UNION OF INDIA Vs. MODI INDUSTRIES LIMITED

JUDGEMENT

(1.) THE Petitioner, Union of India through Director General Supplies & Disposal ('DGS&D'), has filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (Rs.1996 Act') challenging the Award dated 29th August 2002 followed by corrigendum dated 12th September 2002 passed by the learned Sole Arbitrator arising out of the dispute between the Petitioner and Respondent No. 1 Modi Industries Limited pertaining to the Running Contract dated 26th February 1979 for supply of two items of "branded Enamel Synthetic Exterior".

(2.) PURSUANT to the tender notice issued by DGS&D, the above contract was entered into between the parties for the period from 1st February 1979 to 31st December 1979. The value of the contract was Rs. 13,42,269.70. The delivery schedule prescribed in the running contract was at 50,000 litres per month commencing from 30th April 1979 and completion by 31st August 1979. The contract also provided an increase or decrease of the quantity by 25% at purchaser's option. It was stated that in exercise of the tolerance clause provided in the running contract, further quantities were ordered by amendment letters dated 31st May, 21st July and 26th November 1979.

(3.) AGGRIEVED by the withholding of the amounts from its bills, Respondent No. 1 sought reference of the disputes to arbitration. This Court passed an order dated 9th August 2001 appointing a sole Arbitrator. The aforesaid order was passed in OMP No. 111 of 1986 filed by Respondent No. 1 under Sections 5, 11, 12 and 33 of the Arbitration Act, 1940 (Rs.1940 Act'). Respondent No. 1 in the said petition challenged the appointment of Dr. B.N. Mani as Arbitrator. By the time the petition came up for hearing, the Petitioner informed the Court that since Dr. Mani had retired, another Arbitrator had to be appointed. Accordingly, the Court appointed Mr. B.L. Nishad, Additional Legal Advisor, Ministry of Law, who was the arbitrator in cases of the DGS&D, as Sole Arbitrator in the present case. Subsequently, Mr. B.L. Nishad was transferred on promotion as Joint Secretary. As will be noticed hereafter, the parties agreed before the Arbitrator that he should treat the proceedings as being under the Arbitration and Conciliation Act, 1996 ('the 1996 Act'). He however continued acting as an Arbitrator.