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2017 DIGILAW 1821 (RAJ)

VARUN BEVARAGES LTD. v. SHREE SHYAM ENTERPRISES

2017-08-11

MOHAMMAD RAFIQ

body2017
ORDER : MOHAMMAD RAFIQ, J. 1. This application under section 11 of the Arbitration and Conciliation Act, 1996, has been filed by petitioner Varun Beverages Limited praying for appointment of sole Arbitrator to decide the disputes between the petitioner and the respondent. 2. Mr. Kapil Bardhar, learned counsel for petitioner, submitted that a C&F Agreement (carry and forward agreement) was executed between the petitioner and the respondent at Jaipur on 06.07.2006, whereby the respondent was to act as the petitioner's consigning, storing and forwarding agent at the specified territory for receiving, warehousing, safe and secure storage and dispatch of the goods to all categories of customers in line with the policies decided by the petitioner from time to time. As per terms and conditions of the agreement, the parties were to maintain the books of accounts. Clause 12 of the agreement provides that the petitioner shall supply to the C&F Agent a list of present requirement of accounting documents and procedures, and the C&F Agent shall maintain proper accounts for the money and goods received on account of collection and/or deposits made by the customers of the petitioner and shall send/furnish such other information in such form, as may be required by the petitioner from time to time. Clause 13 of the agreement provides that the C&F Agent shall issue debit/credit notes to the customers of the petitioner or dealers only after approval by the official of the petitioner or as per the commercial policy of the petitioner company, as specified from time to time. 3. Learned counsel submitted that pursuant to the agreement, the respondent purchased mentioned articles of the agreement and the petitioner maintained the open and mutual account as per the conditions of the agreement, which was regularly checked by the respondent and till 01.02.2011, a liability balance of Rs. 10,93,205/- upon the respondent was verified and confirmed by the respondent, which was duly confirmed and signed by the respondent on 31.10.2011. The liability upon the respondent had accumulated as Rs. 22,46,537.60 till 31.01.2013 and that liability is still outstanding upon the respondent along-with the interest. The petitioner demanded the aforesaid amount from the respondent by way of a notice dated 09.11.2013. On failure of the respondent to make the liability good, the petitioner demanded the dispute to be resolved through arbitrator as there exists an arbitration clause in the agreement. 22,46,537.60 till 31.01.2013 and that liability is still outstanding upon the respondent along-with the interest. The petitioner demanded the aforesaid amount from the respondent by way of a notice dated 09.11.2013. On failure of the respondent to make the liability good, the petitioner demanded the dispute to be resolved through arbitrator as there exists an arbitration clause in the agreement. Clause 29 of the agreement provides for arbitration, which is to the effect that any dispute or differences between the parties arising out of or in connection with the agreement or its performance, shall be subjected to the legal jurisdiction of court situated at Jaipur only. The petitioner served a notice dated 09.11.2013 through his Advocate demanding the dispute to be resolved through arbitrator. Name of Mr. Pravesh Kumar Bhatia (retired District & Sessions Judge) was suggested to be appointed as sole Arbitrator and it was also stated that if the respondent has any objection then he should revert within 30 days from the receipt of the notice. The respondent denied the aforesaid liability. Learned counsel, in support of the arguments, has relied on the judgment of the Supreme Court in Bharat Petroleum Corporation Ltd. v. Great Eastern Shipping Co. Ltd. - (2008) 1 SCC 503 . 4. Mr. Anurag Kalawatia, learned counsel for respondent, opposed the application and submitted that the agreement was subject to the conditions and clauses regarding duration and tenure and it was clearly stated therein that the agreement would remain in force for 11 months from the date of agreement, and renewing of the agreement was conditional and based on the petitioner's act only as it was the duty of the petitioner to renew the agreement after the time period as specified in the agreement. The agreement remained in force merely on oral basis till February, 2012. The petitioner and the respondent remained in contractual transactions till February, 2012, and thereafter no liability ever arose against the respondent. The petitioner and the respondent came into distributorship