2013 (2) TMI 100 - HC - Indian Laws

Extension of time for delivery of Snow Mobiles - appellant-petitioner heavily banked upon Custom Duty Exemption Certificates issued by GOC to argue that the time stood extended - whether the issue raised in the instant proceedings was covered by the ambit and scope of arbitration clause & parties must be relegated to arbitration - Held that - Nothing to accept the argument because the last request for extension of time was made on 05.05.2011 to extend the period up to 20.09.2011. The Snow Mobiles were not delivered by 20.09.2011 and were actually delivered on 07.10.2011, therefore, it cannot be presumed that there was any extension beyond 20.09.2011. More so when the stipulation contained in Clauses 3 and 9 of the Supply Order clothe the respondents with the unilateral right to cancel the Supply Order. Perusal of Clauses 3 and 9 of the Supply Order show that the Supply Order could be cancelled unilaterally by the buyer in case items were not received within the delivery period and that the extension of delivery period was left to the sole discretion of the respondents which was further subject to liquidated damages. Therefore, on facts there is no room to conclude that in the absence of any express communication extending the period of delivery, it can by implication or by necessary intendment be inferred that there was extension of delivery period in accordance with stipulations made in clause 3 read with clause 9. In any case the prayer was made for extension up to 20.09.2011 but the delivery could be made only on 07.10.2011 which again is beyond the period for which extension was sought. A perusal of clause 3 of Part III of the Standard Conditions of the Supply Order leaves no manner of doubt that there is intention of the parties to settle such difference by arbitration. The parties have agreed in writing to be bound by arbitration and the parties are ad idem. A perusal of clause further shows that the parties have agreed to settle all disputes or differences arising out of or in connection with the Supply Order by bilateral discussions. The very fact that the appellant-petitioner has filed the writ petition relatable to the instant appeal would itself show that there is a dispute with regard to the supply of Snow Mobiles by the appellant-petitioner to the respondents. It thus follows that the arbitration clause in the present case satisfies all essential elements. Once the aforesaid factual position is not in doubt then the writ petition would not be maintainable. See Empire Jute Co. Ltd and ors v. The Jute Corporation of India Ltd. And anr 2007 (10) TMI 545 - SUPREME COURT OF INDIA In all commercial contracts of the nature in question in the present case, it is not possible to conclude that there is any violation of any rule of law of such a nature that equitable jurisdiction of the High Court under Article 226 is required to be exercised. The parties are relegated to the remedy of arbitration as provided by the arbitration clause.

Summary

Issues Involved:
1. Validity of the cancellation of the Supply Order.
2. Interpretation of Custom Duty Exemption Certificates as an extension of the delivery period.
3. Application of the arbitration clause in the Supply Order.
4. Maintainability of the writ petition in the presence of an arbitration agreement.

Detailed Analysis:

1. Validity of the Cancellation of the Supply Order:
The appellant-petitioner, M/S P. V. Traders, failed to deliver the Snow Mobiles within the stipulated period as per the Supply Order dated 10.09.2010. Despite requests for extensions due to production delays caused by power disruptions and snow storms, the delivery was not completed within the extended timeframe requested by the appellant-petitioner. The respondents had the unilateral right to cancel the Supply Order as per Clauses 3 and 9 of the agreement. The Supply Order was ultimately canceled on 15.02.2012 due to the failure to deliver within the stipulated period, and the appellant-petitioner was asked to return the Custom Duty Exemption Certificates.

2. Interpretation of Custom Duty Exemption Certificates as an Extension of the Delivery Period:
The appellant-petitioner argued that the issuance of Custom Duty Exemption Certificates implied an extension of the delivery period. However, the court found that these certificates did not explicitly extend the delivery period. The last request for extension was made on 05.05.2011, seeking an extension up to 20.09.2011, but the Snow Mobiles were delivered on 07.10.2011, beyond the requested extension period. Thus, there was no implied or express extension of the delivery period beyond 20.09.2011.

3. Application of the Arbitration Clause in the Supply Order:
The Supply Order contained an arbitration clause in Part III, which provided for the resolution of disputes through arbitration. The court emphasized that Section 5 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997, restricts judicial intervention in matters governed by the Act. The arbitration clause satisfied all essential elements of an arbitration agreement, as outlined in the relevant legal precedents. Therefore, the court held that the dispute should be resolved through arbitration, and the writ petition was not maintainable.

4. Maintainability of the Writ Petition in the Presence of an Arbitration Agreement:
The learned Single Judge rejected the writ petition on the grounds that the dispute fell within the scope of the arbitration clause. The court upheld this view, emphasizing that the arbitration agreement precluded judicial intervention. The court also noted that findings on merit by the Single Judge could prejudice the arbitration process. Consequently, the findings on facts or any other issue recorded by the learned Single Judge were set aside to avoid influencing the arbitrator's decision.

Conclusion:
The appeal was dismissed, and the parties were directed to resolve their dispute through arbitration as per the arbitration clause in the Supply Order. The court upheld the preliminary objection regarding the arbitration clause and set aside other findings by the learned Single Judge to ensure an unbiased arbitration process. No costs were awarded.