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2023 DIGILAW 1657 (RAJ)

Maheshwary Machineries Pvt. Ltd. v. Franke Faber India Pvt. Ltd. , Through its Company Secretary & Legal

2023-09-04

PUSHPENDRA SINGH BHATI

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JUDGMENT : 1. The instant arbitration application has been filed by the applicant-Company under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘Act of 1996’) claiming the following reliefs:- “It is therefore, humbly prayed on behalf of the Applicant that the instant application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of Arbitrator may kindly be accepted and Mr. Shiv Singh Chauhan, Ex R.H.J.S., Distt. & Session Judge (Retd.), SOLEARBITRATOR, 285, Block ‘A’, Bhuwana Extension, Chittarakoot Nagar, Udaipur (Raj.) -313001, 9414796970, 8209970143 or any other appropriate person, which this Hon’ble Court may deem fit and proper may kindly be ordered to be appointed as Arbitrator to resolve the aforesaid dispute in the interest of justice. Any other order(s) or direction(s) which is deemed just and proper by the Hon’ble Court in the facts and circumstances of the case may also kindly be passed in favour of the Applicant;” 2. The applicant-Company was incorporated under the provisions of the Companies Act, having its main objectives, to carry on business of manufacturing, engineering, processing etc., and dealing in all kinds of plants, machines and equipment. The respondent-Company offered the applicant its (respondent’s) distributorship; thereafter, the applicant and the respondent entered into a pre-drafted agreement of distributorship on 27.04.2018, wherein the applicant was appointed as a Distributor on a non-exclusive basis on the terms and conditions. 2.1. Thereafter, certain disputes arose between the applicant and the respondent, whereupon, the applicant sent a notice dated 10.02.2021 for appointment of an independent arbitrator, as per Article 10 of the Agreement in question. The respondent replied to the said notice on 12.03.2021, while refusing to give its consent for appointment of arbitrator. 2.2. Article 10 of the agreement in question is reproduced as hereunder:- “ARTICLE 10 DISPUTE RESOLUTION AND ARBITRATION 10.1 In the event of any dispute or difference arising out of or concerning this Agreement such dispute shall be subject to resolution by arbitration before a sole arbitrator to be appointed jointly by both the Parties in accordance with the Arbitration and Conciliation Act, 1996 and any modification in the said Act for the time being in force. The language of the arbitration shall be English and the decision of the Arbitrator/s shall be final and binding on the parties. The venue of Arbitration shall be Pune. The laws of India shall govern this Agreement. The language of the arbitration shall be English and the decision of the Arbitrator/s shall be final and binding on the parties. The venue of Arbitration shall be Pune. The laws of India shall govern this Agreement. Subject to the foregoing, both Parties irrevocably submit to the exclusive jurisdiction of the civil Courts in Pune, for any action, proceeding which would be concerned or related to this Agreement or anything done there under. 10.2 During the pendency of any arbitration, (a) each party shall continue to perform its obligations hereunder and (b) neither party shall exercise any remedies hereunder arising by virtue of the matters in dispute. 10.3 In any case of decision for discontinuation of business dealing by either side The Franke Fabel India P. Ltd. Being the company will be owner of stock lying at distributor end, as such subject to settle account on each model wise last dispatch value in credit or debit by paying amount in account within a period of 15 days only by the date of effect.” 3. Learned counsel for the applicant submitted that the dispute had arisen between the applicant and respondent with regard to breach of the agreement in question and the respondent always failed to perform its part of the obligation. 3.1. Learned counsel further submitted that the business between the applicant and the respondent was transacted at Udaipur (Rajasthan), and the agreement in question was accepted and signed by the both parties at Udaipur (Rajasthan), therefore, the same comes under the jurisdiction of this Hon’ble Court. 3.2. Learned counsel also submitted that the agreement in question was signed at Udaipur, and the entire cause of action arose in Udaipur, and therefore, the arbitrator under Section 11 of the Act of 1996 deserves to be appointed by this Court, while Pune is only the venue for the arbitral proceedings. 4. On the other hand, learned counsel appearing on behalf of the respondent, while opposing the aforesaid submissions made on behalf of the applicant, submitted that the parties have mutually agreed to the exclusive jurisdiction of Civil Court at Pune for any disputes arising under the agreement in question, as per Article 10 of the agreement in question. 4.1. 4. On the other hand, learned counsel appearing on behalf of the respondent, while opposing the aforesaid submissions made on behalf of the applicant, submitted that the parties have mutually agreed to the exclusive jurisdiction of Civil Court at Pune for any disputes arising under the agreement in question, as per Article 10 of the agreement in question. 4.1. It was further submitted that the applicant and the respondent both wanted for Pune to be the venue as well as the seat of the arbitration and it is no longer res integra that Pune would be a seat of the arbitration as per the Article 10 of the Agreement in question. Therefore, the present application is not maintainable due to lack of the jurisdiction. 4.2. It was also submitted that the prayer of the applicant seeking to invoke jurisdiction of this Hon’ble Court is against the doctrine of equity which is based on the premise that the litigants cannot be allowed to approbate and reprobate on the same thing. Therefore, the applicant cannot be allowed to take benefits of one part, while ignoring the other part, and thus, the applicant apparently failed to read the agreement in question as a whole. 5. Heard learned counsel for the parties as well as perused the record of the case. 6. This Court observes that the agreement in question was executed between the applicant and respondent on 27.04.2018; thereafter, certain dispute arose between them. The applicant gave notice to the respondent for appointment of the arbitrator, but the same was declined by the respondent. 