9911796707
TMI Blog2019 (7) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... erik Reynders was in no way associated with respondent No.2 and was only an employee of respondent No.1, who acted in that capacity during the negotiations preceding the execution of agreement. Thus, respondent No.2 was neither the signatory to the arbitration agreement nor did have any causal connection with the process of negotiations preceding the agreement or the execution thereof, whatsoever. If the main plank of the applicant, that Mr. Frederik Reynders was acting for and on behalf of respondent No.2 and had the authority of respondent No.2, collapses, then it must necessarily follow that respondent No.2 was not a party to the stated agreement nor had it given assent to the arbitration agreement and, in absence thereof, even if respondent No.2 happens to be a constituent of the group of companies of which respondent No.1 is also a constituent, that will be of no avail. The burden is on the applicant to establish that respondent No.2 had an intention to consent to the arbitration agreement and be party thereto, maybe for the limited purpose of enforcing the indemnity clause 9 in the agreement, which refers to respondent No.1 and the supplier group against any claim of loss, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent Water Purification Inc. and Ors., (2013) 1 SCC 641 a three Judge Bench of this Court opined that ordinarily, an arbitration takes place between the persons who have been parties to both the arbitration agreement as well as the substantive contract underlying it. Invoking the doctrine of group of companies , it went on to observe that an arbitration agreement entered into by a company, being one within a group of corporate entities, can, in certain circumstances, bind its nonsignatory affiliates. That exposition has been followed and applied by another three Judge Bench of this Court in Cheran Properties Limited Vs. Kasturi and Sons Limited and Ors. (2018) 16 SCC 413 In paragraph 23 of this decision, the Court, after analysing the earlier decisions and including the doctrine expounded in Chloro Controls India Private Limited (supra), concluded as follows: 23. As the law has evolved, it has recognised that modern business transactions are often effectuated through multiple layers and agreements. There may be transactions within a group of companies. The circumstances in which they have entered into them may reflect an intention to bind both signatory and non-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent No.2, respectively). In other words, whether the indisputable circumstances go to show that the mutual intention of the parties was to bind both the signatory as well as the nonsignatory parties, namely, respondent No.1 and respondent No.2, respectively, qua the existence of an arbitration agreement between the applicant and the said respondents. 4. In the wake of the amended Section 11(6) read with Section 11(6A) of the Act, the enquiry by this Court must confine itself to the examination of existence of an arbitration agreement. No more and no less. For that, we must revert to the assertion made by the applicant in the present application. Be it noted that respondent No.1 has not filed any counter affidavit to refute the assertions made by the applicant in the application under consideration. Respondent No.1, however, through its counsel has urged that respondent No.2 has no concern with the subject agreement dated 1st May, 2014. That agreement is only between the applicant and respondent No.1 and as a result thereof, it would give rise to a domestic commercial arbitration and not an international commercial arbitration. Respondent No.1 has also made it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... email dated 23rd April, 2014, circulated a draft of the agreement along with the code of conduct and antibribery policy of the applicant. The applicant asserts that the respondents replied to the same through Mr. Frederik Reynders (promoter of respondent No.2 which is the parent company of respondent No.1) by his email of 23rd April, 2014 at 12:00 PM. The said email sent by Mr. Frederik Reynders was responded to by the applicant on 23rd April, 2014 at 12:10 PM. Further, Mr. Frederik Reynders, by his email of 23rd April, 2014 at 4:09 PM, attached a copy of the draft with some attached comments from the headquarters of the respondents in Belgium (respondent No.2 herein). According to the applicant, the comments related to clause 9 of the draft agreement relating to the indemnity of respondent Nos.1 2. It is then stated that in the same email, Mr. Frederik Reynders gave a counter proposal, concerning clause 9.1 of the draft agreement, of providing a document of insurance to inform the applicant about their maximum coverage. On this basis, it is asserted that respondent No.2 was aware of the fact that indemnity is being extended to the applicant and that respondent No.2 was the disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents represented that inspection of printed labels is conducted through a system consisting of 500 100% camera controlled inspection system, online numbering on back side and units for offline numbering . Further, in relation to quality assurance, the Respondents represented to the Applicant that they provide standard quality assurance and in addition, they also provide quality check by camera control. True typed copy of the Presentation dated NIL made by the Respondents is annexed as ANNEXURE A3 (at pages 135 to 156). 7.9 In the interregnum, the Applicant entered into a Supply Agreement dated April 16, 2014 with its affiliate in India viz., RB Healthcare. True typed copy of the Supply Agreement executed between the Applicant and RB Healthcare dated 16.04.2014 is annexed as ANNEXURE A4 (at pages 157 to 189). 7.10 The Applicant and Respondents held detailed negotiations in relation to execution of an agreement, whereby the Respondents were to provide packaging material to the Applicant and its affiliates. Based on negotiations, the Applicant by email dated April 23, 2014, circulated a draft of the Agreement along with the Code of Conduct and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Applicant and the Respondent No.1. Hence, the arbitration agreement also has been executed by Respondent No.1 on its behalf and on behalf of its disclosed principal i.e. the Respondent No.2. 