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2013 DIGILAW 2085 (BOM)

Candid Drug Distributors v. Wanbury Limited

2013-10-08

ROSHAN DALVI

body2013
JUDGMENT : 1. The Petitioner has applied for appointment of arbitrator U/s.11(6) of the Arbitration and Conciliation Act, 1996 (the Act.). The Respondent has opposed the appointment of any arbitrator despite admission of the fact of an arbitration agreement between the parties. 2. The Petitioner initially sued in the competent court in Guwahati. The Respondent challenged the territorial jurisdiction of that Court U/s.21 of the CPC. The Respondent also applied for reference of the dispute between the parties U/s. 8 of the Act. The Court returned the plaint to proper Court for filing upon holding that it did not have territorial jurisdiction. For lack of jurisdiction it did not refer the dispute to arbitration. The suit has remained at that. It has not been filed in any other Court. It has not been adjudicated or decided. The dispute between the parties has accordingly not been adjudicated either by the judicial pronouncement or by the mode of alternative dispute resolution. 3. The Petitioner conceded that the arbitral forum is the appropriate forum. Consequently the Petitioner sought appointment of the arbitrator. When that was done the Respondent has contested and challenged that application. The Respondent claims that once the Petitioner files a suit it would not be entitled to then refer the dispute to arbitration by itself. Mr. Dhond argued that if the Petitioner sued and the Respondent did not challenge the judicial forum the Court would not refer the suit for arbitration U/s.8 of the Act. In that case the suit would proceed to hearing. However, in this case the Respondent has already taken out such an application. The Petitioner only accepts the legal position. If the Petitioner has sued in the Court having territorial jurisdiction and the Respondent had taken out application U/s.8 for reference of the dispute to arbitration the Petitioner may have conceded that fact and the dispute would have been so referred. Consequently the Petitioner may also concede such fact after the plaint is returned to proper Court for filing but has not been either disposed off by hearing or by dismissal. 4. In fact the dispute raised by the Respondent is wholly unnecessary. Arbitration would be the most appropriate and desirable forum since the parties have agreed to refer their dispute to arbitration. 4. In fact the dispute raised by the Respondent is wholly unnecessary. Arbitration would be the most appropriate and desirable forum since the parties have agreed to refer their dispute to arbitration. It may be mentioned that even if the Petitioner had sued and the Respondent did not challenge the jurisdiction of the Court, the Court itself may have referred the dispute to arbitration U/s.89 of the CPC though not U/s.8 of the Act. The fact that the parties have themselves agreed to arbitrate shows that the dispute is amenable to arbitration and could have been referred to arbitration under such other provision of law. 5. Large number of judgments on the extraneous issues of the opposition to elect a forum have been relied upon by the Respondent. 6. In the case of Transcore Vs. Union of India & Anr., (2008) 1 Supreme Court Case 125, the election of a bank to sue under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 or the DRT Act for releasing the secured assets came to be considered. The analogy is that the bank had to choose between the two statutes. It was not for the choice of the mainstream judicial forum and the alternative adjudicative forum. 7. In the case of Bank of India Vs. Lekhimoni Das & Ors., (2000) 3 Supreme Court Cases 640, it has been held that when the two remedies have been provided by law one would not operate in derogation of the other. A suit would not be barred by the summary or concurrent remedy but if the party persued such remedy and failed he could not proceed under the other provision. Again that analogy is wholly distinct. 8. In the case of Raj & Associates & Anr. Vs. Videsh Sanchar Nigam Ltd. & Ors., 2004 (2) ARBLR614 (Delhi), the Plaintiff filed a Writ Petition which was disposed off granting liberty to initiate civil or arbitration proceeding. The Plaintiff itself applied for referral of the dispute U/s.8 of the Act to arbitration. It was observed that the Plaintiff renounced its rights enforce arbitral proceedings. Referring to the case of Sukanya Holdings (P.) Ltd. Vs. The Plaintiff itself applied for referral of the dispute U/s.8 of the Act to arbitration. It was observed that the Plaintiff renounced its rights enforce arbitral proceedings. Referring to the case of Sukanya Holdings (P.) Ltd. Vs. Jayesh H. Pandya & Anr., (2003) 3SCR558, the Court observed that once the Plaintiff opted to file a suit it is no longer open to him to pray to the Court that the parties be referred to arbitration. The case is clearly distinguishable. The order in that case was passed because when the suit was pending the Plaintiff itself made an application envisaged U/s.8 of the Act. Clearly Section 8 does not permit such a course. In this case the Defendant made the application U/s.8 of the Act. The Plaintiff has considered and accepted that position and has, therefore, sought to appoint the arbitrator. The Defendant failing to appoint an arbitrator, the Plaintiff / Petitioner has sought the appointment by the Court. 