Suresh Raina And Anr. vs National Fertilizers Ltd. And ...
2002 Latest Caselaw 1905 Del

JUDGMENT

K.S. Gupta, J.

1. In this petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for short 'the Act'), the petitioner seek direction to the named arbitrator to enter into reference and on his refusal to do so, to appoint an arbitrator. Details of claim to be adjudicated have been set out in tabular form in sub para (xxxi) of Para 5 of the petition as under:-

Supplies made under the supervision and arrangement of the petitioner for the following periods:-

(i) Oct. 93 to March, 94 : 3,81,368 M.Ts.

(ii) April 94 to March, 95 : 6,81,242 M.Ts.

(iii) April, 95 to March, 96 : 6,30,124 M.Ts.

(iv) April, 96 to Aug. 96 : 1,92,514 M.Ts. Total : 18,85,248 M.Ts.

Revised rates fixed @ Rs. 60/-

per MT instead of Rs. 65/- per MT : 18,85,248 x 15 Amount due : 2,82,78,720/-

Less amount received as advance ad-hoc payment : Rs. 30,00,000/-

Net amount due & payable : Rs. 2,52,78,720/- to the petitioners from respondents.

Interest @ 24% p.a. on the :

above amount.

Pecuniary loss and damages : Rs. 10 lacs suffered by the petitioners between 6.8.96 to January, 1997.

Total claim due to and payable : 2,62,78,720/- + by the petitioners plus interest Interest @ 24% on and costs. expenses till date of realisation.

2. In para No. 4 of the reply on merits filed by respondent No. 1, it is alleged that Clause No. 5 of the letter/agreement dated 9th September 1994 does not cover the disputes sought to be referred by the petitioners to arbitration.

3. To be noted that by said letter dated 9th September 1993 (at pages 31 to 39) M/s. Good Friends Agencies whereof petitioners are partners, was conveyed appointment as Handling-cum-General Services Contractor for fertilizer supplies to be made to the cooperative and other institutions/agencies in the States of Punjab & Haryana by National Fertilizers Ltd, respondent No. 1 on the terms and conditions contained therein for a period of 5 years commencing from 1st October, 1993. Para 5 of the letter contains an arbitrator clause. in disputedly, by the letter dated 6th August 1996 said contract was terminated with immediate effect by respondent No. 1. CWP No. 2332/97 filed by petitioners against that termination of contract was dismissed by the order dated 1st February 2000 and LPA No. 169/2000 taken out against this order too was dismissed in liming by the order dated 25th April 2000 by a Division Bench of this court observing that it will be open for the petitioners to take appropriate proceedings against respondent No. 1 before appropriate forum in accordance with law. Thereafter, by the notice dated 5th August 2000 sent through counsel to the Managing Director of respondent No. 1, the petitioners demanded nomination of a sole or three arbitrators to adjudicate upon their claims. On failure by said authority to act upon this notice, petitioner filed this petition on 4th November/13th November 2000.

4. Para 5 of aforesaid letter dated 9th September 1993 which is material, runs as under:-

"In the event of any dispute arising out of the interpretation of any clause of the subject agreement, decision of the Managing Director, National Fertilizer Ltd shall be final and binding on both the parties."

5. It was urged by Sh. R.P. Gupta appearing for respondents that under said clause only a dispute arising out of interpretation of any of the clauses of letter dated 9th September 1993 could be referred to arbitration and not the claims of the nature referred to in aforesaid sub para (xxxi) of Para 5 of the petition. On the contrary, it was contended by Sh. M.L. Qazi for petitioners that said clause is wide enough to include the claims reference whereof to arbitration is being sought. In the decision in Pir Mohd. Shafi and Ors. v. Cantonment Board and Ors., of the MOU read as under:-

"If any question arises relating to the interpretation or implementation of these terms of settlement and also in cases of error or discrepancy, the matter shall be referred for decision to such person as the Secretary, Ministry of defense may generally or specially nominate in this behalf, and the decision of such nominee shall be final and binding. It will be open to the Secretary, Ministry of defense, to nominate any officer of the Ministry of defense. The nominee will, however, give an opportunity to a representative of the Federation of being heard before giving his decision."

6. Interpreting the said clause, in Para 5 of the decision (at pp 22-23) it was held:-

"From the reading of the memorandum of settlement, it cannot be said that para 20 envisages arbitration of any dispute in respect of terms of settlement. It simply provides that if any question would arise about the interpretation or implementation of the terms of settlement or in respect of error or discrepancy, the matter be referred to a person named in the para. In terms of this para petitioners' application was admittedly referred to the authority named in the para and; the authority has taken a decision by its order dated 24th July 1984 which was placed on record during the course of arguments. The memorandum of settlement itself was in the nature of an award so there could not be any clause in the memorandum for referring the matter to arbitration in case of any question relating to the interpretaiton of the memorandum. Learned counsel for the petitioners seem to have laboured under the misconception of law and has incorrectly read into para 20 of Annexure A, an arbitration clause. By no standard para 20 can be termed as arbitration clause of any dispute or difference between the parties. It provides for interpretation to be given by the competent authority if a question arises for such an interpretation. That interpretation has been given and there is nothing which can be referred to arbitration in terms of para 20 of the memorandum of settlement.

7.In my view, aforesaid para 5 of the letter dated 9th September 1993 does not envisage reference to arbitration of the claims towards services allegedly rendered by the petitioners. So, the claims of the nature referred to in aforementioned sub para (xxxi) of Para 5 cannot be referred to arbitration by taking recourse to arbitration clause as contained in said Para 5 which only provides for interpretation to be given to any of the clauses of subject agreement by the competent authority if a question arose for such an interpretation. Ratio in Pir Mohd. Shafi's case (supra) lends support to the conclusion reached by me above. Thus, without referring to other submissions advanced before me the petition deserves to be dismissed on the said ground.

8. Consequently, the petition is dismissed with the observation that it will be open to the petitioners to initiate proceedings before appropriate forum subject to law of limitation for recovery of the amounts claimed. No order as to costs.