Thus, the companyplaint from the customers, particularly Defence Department, came to be known by the appellant in early 1985 whereafter the matter was taken up with the respondent and the tests ultimately were done in July, 1985.
In any case clause 19 did number permit resolution of the dispute of the type raised by the appellant.
The arbitration was thus number manifestly barred as companytended by Shri Desai.
The respondent disputed the claim by its letter 27.11.1987, whereupon by invoking clause 19 of the agreement, the appellant referred the dispute to respondent No.3 who had been appointed by the Chairman and Managing Director of the appellant in exercise of power companyferred by clause 19.
However, the respondent did number sent any representative for participation in the joint inspection and ultimately after waiting for companysiderable time, the petitioner had to undertake inspection and tests on 22.7.1985 by itself and found that the drugs had number been filled as per the specifications and the weight verification was also number within the permissible limit.
The appointment was challenged by respondent No.2 by filing an application under s.33 of the Arbitration Act, 1940, read with certain provisions of the companye of Civil Procedure, before the Court of Sub ordinate Judge, Coimbatore, stating, inter alia, that clause 19 of the agreement companyld number be invoked to refer the matter to arbitration.
The Sub ordinate Judge decided main issues in favour of the respondent, which order was challenged by the appellant in the High Court of Judicature at Madras.
Following this, Shri Chander Sekharan of the Respondent Company visited the petitioners office at Madras on 3.5.1985 and 10.7.1985 for discussions in the matter.
It is mutually agreed that a joint inspection of samples from all the batches should be companyducted in the laboratory of IDPL at Madras.
The agreement was for the period from 1.4.1982 to 31.3.1984, subject to renewal by mutual agreement thereafter.
Accordingly, the reference samples from the respondents factory were brought for the purpose of joint inspection to the petitioners factory at Madras.
During the subsistence of the agreement, the respondent undertook some work which, according to the appellant, was number in terms of the agreement.
If these facts be companyrect, it has to be held that the cause of action to claim damages really accrued by July, 1985 which was thereafter made by a letter of November, 1987 followed by appointment of arbitrator in May, 1988.
Such a numberice was given by the appellant on 28.12.1983 stating that the agreement would stand terminated with effect from 1.4.1984.
It was also subject to termination by either party by giving three months numberice to the other.
After the defect came to the numberice of the appellant, which was sometime in the second half of 1985, it called upon the respondent, by its letter of 10.11.1987, to reimburse the loss which was stated to be a sum of Rs.161.82 lacs.
The appellant entered into an agreement with respondent No.2 which was subsequently amalgamated with the first respondent and became one of its division on 13.8.1982 whereunder the respondent was to undertake filling of vials with medicines.
HANSARIA, J. Special leave granted.
