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Supreme Court of India
THE HONOURABLE MR. JUSTICE S.H. KAPADIA
M/s. Nandan Biomatrix Limited
Versus
D 1 Oils Limited
Arbitration Petition No.6 of 2007
Decided on : 11-02-2009
B) Arbitration and Conciliation Act, 1996, Section 7 and 11:- The law regarding inferring arbitration clause is restated. (Para 19 and 21)
C) Arbitration and Conciliation Act, 1996, Section 11(6):- The power under the provision exercised by the Chief Justice or delegated authority is not an administrative power. (Para 14)
D)
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 the provisions of Arbitration and Conciliation Act, 1996."
4. Applicant herein entered into a Joint Venture Agreement with non-applicant on 30.09.04. The said Agreement contemplated incorporation of a Joint Venture Company. This second Agreement did not contain an arbitration clause. It may be noted that the applicant has no claim against the non-applicant under the second Agreement.
5. Besides the Joint Venture Agreement dated 30.9.04, a third Agreement was also entered into on 26.11.04 called as Research and Development Agreement ("R & D Agreement", in short).
6. In short, there existed three Agreements at the relevant time. The first was the Supply Agreement. The second was the Joint Venture Agreement. The Third was R & D Agreement. In between the Joint Venture and R & D Agreements there is Termination Agreement dated 16.10.04. Although the applicant has no claim under the Joint Venture Agreement, it is necessary to mention that there were three Agreements by and between the parties because one of the contentions raised by the non-applicant in its counter (at page 109 of the paper book of Arbitration Application) to the effect that if the applicant genuinely believed that the Supply Agreement had not been terminated by the Termination Agreement dated 16.10.04, it would not have entered into the R & D Agreement under which the applicant had received #40 thousand.
7. To sum up the chronology of events it may be stated that the Supply Agreement came to be executed on 10.8.04. The Joint Venture Agreement came to be executed on 30.9.04. However, on 16.10.04 a Termination Agreement allegedly has been entered into by and between the parties. After Termination Agreement, parties executed R & D Agreement on 26.11.04.
8. There is no dispute regarding execution of the Supply Agreement, the execution of the Joint Venture Agreement and the execution of R & D Agreement. The dispute is regarding the execution of the Termination Agreement dated 16.10.04. The dispute is regarding the effect of that Termination Agreement by which purportedly the Supply Agreement stood terminated. The dispute is also whether in view of the specific clauses mentioned in the Termination Agreement, all claims ceased to exist.
9. Theentire controversy revolves around the purported Deed of Termination dated 16.10.04.
10. The claim made by the applicant concerns willful breach of obligations by the non-applicant under the Supply Agreement. Applicant says that they have exhausted all the available remedies before approaching this Court for appointment of Arbitrators under Section 11 of the 1996 Act. It is their submission that the Supply Agreement dated 10.8.04 has not been terminated by the purported Termination Agreement dated 16.10.04. It is their claim that the alleged Deed of Termin
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