JAYAMURUGAN GRANITE EXPORTS Vs. SQNY GRANITES AND ORS.

JUDGEMENT

(1.) M/s. SQNY Granites/first respondent, a Partnership firm, was granted granite quarrying lease by the Government of Tamil Nadu by Government Order dated 27.02.2006, in respect of the patta lands measuring 2-21-0 hectares, comprised in Survey Nos.885/2, 886/3B, 894/7, 895/1, 896/1, 896/2, 897/2, 901/1, 901/2, 901/3, 903/1, 903/2, 904/1, 904/2A, 904/2B, 904/3, 904/4A, 904/4B and 905/1 (part) situated in Keelathiruthangal village, Sivakasi Taluk, Virudhunagar District. In pursuance thereto, a lease agreement was executed on 13.03.2006, duly registered, for a period of 20 years commencing from the date of the agreement and ending on 03.02.2026. The granite to be quarried was "Multi Coloured Granite". It appears that this lease must have been operated by the first respondent for some time but an agreement came to be executed on 02.10.2013 by the first respondent, through its Partner Mr.P.Ganesan/second respondent in favour of M/s.Jayamurugan Granite Exports/the petitioner, represented by its Managing Partner Mr.P.K.Ravichandran to be the raising contractor, due to lack of men and machinery available with the first respondent. In terms of the commercial arrangements, a sum of Rs.5 lakhs was to be treated as standing advance without interest, to be refunded on the expiry of the agreement and another sum of Rs.5 lakhs to be adjusted in the sale proceeds of the materials to be sold through the respondents. The commercial transaction, inter alia, required that 80% of the entire exportable and marketable production would be given to the respondent or its nominee/nominees towards raising cost of the entire production and the balance 20% would be taken by the first respondent with no amount paid for it towards raising cost falling to the share of the second respondent. The agreement was to remain valid till the expiry of the lease and was required to be renewed by mutual consent in the event of the Government of Tamil Nadu renewing the lease, but on terms and conditions to be mutually agreed upon.

(2.) The said agreement contains the dispute resolution clause-25 providing for the mode of arbitration by appointment of an Arbitrator by mutual consent. The said clause reads as under:

(3.) It is the case of the petitioner that the first respondent had entered into a raising-cum-sale agreement dated 07.06.2006, with "M/s.Kunnam Granites", in which quarrying operations were to be carried out by engaging the petitioner. In that process, the petitioner is stated to have suffered a loss, which in terms of the sub raising cum sale contract dated 15.07.2006 with "M/s.Kunnam Granites", was to be paid by the first respondent as accepted by letter dated 21.11.2008. There are other facts also set out, but suffice to say that the petitioner suspended the quarry operations by letter dated 27.01.2014, while the first respondent terminated the agreement subsequently on 10.06.2014, which is the subject matter of dispute, the same having arisen under the agreement and would have to be determined in terms of the agreement dated 02.10.2013. Since the differences could not be resolved, the petitioner invoked the jurisdiction of this Court under Section 11(5) of the Arbitration and Conciliaton Act, 1996, after having sent a legal notice dated 30.06.2014, calling upon the second respondent, as Managing Partner of the first respondent, to choose a mutually acceptable Arbitrator, to which there had been no reply from the respondents.