GRASIM INDUSTRIES LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) Grasim Industries Ltd., Kozhikode, filed this application for the appointment of arbitrator and to make a reference for adjudicating all the claims raised by the applicant as against the respondent, the State of Kerala to the two arbitrators.

(2.) The applicant, a company registered under the Companies Act was engaged in the manufacture of rayon grade wood pulp in the Kozhikode District. By Annexure-I agreement dt. 3.5.1958, the company obtained a grant from the Government of Kerala for the exclusive right and licence to fell, cut and remove bamboo from certain areas in the Nilambur valley for the purpose of converting the same into rayon grade wood pulp and connected activities. The above right and licence was for a term of 20 years from the date of actual commencement of the regular working of the company. The regular working of the company started in 1963. There was an arbitration clause in Annexure-I agreement for adjudicating the disputes between the parties. The arbitration Clause.16 of Annexure-I would read:

(3.) The main case put forward by the company was that the State had not supplied the required quantity of raw materials in pursuance to the agreement and the company was entitled to compensation and disputes arose between the parties and all these disputes are to be referred for adjudication in accordance with the arbitration clause in the agreement. The learned Advocate General Sri. Ratna Singh submitted that the original arbitration clause in the agreements viz., Annexure-I to IV were modified by Annexure-V supplementary agreement wherein a new arbitration clause had been introduced and in view of the above arbitration clause, the disputes should be decided by an Arbitral Tribunal to be constituted as provided therein and the dispute be decided within a period of 30 days from the end of each contract year. It was further submitted that when there was a specific provision for arbitration in the agreement and time also had been fixed for deciding the disputes, such disputes should have been raised and decided within the stipulated time and such disputes cannot be referred for arbitration after a long lapse of time. It was further submitted that the cause for arbitration and the entire time had been barred by limitation and as such the application for appointment of arbitrator has only to be dismissed.