2015 (5) TMI 691 - SC - Indian Laws

Default in payment of bills for supply of the product - Appointment of an Arbitrator - Application under Section 11(6) of the Arbitration and Conciliation Act, 1996 - Supply agreement contained a specific dispute resolution clause - Held that - We have heard Shri Chinmoy Pradip Sharma, learned counsel for the petitioner. In spite of due service of notice, the respondent is not represented. Though the petition could have been heard ex parte on the date fixed i.e. 27th April, 2015, a further opportunity was granted to the respondent and the case was adjourned to 11th May, 2015. Even on 11th May, 2015 there is no representation on behalf of the respondent. In the above circumstances, there is no option but to proceed ex parte against the respondent in the matter. On a consideration of the averments made in the present arbitration petition and the oral submissions advanced by the learned counsel for the petitioner, it is clear that disputes and differences have arisen between the parties with regard to the entitlement of the petitioner to receive the amount of bills raised by it i.e. USD 3,212,000. Clause D12 of the Supply Agreement, which according to the respondent, governs the matter specifically provides for reference of all disputes and differences to the arbitration authority under provisions of the Arbitration and Conciliation Act, 1996 . In the above view of the matter, there can be no manner of doubt that the petitioner is entitled to have its claim to receive the aforesaid amount of the bills adjudicated by an Arbitrator appointed by the Court under Section 11(6) of the Act. Consequently, we allow the present petition and appoint Shri Justice B. Sudershan Reddy, a former judge of this Court as the Arbitrator and request him to resolve the dispute between the parties at an early date. The terms of appointment of Shri Justice B. Sudershan Reddy as the Arbitrator will be settled in consultation with the parties. - Application for appointment of Arbitrator accepted.

Summary

Issues:
Jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator due to disputes arising from a contract for the supply of fingerprint scanners.

Analysis:

The petitioner, a company from Korea, engaged in biometrics research, development, and manufacturing, sought the Supreme Court's jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996, to appoint an arbitrator to resolve disputes with the respondent, an Indian private limited company, regarding a contract for the supply of Real Scanner G 10 fingerprint scanners. The respondent company had entered into an agreement with the petitioner for the supply of 10,500 units of the product, which were duly delivered, and bills amounting to USD 3,212,000 were raised but remained unpaid.

Arbitration proceedings were initiated by the petitioner under the Singapore International Arbitration Act after issuing a notice of arbitration to the respondent as per the Master Agreement. However, the respondent objected to the jurisdiction of the Singapore Arbitral Tribunal, claiming that the purchase orders were not connected to the Master Agreement but were governed by the Supply Agreement, which contained a specific dispute resolution clause (D12) referring all disputes to the Arbitration and Conciliation Act, 1996. Consequently, the Singapore Arbitral Tribunal ruled that it lacked jurisdiction over the dispute, leading to the petitioner's application to appoint an arbitrator.

In the absence of representation from the respondent during the court proceedings, the Supreme Court proceeded ex parte. After considering the arguments and submissions, the Court acknowledged the existence of disputes between the parties regarding the payment of the outstanding bills. The Supply Agreement's clause D12 mandated the reference of all disputes to an arbitrator under the Arbitration and Conciliation Act, 1996. Therefore, the Court found the petitioner entitled to have the claim adjudicated by appointing an arbitrator under Section 11(6) of the Act.

Consequently, the Supreme Court allowed the petition and appointed a former judge of the Court, Shri Justice B. Sudershan Reddy, as the arbitrator to resolve the dispute promptly. The terms of the arbitrator's appointment would be finalized in consultation with the parties, and the order was to be communicated to the arbitrator for the expeditious commencement and conclusion of the arbitration proceedings, thereby disposing of the arbitration petition.