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2025 DIGILAW 248 (RAJ)

Anil Raghuvanshi S/O Sh. Mardan Singh Ji Raghuvanshi v. Shree Cement Ltd.

2025-02-07

SUDESH BANSAL

body2025
Order : 1. Heard counsel for both parties and perused the record. 2. By means of instant civil arbitration application, filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for short "the A&C Act, 1996"), applicant is seeking appointment of a sole Arbitrator, to resolve the dispute and differences arisen between applicant and non-applicant No.1- Company (M/s Shree Cement Ltd.) in respect of termination of his appointment as C&F Sales Promoter, in furtherance to the dealership agreement dated 16.02.2021. 3. Applicant has come up with a case that he is a proprietor of Shri Balaji Building Material and he was appointed as C&F Sales Promoter by the non-applicant No.1- Company viz. M/s Shree Cement Ltd. pursuant to the dealership/ C&F agreement dated 16.02.2021 and applicant deposited an amount of Rs. 15 lakhs as security. It has been pleaded by applicant that in furtherance to such appointment, work had been started w.e.f. 16.02.2021, however, non-applicant No.1- Company without assigning any reason and without issuing any notice, terminated his appointment as C&F Sales Promoter on 22.01.2023. 4. Applicant is claiming damages for such arbitrary termination of his agreement of promotership and has relied upon Clause 9(a) of the agreement dated 16.02.2021 to refer his claim for Arbitration. For ready reference, Clause 9(a) of the agreement is being reproduced as under:- "9. Miscellaneous Clauses (a) Any disputes, differences and doubts whatsoever which may arise between the parties hereto during the continuance of this Agreement touching this Agreement shall be resolve amicably within 30 days, failing which, the same shall be referred to arbitration of a sole arbitrator, appointed by the Company, whose decision and Award shall be final and binding on both the parties. Such arbitrator shall have the power to make interim Awards have summary powers, as well as power to make Award/s without giving reasons. The arbitration will be in English language. All such arbitration proceedings shall be held at Beawar in Rajasthan shall be in accordance with and subject to the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification(s), re-enactment thereof for the time being in force." 5. It appears from record that prior to filing of the instant arbitration application, a legal notice dated 05.08.2023 was issued by the applicant to the non-applicants, invoking the arbitration clause and for seeking appointment of Arbitrator with mutual consent. It appears from record that prior to filing of the instant arbitration application, a legal notice dated 05.08.2023 was issued by the applicant to the non-applicants, invoking the arbitration clause and for seeking appointment of Arbitrator with mutual consent. According to the applicant, despite service of notice, same has not been responded, hence instant arbitration application has been filed on 1 st September 2023. 6. On behalf of non-applicant No.1- Company viz. M/s Shree Cement Ltd. reply to the arbitration application has been filed, resisting the arbitration application on the ground that applicant himself made a prayer for revocation of the dealership agreement through letter dated 27.04.2023 and in furtherance thereto, non- applicant No.1- Company has paid and cleared entire outstanding amount through cheques. Thereafter, the present arbitration application has been filed with an ulterior motive and having malice intention to grab more amount from the non-applicant No.1. 7. Counsel, appearing for non-applicant No.1, during course of arguments, raised an objection that non-applicants No.2, 3 & 4 have erroneously been impleaded as party in the present application, since they are not responsible towards the termination of agreement of applicant by M/s Shree Cement Limited in any manner, hence their names need to be deleted. 8. Having considered the contention of counsel for both parties, this Court finds that the dispute between applicant and non- applicant No.1 has obviously arisen, either relating to the arbitrary termination of C&F Promotership agreement and claiming damages in that respect or in respect of settlement of accounts.The plea raised by non-applicant No.1 in respect of full & final settlement of the accounts of applicant on his own wish, is open to be raised before the Arbitrator and obviously would be considered by the Arbitral Tribunal on merits. 9. This Court further finds that as per Clause 9(a), referred hereinabove, there is an arbitration agreement between the applicant and non-applicant No.1 to refer the dispute for arbitration, in case the dispute is not resolved amicably within a period of 30 days'. Indisputably, the dispute between parties have not been resolved with mutual consent, hence in view of the arbitration clause, the matter is required to be referred for Arbitration. 10. The scope of the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 is confined to look into the existence of dispute and an arbitration agreement between the parties. 10. The scope of the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 is confined to look into the existence of dispute and an arbitration agreement between the parties. The High Court, being a referral Court while dealing with the application for appointment of Arbitrator, exercises its jurisdiction within a narrow compass in the light of provision of Section 11(6A) of the A&C Act, 1996, which reads as under:- “(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub- section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.” 