LAWS(SC)-2023-5-79

B AND T AG Vs. MINISTRY OF DEFENCE

Decided On May 18, 2023
B And T Ag Appellant
V/S
MINISTRY OF DEFENCE Respondents

JUDGEMENT

(1.) This is a petition under Sec. 11(6) of the Arbitration and Conciliation Act, 1996, (for short, 'the Act 1996'), filed at the instance of a company based in Switzerland and engaged in the business of manufacturing of arms etc., praying for appointment of an arbitrator for the adjudication of disputes and claims arising out of the Contract No. 78953/SMG/GS/WE4(GS-IV) dtd. 27/3/2012 executed with the respondent Government of

(2.) The respondent, Ministry of Defence vide the RFP No. 78953/SMG/GS/WE-4 dtd. 18/11/2009 floated an urgent tender for procurement of 1,568 Sub Machine Guns under a Fast Track Procedure. The petitioner participated in the tender process and offered its bid. The tender was opened on 21/12/2010 and the petitioner was declared to be the lowest acceptable bidder. After due negotiations, the Contract was executed and signed on 27/3/2012.

(3.) The dispute between the parties arose in relation to the alleged wrongful encashment of warranty bond by the respondent. The respondent vide its letter dtd. 16/2/2016, directed the Joint Chief Executive Officer, State Bank of India, Frankfurt Branch, Germany to encash the WBG No. 12/380 for its full value i.e., Euro 201,793.75 and remit the amount through direct bank transfer to the Principal Controller of Defence Account (PCDA, Government account) in accordance with the details stated in the letter. One copy of the letter dtd. 16/2/2016 was also forwarded to the petitioner. This action on the part of the respondent, i.e., of encashing Liquidated Damages (LDs) for the requisite amount was on account of delay in the supply of goods beyond the contractual time period.