2019 (1) TMI 1810 - HC - Indian Laws

High Court appoints arbitrator in purchase order dispute emphasizing limited intervention and adherence to arbitration agreement.

The High Court appointed Hon'ble Justice Jayanta Kumar Biswas (Retired) as the sole arbitrator in a dispute arising from a purchase order due to ... Appointment of an arbitrator in view of the disputes and differences arisen between the parties - petitioner was required to supply one set of refractories for coke oven battery No. 6 consisting of silica bricks, fire clay bricks and mortars at a price of US$ 7,933,094/- only for the respondent and/or its nominated consignee - issue in the present case is that Despite the acceptance of the said materials, the respondent has failed, refused and neglected to pay a sum of ₹ 2,96,09,916/- to the petitioner out of the total sum due and payable to the petitioner from the respondent in terms of the purchase order dated 12th March, 2015. Whether the petitioner is entitled to appointment of an arbitrator in relation to the disputes and differences that have arisen between the parties in relation to the purchase order dated 12th March, 2015? HELD THAT:- In the instant case, there is no dispute with regard to the existence of an arbitration agreement - Even if an arbitrator is appointed in this proceeding, it would still be open for the respondent to contend before the arbitrator that by filing the written statement in the suit, the petitioner has forfeited its right to refer the dispute to arbitration - The purchase order contains an arbitration clause. The existence of the purchase order is not in dispute. What could be the reason or plausible defence for not releasing the price of the goods sold and delivered under the purchase order is not a relevant consideration at this stage to decide an application for appointment of an arbitrator. The plaintiff in their wisdom may frame a suit with multiple parties and multiple causes of action but such of the parties in the suit whose agreements with the plaintiffs contain arbitration clauses and are desirous of seeking independent reference of their dispute to arbitration cannot be prevented from seeking such reference, particularly in view of the language of Section 11(6A) of the Act. The considerations for Section 8 and Section 11 of the Act are entirely different. The reference to Section 8 of the Act and the decisions on the said Section have been referred to only for the limited purpose of understanding whether the considerations for referring the dispute of the parties to arbitration is the same as that of a proceeding under section 11 of the Act. The considerations are completely different - The objection to the appointment of an arbitrator in the present case, amongst others, appears to be the filing of written statement by the respondent in the suit. This is, in view of the aforesaid discussion, not a relevant consideration for appointment of an arbitrator under Section 11 of the Act. All the questions which could have been decided by the Court previously in an application under Section 11 of the Arbitration and Conciliation Act, 1996 have been taken away and the Court is now denuded of its jurisdiction to decide such questions which otherwise were available to the Court under the unamended Act - Even under the unamended provisions, the consistent view of the Court is to have minimum supervisory jurisdiction over the arbitral tribunal. This has now received a statutory recognition in various amended provisions carried out in 1996 Act, one of which is Section 11(6A). Application allowed. Issues Involved:1. Existence of Arbitration Agreement2. Non-payment of dues3. Pendency of a related suit4. Waiver of right to arbitration5. Jurisdiction of the High Court6. Appointment of ArbitratorDetailed Analysis:1. Existence of Arbitration Agreement:The petitioner filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator due to disputes arising from a purchase order dated 12th March 2015. The arbitration clause in the purchase order mandates that disputes be settled by arbitration in accordance with the Rules of Arbitration of the Indian Arbitration and Conciliation Act, 1996. The respondent did not dispute the existence of the arbitration agreement.2. Non-payment of Dues:The petitioner supplied materials as per the purchase order, which were accepted by the respondent. However, the respondent failed to pay Rs. 2,96,09,916/- to the petitioner. The petitioner initially sought relief through an interlocutory application, which was dismissed, leading to the invocation of the arbitration clause.3. Pendency of a Related Suit:The respondent and others filed a suit (C.S. No. 2 of 2017) against the petitioner, alleging breach of an exclusive agreement. The petitioner argued that the pendency of the suit should not bar the appointment of an arbitrator since the petitioner did not submit to the court's jurisdiction regarding the purchase order dispute. The court noted that the suit's frame should not prevent arbitration, as the law requires satisfaction only with the existence of the arbitration agreement.4. Waiver of Right to Arbitration:The respondent argued that the petitioner waived its right to arbitration by filing a written statement in the suit, thus submitting to the court's jurisdiction. The court held that the plea of waiver is not relevant at the stage of appointing an arbitrator and should be decided by the arbitral tribunal or in an application under Section 8 of the Act.5. Jurisdiction of the High Court:The court emphasized that the amended Section 11(6A) of the Act restricts the court's power to examine only the existence of an arbitration agreement. The court referred to the legislative intent to minimize court intervention and ensure speedy arbitration proceedings.6. Appointment of Arbitrator:The court appointed Hon'ble Justice Jayanta Kumar Biswas (Retired) as the sole arbitrator, directing the arbitrator to fix commensurate remuneration and conclude the reference within twelve months of the statement of claim being lodged. The court stayed the order's operation for two weeks upon the respondent's request for a stay.Conclusion:The court allowed the petition for the appointment of an arbitrator, emphasizing the restricted scope of judicial intervention under the amended Act and the need to respect the arbitration agreement between the parties. The decision underscores the legislative intent to facilitate arbitration with minimal court interference.