LUNES PUBLISHERS (P) LTD Vs. GENERAL MANAGER MADURAI TELECOM DISTRICT BHARAT SANCHAR NIGAM LTD ,; THIRU K V BALASUBRAMANIAN ARBITRATOR AND DY GENERAL MANAGER, BHARAT SANCHAR NIGAM LTD AND THE MANAGER STATE BANK OF TRAVANCORE, MULLASSERY BRANCH

JUDGEMENT

(1.) This O.P. has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') to set aside the award dated 28.6.2002 passed by the 2nd respondent declaring the same as null and void, consequently to grant a permanent injunction restraining the 1st respondent from in any way invoking the bank guarantee bearing No. 6/99 dated 6.11.1999 issued by the 3rd respondent and to appoint a fresh impartial arbitrator conversant with the laws, on the subject to re-hear the matter.

(2.) The petitioner is carrying on the trade of printing and publishing telephone directories for the Bharat Sanchar Nigam Ltd. (hereinafter called BSNL) on contract basis as its principal business. On 7.10.1999 the petitioner entered into a contract with the 1st respondent for printing and supplying of Madurai SSA Directory for 5 consecutive years commencing 2000 issue. The first telephone directory to be printed and supplied to 1st respondent became due to be published in the year 2001 on account of various delays on the part of the 1st respondent. The petitioner delivered about one lakh copies of the directories and was making preparations for printing further copies. The petitioner had already furnished bank guarantee for a sum of Rs. 10 lakhs issued and guaranteed by 3rd respondent bank.

(3.) While so, on 21. 5 2001 the 1st respondent issued, s press statement defaming the petitioner and making it appear that the petitioner would not deliver the said copies of telephone directories and the petitioner might be subjected to legal action. The public at Madurai and other clients of the petitioner who read the press statement reacted by withdrawing their advertisement in the directory refusing to pay amounts due by them to the petitioner and they went, on to issue legal notice to the petitioner. This resulted in the petitioner closing down the Madurai branch and suffering huge loss. The petitioner could not continue the business and therefore initiated arbitration proceedings to enquire into this issue and to find if the contract could be performed further. Fearing untimely encashment of the bank guarantee, the petitioner approached this Court for an interim stay in Application No. 527/2001. This Court in and by order dated 8.11.2001 directed the petitioner to keep the bank guarantee already given alive till the disposal of the arbitration proceedings.