BHARAT PRASAD KESRI Vs. RAJESH KUMAR

JUDGEMENT

(1.) Applicant-Rajasthan State Mines and Minerals Ltd. has filed this application under Section 10 and 11 of the Arbitration and Conciliation Act, 1996, praying for appointment of an independent Arbitrator/constitute Arbitral Tribunal as per Arbitration Clause No. 8 of the agreement dated 25.04.1989 signed and executed between the parties.

(2.) Foundational facts essential for deciding the application are that applicant is a Government of Rajasthan Enterprises known as Rajasthan State Mineral Development Corporation Ltd. but it was later amalgamated with the Rajasthan State Mines and Minerals Ltd. through Central Government Gazette Notification dated 20.02.2003 by which all assets, liabilities and affairs of the former vested unto the later and this fact is not disputed by the parties. An agreement was executed by and between the erstwhile Corporation and the respondent on 15.04.1999 for supply of Gypsum Powder from Hanumangarh Gypsum Project to the respondent on certain terms and conditions as settled in the said agreement during the financial year 1999-2000. Clause no.8 of the agreement provided reference of the dispute to the Arbitrator as per Standard Arbitration Clause of Indian Arbitration and Conciliation Act, 1996, which has been deemed to be part of the agreement. Applicant has contended that it was agreed by agreement dated 15.04.1999 to supply 75000 MT Gypsum powder during the year 1999-2000. The respondent was required to give monthly delivery schedule by last week of every month for the subsequent month to the applicant to plan the production in advance. Applicant has allowed the credit of 60 days from the date of bill to the respondent. It was specifically mentioned in the agreement that the bills shall have to be paid within 60 days from the date of bill through demand draft in favour of the applicant. The price for supply of Gypsum Powder packed in HDPE bags was fixed; for Ex-Grinding Unit, Hanumangarh-Rs. 295/- PMT and for Ex-Hanumangarh Rail-Rs. 305/- PMT. These prices were inclusive of cost of filling, stitching of bags and loading into truck/wagons as the case may be, besides the cost of material. These rates also include royalty, State levies and octroi as applicable as on date, but are exclusive of Central Sales Tax which shall be charged extra as applicable against 'C' Form. The said price was revised from Rs. 295/- PMT to Rs. 315/- PMT plus sales Tax and from Rs. 305/- PMT plus sales tax to Rs. 325/- PMT plus sales tax w.e.f. 9.11.1999 respectively under clause 4 of the agreement dated 15.4.1999. Increased rates were accepted by the respondent vide letter dated 3.4.2000. According to the applicant, it is as per the agreement dated 15.4.1999, the applicant supplied Gypsum Powder to the respondent regularly within the scheduled period, but the payment of the applicant was not made in time by the respondent. As per clause 6 of the agreement, it was obligatory on the part of non-applicant to pay the amount of bills within 60 days from the date of bill through demand draft in favour of the applicant payable at Hanumangarh Junction/Jaipur. The applicant made several efforts for releasing such overdue payment from the respondent by sending numerous letters and telegrams and also approached them personally.

(3.) Due to the exceptional delay in making payment by the respondent to the applicant, supply of Gypsum Powder was suspended. The respondent paid a sum of Rs. 18.95 lacs on 13.3.2000 to the applicant. A sum of Rs. 85 lacs was still outstanding due against the non-applicant. The applicant sent letters on 5.4.2000, 15.5.2000, 10.8.2000 and 19.1.2001 to the non-applicant with a request to release the outstanding amount, but all in vain. The non-applicant by letter dated 18.7.2000 disputed certain amounts shown outstanding in the bills submitted by the applicant for the financial year 1999-2000 and made request for reconciliation. A joint meeting was held on 24.9.2001, but in that meeting too, no consensus could be arrived. Applicant sent details of the bills and outstanding dues, totalling to Rs. 65,84,171 for a period from 15.3.1999 to 31.12.1999 for supply of Gypsum Power to the non-applicant. A legal notice through Counsel was also sent on 27.7.2001 showing outstanding dues of Rs. 71,64,464.79, but no payment was made. The respondent replied to the legal notice vide letter dated 28.9.2001 and requested for one month's time to make payment, but thereafter no payment was made. Applicant thereafter vide registered AD letter dated 1/3.12.2001 requested for appointment of Arbitrator by the Chairman cum Managing Director and to settle the dispute, but nothing transpired.