Denel(Propritary Limited) vs Bharat Electronics Ltd.& Anr

2) The Petitioner is a company wholly owned by the Government of the Republic of South Africa, duly incorporated as per the laws of the Republic of South Africa, with its main business address at Denel Head Office, Nelmapius Drive, Irene, Pretoria, Republic of South Africa.

4) The Petitioner - company had several internal divisions, one of them being Denel Eloptro at the time when the contracts between Petitioner and Respondent were entered into. The name of the said division was changed from Delnel Eloptro to Denel Ptonics with effect from 1st April, 2004. The Optronics division was not a separate legal entity, but was only a business unit of the Petitioner.

7) The petitioner states, that, it duly performed its obligations in terms of the purchase orders and delivered the goods as ordered and the invoices were issued. The said delivery of goods was also accepted by the respondent without raising any objection. It is further stated, that, as the goods were accepted and utilized, the respondent was liable to pay the value of the goods in a sum of GBP 34,894.75(Thirty Four Thousand Eight Hundred and Ninety Four and 75 Pence Pound Sterling).

9) The Insurance Corporation also requested, vide its letter dated 29th May 2006, to pay the amount raised against them. The respondent by its reply letter dated 8th June 2006 addressed to the Corporation - insurer, inter alia contended, that, as per the guide- lines issued by the Ministry of Defence, Government of India, to discontinue dealings with M/s DENEL (PYT) LTD., and withhold payment due if any, it is unable to satisfy its liability to the petitioner.

12) The petitioner was constrained to issue notice dated 30th May, 2009 to the respondent which was served on the respondent and its Managing Director through fax on 30th May 2009 and through speed post and courier on 2nd June 2009 and 6th June 2009, respectively. In the said notice, the petitioner cited Clause 10 of the General Terms and Conditions of the Purchase Orders which provides for reference of disputes to arbitration and accordingly requested the respondent, to refer the disputes for adjudication in accordance with Arbitration and Conciliation Act, 1996. It was also stated, that, since the arbitration clause provides only for the appointment of Managing Director or his nominee, instead of mutually agreed independent arbitrator, the said clause is invalid and accordingly requested the respondent for appointment of mutually agreed independent arbitrator to adjudicate the disputes which have arisen between the petitioner and respondent.

25) Therefore, in the light of the peculiar facts and circumstances of this case, it would be in the interest of both parties and to do complete justice, an arbitrator other than the Managing Director of the Respondent requires to be appointed to settle the dispute.

26) For the foregoing reasons, the Arbitration Petition is allowed. Hon'ble Dr. Justice Arijit Pasayat (Retired) is appointed as the sole arbitrator.

27) The Arbitrator will be at liberty to fix his own remuneration and other terms and conditions with regard to holding of the arbitration proceedings.

..............................J. [ H.L. DATTU ] New Delhi, May 10, 2010.