Union Of India vs M/S. Bharat Battery Manufacturing Co. ...

3. To answer the question involved in this appeal, it may not be necessary to delve the entire facts leading to the filing of the present appeal. Suffice it say that in response to an invitation to tender inquiry No. A.M-5/RC-14100105/ 072003/ WT/ BTYS/ Defence/ 2003-04/ 75 for supply of battery secondary lead acid, an offer dated 7.10.2002 was submitted which was revised by letter dated 8.4.2003. On the basis of the revised offer dated 8.4.2003 a rate contract No. AM-5/RC-14100105/ 072003/ WT/ BTYS/ DEF/ 2003-04/ 75/ BHARAT/ COAC/ 185 dated 5.5.2003 for the period 5.5.2003 to 16.3.2004 was executed between the appellant and the respondent.

4. Clause 12 of rate contract entered into between the parties contained a price variation clause. As the variation factor of the batteries, on account of fluctuation of lead price had not been incorporated, the respondent made a request to the appellant to incorporate the same. The respondent herein also requested the appellant to issue amendment towards rate of sales tax. It appears that the said request was complied with almost after one year by a letter dated 2.7.2004. However, it is alleged that during the pendency of the rate contract, the appellant issued a supply order No. 01/ RC/Z9/ BTY/ 047/ BHARAT/ 2004-05 dated 16.3.2004 for supply of 19,021 batteries. The respondent herein supplied the same to the appellant. The respondent also submitted detailed calculation of unit price of battery as per price variation clause and the photocopies of Hindustan Zinc Price Circular. It is contented that although the appellant continued to receive the batteries but did not issue the amendment with respect to price variation clause for the quarter April to June, 2004, July to September 2004, October to December 2004, January to March 2005, April to June 2005, July to September 2005, October to December 2005 and January to March 2006. As the appellant did not issue the amendment with respect to price variation clause, nor settled the dispute, which had arisen between the parties, the respondent herein sent a notice under Section 11 of Arbitration and Conciliation Act, 1996 on 7.6.2005. Through the said notice the respondent demanded that the appellant either issue the necessary amendments on account of price variation with respect to the above mentioned quarters or appoint an arbitrator within 30 days. The notice dated 7.6.2005 was acknowledged by the appellant vide acknowledgement slip bearing No. 26110 dated 9.6.2005. Having not complied with the notice, another notice dated 2.1.2006 was issued by the respondent invoking the arbitration agreement and seeking appointment of arbitrator. The second notice was also acknowledged by the appellant by slip no. 33190 dated 3.1.2006.

5. Despite the aforesaid notices and the receipt thereof, the appellant neither resolved the disputes between the parties nor appointed an arbitrator within 30 days from the receipt of the request to do so, compelling the respondent to file a petition under Section 11(6) of the Act on 30.3.2006.

(b) The appellant failed to appoint an arbitrator within 30 days from the date of receipt of request to do so from the respondent.

11. The facts of that case, therefore, are clearly distinguishable from the facts of the present case. The aforesaid decision is of no help to the appellant in the present case.

16. We are, therefore, of the view that the order of appointment of Dr. Gita Rawat by the appellant as a sole arbitrator dated 15.5.2006 was passed without jurisdiction. Once Section 11(6) petition is filed by one party seeking appointment of an arbitrator, the other party cannot resurrect the clause of the agreement dealing with the appointment of the arbitrator, in this case Clause 24 of the agreement.

17. In the view that we have taken, there is no merit in this appeal and the same is, accordingly, dismissed with no order as to costs.