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2022 DIGILAW 2132 (RAJ)

United Spirits Limited v. Rajasthan State Beverages Corporation Limited

2022-07-27

PANKAJ BHANDARI

body2022
ORDER 1. The applicant has filed the present arbitration application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act of 1996") for appointment of an arbitrator. 2. It is pleaded in the application that the applicant vide notice dated 19.10.2021 invoked the arbitration under Clause 10 of the agreement and proposed the name of Mr. Justice G.R. Moolchandani, Former Judge of the Rajasthan High Court as sole arbitrator. The non-applicant did not respond to the said notice and the period of 30 days has expired. It is contened by the counsel for the applicant that the non-applicant is adjusting the amount, which was due in the agreement of the year 2019-2020, for which the non-applicant is not entitled in accordance with the agreement of the year 2020-2021. 3. The non-applicant in its reply has disputed the assertions made in the application. It is mentioned in the application that the applicant did not inform the non-applicant about the reduction in the custom duty and committed fraud with the non-applicant. It is admitted that adjustments were made. It is also mentioned in the reply that in terms of Clause 3.6 of the Policy, the suppliers desirous of supplying liquor imported from abroad are required to submit a cost sheet containing the details of basic price and duties in the form as specificed in Annexure-9 to the Liquor Sourcing Policy 2019-20 (hereinafter referred to as "the Policy 2019-20"). The entire break-up of the cost is required to be disclosed by the supplier, which includes custom duty. The applicant did not supply the revised proposals for approval in terms of Policy 2019-20 and a result thereof, the old MRP approved was continued. The applicant took undue advantage by reduction in the custom duty. It is contended by the non-applicant that non-applicant Company came to know about this mischief practiced by the applicant and therefore, issued notices to the applicant. The applicant has deliberately withheld the notices issued by the non-applicants and has not pleaded about the same in the arbitration application. On this ground, the arbitration application filed by the applicant deserves to be dismissed. 4. The applicant has deliberately withheld the notices issued by the non-applicants and has not pleaded about the same in the arbitration application. On this ground, the arbitration application filed by the applicant deserves to be dismissed. 4. It is mentioned in the reply that finally, the applicant submitted the relevant documents and the non-applicant computed the amount recovered by the applicant illegally from the non-applicant and consequently, the amount was deducted from the weekly payment payable to the applicant. It is also mentioned that the amount of custom duty, which has not been paid by the applicant, but has been recovered by the applicant from the non- applicant by playing a mischief could not be retained by the applicant. It is further contended that after the substantial recovery was made by way of adjustments, the applicant with a view to retain the amount recovered from the non-applicant unauthorizedly by practicing cheating, started raising absolutely frivolous and filmsy pleas. 5. It is contended in the reply that there are nine suppliers to the non-applicant, who during the period of 2019-2020 did the same act as that of the applicant and from all the suppliers adjustments were made and none of them have objected to such adjustments. 6. Learned Advocate General appearing for the non-applicant contends that the applicant has played fraud and has not disclosed the reduction in the custom duty and a person, who has played fraud, cannot approach the Court for claiming arbitration. Learned Advocate General has placed reliance on Pravin Electricals Private Limited Versus Galaxy Infra and Engineering Private Limited: (2021) 5 SCC 671 . Learned Advocate General has fruther placed reliance on Mayavati Trading Private Ltd. Versus Pradyuat Deb Burman: (2019) 8 SCC 714 , Vidya Drolia Versus Durga Trading Corporation: (2021) 2 SCC 1 , DLF Home Developers Ltd. Versus Rajapura Homes Private Ltd. & Anr.: 2021 SCC Online SC 781, S.P. Chengalvaraya Naidu Versus Jagannath: (1994) 1 SCC 1 , Bharat Rasiklal Ashra Versus Gautam Rasiklal Ashra: (2012) 2 SCC 144 , India Household and Healthcare Versus LG Household and Healthcare Ltd.: (2007) 5 SCC 510 , Ramjas Foundation Versus Union of India: (2010) 14 SCC 38 , Bhaskar Laxman Jadhav & Ors. Versus Karamveer: (2013) 11 SCC 531 , State of M.P. Versus Vyankatlal: (1985) 2 SCC 544 , Indian Council for Enviro-Legal Action Versus Union of India: (2011) 8 SCC 161 , Ashwini Kumar Handa Versus Union of India: (2018) 3 SCC 322 and Laxminarain Versus State: (2016) 10 SCC 386 . 7. In the alternate, it is argued by the learned Advcoate General that in both the agreements of the years 2019-2020 and 2020-2021, there is an arbitration clause and if the arbitrator is to be appointed, he should also be permitted to adjudicate the dispute pertaining to year 2019-2020 as the amount which was wrongly received by the applicant in the earlier year by not submitting cost sheet and by not informing the non-applicant about the reduction in custom duty cannot be retained by the applicant and the non-applicant is entitled to adjust the same. 8. I have considered the contentions and have perused the agreements entered into between the parties. 9. Clause-10 of the agreement is reproduced hereunder: "10. ARBITRATION 10.1 Any dispute, which may arise between the Parties herein, shall be submitted to arbitration. The arbitral award shall be conclusive, final and binding on both the Parties herein. The Manufacturer has agreed with the Corporation to provide for the nomination of a sole arbitrator by the Corporation only from amongst the following: (a) Any retired Judge of the High Court of Rajasthan. (b) Any retired Chief Secretary or Additional Chief Secretary to Government of Rajasthan. (c) Any retired Excise Commissioner to Government of Rajasthan." 10. Admittedly, there is an arbitration clause in both the agreements executed between the parties for the years 2019- 2020 and 2020-2021. Whether the applicant has played a fraud with the non-applicant and has unlawfully obtained more money than was due in the year 2019-2020 and whether the non- applicant is entitled to adjust the same in the year 2020-2021 are questions, which are to be adjudicted by the arbitrator and not by the Court. During the course of the arguments, both the parties were agreeable for referring the dispute pertaining to both the years to the arbitrator. During the course of the arguments, both the parties were agreeable for referring the dispute pertaining to both the years to the arbitrator. It is true that if a person does not come with clean hands before the Court, the Court may not be inclined to pass an order in favour of such person, however, as to whether the non-applicants are entitled to deduct the amount, is also to be adjudicated by the arbitrator. There being an arbitration clause in both the agrements and there being a dispute with regard to the amount wrongfully received by the applicant in the year 2019- 2020, I deem it proper to refer the dispute to arbitration and appoint Mr. Justice G.S. Sarraf (Retired), E-45, Sidhardh Nagar, Sector-13, Malviya Nagar, Jaipur, to adjudicate the dispute arising between the parties pertainig to the agreements of years 2019- 2020 and 2020-2021. 11. The appointment of the sole arbitrator is subject to the declarations being made under Section 12 of the Arbitration and Conciliation Act, 1996 with respect to the independence and impartiality, and the ability to devote sufficient time to complete the arbitration within prescribed period. 12. Accordingly, arbitration application stands allowed. The arbitrator shall be entitled to lay down fees as provided under Manual of Procedure for Alternative Disputes Resolution, 2009 as amended from time to time. 13. Registry is directed to intimate Mr. Justice G.S. Sarraf (Retired) and obtain his formal consent.