UDEY PYROCABLE PVT LTD Vs. FEDO

JUDGEMENT

(1.) The defendant is the appellant. The proceedings were initiated by the plaintiff under S.20 of the Arbitration Act 1940 seeking filing of the agreement along with attachment and appointment of an Arbitrator. The plaint allegations were that the plaintiff had invited tenders for supply of materials namely electrical armoured cables and screened armoured cables for the construction of the Caprolactum Project and the plaintiff accepted the tender submitted by the defendant, that the defendant failed to supply the cables in terms of the tenders even within the extended time, that only small quantity was supplied by them, that the defendant committed breach of contract whereupon the plaintiff was forced to cancel the contract and arrange purchase of the items from alternate source which caused the plaintiff to suffer a loss of Rs. 17,77,545/-. The plaintiff called upon the defendant to pay the above amount. As the defendant failed, the plaintiff invoked the arbitration clause in the agreement and suggested the name of Mr. Ramachandran Nambiar, Advocate, Ernakulam as a sole arbitrator and called upon the defendant to communicate their approval. The defendant did not respond to the request. In addition to the amount named above in the plaint, the plaintiff has suffered liquidated damages to the tune of Rs. 3, 21,923.87 of which they could recover only Rs. 1,53,958.84. The balance is outstanding. The plaintiff claims, in addition to the above amount Rs. 9735.60 towards excess freight paid and Rs. 1395/- towards demurrage charges incurred. In aggregate, the plaintiff suffered a loss of Rs. 21,10,599.47 and after adjusting the amount recovered from the running bills, the plaintiff is entitled to recover Rs. 19,56,640.63. Under the terms of the contract there is provision for recovery of 10% towards retention amount and the plaintiff could realise only Rs. 2,12,405.19 under this head as the supplies were stopped abruptly by the defendant. The total amount realised from the defendant comes to Rs. 4,68,405.19 and the balance comes to Rs. 14,88,235.44. In Art.25 of the Standard Terms and conditions attached to the purchase orders, there exists an arbitration clause and the remedy available to the parties is only to settle the dispute by means of arbitration. Hence the plaintiff prayed for a direction to the defendant to file the agreement along with the attachment thereto before court and to appoint an arbitrator to decide all disputes and differences arising out of the contract between the parties.

(2.) The defendant filed a written statement contending that the suit is not maintainable. The plaintiff had placed two purchase orders and certain amendments were made to the said orders whereby the total value of the orders increased considerably. The defendant commenced executing the said orders on 30.4.1988. But due to the changes in the purchase orders the value of the goods increased and the overall cost of production of the work order had gone up very high resulting in substantial loss to the defendant. The plaintiff did not make payments as per the terms of the purchase orders. The defendant had assured the plaintiff delivery of the items provided. The defendant was not notified in regard to the breach of contract. The defendant contended that the plaintiff has no right to recover liquidated damages. The named arbitrator is not acceptable to the defendant. Aggrieved by the action of the plaintiff, the defendant had filed a suit O. S. No. 3603/90 before the High Court of Bombay under the Original Civil jurisdiction for the recovery of an amount of Rs. 24,00,545.03 with interest at the rate of 24% per annum. The present suit has been filed by the plaintiff suppressing these facts. In view of the pendency of the said suit, the present proceedings are not maintainable. The present suit is barred by the principle of res judicata and liable to be dismissed.

(3.) After settling the issues and trial the suit was decreed directing the parties to settle the dispute by appointment of an Arbitrator. The parties were directed to name the Arbitrator within three days and in the event of the defendant not amenable to name such an arbitrator it was directed that the plaintiff will file a panel of persons so as to appoint an arbitrator from that panel. It was further directed that the arbitrator so appointed will proceed with the matter as provided under the Indian Arbitration Act and file the award within six months from the date of his appointment.