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2009 Supreme(SC) 221

S.H.KAPADIA
Nandan Biomatrix Limited – Appellant
Versus
D 1 Oils Limited – Respondent


Advocates appeared:
For the Appellant:SUK. Sagar, Bina Madhavan, M/s. Lawyer's Knit & Co., Advocates. For the Respondent:Ashwani Kumar, Advocate.

Judgement Key Points
  • Parties and Application: Application under Sections 11(5) and 11(9) of the Arbitration and Conciliation Act, 1996, by M/s. Nandan Biomatrix Limited (applicant) against D 1 Oils Limited (non-applicant) for appointment of arbitrator under clause 15.1 of Supply Agreement dated 10.08.2004. [1000470580001][1000470580002] (!) (!)

  • Supply Agreement Details: Applicant engaged in seed cloning, nursery development, etc.; agreed to establish nurseries and supply seedlings to non-applicant, who promised investment of Rs. 299.35 lakhs. Contains arbitration clause 15.1 for institutional arbitration in India under 1996 Act. [1000470580002] (!) (!)

  • Other Agreements: Joint Venture Agreement dated 30.09.2004 (no arbitration clause); Termination Agreement dated 16.10.2004 (disputed); R&D Agreement dated 26.11.2004 (later addendum added arbitration clause). No claim under Joint Venture Agreement. [1000470580003][1000470580004][1000470580005][1000470580006]

  • Applicant's Claims: Willful breach by non-applicant under Supply Agreement; Termination Agreement forged (signatures of two Directors forged, no authority); noticed on 24.05.2005; criminal complaint filed 01.09.2005; seeks damages for expenses/reimbursement for seedlings supplied. [1000470580007][1000470580008][1000470580009]

  • Non-Applicant's Defenses: Arbitration clause 15.1 vague/uncertain/void (no specific institution or rules named); no arbitration agreement for claims under other agreements; Supply Agreement terminated by valid Termination Agreement dated 16.10.2004 (signed, mutual, all claims ceased); R&D Agreement implemented separately; applicant in breach of R&D. [1000470580010][1000470580011] (!)

  • Issues Framed: (a) Existence of valid arbitration agreement; (b) Existence of live claim. Power under Section 11(6) is judicial, not administrative. (!) (!) (!) (!) [1000470580012]

  • Arbitration Agreement Validity (Issue a): Clause 15.1 valid under Section 7; no prescribed form required; must ascertain intention from agreement, correspondence, circumstances; parties intended disputes resolved by institutional arbitration in India under 1996 Act; vagueness argument (no specific institution) rejected as form not essential, intention suffices. (!) (!) (!) (!) (!) (!) (!) (!) (!)

  • Live Claim (Issue b): Exists due to disputes over Termination Agreement (forgery? authority? effect?); interplay with other agreements; whether claims under Supply Agreement extinguished; basic claim for damages/reimbursement for seedlings supplied. (!) (!) (!) (!)

  • Undertaking and Order: Applicant undertakes to withdraw criminal complaint (FIR No.902/2005 at Hyderabad). Disputes referred to Singapore International Arbitration Centre to nominate arbitrator from its panel; application allowed, no costs. (!) (!) (!)


Judgment :-

S.H. Kapadia, J.

1. This application under sub-section (5) and (9) of Section 11 of the Arbitration and Conciliation Act, 1996 (for short, "the 1996 Act") has been filed with a prayer to appoint an Arbitrator in terms of clause 15.1 of the Agreement dated 10.8.04 entered into by and between the applicant and the non-applicant.

2. Thefacts leading to filing of this application may be briefly noticed.

3. The applicant is inter alia engaged in the business of seed cloning and production, nursery development and propagation, plantation management and maintenance and the cultivation of medicinal plants. On 10.8.04 the applicant and the non-applicant entered into seed supply agreement (Supply Agreement) through which the applicant agreed to establish nurseries and prepare seedling (seed) catering to the requirement of non-applicant. According to the said Agreement the non-applicant promised to make an investment of Rs.299.35 lakhs with the applicant.

The Supply Agreement inter alia contained an arbitration clause 15.1 which reads as under:

"15.1. Any dispute that arises between the parties shall be resolved by submitting the same to the institutional arbitration in India under






































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