The dispute over the refund of earnest money did not fall within the arbitration clause as it was not related to the execution of the contract.

P.P. Naolekar, C.J.

1. The petitioner M/s. A.T.O (I) Private Limited, was awarded the job of transportation of PSF for various destinations in the country by letter of intent dated 31.3.1990 issued by the Additional Marketing Manager of M/s Bongaigaon Refinery and Petrochemicals Limited (hereinafter shortly called 'BRPL'). The petitioner has informed the BRPL authority that due to untoward incidents like killing, kidnapping, looting and threatening to the businessmen in the region, the transport industry is completely disturbed and as such they have taken timely and judicious steps for withdrawal of their fleets from the route of Assam region. Further, the truck owners felt insecured due to lack of security to their life, valuable trucks as well as property loaded therein. As such, under these circumstances, the petitioner informed the BRPL authority that due to non-availability of truck, drivers, employees and security of life, they are incapable to continue the contract undertaken by them. Thus, the petitioners have withdrawn from the contract under force majeure clause.

2. When the contract was entered into the petitioner deposited an amount of Rs. 50,000 as earnest money. The amount of earnest money has not been refunded by the BRPL. Thus, the petitioner moved an application under Section 8 of the Arbitration Act, 1940 before the Court for appointment of an arbitrator as provided in Special Condition of Contract entered into between the petitioner and the BRPL. The Court rejected the application filed by the petitioner for appointment of arbitrator. The trial court was of the view that the question of refund of earnest money deposited by the contractor does not fall within the purview of Clause 28 of the Special Condition of Contract, which has a reference to refer the dispute to the arbitrator.

3. Heard Mr. R. K. Jain, learned counsel for the petitioner and Mr. P. C. Deka, learned counsel appearing for the respondent BRPL.

4. It is submitted by the learned counsel for the petitioner that a dispute of refund of the earnest money deposited by the petitioner with the BRPL falls within the four corners of Clause 28, which provides for arbitration. The arbitration Clause 28 of the Special Condition of Contract reads :

"If any question, dispute or differences arisen between the Corporation and the contractor concerning rights, duties and obligations of the parties to the contract the same shall be referred to a sole arbitrator to be appointed by mutual agreement. The award of the arbitrator shall be final and binding on both the parties. The arbitration proceeding shall be held at Bongaigaon or such other place as Corporation may specify for this purpose. Work under the contract will however be continued by the contractor during the pendency of the proceeding unless otherwise directed in writing by the Corporation."

5. It is apparent from the application moved by the petitioner for appointment of Arbitrator that the petitioner does not want to continue with the contract. The petitioner's claim is for refund of the earnest money deposited by him. Where there are differences between the parties about liability towards each other or in regard to execution of the contract then a dispute is clearly made out in terms of Section 2(a) of the Arbitration Act, 1940. But the claim, which the petitioner wants to refer to the arbitrator, is not in regard to the execution of the contract, as the petitioner has nor carried out the contract and has treated it to be nullified on account offeree majeure clause but as a consequence thereof is claiming for refund of the earnest money deposited.

6. Clause 21 of the Special Condition of Contract provides earnest money. As per this clause tenderers are required to furnish earnest money amounting to Rs. 50,000 only in demand draft at State Bank of India, BRPL Complex, failing which their tenders shall not be considered. Thus, the amount of earnest money is to be deposited for consideration of the ten