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Rajasthan High Court · body

2024 DIGILAW 915 (RAJ)

Vinayak Marketing v. Mangalam Cement Ltd.

2024-07-02

REKHA BORANA

body2024
ORDER : 1. The present application under Section 11(6) of the Arbitration and the Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996') has been preferred by the applicant for appointment of an independent and sole arbitrator for resolution of the dispute as raised vide notice dated 25.06.2022 (Annex.6). 2. The case of the applicant firm is as under: (i) An agreement dated 01.09.2015 for sales promotion of cement was entered into between the applicant firm and the respondent No. 1 company. The said agreement was for a period of seven months i.e. from 01.09.2015 to 31.03.2016. However, vide letter dated 01.04.2016 (Annx.2), the agreement was extended by the Company for a further period of three months from 01.04.2016 to 30.06.2016. However, as the said letter of extension was issued without the consent of the applicant firm, it accepted the same with certain conditions as handwritten on the said letter of extension. (ii) Subsequently, an agreement dated 12.07.2016 (Annx.3) was sent by the company for a period of nine months i.e. from 01.07.2016 to 31.03.2017 to the applicant firm which the firm accepted subject to certain new conditions and denial of certain existing conditions. Subject to the said conditions, the agreement was signed and sent back to the company. Meaning thereby, the agreement was accepted subject to the conditions as noted on the said agreement. (iii) Although the agreement stood extended till 31.03.2017, a fresh agreement dated 24.04.2016 was again sent by the company to the firm for the complete period from 01.04.2016 to 31.03.2017. This agreement was also signed by the applicant firm subject to the conditions as noted on the same and handed over to the officials of the company on the same date i.e. 25.05.2017. (iv) The agreement was ultimately discontinued with effect from 01.04.2017 as certain disputes arose between the parties. (v) However, the matter was settled between the parties for an amount of Rs.7.02 lacs qua all the other disputes except the security deposit and other amounts recovered from the applicant firm. In pursuance to the said settlement, a cheque dated 19.10.2019 for an amount of Rs.7.02 lacs was handed over to the applicant firm and the same was even credited to its account. But, the dispute regarding security deposit of Rs.15 lacs subsisted and hence the proceeding before the Commercial Court, in pre-litigation meditation, was taken up by the applicant firm. In pursuance to the said settlement, a cheque dated 19.10.2019 for an amount of Rs.7.02 lacs was handed over to the applicant firm and the same was even credited to its account. But, the dispute regarding security deposit of Rs.15 lacs subsisted and hence the proceeding before the Commercial Court, in pre-litigation meditation, was taken up by the applicant firm. In the mediation proceedings before the Legal Services Authority, Udaipur, the respondent Company denied for any settlement and hence, the proceedings were dropped on 10.07.2019. (vi) Ultimately, notice dated 25.06.2022 invoking arbitration clause 39(e) of the agreement was served on the respondent Company by the applicant firm. 3. When the notice invoking arbitration clause was not responded to and no action for appointment of sole arbitrator was taken by the respondent Company, the present application was filed before this Court on 26.08.2022. 4. A detailed reply to the application has been preferred on behalf of the respondents wherein, letter dated 01.04.2016 (Annx.2) and agreement dated 12.07.2016 (Annx.3) have specifically been denied with the averment that they are forged. So far as the agreement dated 24.04.2016 is concerned, it has been averred that the same does not even bear the signatures of any representative on behalf of the company and hence, cannot be termed to be an agreement so as to conclude the existence of any arbitration agreement between the parties. 5. During the course of arguments, learned counsel for the respondent raised three preliminary objections: Firstly, the application is barred by limitation as admittedly, the cause for a claim qua the security deposit as raised by the applicant firm arose to it in the year 2017 but the notice invoking the alleged arbitration clause admittedly has been served in the year 2022 and the present application has also been filed in the year 2022 which is clearly barred by limitation. Secondly, although the respondent company has denied the documents dated 01.04.2016, 24.04.2016 and 12.07.2016, even if the same are taken into consideration, clearly, vide the same, the applicant firm had specifically denied the arbitration clauses (clauses 20 & 21 and clauses 38, 39 & 40 respectively). Once the firm has denied the acceptance of the said clause, it cannot invoke the same and hence, the present application cannot be entertained. Once the firm has denied the acceptance of the said clause, it cannot invoke the same and hence, the present application cannot be entertained. Thirdly, even if the agreements as alleged by the applicant firm are accepted, the territorial jurisdiction to entertain the present application would clearly not lie with the present Court. Clause 39 & 40 of the agreement specifically provide for venue/seat of arbitration to be at Jaipur and the jurisdiction of the Courts to be at Ramganj Mandi, Kota. An application arising out of the jurisdiction of both these places would not lie before this Court and hence, the application deserves to be rejected on this count too. Learned counsel for the respondents, in support of his submission regarding the jurisdiction of this Court to entertain the present application, relied upon the judgments passed by the Hon'ble Apex Court in State of Gujarat v. M/s Kothari and Associates, (2016) 14 SCC 761 and M/s Swastik Gases P. Ltd. v. Indian Oil Corp. Ltd. (2013) 9 SCC 32 . 