HIM SPORTS Vs. STATE OF HIMACHAL PRADESH

JUDGEMENT

(1.) One Sh. Guru Dutt Sharma representing himself to be the sole arbitrator filed the award dated 8th April, 1986 in the Court on 5th May, 1986. On the basis of this award, a sum of Rs. 31 lacs were awarded against claim No. A and further a sum of Rs. 39 lacs were awarded against claim No. B against the State of Himachal Pradesh and in favour of the petitioner -claimant, who happened to be the appellant in the present appeal. Learned Arbitrator further awarded a sum of Rs. 43,200 with interest since 1977 at the rate of 12% per annum against claim No. C Apart from that a further sum of Rs. 10,500 with interest since 1977 at the rate of 12% per annum against claim No D was also awarded. Learned Arbitrator further directed that the aforesaid award amounts would be paid by the State within a period of one month from the making of the award and on its failure to pay the said amount, further interest at the rate of 12% per annum, till its realisation, was also awarded.

(2.) The facts giving rise to the present proceedings are that M/s. Him Sports the present appellant entered into an agreement with the State of Himachal Pradesh on 10th July, 1975 and on the basis of that agreement State agreed to sell standing willow trees and trees of other species in favour of the appellant for the manufacture of sports articles and other allied produces, subject to availability. This agreement was to last for a period of ten years and during this period the forest wood, as referred in the agreement, was to be supplied and some broad leaf species of wood was also to be agreed to be supplied annually for the purpose of converting the same into sports articles in the factory to be set up at Mehatpur. A dispute arose between the parties regarding supply and price thereof. Clause 39 of the agreement stipulates reference of the dispute, arising out of the agreement, for arbitration. State of Himachal Pradesh rescinded the agreement in November 1979 as it was observed that the present appellant was defrauding it by selling the wood outside Himachal Pradesh, since the appellant had neither any machinery nor factory for manufacturing the sports articles. A report in this behalf was submitted by Deputy Commissioner, Una and in pursuance to that, a show cause notice was issued to the appellant and a penalty to the extent of Rs. 1,14,210 was also imposed. The appellant disputed these allegations and also assailed the cancellation of the agreement as well as the imposition of the penalty.

(3.) The present appellant filed a suit in the court of Senior Sub Judge, Una against the State of Himachal Pradesh restraining it from cancelling the agreement and imposing the penalty on the plaintiff -appellant. The suit was found to be bad for want of notice under section 80 of the Code of Civil Procedure and after removing this lacuna, another suit was filed in the Court at Una State of Himachal Pradesh preferred an application before the Court for sending the case for arbitration and this plea was allowed and the suit was stayed under section 34 of the Indian Arbitration Act. In this Court, a suit for recovery of Rs 35,63,200 was filed by the present appellant against the State of Himachal Pradesh and in that suit an application under section 34 of the Indian Arbitration Act was preferred, which application was allowed on July 19, 1982 and the suit was stayed.