TaxTMI 
TaxTMI 
2020 (1) TMI 1625
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....he petitioner had failed to lift the goods, as a result of which it was compelled to sell the material to third parties at the risk and cost of the petitioner. 3. In terms of the agreement between the parties, the respondent sought to invoke arbitration in accordance with the Rules of the Indian Council of Arbitration (hereinafter "ICA"). The respondent's claims in the arbitration proceedings were for the loss allegedly incurred in the risk sale. 4. The petitioner approached the City Civil Court, Calcutta by filing Title Suit No. 1297/2013, in which it appears that the validity of the agreement itself was challenged. The respondent filed an application in the suit under Sections 8 and 21 of the Act (for reference of the matter to arbitration). Although the pleadings and records of the suit and the orders passed by the City Civil Court are only partially produced on the record of this petition, it is undisputed that the City Civil Court did not grant any stay of the arbitration. In the circumstances, the learned Arbitrator rejected the repeated requests of the petitioner for adjournment. There was some correspondence between the petitioner and ICA relating to the pending a....
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....amount. It was recorded in the order dated 26.09.2019 that, in the event the impugned award is upheld by this Court, the respondent would execute it only to the extent stated in its affidavit. Relevant Provisions 8. Before dealing with the contentions of the parties, it is necessary to notice the arbitration clause contained in the agreement between the parties:- "16. ARBITRATION: Any dispute or difference in respect of any matter relating to or arising out of the Contract will be settled in accordance with the Rules of Arbitration of Indian Council of Arbitration, Delhi and the award made in pursuance thereof shall be final and binding on the parties. The venue of the Arbitration will be New Delhi." 9. Section 21 of the Act, which governs the invocation of proceedings, provides as follows: "21. Commencement of arbitral proceedings. Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent." 10. The arbitration clause makes the ICA Rules applicable to the arbitral proceedings. Rules 15 a....
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....ation had been duly served on the concerned party. The Registrar may in such cases make an additional communication to the Parties by Registered Letter or by other means which may provide a record of attempts to deliver it. (c) A copy of the defence statement and all appended documents, if any, shall be sent to the Claimant for information. (d) The communication is deemed to have been received on the day it is so delivered" [Although there was initially some controversy between the parties regarding the exact text of the Rules as applicable at the relevant time, learned counsel for both parties ultimately agreed that the above extracted provisions governed the proceedings in question.] Analysis 11. The petitioner's contention is that it had not received any notice of commencement of arbitration in terms of Section 21 of the Act, and Rule 15 of the ICA Rules. This contention must be examined in the context of the correspondence between the parties. In view of the fact that much will turn on the nature of the correspondence exchanged, the communications between the parties are dealt with in some detail hereinbelow:- (a) The first comm....
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.... 2011 for certain extraneous reasons which are best known to your client. I deny and dispute, therefore, in view of the facts as stated herein above that your client are at all entitled or has suffered any loss on account of any alleged risks sale to a sum of Rs. 54,27,500/- and/or entitled to any alleged interest @ 12.75% month rest with effect from 23rd June, 2010 to 4th October, 2011 to a sum of Rs. 26,56,129/- along with any alleged warehousing charges amounting to Rs. 7,24,200/- with other charges of Rs. 1,103/- thereby to a alleged total amount of Rs. 88,08,932/- along with interest from my client as alleged or at all. I say that on the contrary in view of the aforesaid facts and circumstances and the illegal and wrongful method which had been adopted by your client in dealing with my client with respect to the aforesaid purported acts, my client is entitled to a sum of Rs. 10,75,000/-@ 18% interest per annum for the aforesaid sum for loss and damages suffered by my client and for further sum which my client would be entitled to for losses and damages from third parties caused by the aforesaid wrong acts and omissions of your client and accordingly your client are re....
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....ke to inform you that at the first instance it is also embarrassing for us that how you have been approached for holding this reference as the claimant did not make any communication regarding existence of any dispute. This is further to inform you that there was no communication as to initiation of arbitration in case the disputes are not resolved. Under the facts and circumstances you are requested to direct the claimant to supply us documents regarding compliance of Section 21 of the Arbitration and Conciliation Act, 1996 so that we can take appropriate steps for challenging the initiation of reference before you also adjourn this reference till the supply of documents as aforesaid." (g) The petitioner has placed on record two further communications to the ICA. Its letter dated 03.12.2013 does not appear to be relevant to the dispute at hand. However, in its further communication dated 23.12.2013 (in response to a letter dated 16.12.2013, which is not on record), the petitioner contended as follows:- "We are very much interested about your statements made in paragraph number 3 of your letter under reference and particularly point 'C' of the sai....
