K.S Gupta, J.:— A.As 4/2000, 3/2000, 5/2000, 8/2000, 9/2000, 10/2000, 12/2000, 13/2000, 14/2000, 16/2000, 17/2000, 18/2000, 19/2000, 20/2000, 32/2000, 33/2000, 673/1999, 674/1999 and 675/1999 have been filed under Section 11(6)(a) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) read with Section 151, Code of Civil Procedure by Usha Beltron Ltd., against Union of India in the Ministry of Communications seeking to refer the disputes between the parties to arbitration. Except the dates of execution of agreements and claim amounts which are given below, identical issues arise for decision in all these petitions and I propose to dispose them of by this common order:

A.A No. Date of Agreement Claim Amount A.A 4/2000 15.01.1998 27,25,380.00 A.A 3/2000 19.01.1998 14,69,821.00 A.A 5/2000 19.01.1998 19,41,824.00 A.A 8/2000 29.01.1998 10,71,957.00 A.A 9/2000 06.12.1996 20,27,797.00 A.A 10/2000 29.11.1996 26,88,867.00 A.A 12/2000 26.12.1996 28,83,301.00 A.A 13/2000 05.12.1996 14,26,322.00 A.A 14/2000 17.02.1997 08,01,078.00 A.A 16/2000 30.12.1996 28,21,599.00 A.A 17/2000 11.12.1996 20,38,142.00 A.A 18/2000 31.12.1996 10,72,204.00 A.A 19/2000 03.01.1997 11,91,978.00 A.A 20/2000 20.12.1996 05,67,032.00

A.A 32/2000 06.02.1998 22,37,112.00 A.A 33/2000 22.01.1998 21,73,230.00 A.A 673/1999 22.01.1998 08,46,243.00 A.A 674/1999 23.01.1998 12,57,330.00 A.A 675/1999 23.01.1998 26,89,502.00

2. A.A 4/2000 which is being treated as lead case, was filed alleging that petitioner is a Public Limited Company incorporated under the Companies Act, 1956 and Mukesh Gupta, Manager (Marketing) is authorised to sign, verify and institute petition on behalf of petitioner, petitioner-company is engaged in the business of manufacturing of Polyethylene Insulated Jelly Filled (PIJF) cables and for supply thereof on deferred payment basis an agreement was entered into on 15th January, 1998. Petitioner made supplies of cables of an amount of Rs. 21,04,64,200 pursuant to various purchase orders placed on it. Under Clause 12.9 of said agreement which is reproduced below the respondent had an option to foreclose the agreement by making one time payment of balance amount due to the supplier.

“12.9 The purchaser may at any time after the commencement of this ‘Agreement’ make one time payment to the supplier in respect of any/all the outstanding and balance instalments of QA/EQA by discounting such instalments with prevailing prime lending rate of SBI including all charges, taxes and levies thereon plus 3% p.a”

3. Vide letter dated 15th March, 1999 the respondent conveyed to the petitioner its decision to foreclose the said agreement by making one time payment of balance instalments by invoking Clause 12.9 It is further alleged that outstanding instalments as per said clause can be paid at a time by applying the discounting rate equivalent to prime lending rate which at the material time was 12%, and effective discounting rate would be 15% p.a Since instalments were payable on quarterly basis, discounting rate of 14.2232% to be compounded quarterly had to be applied to achieve the effective discounting rate of 15% p.a However, the discounting factor had been calculated at 15% compounded quarterly which is equivalent to 15.1224% p.a, erroneously by the respondent and amount of Rs. 27,25,380 was illegally deducted from the bills of petitioner company. It is stated that petitioner is entitled to the refund of this amount, together with overdue interest @ 18% p.a thereon and interest pendente lite and future at the same rate. It is further alleged that aforesaid agreement contains arbitration clause being Clause No. 25. Petitioner issued legal notice dated 14th October, 1999 invoking arbitration clause and claiming payment of the amount due. Respondent sent a reply dated 5th November, 1999 thereto denying the claim and referring the disputes to arbitration.

4. Respondent contested the petition by filing reply on the affidavit of R. Thiyagarajan, Assistant Director General (VLF) Sanchar Bhawan, New Delhi. Execution of the agreement dated 15th January, 1998 and supplies of Page: 74PIJF cables by the petitioner of total amount of Rs. 21,04,64,200 are not disputed. However, it is averred that discounting factor applied by the respondent is correct and it did not find any ground for referring the alleged disputes to arbitration. It is further averred that petitioner-company is part of Telecom Cables Development Association (TCDA) as is evident from the minutes of meetings dated 11th March, 1999 and 16th September, 1999 and it has failed to represent its case to the respondent through TCDA. There is no outstanding arrears and petitioner was given suitable reply of the legal notice.

