KOLLERI CONSTRUCTIONS HYD Vs. NECTAR LABORATORIES LTD

JUDGEMENT

(1.) By this application filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (for short, 'the new Act'), the petitioner/firm seeks appointment of an independent arbitrator for adjudicating the dispute that has arisen between it and the respondent/company.

(2.) By an agreement dated 16-2-1995 concluded between the petitioner / firm and the respondent/company, construction of factory building, formation of roads and other civil engineering works of the respondent/company was entrusted to the petitioner/firm. The estimated value of the contract was approximately Rs. 48 lakhs. The work has not been completed within the stipulated period. Clause 56 of the agreement provides for adjudication of the disputes through arbitration.

(3.) The case of the petitioner/firm, in brief, is that it was submitting running bills to the respondent/company and it was paid amounts in instalments. On 23-1-1996, the petitioner/firm has submitted the final bill amounting to Rs. 63,14,070/-. The respondent/company kept the matter pending for weeks and after repeated demands, they had a negotiation but it failed and thereafter the matter was referred to G. Satya Rao, Architect, by the respondent/company for arbitration. A tripartite meeting was conducted on 24-2-1996 which was attended by the representative of the petitioner/firm, respondent/company and G. Satya Rao, the Architect. The Architect has taken sides with the respondent/company and he was won over by it. The final payment was deliberately delayed to pressurise the petitioner/firm. On 13-3-1996, the representative of the petitioner/firm was offered Rs. 1 lakh as the final payment though a sum of Rs. 10,71,586/- was due to it. The petitioner/firm was in deep financial crisis as it had to clear the dues of other suppliers. The attitude of the Chirman/Managing Director of the respondent/company was unreasonable and harsh and, therefore, the partner of the petitioner / firm, Biju Kolleri, had no other alternative but to accept the payment of Rs. 1 lakh. He was forced to sign on the receipt of the final payment. On 4-4-1996, the petitioner/firm, after making calculations, brought to the notice of the respondent/company that the last bill was paid after drastically cutting the rates and as such the petitioner /firm was again approaching it with full details. On 8-4-1996, the petitioner/firm wrote to the respondent/company giving details of the due and claimed Rs. 5,83,000/- on account of the work already done and Rs. 2,88,240/- against other items, viz. escalation, cost of labour etc., total Rs. 8,71,240/- plus interest at the rate of 24 per cent per annum besides Rs. 75,000/- towards the cost of arbitration. Inspite of exchange of letters, the respondent/company did not appoint an arbitrator for resolving the dispute; therefore, on 2-10-1996, the petitioner/firm nominated Shri A. Somaath as the arbitrator from its side and called upon the respondent/company to nominate an arbitrator from its side as per Clause 56 of the agreement, but the respondent/company had refused to do so and, therefore, an independent arbitrator should be appointed to adjudicate the dispute.