11. In the recent judgment of Hon'ble Supreme Court in case of SBI General Insurance Co. Ltd. Vs. Krish Spinning: [Civil Appeal No.7821/2024 arising out of SLP (C) No.3792/2024] delivered on 18 th July, 2024, in respect of scope of the High Court while dealing with the arbitration application in context of Section 11(6A) of the A&C Act, 1996, it has been held and observed by Hon'ble Supreme Court in following paras as under:- "110. The scope of examination under Section 11(6-A) is confined to the existence of an arbitration agreement on the basis of Section 7. The examination of validity of the arbitration agreement is also limited to the requirement of formal validity such as the requirement that the agreement should be in writing. 111. The use of the term 'examination' under Section 11(6- A) as distinguished from the use of the term 'rule' under Section 16 implies that the scope of enquiry under section 11(6-A) is limited to a prima facie scrutiny of the existence of the arbitration agreement, and does not include a contested or laborious enquiry, which is left for the arbitral tribunal to 'rule' under Section 16. The prima facie view on existence of the arbitration agreement taken by the referral court does not bind either the arbitral tribunal or the court enforcing the arbitral award. 112. The aforesaid approach serves a two-fold purpose - firstly, it allows the referral court to weed out non-existent arbitration agreements, and secondly, it protects the jurisdictional competence of the arbitral tribunal to rule on the issue of existence of the arbitration agreement in depth. 113. 112. The aforesaid approach serves a two-fold purpose - firstly, it allows the referral court to weed out non-existent arbitration agreements, and secondly, it protects the jurisdictional competence of the arbitral tribunal to rule on the issue of existence of the arbitration agreement in depth. 113. Referring to the Statement of Objects and Reasons of the Arbitration and Conciliation (Amendment) Act, 2015, it was observed in In Re: Interplay (supra) that the High Court and the Supreme Court at the stage of appointment of arbitrator sha l l examine the existence of a prima facie arbitration agreement and not any other issues. The relevant observations are extracted hereinbelow: "209. The above extract indicates that the Supreme Court or High Court at the stage of the appointment of an arbitrator shall "examine the existence of a prima facie arbitration agreement and not other issues". These other issues not only pertain to the validity of the arbitration agreement, but also include any other issues which are a consequence of unnecessary judicial interference in the arbitration proceedings. Accordingly, the "other issues" also include examination and impounding of an unstamped instrument by the referral court at the Section 8 or Section 11 stage. The process of examination, impounding, and dealing with an unstamped instrument under the Stamp Act is not a timebound process, and therefore does not align with the stated goal of the Arbitration Act to ensure expeditious and time-bound appointment of arbitrators.[...]" (Emphasis supplied) 114. In view of the observations made by this Court in In Re: Interplay (supra), it is clear that the scope of enquiry at the stage of appointment of arbitrator is limited to the scrutiny of prima facie existence of the arbitration agreement, and nothing else. For this reason, we find it difficult to hold that the observations made in Vidya Drolia (supra) and adopted in NTPC v. SPML (supra) that the jurisdiction of the referral court when dealing with the issue of "accord and satisfaction" under Section 11 extends to weeding out ex-facie non-arbitrable and frivolous disputes would continue to apply despite the subsequent decision in In Re: Interplay (supra)." (Emphasis supplied) 12. As a result, the instant arbitration application succeeds and is hereby allowed and this Court appoints Sh. Kishan Chand Gurjar, Retd. As a result, the instant arbitration application succeeds and is hereby allowed and this Court appoints Sh. Kishan Chand Gurjar, Retd. District Judge, Address:- Plot No.10, Gokul Colony, Kundan Nagar, Ajmer- 305001; Mobile No.7727874098; E-mail:- K280462@gmail.com, as Arbitrator to adjudicate the dispute between parties in accordance with provisions of the Arbitration and Conciliation Act, 1996. 13. The appointment of the Sole Arbitrator is subject to the declarations being made under Section 12 of the Arbitration & Conciliation Act, 1996 with respect to independence and impartiality, and the ability to devote sufficient time to complete the arbitration within the prescribed period. 14. The arbitration fee of the Sole Arbitrator shall be payable in accordance with the provisions contained in the Manual of Procedure for Alternative Dispute Resolution, 2009 as amended by the Manual of Procedure for Alternative Dispute Resolution (Amendment), 2017 vide notification dated 23.03.2017 read with 4 th Schedule appended to the Act of 1996 or as determined by the Arbitrator with consensus of parties. 15. The Registry is directed to intimate Arbitrator Sh. Kishan Chand Gurjar, Retd. District Judge, for his approval and consent to act as Arbitrator. 16. All other issues may be raised by the parties before the Arbitrator, which shall be considered in accordance with law. 17. Since as per Section 29A of the Arbitration and Conciliation Act, 1996, the arbitration proceedings are required to be concluded within scheduled time as stipulated therein, it is expected from the parties to appear before the Arbitrator on 28.02.2025 or any other date as informed by the Arbitrator to parties or agreed between parties with the consent of Arbitrator, and further parties shall provide their respective E-mail/ Contact Number/ Mobile Number as also of their authorized representatives/lawyers, appearing on their behalf before the Arbitration Tribunal, in order to facilitate the Arbitrator to send information to the parties, whenever required. The information sent by the Arbitrator, on such address/ E-mail/ cellphone of the parties/ their authorized representatives/lawyers, shall be treated as sufficient unless same is not changed. 18. The instant arbitration application stands disposed of accordingly.