collected the seeds and disposed off. The respondent verbally represented that in case the petitioner collects the stock of unused seeds, it would expedite the release of balance payment. Based on such representation, the petitioner collected the stock of seeds worth Rs. 54,92,576/- from the respondent at its costs in January, 2015. It is submitted that since the said stock was rendered useless due to passage of time, the petitioner had no option but to dispose off the said stock by burning it. Despite that, the respondent failed to release the payment. The petitioner sent a letter dated 21.03.2016 to the respondent requesting for release the outstanding amount due under the agreements. The respondent was liable to pay to the petitioner an amount of Rs. 19,43,75,665/- towards outstanding principal balance amount along-with interest on the said amount at the rate of 18% per annum. The petitioner, vide letter dated 19.11.2016, invoked arbitration under Clause 29 of the Agreements. Thus, the disputes have arisen between the parties as the respondent, despite admitting its obligation and liability to pay for seeds supplied to it by the petitioner and despite making part payment, has failed to pay the balance outstanding amount of Rs. 19,43,75,665/- due and payable by it, under the agreements. The respondent vide letter dated 11.01.2017 replied to the said notice and in derogation of the provisions of the Act of 1996, referred the dispute between the parties to its Chairman for arbitration. The petitioner objected to the said reference of the matter to the Arbitrator stating that the appointment of Chairman of the respondent as an Arbitrator is contrary to Section 12(5) of the Act of 1996.;