MADHUSUDAN TIMBER INDUSTRIES Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS application has been moved under Section 41 read with Schedule II of the Arbitration Act. praying that the Court should direct the stay of operation of The order of de-registration of the petotioner from made by the respondents on July 11, 1990.

(2.) THIS application has been moved in a petition filed under Section 20 of the Arbitration Act. The facts, in brief, are that in response to the invitation of tenders issued by the respondents. the petitioner had submitted its tender for supply of 2000 boxes C-33A each to Ordnance Factory, Khamaria and Ordnance Factory, Chanda. The tender of the petitioner was accepted by the respondents on January 18, 1989. According to the petitioner, it had supplied the entire store under the aforesaid supply orders after they were manufactured under strict inspection procedure and quality control measures adopted by the respondents, and no sub-standard plywood was used in the manufacture of the said supplies and the supplies were also accepted by the respondent without any defects being pointed out. However the respondents issued a letter dated October 3, 1989, after five months of the supplies being made, intimating the petitioner that the supplies stood rejected as the plywood used was sub-standard and the petitioner was called upon to make immediate replacements. It is alleged that the respondents in an illegal and high-handed manner made a recovery of Rs. 46600 by way of price reduction. So it pleaded that. disputes have arisen between the parties with regard to the wrongful rejection of 400 Nos. boxes and withholding of Rs. 9,320 in respect of one supply order and Rs. 46,600 in respect of the second supply order and regarding the claim of the petitioner of interest @ 21% per annum, It was pleaded that the said dispute are covered by the arbitration clause and thus a prayer was made in the petition that the agreement for arbitration be directed to be filed and arbitrator he nominated in accordance with the arbitration clause.

(3.) THE counsel for the petitioner has vehementl argued that the petitioner has a good prima facie case to show that infact no defective goods have been supplied and thus thus balance of convenience being in favour of the petitioner, the operation of the impugned order should be stayed by this court by passing an injunction order.