HARYANA PRATHMIK SHIKSHAN PARIYOJANA PARISHAD Vs. CENTURY COOLERS

JUDGEMENT

(1.) This revision is filed by the applicant/defendant being aggrieved by the fact that its application under Section 8 of the Arbitration and Conciliation Act was rejected by the Civil Judge (Sr.Dn.), Nagpur.

(2.) The facts giving rise to this revision, in short, are as follows - The non-applicant/plaintiff is a Manufacturer of Cooler as well as Almirahs. It entered into an agreement of supply of 1022 almirahs valued at Rs.3625/- each to the defendant. The order was placed with the plaintiff by the defendant on 20/5/2000. The goods were to be delivered within thirty days from the date of signing of the contract. In pursuance of the said agreement, terms were reduced to writing and the said contract was signed by the parties. The plaintiff had furnished a bank guarantee of Rs.1,85,238/- on 24/5/2003. The same was valid up to 31/8/2004. It is alleged that the defendant all of a sudden encashed the bank guarantee and terminated the contract. It is contended that there was no grievance of the defendant any time that the goods were not delivered and not according to the agreed quality. It is also contended by the plaintiff that the act of defendant in encashing the bank guarantee is illegal. Plaintiff seeks to recover Rs.3 lakhs and odd.

(3.) The defendant appeared in the suit and filed an application under Section 8 of the Arbitration and Conciliation Act, alleging therein that there is an arbitration clause in the agreement entered into by the parties and in view of that clause, the matter needs to be referred to the Arbitrator. It is contended that the plaintiff had supplied 350 almirahs and price thereof has already paid to the plaintiff. It is contended further that the plaintiff itself failed to adhere to the terms of contract for which the defendant was constrained to terminate the contract and invoke the bank guarantee. It is contended that since there is an agreement to refer the dispute to the Arbitrator, the civil courts should keep its hands off and refer the dispute to the Arbitrator. The application was resisted by the plaintiff and it was contended that there was no cause of action for encashing the bank guarantee. In fact, there was no need to terminate the contract. It is the defendant who had failed to adhere to the conditions of the contract.