ITI LIMITED Vs. STATE OF M P

JUDGEMENT

(1.) This is an application filed by the Petitioner under Section 11(6) of the Arbitration and Conciliation Act. 1996 seeking appointment of an Arbitrator. Petitioner is an undertaking of Government of India functioning under the Ministry of Communication and Information Technology. The Respondent State of M.P. and Inspector General of Registration and Superintendent of Stamp floated tenders for appointment of various agencies for the purpose of providing Turnkey Solution towards Commissioning, Management and maintenance of data centres in various places in the State of M.P. through a wide area network including supply and installation of services, desktop systems and Peripheral for implementation of Property Administration System in the department or Registration and Stamps. Tender of the Petitioner having been accepted, an agreement was entered into as is evident from Annexure A/1. Clause 13 of the said agreement contemplates an arbitration clause for resolution of dispute in case of difference or any other matter connected with the agreement.

(2.) Record indicates that due to. non performance of the contract and on the ground of delay in execution of work, various show cause notices were given to the Petitioner, Petitioner submitted the reply and finally vide order Annexure A/9 dated 12.5.2009, the contract in question was cancelled. The Performance Bank Guarantee to the tune of Rs. 2,04,50,472/-was forfeited and further a penalty of 20% of the gross bid value amounting to Rs. 4,09,00,945/- was imposed, Petitioner has filed this application seeking appointment of Arbitrator as the Respondents refused to respond to the claim made by the Petitioner for appointment of Arbitrator made vide Annexure A/10.

(3.) On notice being issued, Respondents have filed a reply and three objections are raised in the reply. The first objection pertains to existence of the remedy of .adjudication to the Petitioner under the M.P. Madhyastham Adhikaran Adhiniyam, 1983. (herein after referred to as 'Adhiniyam of 1983') and therefore, non maintainability of this application. The second objection pertains to certain concealment of fact by the Petitioner before entering into agreement. It is stated in the order Annexure A/9 and in the reply to this application under Section 11(6) of the Arbitration and Conciliation Act that before entering into the agreement Petitioner's company was facing proceedings to be declared as a Sick Industry under the Sick Industrial Company (Special) Provisions Act, 1985. As the agreement was entered into by concealment of this fact, no arbitrator can be appointed. The third objection is with regard to merit of the dispute and justification of the Respondents in terminating the agreement.