1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION APPLICATION NO.115 OF 2008 Latiff Sons : Applicant V/s. Mazagon Dock Limited : Respondent ... Mr.Birendra Saraf i/b. M/s.Solomon & Co., for the applicant. Mr.Simil Purohit i/b. Udwadia & Udeshi & Co., for the respondent. ... CORAM : SWATANTER KUMAR, C.J. DATE : JULY 10, 2009. P.C. We have heard the learned counsel appearing for the parties. 2. The present application has been filed under section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “Act”) by the applicant, a partnership firm, which is carrying on business as timber merchants and general contractors. In response to Invitation to Tender no.AGM(M)/KBK/Timber/IR-763/MR-145/2003 dated 14.10.2003, the applicant submitted tender for supply of teak-wood logs and sawn mukri salwood of different sizes, the details were specified in 2 annexure “CC” to the said tender and annexure “AA” specified IS standard in which the goods should be supplied. General terms and conditions of the tender contained arbitration clause 802 which reads as under:- “C.P.802 – Arbitration Any dispute/differences between the parties arising out of and in connection with the contract shall be settled amicably by mutual negotiations. Unresolved disputes/differences, if any, shall be settled by Arbitration and the arbitration proceedings shall be conducted at Mumbai (India) in English language, under the Indian Arbitration and Conciliation Act, 1996. Any unresolved difference/dispute between the Purchaser and Contractor/Supplier being a Public Sector Enterprise, shall be referred by either party to the Department of Public Enterprises, as per extant guidelines.” 3. Certain disputes arose as regards the quality of the goods supplied as well as specification in which the original tender had been invited. Since disputes could not be resolved, the applicant served a notice on 21.8.2007 upon the respondent to which no Arbitrator was appointed as agreed to between the parties, resulting in filing of the present application. 4. The learned counsel appearing for the respondent has raised an 3 objection that there was novation of contract and the original contract between the parties was rendered ineffective in view of the fact that the applicant had supplied the goods not of the specifications specified, but according to the applicant, as per office memo which has been annexed as exh.`B’ to the petition. An analysis of this is that the arbitration clause between the parties came to an end and stood substituted as a whole contract by the subsequent supply of unspecified goods. Counsel also relied on the judgement of the Supreme Court in the case of U.P. Rajkiya Nirman Nigam Ltd. v. Indure Pvt. Ltd. (AIR 1996 SC 1373). I am unable to find any merit in the contention raised. In paragraph 3 of the application, it has specifically been mentioned that the contract was subsisting. However, the specification of the good was changed as per the discussion and it is stated:- “This clarification was necessary because mechanical properties mentioned in the Table in Annexure AA to the above mentioned Tender is not a specification and cannot be applied for the requirements of the Respondents and mechanical properties mentioned in this Table are not required for the purposes for which these materials are to be used. It is not possible to obtain the mechanical properties mentioned in the said Table in logs with diameters required by the Respondents.” In other words, it is clear from the above averments made in the application that according to the applicant, goods of altered specification 4 were supplied on mutual understanding and the applicant is entitled to receive the payment of the amount. This, by no stretch of imagination, can be construed as modification of the original contract entered into between the parties. The parties had entered into a specific agreement in response to the invitation of tender dated 14.10.2003 which contains C.P. 802 arbitration clause. The arbitration clauses subsists and is binding and does not frustrate itself by the fact of altered specifications. It is a dispute on merits of the claim. If the Arbitrator comes to the conclusion that the goods were of the specifications not required by the respondent or as per their instructions contained in exh.`B’, the claim may be rejected by the Arbitrator and if the Arbitrator finds that the parties had mutually altered specifications of the goods to be supplied, he will have to consider the claim of the applicant on merits. It has no bearing on the question of existence of the arbitration agreement and filing of the present application. In any case, the scope of section 16 of the Act is very wide to cover all disputes of this nature. The judgement relied upon by the counsel appearing for the respondent has no application to the facts of the case and further more, the principles stated in the judgement and the judgements of subsequent larger Benches of the Supreme Court have no bearing on the facts of the present case. 5. In the circumstances afore-stated, the Arbitration Application is 5 allowed. By consent of the learned counsel appearing for the parties, Mr.Justice H. Suresh (Retd.) is appointed as the Sole Arbitrator who shall enter into reference and proceed in the matter, in accordance with law. All contentions of the parties are left open. Arbitration Application is disposed of, leaving the parties to bear their own costs. CHIEF JUSTICE