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2023 DIGILAW 537 (GUJ)

Sanghi Industries Ltd. v. Visa Minmetal Ltd.

2023-03-31

A.J.DESAI

body2023
ORDER : 1. By way of present petition under Section 11 of the Arbitration and Conciliation Act, 1996, the petitioner has sought an appointment of Arbitrator under Clause 21 of the agreement dated 27.8.2021, by which the parties had agreed for appointment of an Arbitrator under provisions of the Act if any dispute arises between the parties. 2. In response to the notice issued by this Court, the respondent had appeared and filed reply opposing the petition. 3. The short facts giving rise to the present petition are as under: 3.1 The parties in the present proceedings entered into the agreement dated 27.8.2021 for sale and purchase of Steam (Non-Cooking Coal) of Australian Origin in bulk. The respondent was supposed to supply the coal imported from Australia to the petitioner. 3.2 By way of agreement, certain clauses are with regard to Commodity, Quality and Specification, Quantity, Load Port & Discharge Port, Shipment Period, Prices, Price Adjustment, Payment, Shipping Documents, Sampling and Analysis, etc. One of the clauses referred to in the agreement is with regard to the appointment of an arbitration in case the dispute is arise between the parties. 3.3 By an agreement amendment No.1 dated 30.9.2021, certain clauses of the sale contract were amended. On 30.9.2021, i.e. on the day of agreement amendment No.1, the respondent had informed the petitioner that the terms and conditions of the agreement except agreement amendment No.1 dated 30.9.2021 remain unchanged. 3.4 Several disputes arose between the parties and, therefore, the petitioner served a notice dated 31.12.2021 and called the respondent to appoint a Former Judge, High Court of Gujarat as Sole Arbitrator. The same was replied by the respondent objected the request made on behalf of the petitioner. Hence this petition. 4. Mr. Kunal Nanavati, learned advocate for the petitioner would submit that clause 21 of the agreement dated 27.8.2021 clearly refers about appointment of Arbitrator if disputes arise between the parties. He would submit that the respondent has put emphasis on a communication dated 14.12.2021, by which it is alleged that the debit note as a full and final settlement was issued by the petitioner and, therefore, no dispute remains. However, he would submit that the debit note has been issued only with regard to quality deductions and several disputes which have been raised by issuing notice, particularly in paragraph 2 of the said notice, still remains to be resolved. However, he would submit that the debit note has been issued only with regard to quality deductions and several disputes which have been raised by issuing notice, particularly in paragraph 2 of the said notice, still remains to be resolved. He would submit that there are several issues which are required to be dealt with by the Arbitrator. 5. Mr. Nanavati, learned advocate would further submit that the contention raised by the respondent about applicability of the agreement amendment dated 30.9.2021 that it does not incorporate the arbitration clause, cannot be accepted since it is the amendment dated 30.9.2021 which refers only certain clauses which were incorporated in the earlier contract dated 27.8.2021 and as per the communication dated 28.9.2021, all the clauses were kept in abeyance. He, therefore, would submit that the petition be allowed and the Arbitrator be appointed. 6. On the other hand, Mr. Mainak Bose, learned Senior Advocate appearing with Mr. Devang Joshi, learned advocate for the respondent, by taking through a communication dated 14.12.2021 produced along with the reply, would submit that the dispute was finally settled between the parties and the petitioner has accepted the deduction to the tune of Rs.32,36,243/- and, therefore, the petitioner has no claim whatsoever. He would further submit that on the contrary, the respondent has suffered irreparable loss and, therefore, the suit has already been filed before the competent Civil Court. He would submit that by taking up the agreement amendment No.1 dated 30.9.2021, there is no clause of arbitration. In support of his submission by relying sub-section (5) of Section 7 of the Arbitration and Conciliation Act, 1996, he would submit that it is required to be treated as new agreement and in the said agreement, there is no clause of appointment of Arbitrator and, therefore, the petition be dismissed. In support of his submission by relying upon the decision in the case of Vidya Drolia and others vs. Durga Trading Corporation [ (2021) 1 SCC 1 , particularly in paragraphs 147.9 and 149, he would submit that when there is no clause of arbitration in the second agreement, there is no requirement of referring the matter to the Arbitrator. He would, therefore, submit that the petition be dismissed. 7. I have heard learned advocates for the respective parties. 8. He would, therefore, submit that the petition be dismissed. 7. I have heard learned advocates for the respective parties. 