2011 (3) TMI 1511 - SC - Companies Law

Whether interpretation of Clause 4 of the termination agreement which was by itself a disputed matter and requires to be adjudicated upon, could be left to be determined by the Arbitrator? Held that - Appeal allowed. No reason why the present petition cannot be allowed and all disputes including the dispute regarding interpretation and effect of Clause 4 of the termination agreement referred for adjudication by arbitration as the Respondent has consented to the appointment of arbitrator & the Respondent has consented to raising all the issues including the existence of the arbitral dispute before the said arbitrator.

Summary

Issues:
1. Interpretation of clauses in the agreement between the parties.
2. Discharge of obligations after termination of the agreement.
3. Invocation of arbitration clause and appointment of an arbitrator.
4. Disputes regarding the termination agreement and the appointment of an arbitrator.

Analysis:
1. The judgment revolves around an agreement between a Dutch citizen (respondent) and a company appointing him as a marketing representative in the European market. The agreement outlined the terms of the representation, marketing responsibilities, and obligations of both parties, including post-termination duties. The respondent's alleged failure to fulfill these obligations led to disputes deemed arbitrable under the original agreement.

2. The termination of the agreement was executed by both parties in accordance with a subsequent agreement. The petitioner alleged that the respondent did not discharge the obligations outlined in the termination clause of the original agreement, leading to the invocation of the arbitration clause. The respondent contended that all claims and obligations were discharged upon signing the termination agreement, thereby challenging the need for arbitration.

3. The petitioner sought the appointment of an independent arbitrator to resolve the disputes arising from the agreement and its termination. The respondent initially resisted this, arguing that there were no existing arbitrable disputes. However, upon further legal proceedings, the respondent consented to the appointment of an arbitrator to adjudicate all issues, including the interpretation of disputed clauses, thus paving the way for arbitration.

4. The judge, after considering the arguments and the respondent's consent, allowed the petition and referred all disputes between the parties, including the interpretation and effect of the termination agreement's clause, to arbitration. The former Chief Justice of the Rajasthan High Court was appointed as the sole arbitrator, with directions for the parties to appear before the arbitrator on a specified date. The judgment emphasized the resolution of disputes through arbitration as per the agreement's provisions.

This detailed analysis of the judgment highlights the contractual obligations, termination disputes, invocation of arbitration, and the subsequent appointment of an arbitrator to resolve the issues between the parties effectively.