SUNRISE ENTERPRISES Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner has filed the present petition under Section 8 of the Arbitration and Conciliation Act, 1996 against the respondents for appointment of an Arbitrator as disputes have arisen between (he parties in connection with contract No.58380/DGOS/OS-P-II/Proc.Sec/605 dated 11th November, 1997 for supply of 15,19,100 numbers of towel hand bleach of a particular size at the rate of Rs.31.00 per towel to the four consignees indicated by the respondents in the contract. The time, being the essence of the contract, the petitioner in order to execute me contract and supply the towels in the stipulated time started the manufacturing process and in the first phase manufactured three lakhs of towels and arranged the raw material for the balance quantity. Three lakh towels were sent to three consignees named in the contract but they refused to accept the same. In the process the petitioner had suffered huge losses on account of the breach of the contract on the part of the respondents. The petitioner issued a notice dated 22nd May, 1998 bringing the entire facts to the notice of the respondents but the respondents kept silent. This led to subsequent notices and letters dated 28th November, 1998, 16th December, 1998 and 12th January, 1999, wherein the petitioner had claimed the amount of losses suffered by him and in the alternative desired the disputes to be referred to the arbitrator in terms of the Arbitration clause contained in the contract. The respondents in their counter-affidavit challenged the legality and validity of the contract alleging that the same was got executed by playing fraud upon them and as such claimed that the contract was voidable and illegal and the arbitration clause fell with it. They claimed the contract to be voidable, as according to them the petitioner was not registered with DGQA/NSIC under the Single Point Registration Scheme and had not deposited the security amount which was a pre-requisite for the acceptance of the tender. Another contention raised is that the issuance of advance acceptance of tender was based on fraudulent and false information and as such did not amount to a concluded contract. According to the petitioner, the advance acceptance of tender sent by the respondents through a telegram amounted to a concluded contract and time being the essence thereof, the petitioner had started the manufacturing process and even sent three lakhs of towels to the three consignees named in the contract.

(2.) An objection raised by the respondents is that the petition under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as me Act) is not maintainable. No doubt, reference of Section 8 of the Act in the main petition is not correct but perusal of the petition makes it abundantly clear that the petitioner seeks the appointment of an arbitrator as the respondents failed to appoint one as contemplated by the Arbitration clause which clearly falls within the purview of Section 11 of the Act.Tlie law is well settled that mentioning of a wrong provision of law in me title does not invalidate the petition. The present petition is, therefore, treated as a petition under Section 11 of the Act.

(3.) Both the learned counsel for the petitioner and respondents have addressed their arguments and have taken the court through the records.