J.B. Pardiwala JUDGMENT
J.B. Pardiwala, J.
1. This is a petition Under Section 11(6) of the Arbitration and Conciliation Act, 1996, (for short, 'the Act 1996'), filed at the instance of a company based in Switzerland and engaged in the business of manufacturing of arms etc., praying for appointment of an arbitrator for the adjudication of disputes and claims arising out of the Contract No. 78953/SMG/GS/WE- 4(GS-IV) dated 27.03.2012 executed with the Respondent Government of India in its Ministry of Defence.
FACTUAL MATRIX
2. The Respondent, Ministry of Defence vide the RFP No. 78953/SMG/GS/WE-4 dated 18.11.2009 floated an urgent tender for procurement of 1,568 Sub Machine Guns under a Fast Track Procedure. The Petitioner participated in the tender process and offered its bid. The tender was opened on 21.12.2010 and the Petitioner was declared to be the lowest acceptable bidder. After due negotiations, the Contract was executed and signed on 27.03.2012.
3. The dispute between the parties arose in relation to the alleged wrongful encashment of warranty bond by the Respondent. The Respondent vide its letter dated 16.02.2016, directed the Joint Chief Executive Officer, State Bank of India, Frankfurt Branch, Germany to encash the WBG No. 12/380 for its full value i.e., Euro 201,793.75 and remit the amount through direct bank transfer to the Principal Controller of Defence Account (PCDA, Government account) in accordance with the details stated in the letter. One copy of the letter dated 16.02.2016 was also forwarded to the Petitioner. This action on the part of the Respondent, i.e., of encashing Liquidated Damages (LDs) for the requisite amount was on account of delay in the supply of goods beyond the contractual time period.
4. The Respondent, vide its letter dated 24.02.2016, informed the Petitioner that the subject instructions for WBG encashment had been issued after due scrutiny and analysis of the case put up by the Petitioner vide letter dated 24.10.2014 and such encashment was with approval of the competent authority at Ministry of Defence. The Respondent was also accorded sanction by the President of India to deduct Euro 197,230.35 towards the recovery of applicable LDs from the Petitioner in accordance with the terms of the Contract vide letter dated 11.08.2016.
5. In the aforesaid context, the Respondent on 26.09.2016 deducted the amount for recovery of applicable LDs. The amount was consequently, credited into the Government Account as per the instructions contained in the letter dated 11.08.2016 issued on behalf of the President of India. Accordingly, the claims of the Petitioner stood rejected.
6. Despite the aforesaid, the parties continued to engage themselves in "bilateral discussions" with a view to explore the possibility of resolving the dispute regarding imposition of the LDs and encashment of the WBG. However, the Respondent vide its letter dated 22.09.2017 informed the Petitioner, that all actions taken by the Respondent were in accordance with the terms of the Contract, and that the Petitioner was given sufficient opportunity to present its case.
7. The Petitioner claims that after the letter dated 22.09.2017 was issued, the parties remained in constant communication with each other, to negotiate and resolve the dispute. Nonetheless, the Petitioner vide letter dated 04.09.2019, requested the Respondent to review and discuss the wrongful imposition of LDS and ........