( 1 ) THIS petition has been filed by the petitioner under Sections 10 and 11 (5) of the Arbitration and Conciliation Act, 1996 read with Clauses 2 and 3 of the Scheme, 1996 framed by Delhi High Court for appointment of Arbitrators.

( 2 ) A Contract was awarded to the petitioner for procurement of anti-Leprosy drugs for Rs. 27. 45 crores vide Agreement dated 29. 3. 1995 and the general conditions and terms contained in the bidding documents for procurement of these drugs under National Leprosy Eradication Programme ( in short nlep ). The entire quantity of drugs under the contract were supplied by the petitioner. Subsequently, another offer was made for supply of additional quantity of same drugs valuing Rs. 13. 722 crores on the same terms and conditions as applicable to the earlier contract. The offer was accepted and a contract was executed dated 15. 3. 996.

( 3 ) IN the meanwhile, respondent cancelled the said agreement dated 15. 3. 1996 vide letter dated 10. 7. 1996 on the ground that adequate stock of such drugs were available with the Government. The petitioner aggrieved by the cancellation of the said contract approached the respondent-Union of India in terms of Clause 26. 2 (a) of the General Conditions of the contract. Clause 26 of the General Conditions of contract is as follows |-

26. Resolution of Disputes : 26. 1 The Purchaser and the Supplied shall make every effort to resolve amicably by direct informal negotiation any disagreement or dispute arising between them under or in connection with the Contract. 26. 2. If, after thirty (30) days from the commencement of such informal negotiations, the Purchaser and the Supplied have been unable to resolve amicably a contract dispute, either party may require that the dispute be REFERRED TO for resoltuion to the formal mechanisms specified below : a) in case of a dispute between the purchaser and a Supplied which is a national of the Purchaser s country, the dispute shall be REFERRED TO to adjudication/arbitration in accordance with the laws of the Purchaser s country; and b) in the case of a dispute between the Purchaser and a foreign Supplier, the dispute shall be settled by arbitration in accordance with the provisions of the UNICITRAL Arbitration Rules.

( 4 ) THE petitioner nominated Mr. Justice H R Khanna, a former Judge of the Supreme Court of India as the sole Arbitrator to resolve the disputes and differences. Petitioner, inter alia, requested the respondent to concur to the said appointment and when nothing was heard from the side of the respondent, the petitioner filed the present petition for appointment of Arbitrator by this Court to settle the disputes arisen between the petitioner and the respondents under the contract dated 15. 3. 1996. Respondent-Union of India, inter alia, admitted in para-2 of their written statement that a repeat order for supply of anti-leprosy drugs worth Rs. 13. 72 crores was given to the petitioner on 7. 5. 1996 on the same terms and conditions as the previous contract for Rs. 27. 44 crores.

( 5 ) MR. K C Mittal, learned counsel appearing for the respondent-Union of India, argued that the repeat order was signed by the then Additional Director General with one witness and the same does not indicate the clause of the bid document under which the repeat order has been made. The whole tenor of the written statement was that the drug position was found to have large stock of drugs and additional order was not at all required.

( 6 ) ANOTHER leg of the argument of the respondent was that the arbitration clause is not applicable as the contract itself is void and unenforceable. This was also stated by the respondent that the petitioner has obtained the order by misrepresentation and in connivance of the officials and the matter is already being investigated by of the Central Bureau of Investigation (for short cbi ) and, therefore, the petitioner has no right to enforce the contract through Court of law. It was further