agreement during that period and all the accounts were settled upon the liability of Rs. 2,43,167/- as on 14.03.2012, out of which an amount of Rs. 1,50,000/- was duly paid by the respondent through Cheque dated 11.07.2012 and remaining amount of Rs. 93,167/- was withheld as it was subject to the N.O.C. asked by the respondent but the petitioner denied the same. 2,43,167/- as on 14.03.2012, out of which an amount of Rs. 1,50,000/- was duly paid by the respondent through Cheque dated 11.07.2012 and remaining amount of Rs. 93,167/- was withheld as it was subject to the N.O.C. asked by the respondent but the petitioner denied the same. The respondent gave reply to the notice of the petitioner stating therein that the liability remained to the extent of Rs. 93,167/- only and that too subject to the N.O.C., which was denied by the petitioner, and therefore that amount was withheld by the respondent. 5. Learned counsel submitted that the agreement itself became time barred as it was only for a period of 11 months from the date of its execution. The agreement subjected to its conditional clauses, cannot be overcome by whims and fences of the petitioner only. Clause 30 of the agreement specifically states that validity of the agreement would remain in force upto the specific period and thereafter the petitioner would consider the performance of the respondent and if it is found satisfactory the same would be renewed thereafter. 6. It is argued that the petitioner has not disclosed the correct position and wants to take wrongful benefits from the respondent. The respondent never denied that some liability remained to be paid by the respondent but the amount which was stated by the petitioner, was arbitrary and cannot be accepted without any proper accounting. The arbitration clause in the agreement cannot override or succeed over the agreement itself. The agreement itself became time barred. The petitioner has filed this application with delay of more than six months and that the petitioner has an alternative remedy of civil suit. 7. I have given my thoughtful consideration to rival submissions and perused the material on record. 8. No doubt, the agreement (Annexure-2), that was signed between the parties, has provided that it would be valid for 11 months, subject to its renewal thereafter on finding the performance of the respondent to be satisfactory. But, it is not in dispute that though the agreement was executed on 06.07.2006, the respondent continued to work as the petitioner company's consigning, storing and forwarding agent at the specified territory for receiving, warehousing, safe and secure storage and dispatch of the goods to all categories of customers till the end of the year 2011. But, it is not in dispute that though the agreement was executed on 06.07.2006, the respondent continued to work as the petitioner company's consigning, storing and forwarding agent at the specified territory for receiving, warehousing, safe and secure storage and dispatch of the goods to all categories of customers till the end of the year 2011. The duration of 11 months indicated in the agreement alone therefore cannot be a reason not to assume that the agreement still survives between the parties by their conduct. The agreement was taken to have been renewed as the very same clause, which has been relied by the respondent that the agreement was valid for 11 months, also in latter part provided that it can be renewed thereafter. Even if there is no fresh agreement signed between the parties, considering that the parties acting on such agreement continued to act upon that, the agreement shall be deemed to subsist between them. In fact, the respondent continued to work as carry and forwarding agent of the petitioner company. Even otherwise, the law is well settled that on expiry of the main agreement, the arbitration clause therein being the stand alone agreement, does not come to an end and would still survive. 9. In view of the above, the present application succeeds and the same is allowed. Hon'ble Mr. Justice K.S. Chaudhari, (Retired), R/o B-231, Meera Path, Vaishali Nagar, Jaipur (cell number 9461440394), is hereby appointed as an independent sole arbitrator to resolve the disputes between the parties. Payment of the costs of arbitration proceedings and the arbitration fees shall be made as per the Fourth Schedule of the Arbitration and Conciliation (Amendment) Act, 2015 read with Manual of Procedure for Alternative Dispute Resolution, 2009 of this Court, as amended from time to time. 10. A copy of this order be sent to Hon'ble Mr. Justice K.S. Chaudhari, (Retired), R/o B-231, Meera Path, Vaishali Nagar, Jaipur (cell number 9461440394), for needful.