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....etitioner's contention on the basis of Section 21 of the Act is wholly unmerited. The provision requires a party to send a request to the counter-party for the dispute to be referred to arbitration. The respondent's communication dated 14.12.2012 meets that requirement. The facts leading to the dispute, and the nature of the respondent's claim were made sufficiently clear in that letter. The respondent also stated that legal recourse would be taken by the respondent if its claim was not satisfied. The initiation of arbitration proceedings in such a situation was expressly contemplated. The petitioner's response of 11.01.2013 extracted above deals with the respondent's claim on merits and, in fact, raises a claim on behalf of the petitioner itself, alongwith a threat of legal action. My conclusion in this regard is supported by a judgment of the Rajasthan High Court, cited by Mr. Sanat Kumar. In RIICO Ltd. Jaipur & Ors. vs. Manoj Ajmera & Anr., (2008) 2 ArbLR 388, the Rajasthan High Court held that a communication claiming a disputed amount and contemplating arbitration in the alternative is sufficient notice of a request for arbitration. 14. The petitioner....
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....lt to discern. The party to the arbitration agreement against whom a claim is made, should know what the claims are. It is possible that in response to the notice, the recipient of the notice may accept some of the claims either wholly or in part, and the disputes between the parties may thus get narrowed down. That is one aspect of the matter. The other is that such a notice provides an opportunity to the recipient of the notice to point out if some of the claims are time barred, or barred by any law or untenable in fact and/or that there are counter-claims and so on. 26. Thirdly, and importantly, where the parties have agreed on a procedure for the appointment of an arbitrator, unless there is such a notice invoking the arbitration clause, it will not be possible to know whether the procedure as envisaged in the arbitration clause has been followed. Invariably, arbitration clauses do not contemplate the unilateral appointment of an arbitrator by one of the parties. There has to be a consensus. The notice under Section 21 serves an important purpose of facilitating a consensus on the appointment of an arbitrator. 27. Fourthly, even assuming that the clause permit....
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..... This judgment in Alupro (supra) is distinguishable on facts. First, there was no notice to the respondent at all in that case. In the present case, the legal notice dated 14.12.2012 fulfils the requirement of Section 21. The purpose of Section 21, as set out in paragraph 25 of Alupro, was clearly fulfilled by the said notice and the subsequent correspondence between the petitioner and the ICA. Second, the parties in the present case had agreed on the applicability of the ICA Rules. The petitioner expressly declined to appoint an arbitrator in terms thereof. In Alupro also, the Court notices that parties can agree to waive the requirements of Section 21. This judgment itself makes it clear that the provisions are derogable, and it is possible in a given case that agreement on the rules to be followed would constitute waiver of the statutory requirement. As I have held that the statutory requirements were in fact fulfilled in the present case, it is not necessary to consider this in greater detail in the present case. 19. The correspondence extracted above also indicates that the position taken by the petitioner was entirely baseless. After receiving three communications from th....
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....MMTC certain documents were also filed with the affidavit. Additional affidavit of evidence was filed on 1st October, 2014. On 1st October, 2014, a letter dated 24th September, 2014 received from the respondent was placed before Tribunal. It was stated in the letter that the respondent had not submitted the tender dated 7th June, 2010 which was the subject matter of dispute in the present case, and there was thus no question of the respondent intending to purchase the product in question. It was also stated in the letter that the respondent had made an application before the City Civil Court, Kolkata for production of original render but the copy which was filed in the Court did not bear the seal and the signature of the respondent Company. It was stated that the Tribunal should adjourn the proceedings till disposal of the application of the respondent fixed for hearing on 27th November, 2014. The tribunal on receipt of this letter observed that as there was no stay of proceedings by the Court, the proceedings cannot be adjourned. Mr. Sanat Kumar, Ld. Counsel for the Claimant submitted that the respondent had itself admitted the submission of tender dated 7th June....
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....ted vide the letter of acceptance of the Claimant dated June 11th, 2010 (marked as exhibit CW1/3). By the letter of acceptance the respondent was informed that the Claimant had additional quantity of 500 MT of "Toor whole Lemon" which they would also like to offer to the respondent and they wanted to know the respondent's interest in the above offer. The respondent was also asked to make the balance payment in respect of 250 MT for which the tender was accepted and arrange to lift the material within the free time allowed as per the terms and conditions of the subject tender. The respondent, however, did not lift the material within the free time. By letter dated 21st June, 2010 (exhibit CW 1/5) the respondent was asked to make full payment and lift the material by 22nd June, 2010 which was the free time for lifting of the material. The respondent, however, did not respond to the letters of the claimant and reminders dated 06.07.2010 and 15.07.2010 (marked as CW 1/6 and CW 1/7) were sent to the respondent. Final opportunity was given by letter dated 17th September, 2010 (marked as CW1/8) to lift the material upto 30th September, 2010 after making full payment of Rs. 1,07,50,000....