BHARAT RASAYAN LIMITED Vs. HINDUSTAN INSECTICIDES LIMITED

JUDGEMENT

(1.) This petition under Section 11 of the Arbitration and Conciliation Act,1996 was filed by petitioner company alleging that it is engaged in the business of manufacturing and trading of Technical grade pesticides and their intermediates. In pursuance of Tender Notice No.HIL/CO/1/96 dated 1/2/1996 issued by the respondent in local daily newspapers for purchase of Fenvalerate Technical and Cypermethrin Technical, the petitioner submitted its quotations/ offers alongwith earnest money deposits etc with the respondent vide letter Nos. BRL : 96:4538 and 39,'both dated 20/2/1996. Tenders were opened on 23/2/1996 and petitioner company was declared successful tenderer. Respondent thereafter entered into negotiations with petitioner. Petitioner company gave its revised offers vide letter Nos.BRL : 96 : 4823 and 24, both dated 21/3/1996. After further negotiations, petitioner vide its letter dated 12/4/1996 offered to extend interest free credit for 70 days instead of 30 days with respect to Cypermethrin Technical only. Petitioner also offered to respondent a special rebate of 2% on basic price of the supplies of Cypermethrin Technical only if payment was made by it within 70 days. The respondent agreed to pay interest on outstanding amount @ 24% p.a. in case of its faiflure to make payment within 30 days of the supply of Fenvalerate Technical and 70 days of Cypermethrin Technical. It is further alleged that respondent placed purchase orders bearing Nos.CTM-4/HO/D/ll/Fenvalerate/96-97 dated 13/5/1996 17/5/196 for 3,000 kgs of Fenvalerate Technical 90% Min and CTM-3/HO/D/14/96-97 dated 20/5/1996 23/5/1996for 16 MTs of Cypermethrin Technical 92% Min. on petitioner company. Pursuant to these orders, petitioner company manufactured and supplied said materials to the respondent against invoices, details whereof together with due date of payment(s) have been set out in sub para (x) of Para 7 of the petition thus:- <FRM>JUDGEMENT_785_AD(DEL)4_2001Html1.htm</FRM>

(2.) It is stated that materials against said invoices were duly received by the respondent. In sub para (xi) of aforesaid para the details of part payments made by respondent have been given as under:- <FRM>JUDGEMENT_785_AD(DEL)4_2001Html1.htm</FRM>

(3.) Thus, a total sum of Rs.2,33,69005.00 was paid by the respondent after considerable delay. It is further alleged that invoices raised by petitioner company specifically provided that interest will be charged @ 24% - p.a If payment was not made within the stipulated period. Respondent was thus liable to pay amount of Rs.12,90,210.00 towards interest on delayed payments calculated @ 24% p.a. in addition to further interest calculated at the same rateon said amount of Rs.12,90,210.00 from 17/1/ 1997 to 31/8/1999 which comes to Rs.8,12,32.00, making the total liability of respondent to the tune of Rs.21,03,042.00. It is stated that Tender documents dated 20/2/1996 containing general terms and conditions of tender, has arbitration clause by way of clause 23. The petitioner got a legal notice dated 16/4/1999 served upon the respondent requiring it to concur in the appointment of an arbitrator to decide the dispute regarding interest on delayed payments. In the reply dated 22/5/1999 the respondent denied its liability to pay interest and took the stand that alleged claim towards interest was not a dispute and,therefore,could not be referred to arbitration. It was prayed that sole arbitrator be appointed by court and dispute as to payment of interest on delayed payments be referred to him for adjudication.