BAKSHI STEELS LIMITED Vs. GOVERNMENT OF INDIA

JUDGEMENT

(1.) The petitioner in this petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short the Act), has prayed for directions to the respondents to appoint an Arbitrator and for reference of disputes for adjudication as per Clause 2900 of the Indian Railway Standard Conditions of the Contract (for short IRS Conditions of Contract). It is alleged that on 6/12/1993 contract was awarded to the petitioner for manufacture and supply of MCI Inserts, against Limited Tender No. CS-103/1993; total quantities to be supplied under the contract were 94 lacs MCI inserts, at the rate of Rs. 33.50 per piece, which were to be supplied during 24 months, in equal monthly instalments. Subsequently, the delivery period was extended from 24 to 30 months, but other conditions remained the same. IRS Conditions of Contract, formed part of the contract. Clause 10.1 of the contract empowered Ministry of Railways, Railway Board to enhance or reduce the contractual quantity upto 25% on the same terms and conditions, at their sole discretion with 30 days advance notice. It is further alleged that in pursuance of the said contract, the petitioner started manufacturing and supplying the MCI Inserts against the supply order issued by the respondents but the respondents did not issue the requisite release order upto November, 1995. The petitioner vide letter dated 25/11/1995 requested the respondents, to issue the release order as per the contract and apprised them that the petitioner had been holding stocks without knowing when the material would be required that till 15/03/1996 only 75% of the quantity was supplied though upto that date the respondents ought to have issued release orders covering 85% of the contracted quantity. The petitioner requested for supply order but the respondents in violation of the terms of the contract, reduced the supply by 25% of the entire contract, vide letter dated 24/04/1996. The petitioners raised the dispute requesting that the reduction was absolutely illegal and against the terms of the contract, and that they had suffered huge losses to the extent of 2.60 crores. Relevant portion of Clause 2900 of IRS Conditions of Contract reads as under : 2900 Arbitration

(2.) On 14.5.1998, the petitioner requested the respondents to appoint an Arbitrator. The petitioner has now sought directions to the respondents for appointment of Arbitrator and for reference of the following disputes.

(3.) I have heard the learned Counsel for the parties and have been taken through the record. Learned Counsel for the petitioner argued that while exercising powers under Sub-section (6) of Section 11 under the Act, the Court is required to pass an order of an administrative nature and the objections on merits of the claim raised by respondents can be examined only by the Arbitrator. Reliance was placed on Supreme Court decision in M/s. Sundram Finance v. M/s. NEPC India Ltd., JT 1999 (1) SC 49=1 (1999) SLT 179; Wellington Associates v. Kirit Mehta, (2000) 2 L.R.I. 242=II (2000) CLT 139 (SC)=IV (2000) SLT 31, Ador Samia Ltd. v. Peekay Holdings Ltd., (1999) 8 SCC 572=VII (1999) SLT 371 =IV (1999) CLT 53 (SC) and Konken Railway Corpn. Ltd. & Ors. v. M/s. Mehul Construction Co., 2000 (6) SCALE 71=VI (2000) SLT 321, wherein it was held :