5. While opposing petition, the submission advanced on behalf of respondent was two fold. First, the notice dated 14th October, 1999 did not specify the disputes which were sought to be referred to arbitration. Second, the petitioner is a past of Telecom Cables Development Association and it should have represented its case for being referred to arbitration through the Association.

6. Copy of aforesaid notice addressed to Director General, Department of Telecommunications, Sanchar Bhawan, New Delhi is placed at page No. 79 on Part III file. Paras 3 and 4 thereof notice that as instalments were payable on quarterly basis, discounting rate of 14.2232% to be compounded quarterly, ought to have been applied to arrive at effective discounting rate of 15% p.a but the Department while making payment calculated the discounting factor at 15% compounded quarterly which is equivalent to 15.1224% p.a and due to application of this wrong discounting rate, the petitioner was short paid amount of Rs. 27,25,380. Obviously, the submission that notice did not specify the nature of dispute being contrary to the contents of said paras 3 and 4 deserves to be repelled being without any substance.

7. Coming to second submission, during the course of arguments my attention was drawn to the copies of minutes of the meetings dated 11th March, 1999 and 16th September, 1999 filed by way of Annexures A and B to the reply as also reply to petitioner's notice at Page 81 on Part III file. These minutes relate to meetings held between the Committee to redress the vendors' grievances of Telecom Cables Development Association and the respondent in the Department of Telecommunications (MMS Cell). Sandeep Sen in shown to have participated on behalf of petitioner in both these meetings. Through the said reply the petitioner was advised to represent the matter through TCDA as per the minutes of said meetings dated 11th March, 1999 and 16th September, 1999. Above minutes would reveal that issues discussed in two meetings were of general nature. Admittedly, TCDA is not a party to aforesaid agreement dated 15th January, 1998. It is the petitioner-company alone which could have invoked the arbitration clause. The objection that petitioner-company ought to have invoked arbitration clause through TCDA which has nothing to do with that clause, therefore, also deserve to be discarded being without any merit.

8. Relying on the decision in Daiar Siuitchgears Ltd. v. Tata Finance Ltd. 2000 (3) Arb. LR 447 (SC), the submission advanced on behalf of petitioner-company was that for failure of the Director General of Department of Communications either to act himself or nominate a person as Arbitrator for deciding the disputes raised by petitioner despite service of notice dated 14th October, 1999, it had forfeited its right to act on nominate a person as Arbitrator and an independent Arbitrator has to be appointed by Court. Para No. 19 of the decision on pages 454 and 455 of the report which is material, is reproduced below:

“So far as cases failing under Section 11(6) are concerned-such as the one before us-no time-limit has been prescribed under the Act, whereas a period of 30 days has been prescribed under Section 11(4) and Section 115) of the Act. In our view, therefore, so far as Section 11(6) is concerned, if one party demands the opposite party to appoint an Arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before the first party has moved the court under Section 11, that would be sufficient. In other words, in cases arising under Section 11(6), if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an Arbitrator. Only then the right of the opposite party ceases. We do not, therefore, agree with the observation in the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an Arbitrator under Section 11(6) is forfeited.”

(emphasis supplied)

9. Considering the said submission as also the ratio in Datar Switchgears case (supra), an Arbitrator needs to be appointed by the Court to decide whether discounting factor as per aforesaid Clause 12.9 applied by respondent, was correct or not; whether petitioner is entitled to any interest and if so, at what rate, for which period and on what amount. Consequently, A.As 3/2000, 4/2000, 5/2000, 8/2000, 9/2000, 10/2000, 12/2000, 13/2000, 14/2000, 16/2000, 17/2000, 18/2000, 19/2000, 20/2000, 32/2000, 33/2000, 673/1999, 674/1999 and 675/1999 are allowed. Justice P.K Bahri (Retd.) is appointed as Arbitrator to adjudicate upon the disputes referred to in preceding para of the order in all the matters. He will fix his own fee which will be borne in equal share by the parties. He will make and publish the award(s) in accordance with law. Parties will appear before the Arbitrator on 23rd March, 2001. Copy of this order will be sent by the Registry to him for information before this date.

10. Petition allowed.