6. Responding to the first preliminary objection as raised by learned counsel for the respondents, learned counsel for the applicant submitted that the last payment qua the agreement in question was made by the respondent Company vide cheque dated 19.10.2019 and hence, the notice invoking the arbitration clause as well as the present application preferred in the year 2022 are clearly within limitation. So far as the denial of the arbitration clause by the applicant is concerned, learned counsel submitted that the denial was not for the arbitration clause but was of the venue/seat for arbitration as well as the jurisdiction of the Courts. The applicant firm had specified that the jurisdiction of the Courts would be at Udaipur (Rajasthan). Learned counsel, therefore, submitted that as per the terms of the agreement, the jurisdiction is of the Courts at Udaipur and hence, this Court would only have jurisdiction to entertain the present application. Learned counsel further submitted that even if communication dated 01.04.2016 (Annx.2) and agreement dated 12.07.2016 (Annx.3) are ignored, agreement dated 24.04.2016 definitely remained into existence as it superseded all the earlier agreements. The agreement dated 24.04.2016 was executed for complete one year from 01.04.2016 to 31.03.2017 and the same comprised of clause 39 pertaining to arbitration. Learned counsel further submitted that even if communication dated 01.04.2016 (Annx.2) and agreement dated 12.07.2016 (Annx.3) are ignored, agreement dated 24.04.2016 definitely remained into existence as it superseded all the earlier agreements. The agreement dated 24.04.2016 was executed for complete one year from 01.04.2016 to 31.03.2017 and the same comprised of clause 39 pertaining to arbitration. No objection qua the said arbitration clause was made by the applicant firm in the said agreement dated 24.04.2016 and hence, the firm is very well entitled to invoke the arbitration clause and to lay the present application. 7. Heard learned counsel for the parties and perused the material available on record. 8. The facts which emerge in the present application are that the first agreement was entered into between the parties on 01.09.2015 which provided for a clause for arbitration (clause 21) and for jurisdiction of the Courts at Ramganj Mandi, Kota. As per the applicant, the said agreement was extended vide letter dated 01.04.2016 by the company on the same terms and conditions except the change in rates. However, clause 21 of the said agreement was not accepted by the applicant firm and it was specifically noted by the firm on the agreement, as under: “Arbitration clause is not acceptable to us. Jurisdiction will be court in Udaipur (Raj.) only.” 9. A fresh agreement dated 12.07.2016 was then executed between the parties which comprised of the arbitration clause (clause 39) and jurisdiction clause (clause 40). However, both these clauses were also not accepted by the applicant firm and it was specifically noted by the firm, as under: “Clause no. 38, 39 & 40 are not acceptable as these are without any discussion with us.” It was further reiterated by the applicant firm on the said agreement as under: “Arbitration clause is not acceptable. Jurisdiction will be court in Udaipur (Raj.) only.” 10. As per the applicant, finally agreement dated 24.04.2016 was sent by the company to it which was received on 25.05.2017 and after signing the same, it was handed over to the officials of the company on the same date. No objection pertaining to arbitration or jurisdiction clause was made in the said agreement. Meaning thereby, as per the version of the applicant firm, the agreement dated 24.04.2016 is the last agreement executed between the parties and hence, the parties would be governed by the same. 11. No objection pertaining to arbitration or jurisdiction clause was made in the said agreement. Meaning thereby, as per the version of the applicant firm, the agreement dated 24.04.2016 is the last agreement executed between the parties and hence, the parties would be governed by the same. 11. Even while ignoring the objections as raised by counsel for the respondent company and going by the averments/pleadings as made by the applicant firm only, this Court is of the clear opinion that the present application cannot be entertained and deserves to be dismissed. The reasons for the same are as under: Firstly, as noted in the preceding paras, the document dated 01.04.2016 and the agreement dated 12.07.2016 bears a specific handwritten note of denial of arbitration clause by the applicant firm. The said handwritten note has not been denied by the firm. Once denied, the applicant firm cannot rely upon the same and cannot invoke the said clause. A party cannot be permitted to approbate and reprobate at the same time. Secondly, coming on to the agreement dated 24.04.2016, the same cannot be termed to be an agreement in terms of law. As is evident from the alleged agreement dated 24.04.2016 (Annx.3), the same does not bear the signature of any of the legal representative on behalf of the respondent company. 12. Section 7 of the Act of 1996 defines 'arbitration agreement' as under: “7. Arbitration agreement: (1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in: (a) a document signed by the parties. (b) an exchange of letters, telex, telegrams or other means of telecommunication [including communication through electronic means] which provide a record of the agreement. (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. (b) an exchange of letters, telex, telegrams or other means of telecommunication [including communication through electronic means] which provide a record of the agreement. (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. (5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.” Testing on the touchstone of the definition of 'arbitration agreement', the consent of the respondent company cannot be spelt out from the agreement dated 24.04.2016, the same not being signed by it and further, because of the fact that execution of the same has specifically been denied by the respondent company in its reply. 13. 'Arbitration agreement' presupposes a document signed by the parties. Admittedly, alleged agreement dated 24.04.2016 does not bear any signature on behalf of the respondent company. 14. Further, even if for the sake of assumption, the agreement dated 24.04.2016 is deemed to have been executed, the same comprises of specific clauses pertaining to venue of arbitration as well as jurisdiction of the Courts. Clause 39(c) of the said agreement provides as under: “The Arbitration will be held at Jaipur (Raj.) only.” Clause 40 of the agreement provides as under: “Jurisdiction It is hereby agreed that Court at Ramganjmandi, district Kota, Rajasthan alone shall have jurisdiction to decide or adjudicate upon any disputes which may arise out of or be in connection with this agreement.” In view of the above two clauses, how the present application has been filed before this Court is incomprehensible. 15. In view of the above analysis, it is clear that the applicant firm cannot take shelter of the alleged arbitration clause, it itself having specifically denied the same. Therefore, no arbitrator in terms of the alleged arbitration clause can be appointed by this Court. 16. As this Court has reached to the above conclusion, it is not required to go into the question of limitation. 17. In view of the above observations, no arbitration clause can be concluded to exist so as to call for appointment of any arbitrator by this Court. 18. The present arbitration application is hence, dismissed.