9911796707
TMI Blog2012 (10) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by the petitioner needs to be referred to arbitration - Since the parties have failed to appoint an arbitrator under the agreed procedure, it is necessary for this Court to appoint the Arbitrator - Arbitration Petition No. 18 of 2010 - - - Dated:- 25-11-2011 - Surinder Singh Nijjar, J. P.S. Narasimha, Sr. Adv.; Vyapak Desai, P.V. Dinesh and Cherrie Alexander, Advs. for the Petitioner Tasneem Ahmadi, Sudhir Kr. Gupta and Manish Gupta, Advs. for the Respondent ORDER Surinder Singh Nijjar, J:- 1. The petitioner has filed the present application under Sections 11(4) and (6) of the Arbitration and Conciliation Act, 1996 read with paragraph 2 of the Appointment of the Arbitrators by the Chief Justice of India Scheme, 1996. It is stated that the parties had entered into a legally valid and enforceable Memorandum of Understanding (MOU') dated 25th September, 2007, providing, inter alia, for the respective obligation of both the parties in connection with the marketing of the cars of the petitioner. Though the term of the MOU was till December, 2007, it was extended by the acts of the parties in terms of Clause 2 of the MOU. 2. The petitioner makes a refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the MOU invoking arbitration under the MOU and referring all disputes between the parties to arbitration. The petitioner in fact nominated Mr. Justice Jayasimha Babu (Retired) as the Sole Arbitrator, and failing confirmation by the respondent, as the arbitrator of the petitioner on the three member Arbitral Tribunal to be constituted in terms of Clause 11. 6. The respondent through its counsel sent a reply to the notice dated 7th April, 2010 denying existence of any contractual relationship between the parties on the date of termination of MOU on 25th September, 2009. 7. The petitioner, therefore, filed Arbitration Application No.576 of 2010 under Section 9 of the Arbitration and Conciliation Act, 1996 before the Court of the Principal City Civil and Sessions Judge at Bangalore praying for an order of injunction restraining the respondent from proceeding with the legal proceedings initiated before the First Divisional Court, Room A of Commercial Court of Brussels, Belgium. 8. The petitioner had also moved I.A.No.1 in the aforesaid suit dated 19th April, 2010 seeking an order of temporary injunction which was granted by the Principal City Civil and Sessions Judge at Bangalo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Court at Brussels on 14th January, 2010; the petitioner was intimated about the said proceedings vide e-mail dated 15th March, 2010; and the notice invoking the arbitration clause in the MOU is dated 24th March, 2010. It is, therefore, clear that the arbitration clause is invoked only to avoid proceedings before the Commercial Court at Brussels. It is emphasised that the proceedings before the Commercial Court at Brussels related to the period beyond the MOU when the parties had commenced work of distributorship or dealership after the test trial period under the MOU had come to an end. 10. I have heard the learned counsel for the parties. 11. Mr. Narasimha, learned senior counsel appearing for the petitioner submits that the averments made by the respondent in reply to the petition make it abundantly clear that the disputes pertained to the MOU dated 25th September, 2007. According to the learned counsel, there was no fresh agreement entered into between the parties. Cars were being supplied to the respondent in terms of Clause 2 of the MOU. Making a reference to Clause 2, learned counsel submits that the aforesaid clause makes it clear that the MOU was effective for a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any time between the parties in relation to the agreement shall be referred to a Sole Arbitrator. The clause, according to the learned senior counsel, is not limited to the disputes relating only to the initial period of the MOU till 31st December 2007. 15. He submits irrespective of whether the MOU is now in existence or not, the Arbitration clause would survive. He relies on the decisions of this Court in the cases of Bharat Petroleum Corporation Ltd. vs. Great Eastern Shipping Company Ltd.1 and Everest Holding Limited vs. Shyam Kumar Shrivastava and Ors.2 He further submits that this Court is required to refer the disputes between the parties to the Sole Arbitrator, without any in-depth examination of the disputes. The Court is merely to be satisfied that the disputes fall within the ambit of the Arbitration Clause. In support of this submission, he relies on the judgment of this Court in Brigadier Man Mohan Sharma, FRGS (Retd.) vs. Lieutenan t General Depinder Singh3 . He also relies on the judgment in the case of National Insurance Company Limited vs. Boghara Polyfab Private Limited4 , in support of the submission all disputes are such which need to be decided by the Sole A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A reference in this connection can be made to the judgment of this Court in SBP and Co. (supra) wherein a Constitution Bench of this Court has clearly held as under: "39. It is necessary to define what exactly the Chief Justice, approached with an application under Section 11 of the Act, is to decide at that stage. Obviously, he has to decide his own jurisdiction in the sense whether the party making the motion has approached the right High Court. He has to decide whether there is an arbitration agreement, as defined in the Act and whether the person who has made the request before him, is a party to such an agreement. It is necessary to indicate that he can also decide the question whether the claim was a dead one; or a long-barred claim that was sought to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. It may not be possible at that stage, to decide whether a live claim made, is one which comes within the purview of the arbitration clause. It will be appropriate to leave that question to be decided by the Arbitral Tribunal on taking e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, issues which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide. 22.1. The issues (first category) which the Chief Justice/his designate will have to decide are: (a) Whether the party making the application has approached the appropriate High Court. (b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement. 