CEKOP Vs. ASIAN REFRACTORIES LTD

JUDGEMENT

(1.) ON 1st of April, 1960 an agreement was entered into between one J. N. Jaju as the then sole proprietor of Asian refractoris and Messrs. Cekop, whereby it was agreed that Messrs. Cekop would, sell and Asian Refractory would purchase machinery and equipment as well, as Technical Design for fire brick plant: of output target of about 24,000 bricks per year in two shifts per 8 hours on certain terms and conditions as would appear from the document in writing dated 1st of April, 1960. The terms and conditions, so far as are relevant for the present purpose, provided that the machinery and the equipment would be delivered by Messrs. Cekop F. O. P. Polish Port in partial shipments and would be supplied within 22 months from the execution of the said agreement. It further provided that the total price of Technical Design and machinery and equipment would amount to 56,040 less discount 21/2 on the total value, i. e. , 152,139. It further stipulated that 20% of the total price of 152,139 being 39,428 would be paid within 60 days from the date of obtaining the import licence by the asian Refractories and the balance 80% being 121,711 would be paid in eight successive equal half yearly installments of 15,214 together with interest of 6% per annum, the first of such instalment being payable within 390 days from the last substantial shipment. The agreement provided that Asian Refractories would provide Messrs. Cekop with an irrevocable Bank guarantee securing the payment in due time of the full credited amount with interest. It was the further condition of that agreement that Messrs. Cekop would be responsible for faultless design, materials, workmanship and for the proper execution of each machine for which a standard guarantee letter had been issued. The said guarantee was valid for 12 months and would be extended in case of delay in shipment and was to start from the date on which Asian refractories would receive notification from Messrs. Cekop that the machinery and equipment were ready for despatch.

(2.) THERE was a clause in the agreement providing for arbitration in the following terms-"both parties to this Agreement are deemed to fulfil this Agreement in good faith and mutual trust. Both parties will try to settle any dispute arising out of or in connection with this Agreement by mutual amicable arrangement. Should it fail, the case shall be submitted to arbitration without recourse to state Courts. The case shall be referred to two Arbitrators and one Umpire. The legal place of arbitration shall be at the place of the defendant party which shall be deemed to be Calcutta and Warsaw respectively. Upon receipt of the plaintiff's notice containing the name and address of their arbitrator, the object of dispute and claim of the plaintiff, the defendant party shall be obliged to appoint, within three weeks from the date of receipt of this notice, the second arbitrator and give his name and address to the plaintiff. Both arbitrators shall elect and appoint an umpire within one month from the date of the second arbitrator having been appointed. Failure to appoint the arbitrators or the Umpire within the above definite time or in case of the refusal or inability of any of them to accept the appointment, he or they will be appointed by the president of the polish Chamber of Foreign Trade. Each party will bear the advance expenses connected with the appointment of its arbitrator, The Umpire after hearing both parties shall decide, inter alia, upon the mode of further advance payments. The award of the arbitration court shall determine the amount of arbitration cost and the party having to bear them. The majority award shall be final and binding on both the parties. "

(3.) THE Bank guarantee was given by the United Commercial Bank. It has to be noted that apart from the amendment to the agreement which was signed on the 20th July, 1960 all other agreements were entered into and executed' and signed at Calcutta. On the 22nd December, 1967 the Asian refractories Ltd. instituted a suit in this high Court being suit No. 2928 of 1967 (Asian Refractories Ltd. v. Cefcop and anr.) for a decree for Rs. 11,52,635/-against Messrs. Cekop for an enquiry into the damages suffered by the Asian refractories Ltd. since 1st December, 1967 due to loss in production or, otherwise, and for certain incidental relief's.