7. This Court in the case of Aseem Watts Vs. Union of India (S.B. Arbitration Application No. 14/2021, decided, alongwith connected applications on 02.09.2023), made the following observations: “7. The applicant gave notice to the respondent for appointment of the arbitrator, but the same was declined by the respondent. 7. This Court in the case of Aseem Watts Vs. Union of India (S.B. Arbitration Application No. 14/2021, decided, alongwith connected applications on 02.09.2023), made the following observations: “7. This Court is conscious of the judgment rendered by the Hon’ble Apex Court in the case of BGS SGS SOMA JV (Supra) wherein it was clearly held that “This, coupled with there being no other significant contrary indicia that the stated venue is merely a “venue” and not the “seat” of the arbitral proceedings, would then conclusively show that such a clause designates a “seat” of the arbitral proceedings.”; and same was further relied by the Hon’ble High Court of Calcutta in the case of Homevista Decor (Supra) wherein it was clearly held that “In circumstances where a place is designated merely as a ‘venue’ and courts of another place have been granted the exclusive jurisdiction, the latter is a clear ‘contrary indicia’. It can be inferred from a comprehensive reading of such clauses, that the ‘venue’ is a convenient place of arbitration and not the seat.” 8. This Court is also conscious of the judgment rendered by the Hon’ble Supreme Court in the case of Ravi Ranjan Developers Pvt. Ltd. Vs. Aditya Kumar Chatterjee (Civil Appeal Nos. 2394-2395 of 2022, decided on 24.03.2022); relevant portion whereof is reproduced as hereunder:- “45. In Mankastu Impex Private Limited v. Airvisual Limited MANU/SC/0283/2020 : (2020) 5 SCC 399 a three Judge Bench of which one of us (Hon. A.S. Bopanna, J) was a member, held: ….. 20. It is well settled that "seat of arbitration" and "venue of arbitration" cannot be used interchangeably. It has also been established that mere expression "place of arbitration" cannot be the basis to determine the intention of the parties that they have intended that place as the "seat" of arbitration. The intention of the parties as to the "seat" should be determined from other clauses in the agreement and the conduct of the parties. 46. In this case, the Development Agreement provided that the sittings of the Arbitral Tribunal would be conducted in Kolkata. As observed above, the parties never agreed to submit to the jurisdiction of Calcutta High Court in respect of disputes, nor did the parties agree upon Kolkata as the seat of arbitration. 46. In this case, the Development Agreement provided that the sittings of the Arbitral Tribunal would be conducted in Kolkata. As observed above, the parties never agreed to submit to the jurisdiction of Calcutta High Court in respect of disputes, nor did the parties agree upon Kolkata as the seat of arbitration. Kolkata was only the venue for sittings of the Arbitral Tribunal.” 8. This Court is also conscious of the judgment rendered in the case of BGS SGS (supra); relevant portion whereof is reproduced as hereunder: “95. Coming to the impugned judgment in the present appeals, it is clear that the reasoning followed stems from the subject-matter test that flows from the definition of “court” in Section 2(1)(e)(i) of the Act. According to the impugned judgment [NHPC Ltd. v. Jaiparkash Associates Ltd., 2018 SCC OnLine P&H 1304: (2019) 193 AIC 839 ], since the agreement was executed at Faridabad, part of the cause of action would arise at Faridabad, clothing Faridabad courts with jurisdiction for the purposes of filing a Section 34 petition. The second part of the reasoning is that Faridabad is the place where the request for reference to arbitration was received, as a result of which part of the cause of action arose in Faridabad, which ousts the jurisdiction of courts of New Delhi, in which no part of the cause of action arose. 98. However, the fact that in all the three appeals before us the proceedings were finally held at New Delhi, and the awards were signed in New Delhi, and not at Faridabad, would lead to the conclusion that both parties have chosen New Delhi as the “seat” of arbitration under Section 20(1) of the Arbitration Act, 1996. This being the case, both parties have, therefore, chosen that the courts at New Delhi alone would have exclusive jurisdiction over the arbitral proceedings. Therefore, the fact that a part of the cause of action may have arisen at Faridabad would not be relevant once the “seat” has been chosen, which would then amount to an exclusive jurisdiction clause so far as courts of the “seat” are concerned.” 8.1. Therefore, the fact that a part of the cause of action may have arisen at Faridabad would not be relevant once the “seat” has been chosen, which would then amount to an exclusive jurisdiction clause so far as courts of the “seat” are concerned.” 8.1. However, in the present case, the venue and seat for the arbitral proceeding, as per Article 10 of the agreement in question, was mentioned as Pune, and that, the Civil Court at Pune has exclusive jurisdiction in the matter, and the agreement in question was accepted and signed at Udaipur (Rajasthan). 9. This Court further observes that once the seat and venue was fixed in the agreement, the place of the cause of action, acceptance and signing of the agreement would not be relevant. This Court also observes that in case where the agreement specifically speaks of a particular Court pertaining to seat and venue of arbitration, then only that Court can exercise the jurisdiction in the matter. Therefore, this Court is having no jurisdiction to entertain the present application. 10. Thus, in light of the aforesaid observations and in view of the aforementioned judgments as well as looking into the factual matrix of the present case, this Court does not find it a fit case so as to grant any relief to the applicant in the present application. 11. Consequently, the present arbitration application is dismissed. All pending applications disposed of. However, the applicant shall be at liberty to approach the Court having jurisdiction, strictly in accordance with law.