8. It is an undisputed fact that the parties have entered into the agreement dated 27.8.2021, by which they have agreed for 32 different types of terms and conditions including Commodity, Quality and Specification, Quantity, Load Port & Discharge Port, Shipment Period, Prices, Price Adjustment, Payment, Shipping Documents, Sampling and Analysis, etc. Clause 21 of the said agreement reads as under: “21. ARBITRATION In case of any dispute between the parties, the same shall be solved through mutual understanding. In case it persists than the same to be referred to Arbitration. The Arbitration shall be governed by the Arbitration and Conciliation Act 1996 as applicable to whole of India along with subsequent amendments made from time to time. The award passed by the Sole Arbitrator shall be final and binding to all the parties and the place of Arbitration shall be Ahmedabad, Gujarat, India. The cost of Arbitration shall be borne by the party itself. The language of Arbitration shall be English (U.K.). The courts in Ahmedabad shall have exclusive jurisdiction.” 8. Emphasis which has been put on another agreement amendment No.1 dated 30.9.2021 reads as under: “AMENDMENT NO.1 DATED 30TH SEPTEMBER, 2021 TO AGREEMENT FOR SALE AND PURCHASE OF COAL NO SIL/COM/COAL/02/2021-22 dated 27th AUGUST, 2021 9. It is an amendment to the earlier agreement dated 27.8.2021. Subsequent clauses which are referred in the said agreement are with regard to clauses 4 and 9 which read as under: “CLAUSE 4 ‘QUANTITY’ SHALL BE AMENDED AS FOLLOWS: Quantity: 27,798 Mt I/O Existing CLAUSE 9 ‘PAYMENT’ SHALL BE AMENDED AS FOLLOWS: Payment in respect of the shipment shall be effected by Buyer as detailed below: A) To be deleted in entirety. B) 1) Payment for 27,798 Mt cargo @ Adjusted price of USD 107.113 per MT or INR 8033.47 per MT shall be affected by Buyer by Post dated cheques (PDC) for value INR 22.33 Crores as per schedule by 30th November, 2021. The PDCs issued as per the schedule shall be handed over to Seller’s representative within 1st October, 2021. 2) HSS Invoice shall be raised basis provisional exchange rate for USD/INR Conversion of INR 75 per USD. The PDCs issued as per the schedule shall be handed over to Seller’s representative within 1st October, 2021. 2) HSS Invoice shall be raised basis provisional exchange rate for USD/INR Conversion of INR 75 per USD. 3) For any and all payments related to this shipment & Agreement, the USD price will be converted to INR at the SBI TT Selling exchange rate of the 5th of October, 2021, which will be final & binding on both parties. Since seller will hedge the foreign exchange, in case SBI TT Selling rate for USD is not available at Kolkata on the 5th of October, 2021 for hedging, the SBI TT Selling rate of the next banking day shall be applicable. 5) Demurrage for the vessel MV Aeolian @ USD 28,000 per day for 7 days or value INR 1.47 Crores shall be paid by PDC which shall be handed over to Seller’ representative within the 1st of October, 2021. Final demurrage for the vessel will be settled in line with the Agreement.” 10. It is pertinent to note that on the date of agreement amendment No.1, i.e. on 30.9.2021, the respondent has sent a communication by email and has declared that the terms and conditions of the agreement except agreement amendment No.1 dated 30.9.2021 remain unchanged. 11. In view of the above facts, the submission made by Mr. Bose that the agreement amendment No.1 dated 30.9.2021 is totally new contract, cannot be accepted. As per the Black’s Law Dictionary, the word ‘amendment’ is defined which reads as under: “A formal revision or addition proposed or made to a statute, constitution, pleading, order, or other instrument; specif., a change made by addition, deletion, or correction; esp., an alteration in wording.” 12. As per the aforesaid definition, the amendment means formal revision or addition in various documents like statute, pleading, order, or other instrument and specific change made by addition, deletion or correction. As per the aforesaid definition, the amendment means formal revision or addition in various documents like statute, pleading, order, or other instrument and specific change made by addition, deletion or correction. I am therefore of the opinion that the amendment made on 30.9.2021 is required to be treated as part of the agreement which was executed between the parties on 27.8.2021 and is not an independent subsequent agreement entered into between the parties and, therefore, the provision of sub-section (5) of Section 7 of the Act is not applicable in the present case and above citation relied on by the learned advocate for the respondent is not applicable in the facts of the present case. 13. Hence, I hereby hold that the arbitration clause is one of the clauses which the parties have agreed for referring the matter to arbitration in case of dispute arises. 14. As far as the submission raised by Mr. Bose, learned Senior Advocate about accepting the amount by issuing debit note is concerned, at this stage, prima facie, I am of the opinion that the amount was deducted qua quality of the coal which was supplied by the present respondent and not as a full and final settlement. Hence, I am of the opinion that the petition requires consideration and is required to be accepted. Accordingly, the same is allowed. 15. As far as the appointment of Arbitrator is concerned, the parties have not suggested any name of a retired Judge of this High Court. Hence, I appoint Mr. Akil Kureshi, Former Chief Justice, Rajasthan High Court, having address at Akil Villa, Opp. B-9, Swastik Society, Navrangpura, Ahmedabad, Email ID: akil.kureshi@gmail.com, Mobile Nos. 9408481511, 9825049099, as Sole Arbitrator to resolve the disputes between the parties in accordance with the Arbitration Centre (Domestic and International), High Court of Gujarat Rules, 2021. Both Parties would also be bound by said Rules. It is made clear that these observations are tentative in nature.