SHANKAR TRADERS Vs. UNION OF INDIA

JUDGEMENT

(1.) This is an application under Section 11 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the Act), for appointment of an arbitrator. There was a contract between the petitioners herein and the Union of India, represented by Divisional Engineer (Co-ordination), Eastern Railway, Sealdah. The petitioner company was awarded a contract of lifting of track from km 5/25 to km 8/21 all four lines, and PQS station limit for provision of ballast cushion with other ancillary works at a cost of Rs. 12,33,968/-. This contract was awarded to the petitioner company vide letter dated 14th April, 2004. The work was to be completed within four months from the date of Issue of the contract. In pursuance of this offer an agreement was executed on 13th September, 2004. It seems that the petitioner company's claim is that due to default and breaches on the part of the respondents the execution of the work was prolonged and the extensions were also granted by the respondents without any penalty and when the work in question was successfully executed to the extent of 90% before the expiry of the extended period, a notice was sent to the petitioner company making some allegations. The petitioner company had given reply to the notice. However, it seems that the petitioner company has not been paid for the financial losses suffered by it on account of breach of contract by the respondents. The petitioner company by its letter dated 22nd February, 2005 claimed that its dues should be paid. However, no reply was ever received by the petitioner company.

(2.) Thus since this contract took place within the local jurisdiction of this Court, this Court has the territorial Jurisdiction to try and entertain this application and there is also a live issue in between the parties. Clause 63(1)(i) of the agreement provides for the arbitration clause, which is as under :

(3.) Thus, there is a valid arbitration clause in the agreement between the parties. The petitioner company's case is that in pursuance of this clause, the petitioner company sent a letter dated 22nd February, 2005 mentioning therein that in case nothing was heard or the letter was not complied with, the petitioner company would be compelled to Invoke the arbitration agreement. It is an admitted position that the Divisional Railway Manager, to whom this letter was sent, received this letter and in that letter the petitioner company had claimed a sum of Rs. 22,03,317/-. However, there was no decision taken even within 120 days, as provided in the arbitration agreement, and the petitioner company therefore by letter dated 11th July, 2005 invoked the arbitration clause and requested the General Manager to refer the dispute to the arbitration as per the arbitration clause quoted above. It is apparent that no action was taken and therefore the petitioner company filed the present application.