-Report by Deep Shikha
The Hon’ble High court of Delhi in the case of Panasonic India Private Ltd vs. Shah Aircon Through its Proprietor Shadab Raza, held that the court cannot intervene in the arbitral proceedings as well as the parties can refer the disputes to arbitration even without an agreement but at some point of time in the course of the agreement must show the intention to refer the disputes to arbitration.
FACTS OF THE CASE
The petitioner, hereby, entered into a distributorship agreement to sell electronic goods to the respondent. The agreement contains a clause of dispute resolution by arbitration saying that all issues relating to appointment of arbitrator or any petition to be made to the court under the applicable arbitration law with the provisions of the Arbitration and Conciliation Act, 1996 or any issue arising out of arbitration proceedings and award shall be subject to the exclusive jurisdiction of courts at New Delhi.
The dispute arose between them over alleged unpaid invoices. Therefore, a legal notice was sent on behalf of the respondent dated 20.08.2020. It was further alleged that even after the distributorship agreement between them, petitioner sold goods to some dealer directly and bills were made in the name of respondent which resulted in huge loss to the respondent, but the payment was not received by them. In reply to legal notice, petitioner demanded a sum of Rs. 37,29,976/- in the event of failure of payment and invoked the arbitration clause contained in the agreement. This led to the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 on 15.07.2021. In response to it, the respondent contended to be the dispute of civil nature which can be resolved under the jurisdiction of court.
There are mainly three issues addressed in this case namely:-
- Whether the purported arbitration clause is a valid clause in an agreement?
- Whether the distributorship agreement is under the limitations for the agreement to be made enforceable?
- Whether the court has jurisdiction to resolve the dispute by way of civil nature?
Hence, it brings to the present petition for resolving civil disputes in arbitration rather under the jurisdiction of court.
The learned counsel appearing from respondent’s side stated that it did not sign any agreement with the petitioner. Therefore, the arbitration clause in the agreement is not a valid clause as the term “can” and “shall” makes the agreement uncertain, cases like Jagdish Chander vs. Ramesh Chander and Ors. and Jyoti Brothers vs. Sree Durga Mining Company, were relied on.
It also pointed out the second issue of limitation of the agreement which is not mentioned in agreement is one year as per Clause II(xi) of the General Terms & Conditions of the agreement, to be read with Schedule II and III. In this present case, it is outside the limitation of the agreement making an agreement void.
While addressing the third issue by the learned council from respondent side, it further questioned that the dispute is related to arrears in accounts, which provide jurisdiction to court through civil proceedings in Gurugram, Haryana. And the petitioner has no power to appoint any learned arbitrator. The respondent contended that courts lacked jurisdiction over the venue of arbitral proceedings.
The learned counsel appearing from appellant’s side made an application to address the first issue in the suit for reference to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996. Since, the parties’ intention to take reference to arbitration is sufficient for the parties to mutually refer the dispute to Arbitral Tribunal even without any expressly or impliedly agreement under the reference of the Clause XXIV and XXV of the agreement, the arbitration clause stands forth under the provisions of Section 7 of the Arbitration and Conciliation Act, 1996.
While addressing the second issue, on the question of limitation, they contended that this issue be adjudicated by the arbitral tribunal during arbitral proceedings. Further on the question of jurisdiction which is the last issue, exclusive jurisdiction of contract will prevail over the intention of the parties to signify the place for the conduct of arbitral proceedings.
The Hon’ble High court of Delhi grants the petition of referring the dispute to Arbitral Tribunal. Addressing this, the court appointed an arbitrator for resolving the dispute and pronounced an Arbitral Award. The remuneration is to be calculated on the basis of Schedule IV of the Act. All rights and contentions of the parties are left open for adjudication under the Arbitral Tribunal by the learned Arbitrator.