2002 (10) TMI 709 - HC - Companies Law

Summary

Issues:
1. Jurisdiction of the arbitrator in adjudicating disputes under the arbitration agreement.
2. Interpretation of the arbitration clause regarding the appointment of the arbitrator by the Bombay Chamber of Commerce.
3. Rejection of counterclaim for refund of commission paid on direct sales.
4. Rate of interest awarded by the arbitrator.

Jurisdiction of the Arbitrator:
The dispute arose between the parties after the termination of the agency agreement. The respondent invoked the arbitration clause by requesting the Bombay Chamber of Commerce to appoint an arbitrator. The petitioner contended that the arbitration clause was not valid post-termination. The court held that the arbitration clause is independent of the main contract under Section 16 of the Arbitration and Conciliation Act, 1996. The petitioner's objection that the arbitration could not proceed without mutual agreement on the arbitrator's appointment was dismissed as the petitioner did not object to the chosen arbitrator during the process. The court upheld the arbitrator's decision to proceed under the Bombay Chamber of Commerce and Industry.

Interpretation of the Arbitration Clause:
The petitioner argued that the arbitration should not be under the auspices of the Bombay Chamber of Commerce. The court held that the arbitrator must follow the provisions of the Arbitration and Conciliation Act, 1996, and the Chamber's rules cannot override the Act. The involvement of the Chamber was limited to administrative and secretarial assistance, which did not prejudice the petitioner. Thus, the court found no merit in this argument.

Rejection of Counterclaim:
The arbitrator rejected the petitioner's counterclaim for a refund of commission paid on direct sales. The arbitrator found that the payments were not made under a mistake but as a conscious business decision to maintain good relations and promote business. The court agreed that past transactions should not be revisited without a valid reason. The decision was based on evidence, and the court found no grounds for interference under the Act.

Rate of Interest Awarded:
The arbitrator awarded interest at 18% from the date of reference. The court, considering the circumstances, reduced the rate to 15% but upheld the rest of the award. The court found the award within the arbitrator's jurisdiction and not against public policy. Thus, the arbitration petition was rejected, subject to the interest rate modification.