-Report by Deep Shikha
In the case of Sorin Group Italia S.R.L vs. Neeraj Garg, it was held that when the dispute is non-arbitrable, it will be adjudicated by the court and not by the Arbitration. And it is upon the discretion of the plaintiff to refer the dispute to which competent court leading to the present application being made successful.
FACTS OF THE CASE
Sorin, the plaintiff, entered into a Sole Distribution Agreement with the defendant to supply certain goods. Sorin supplied the goods as per the agreement and issued three invoices to the defendant. Since the defendant failed to make full payment for the goods purchased, this led to the present suit under Order XXXVII of the Code of Civil Procedure for recovery of money.
In the course of the hearing, the defendant filed an application under Section 8 of the Arbitration and Conciliation Act for seeking leave to defend. When the defendant was given the liberty to file an application under Section 45 of the Arbitration and Conciliation Act, which gives the power to judicial authority to refer the parties to the arbitration. He lifted up the application filed under Section 8 of the Arbitration and Conciliation Act, which led to the present application being issued for this case.
As per the agreement between both parties, the rules set out are under Article 15 of the Memorandum of Understanding. As per Clause 1 of Article 15, the choice of law is being considered. It says if any dispute arose, it shall be governed in accordance with the laws of Italy and the rules of the United Nations Convention on the International Sale of Goods and the place would be Milan, Italy. According to Clause 2 of Article 15, dispute resolution laws are mentioned which says that if disputes arise between parties relating to grounds of termination or termination or for potential claims for indemnification or compensation thereof, and if this dispute is not resolved within 60 days from the dispute, it will be submitted to final and binding Arbitration with current Commercial Arbitration Rules of the Chamber of Commerce Milan, by three arbitrators. The language would be exclusively English. The other disputes are to be adjudicated in the courts of Milan, Italy. Even as per the agreement, the plaintiff will have sole discretion to invoke the jurisdiction of any competent court.
The learned counsel appearing on behalf of the plaintiff contended that as per the terms of the agreement only the termination dispute was to be resolved by the Arbitration. In this case, the dispute is about unpaid invoices not about the termination clause, therefore, the dispute cannot be adjudicated by Arbitration. And as per the agreement, a plaintiff has the sole discretion for the right to invoke the jurisdiction of any competent courts. As per the agreement, the disputes to be arbitrated are not the present dispute. It says that ‘excepted matters’ will be adjudicated by the court. In the present case since the dispute is about unpaid invoices, it will term an excepted matter.
The learned counsel appearing on behalf of the defendant contended that since the dispute is of recovery of money which is covered under the aforesaid arbitration clause under Section 45 of the Arbitration and Conciliation Act. As per the agreement, a case can be filed in any court having competent jurisdiction to adjudicate upon the case. They even contended that they have counted claims that they want to be adjudicated in Arbitration and not in front of judicial authorities. In the Vidya Drolia case, it was held that the court may interfere at Section 8 or 11 when the dispute is ex-facie certain or the disputes are non-arbitrable. The limited view of the court is to check and protect the parties from being forced to arbitrate when the matter is non-arbitrable. When the dispute is arbitrable, the dispute will be adjudicated by Arbitration.
The court held that the dispute in the present case comes within the ambit of ‘excepted matters’ which is unpaid invoices. Therefore, the present suit is maintainable before this court. In the present case, the issue is with regard to the non-arbitrability of the dispute and not with regard to the Agreement being null and void with reference to the clause of the sole discretion of the plaintiff to refer the dispute to the competent court.