The Punjab Paint Colour and Varnish Works vs Union of India (UOI)

H.C. Goel, J.—This is a petition under Sections 8 and 20 of the Arbitration Act with the prayer that the arbitration agreement as entered into between the parties may be filed in this Court and the matters in dispute as formulated in Clauses (a) to (f) of para 16 of the petition may be referred to arbitrator as per the arbitration agreement as entered into between the parties. The respondent/Union of India in reply did not raise any objection to the reference of disputes as contained in Clauses (a) to (d) of para 16 of the petition. They however, disputed that the alleged matters in dispute as contained in Clauses (e) and (f) of para 16 of the petition do not arise under the contract and were not referable to arbitration.

On the pleadings of the parties, the following issues were framed:

Whether the matters in dispute as contained in Clauses (e) & (f) of para 16 of the petition are covered by the arbitration clause and are also liable to be referred to arbitration?

Relief.

Findings:

I have heard Mr. U.L. Watwani, leaned counsel for the respondent and Mr. D.K. Syal, learned counsel for the petitioner. Clause (e) of para 16 of the petition reads as under:

"Disputes pertaining to the wrongful and illegal rejection of the store by the consignees."

I am unable to see as to how the disputes about the alleged wrongful and illegal rejection of the stores as offered by the petitioners to the respondents for sale in pursuance of the contract as entered into between the parties can be said to be not arising under the contract or not connected with the contract. The question as to whether the respondents were justified in rejecting the stores as offered by the petitioners is a matter to be decided by the arbitrator. The fact however, remains that this dispute is certainly covered by the arbitration agreement as entered into between the parties. I accordingly hold that this dispute is liable to be referred to the arbitration.

Clause (f) of para 16 of the petition reads as follows:

"Disputes pertaining to the wrongful and illegal deregistration on the basis of unwarranted and illegal rejection of the store by the consignees."

The petitioners have admittedly been deregistered by the respondents subsequent to the disputes having arisen between the parties as regards the fulfillment of the terms of the contract by the petitioners. Mr. Syal submitted that the de-registration of the petitioner was a direct consequence of the respondent''s claim that the petitioners have defaulted in fulfillling their part of the contract which is disputed by the petitioners and as such this dispute is also in connection with the contract. I do not agree with this submission. This dispute cannot be said to have arisen between the parties in connection with the contract in question. Although in the de-registration of the petitioners by the respondents the alleged non-fulfilment of the contract by the petitioners may have weighed with the respondents. As such I hold that this matter does not deserve to be referred to arbitration being beyond the scope of the arbitration agreement as entered into between the parties. The disputes as contained in Clauses (a) to (e) of para 16 of the petition are accordingly referred to arbitration of the arbitrator to be appointed by the Director General of Supplies & Disposals within two months in accordance with the arbitration agreement as entered into between the parties. The respondents shall be entitled to raise the plea that the claims of the petitioner''s are time-barred before the arbitrator and the arbitrator shall decide the same also. The petition stands disposed of. The parties are left to bear their own costs of this petition.