22.2. The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the Arbitral Tribunal) are: (a) Whether the claim is a dead (long-barred) claim or a live claim. (b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection. 22.3. The issues (third category) which the Chief Justice/his designate should leave exclusively to the Arbitral Tribunal are: (i) Whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mail dated 25th September, 2009 in which it is clearly stated that MOU was entered into on 25th September, 2007 for a test period of six months from the date of arrival of the trial cars. It is further stated that this period was extended on an informal and voluntary basis by the petitioner for a period extending to two years from the date of signing of the MOU. During this two years period, a total of 15 REVA cars have been sold. It is pointed out that inspite of the best efforts of the respondent and the efforts of the petitioner to support the respondent, following a review of the European operations it is believed that the respondents do not have in place the resources to build the REVA brand, invest in the appropriate infrastructure, obtain necessary fiscal and/or subsidy and infrastructure support and are not adequately prepared to launch the M1 vehicles introduced by REVA at the Frankfurt IAA. Thereafter it requests the respondents to immediately cease all sales and marking activities on behalf of REVA brand. This termination of the agreement has been acknowledged by the respondents in its e-mail dated 7th October, 2009. A perusal of this e-mail would also demonstrate that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a pilot project of three to six months to test the marketing possibilities of the REVA cars on the Belgium market. It is further pleaded that at the end of the test period and at the latest on 31st December, 2007, the parties had to decide jointly whether the petitioner would continue to provide the promotion, sales and service of REVA Cars in Belgium within the framework of a long-term distribution contract. The respondents further pleaded that:- "Whereas, in spite of the absence of the signing of a written contract between the parties, the petitioner de facto became the exclusive distributor of REVA vehicles in the BENELUX starting the month of January, 2008." 24. Thereafter the respondents gave details of the efforts made by it for marketing of the REVA Cars from January, 2008 onwards. In paragraph 19 of the writ of summons, it is clearly admitted as follows:- "Whereas on the 25th of September, 2009, as soon as the first REVA cars fitted with Lithium batteries and of the new REVA NXR model arrive in Belgium the petitioner is going to be ejected all of a sudden by the party summoned below. That during a telephone conversation on 25th September, 2009, confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether there is any common practice that if the vessel is not redelivered at the end of the period mentioned in the time charter the vessel would be governed by the charter party under which originally it was chartered? * * * Issue 5: Whether the time charter party dated 6-5-1997 came to an end by efflux of time on 30-8-1998? " 29. The Arbitral Tribunal by its order dated 12th May, 2003 came to the conclusion that the appellant having invoked the arbitration clause contained in the charter party agreement dated 6th May, 1997, which was valid upto 31st December, 1998 and as the dispute between the parties related to the period subsequent to 31st August, 1998, they had no jurisdiction to decide the reference. The tribunal held that the charter party agreement dated 6th May, 1997 was superseded by a fresh agreement. Therefore, original charter party dated 6th May, 1997 got extinguished. The respondents challenged the said award before the High Court. Learned Single Judge set aside the award and held that the Arbitral Tribunal has the jurisdiction to adjudicate the disputes between the parties as the vessel continued to be hired by the appellant for the period subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of mining, processing and export of Iron Ore. On 26th March, 2004, another JVA was executed between the parties, particularly to iron out certain controversy in respect of JVA dated 25th September, 2003. Article 14.3 of the said JVA contained an arbitration clause providing that if the parties failed to resolve the matter through mutual agreement, the dispute shall be referred to an Arbitrator appointed by mutual agreement of the two parties. The stand of the petitioner in the aforesaid case was that on 20th September, 2004, it was shocked and surprised to receive unwarranted notices for cancellation of JVA. The aforesaid notice was replied on 6th October, 2004. Since the disputes between the parties were not resolved, the petitioner invoked the arbitration clause. Respondent No. 1 in reply to the notice refuted the claim of the petitioner and also refused to refer the matter to arbitration on the ground that the JVA between the petitioner and the respondent No.1 is not in existence as the same had been terminated by respondent No.2. It was stated that in view of the aforesaid position, there could be no invocation of Clause 14.3 of JVA. 32. Considering the aforesaid fact situ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose:- (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause." 34. The aforesaid provision has been enacted by the legislature keeping in mind the provisions contained in Article 16 of the UNCITRAL Model Law. The aforesaid Article reads as under:- "Article 16 - Competence of arbitral tribunal to rule on its jurisdiction - (1) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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