7.12 After further discussions, the Respondent No.1, on its behalf of and on behalf of its parent and disclosed principal Reynders Belgium) of Respondent No.2, executed the Agreement on May 1, 2014 and sent the same to the Applicant. In this context it is stated that the Respondent No.1 had addressed an email dated June 6, 2014 to the Applicant enclosing the signed copy of the Agreement and further stating that hard copy shall be delivered to the Applicant. True typed copy of the email dated June 6, 2014 sent by the Respondent No.1 to the Applicant is annexed as ANNEXURE A9 (at page 195). The Agreement was subsequently executed by the Applicant and a hard copy, was sent to the Respondents. (emphasis supplied) 6. We deem it apposite to reproduce the correspondence, referred to in the aforesaid paragraphs of the application under consideration, for examining the case made out by the applicant as to whether respondent No.2 can be said to have assented or had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirm. Best regards, Frederik Reynders Reynders_Label Printing India Pvt. Ltd. www.reynders.com ANNEXURE A-7 From: Joshi, Sonu [mail to: [email protected]] Sent: woensdag 23 april 2014 12:10 To: Frederic Reynders Cc: Kari Vandenbussche Subject: Re: Commercial Agreement signoff RB Reynders Hi Frederik Thanks. We (me and you) will discuss on the leadtimes, align on some buffer days and publish the official lead times to BADDI planning team. The unofficial or real/crash/squeeze lead time must remain between the three of us. Regards Sonu Dev Joshi ManagerPM Procuremen RB ANNEXURE A-8 From: Frederic Reynders [mail to: [email protected]] Sent: Wednesday, April 23, 2014 4:09 PM To: Joshi, Sonu Cc: Kari Vandenbussche Subject: RE: Commercial Agreement signoff RB Reynders Dear Sonu, Please find attached the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anagerial functions for respondent No.2, nor was he an authorized representative or a director of respondent No.2 with any authority to appoint the said respondent. The relevant extract of the counter affidavit reads thus: THE ANSWERING RESPONDENT DID NOT PARTICIPATE IN THE NEGOTIATIONS PERTAINING THE AGREEMENT 15. It is incorrect to state that the answering Respondent was at any point in time involved in the negotiations with respect to the Agreement. The answering Respondent did not make any presentation or representations to the Applicant. From the documents annexed by the Applicant, there is nothing to show that the answering Respondent ever made any presentation to the Applicant or was present at any meeting prior to the date of the alleged Agreement. 16. Contrary to what has been alleged by the Applicant, the answering Respondent did not provide any comments on the draft of the Agreement. The answering Respondent submits that it is not aware of the email dated 23.04.2014, as alleged by the Applicant. Respondent No.1 did not forward email dated 23.04.2014 or any such email to the answering Respondent seeking comments of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing to show that Mr. Vandenbussche or Mr. Frederik Reynders represented themselves to be the agents of the answering Respondent or authorized persons acting for the answering Respondent. 22. It is submitted that the answering Respondent has no connection to the present dispute not having been a party in any capacity to the negotiation, execution, or enforcement of the Agreement. Therefore, the Applicant s submission that the Agreement was executed by Respondent No.1 on behalf of Respondent No.2, is incorrect. As demonstrated above, the answering Respondent was never a participant in the negotiations between the Applicant and Respondent No.1. (emphasis supplied) 8. The applicant has filed a rejoinder affidavit in which it is vaguely stated that Mr. Frederik Reynders, during the stage of negotiation of the agreement, was taking directions from the representatives of respondent No.2. In paragraphs 10 to 12 of the said affidavit, in response to the stand taken by respondent No.2, the applicant has stated thus: 10. The contents of Para 15 are wrong and denied. It is a matter of record (Annexure A3 at Page 135 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent No.2 by stating, on affidavit, that Mr. Frederik Reynders was in no way associated with respondent No.2 and was only an employee of respondent No.1, who acted in that capacity during the negotiations preceding the execution of agreement. Thus, respondent No.2 was neither the signatory to the arbitration agreement nor did have any causal connection with the process of negotiations preceding the agreement or the execution thereof, whatsoever. If the main plank of the applicant, that Mr. Frederik Reynders was acting for and on behalf of respondent No.2 and had the authority of respondent No.2, collapses, then it must necessarily follow that respondent No.2 was not a party to the stated agreement nor had it given assent to the arbitration agreement and, in absence thereof, even if respondent No.2 happens to be a constituent of the group of companies of which respondent No.1 is also a constituent, that will be of no avail. For, the burden is on the applicant to establish that respondent No.2 had an intention to consent to the arbitration agreement and be party thereto, maybe for the limited purpose of enforcing the indemnity clause 9 in the agreement, which refers to responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to observe that the application must fail against respondent No.2 and on that conclusion, no relief can be granted to the applicant who has invoked the jurisdiction of this Court on the assumption that it is a case of international commercial arbitration. Despite that, respondent No.1 through counsel has urged that as the subject agreement between the applicant and respondent No.1 contains an arbitration clause (clause 13) and since disputes have arisen between them, the respondent No.1 would agree to the appointment of a sole arbitrator by this Court for conducting arbitration proceedings between the applicant and respondent No.1, as domestic commercial arbitration. This stand has been reiterated in the written submissions filed on behalf of respondent No.1, filed after the conclusion of the oral arguments. Resultantly, even though no relief can be granted to the applicant as against respondent No.2, we proceed to pass the following order in the interest of justice. 13. The arbitration application is dismissed as against respondent No.2. However, we appoint Mr. Justice Badar Durrez Ahmed (Former Chief Justice, Jammu Kashmir High Court) as the sole arbitrator to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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