9. Even the case of Corn Products Company (India) Ltd. Vs. Ayaz Ghadiya & Anr., AIR 1997 Bom. 331 , holding that the agreement between the parties to arbitrate may be abandoned by the parties so as to allow the parties only the public forum of adjudication would not apply in this case. In that case the Plaintiff himself sought reference to arbitration in the summary suit filed by the Plaintiff. It was, therefore, argued that instituting the suit in respect of the claim showed abandonment by the Plaintiff of the willingness to arbitrate. 10. Similar position has been shown in Bharti Televentures Ltd. Vs. DSS Enterprises Pvt. Ltd. & Ors., 2005(2) ARBLR 561 . Consequently the appointment of the arbitrator as per the admitted agreement to refer the parties' disputes to arbitration, contained in clause 43 of the agreement Exh.A to the Petition as also clause 42 of the further / supplementary agreement Exh.A1 to the Petition which are identical in terms, must be accepted. Under that clause the dispute, differences and questions arising during the agreement or afterwards between the parties and their representatives relating to the agreement were to be referred to single arbitrator if the parties agreed upon one and otherwise to two arbitrators one to be appointed by each of the parties and an umpire to be appointed by such arbitrators. Under that clause the dispute, differences and questions arising during the agreement or afterwards between the parties and their representatives relating to the agreement were to be referred to single arbitrator if the parties agreed upon one and otherwise to two arbitrators one to be appointed by each of the parties and an umpire to be appointed by such arbitrators. In that case also there is nothing to show that the Defendant in the suit despite arbitration applied U/s.8 of the Act. 11. In the case of Jagdish Chander Vs. Ramesh Chander & Ors., (2007) 5 Supreme Court Cases 719, one of the partners to partnership agreement sought arbitration in terms one of the clauses to the partnership agreement requiring partners to “mutually decide the disputes” or “refer the disputes to arbitration”. Upon considering that the intention of the parties to arbitrate is to be gathered from the terms of the agreement and the words in the agreement should disclose the determination or application to go to the arbitration, it was held that if the agreement merely contemplated a possibility of going to arbitration or possibilities of parties agreeing to arbitrate for future, there would be no valid arbitration agreement. In the absence of the valid arbitration agreement it was held that the arbitrator could not be appointed U/s.11 of the Act. In that case the submission of the party seeking to arbitrate that even U/s.8 the Court had the power to have recourse to alternative dispute resolution process to settle the dispute was repelled on the ground that Section 89 of the CPC did not have any application with Section 11 of the Arbitration Act. The reference to arbitration even U/s.89 of the CPC could be only by mutual consent for such reference. That also is a situation different from situation in this case. In this case the Defendant himself sought reference to arbitration. Hence Defendant's consent to arbitration would be implicit in its own application. Merely because the Plaintiff accepted that position later the Defendant cannot be allowed to resile from its own case that the dispute between the parties was to be referred to arbitration. In such a case the spirit of Section 89 of the CPC would have to be seen since the consent of the Defendant to refer the dispute to the arbitration is implicit and has been amplified by its own application. 12. In such a case the spirit of Section 89 of the CPC would have to be seen since the consent of the Defendant to refer the dispute to the arbitration is implicit and has been amplified by its own application. 12. The real aspect to be seen is not that the parties must get even or that the Defendant must challenge every action that the Plaintiff takes. The real purpose and spirit of the Act would be maintained if the application of the Defendant is accepted by the Plaintiff as has been done in this case. Of course, if the Defendant had not taken out this application U/s.8 of the Act and had not shown its own willingness to refer the dispute to arbitration, it could have resisted the Plaintiff's application after the suit was filed. It would be too late in the day for the Defendant to oppose every application made by the Plaintiff including the application which was sought by the Defendant itself. 13. There would have been a sole arbitrator appointed by consent of the parties. That having not been effected, the parties would require to appoint one arbitrator each. Since that has been challenged, the Court is required to appoint two arbitrators in the place of one each to be appointed by the parties, who would appoint an umpire. 14. Justice H. Suresh, Retired Judge of this Court and Justice Sindhkar, Retired Judge of this Court are appointed arbitrators. 15. Arbitration Petition is disposed off accordingly.