( 1 ) THIS application under S. 11 (6) of the Arbitration and Conciliation Act, 1996 (for short the Act ) has been filed by the petitioner herein for appointment of arbitrator for adjudication of the claims and disputes between the parties hereto.

( 2 ) A Distribution Agreement dated 1-1-1993 had been entered into between the parties for distribution of the explosives and other accessories manufactured by the respondent herein. Disputes and differences having arisen between the parties, the applicant made several requests for referring the disputes to an arbitrator making a claim of US $ 707,710. 80 covering FOB value of defective goods delivered and disbursement costs incurred by it on several counts. The respondent in its letter dated 15-2-2000 recorded that the claim of US $ 707,710. 80 against the total FOB value of US $ 279,988. 40 is totally unsustainable and contrary to the specific terms agreed upon governing the supply. It was further recorded that as per General Terms of Sale, the maximum liability of IDL is US $ 279,988. 40. Thereafter, the applicant issued a notice on 10-3-2000 which is in the following terms :"mr. R. M. Unnisenior Executive Directoridl Industries Limitedkukatpally, Hyderabad. Dear sir,ref : ECA claims for defective products delivered. Please refer to our letter dated 31/01/2000 and your (IDL) letter dated 15/02/2000. We noted your contentions stipulated in your letter dated 15/02/2000, but humbly beg to defer. We maintain our claims made totalling to US $ 707,710. 80 is a valid claim for compensation and defrayal just as we reaffirm the contentions in our letter dated 31/01/2000. Essentially, the said IDL General Terms of Sales are not exhaustive of the rights and liabilities of the parties as its silence on the defective products liabilities and the danger it pose till its locally authorised/licensed disposal. Your reference and interpretation of Clause 14 of the General Terms of Sales is unfair and in our opinion NOT applicable. It is our humble opinion that IDL liability has to be determined not only with reference of the said General Terms of Sales but also its mutually agreed qualified acceptance stipulated in FCA letter dated 18/09/1992 which clearly states "product quality complaints must be the responsibility of your company", statutory law including the rights and liabilities arising under the Sale of Goods Act, 1930. We are of the opinion that IDL Export Manager admissions in the various correspondences and also course of conduct clearly establish that any restriction in IDL liability has been waived even if it is assumed that the relevant clause applies to our claims. Consequently, we cannot possibly accept your contention that our claim is limited to defective products FOB value of US $ 279,988. 40. It is clear from the above that our claims at this stage cannot be resolved amicably due to the substantial difference in amount in dispute and almost the total claims of defective products were manufactured before the tenure of your goodself and Mr. S. Pramanik. We sincerely regret our forbearance and corporate courtesy extended to seek an amicable settlement has not bear fruit but lingered on to be a burden. Since you have expressed Corporate IDL willingness to have our claims adjudicated by arbitration, we feel that is the only course available to both of us to settle our disputes without exposing the greater interests of Corporate IDL to public scrutiny. We herein agree for the same provided that our total claims of US $ 707,710. 80 is referred to the arbitrators for adjudication. Your contention that the General Terms of Sales limits IDL liability could also be raised and decided in the said arbitration. As it is our mutual interest to resolve the dispute expeditiously, we propose that Justice (Retd.) T. N. C. Rangarajan be appointed as a Sole Arbitrator by both of us. In which case, ECA stand steadfast to respect and honour Justice (Retd.) T. N. C. Rangarajan ruling is final and lega

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