SUN SECURITY SERVICES Vs. BABASAHEB BHIMRAO AMBEDKAR UNIVERSITY

JUDGEMENT

(1.) By means of this application, the applicant has prayed for appointment of arbitrator under section 11 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as 'the Act') for resolution of dispute between the parties arising out of the agreement dated 7th April 2008.

(2.) The applicant firm entered into an agreement with Babasaheb Bhimrao Ambedkar University, Lucknow, for providing security services at University Campus. The period of agreement was from 1st April 2008 to 31st March 2009 and according to the applicant, it was extended up to 2nd July 2009. The applicant had deposited refundable security amount of Rs. 2,80,000/- The applicant firm provided security services without any complaint and the period of contract was extended up to 2nd July 2009, whereafter, it handed over the campus to the newly appointed security agency. However, its bill for the month of March 2009, June 2009 and July 2009 as well as the amount towards additional duties were not paid nor security deposit refunded to it. It made several representations to the Vice Chancellor of the University for clearing the bills. Ultimately, it served a legal notice dated 24th May 2010 through its counsel on the Vice Chancellor and the Registrar of the University calling upon them to pay the outstanding amount of Rs. 9,73,192/- along with 18% interest failing which it would be constrained to initiate legal proceedings. Thereafter, the respondents released a further sum of Rs. 2,50,782/- on 13th December 2010. Vide letter dated 24th January 2012, the Registrar of the University informed the applicant firm that remaining amount has been adjusted towards alleged losses due to theft, pilferage, etc. for which security agency is liable in view of clause 14 of the agreement. The applicant firm served the University with another legal notice dated '1st August 2012 invoking clause 22 of the agreement for appointment of arbitrator. It suggested three names and requested the respondents to give consent to one of the names failing which the applicant firm will approach the Court of law for appointment of arbitrator. The University did not respond to the said notice and, hence, the present application for appointment of arbitrator.

(3.) The application is opposed by the University by filing counter affidavit, in which it is asserted that the contract expired on 31st March 2009. Thereafter, the applicant firm continued its services up to 2nd July 2009 without any extension of agreement or fresh agreement. Thus, the dispute relating to payment of bills for the month of June 2009 and July 2009 relate to the period after the expiry of the contract and are not arbitrable. It is further contended that the entire amount stands paid to the applicant firm and the remaining amount was adjusted towards loss caused to the University on account of certain goods found missing due to negligence of security personnel, as per clause 14 of the agreement. A further plea has been taken that under clause 22 of the agreement, the applicant firm having not approached the Vice Chancellor, the present application is premature. The remedy provided under the agreement has to be exhausted before a party can approach the Court under section 11(6) for appointment of arbitrator. Learned counsel for the respondents opposed the application on the selfsame grounds. He placed reliance on the judgment of the Apex Court reported in -