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2016 Supreme(SC) 581
SUPREME COURT OF INDIA
T.S.THAKUR, CJI., R.BANUMATHI, UDAY UMESH LALIT, JJ.
ETOILE CREATIONS – Petitioner
Versus
SARL DANSET DECO – Respondent
ARBITRATION APPLICATION (CIVIL) NO. 4 OF 2015
Decided On : 25-07-2016
IMPORTANT POINT
When an arbitration agreement exists between the parties, the petition under Section 11 (5) read with Section 11 (9) of the Arbitration and Conciliation Act, 1996, shall have to be allowed with appropriate directions.
Headnote:Arbitration and Conciliation Act, 1996 – Section 11(5) r/w section 11(9) – Arbitration agreement existing – Disputes actually arisen – Petition liable to be allowed. (Para 8)
Facts of the case:
Petitioner is a proprietorship firm having its registered office at C-291, Suraj Mal Vihar, Delhi and engaged in manufacturing of products relating to home furnishing and upholstery etc., exclusively for the respondent since 2000.
The respondent-SARL DANSET DECO is a French concern.
A ‘Buyers Agreement’ was executed on 18.10.2012 at New Delhi between the petitioner and the respondent. There was a long business relationship since 2000, even prior to execution of the agreement and the petitioner was regularly supplying the products to the respondent.
At the time of execution of the aforesaid agreement, it was acknowledged that the respondent owes a total amount of Euro 367814.80 as the outstanding amount as per Schedule-I.
The ‘Buyers Agreement’ stipulated that the respondent would release the outstanding amount within seven days of the agreement, which was not done.
Clause 2.2 of the ‘Buyers Agreement’ imposed a restriction upon the petitioner from supplying its product to any other person/firm or company, in the territory of France. On the other hand, the respondent agreed and assured that the products ordered during each year of the term shall not fall short of the target provided in Schedule-II of the said agreement. In the event of the failure to meet such target, the agreement stipulated termination of restriction so imposed upon the petitioner.
The respondent cancelled a few orders to the tune of Euro 272368.25 and did not restore the same committing breach of the terms and conditions of the ‘Buyers Agreement’.
The respondent not only cancelled the orders, but also in violation of Clause 4.1 of the ‘Buyers Agreement’, purchased the same products worth approximately Euro 700000 from M/s. Chahat Exports, 148-A, Basement, Deep Complex, Near Maharani Bagh, New Delhi and Dhruv Overseas, 4502, Dau Bazar, Cloth Market, Fateh Puri, Delhi.
As the respondent did not make the payment of the invoices, the petitioner invoked arbitration clause agreed in Clause 14 of the ‘Buyers Agreement’ for the appointment of three arbitrators, one to be nominated by each party and the third to be appointed by the two appointed arbitrators. Accordingly the petitioner nominated on his behalf Mr. Subhash Chandra, LLM, Higher Judicial Services (V.R.S.), Member Judicial, Railway Claims Tribunal (Retd.) as an arbitrator. Petitioner requested the respondent to nominate its arbitrator so as to enable these arbitrators nominated by the parties to further nominate the presiding arbitrator and constitute an arbitral tribunal.
The petitioner’s filed in courts in France were dismissed in view of the arbitration clause.
As the the aforesaid disputes and differences have arisen in India, are covered by the terms and conditions of the ‘Buyers Agreement’ and are to be resolved by the arbitrator in view of the arbitration clause 14 of the ‘Buyers Agreement’, the petitioner has filed this petition invoking the arbitration clause 14 of the ‘Buyers Agreement’ for appointment of a sole arbitrator qua recovery of Euro 393916.95 payable to the petitioner alongwith interest at the rate of 24% per annum.
Finding of the Court:
When an arbitration agreement exists between the parties, the petition under Section 11 (5) read with Section 11 (9) of the Arbitration and Conciliation Act, 1996, shall have to be allowed with appropriate directions.
Result: Petition allowed, arbitrator appointed.
JUDGMENT :
R. BANUMATHI, J.
In this petition under Section 11(5) read with Section 11(9) of the Arbitration and Conciliation Act, 1996, the petitioner prays for the appointment of a sole arbitrator for adjudication of disputes that have arisen between the parties in relation to ‘Buyers Agreement’ dated 18.10.2012 executed between them.
2. Briefly stated case of the petitioner is as under:-Petitioner is a proprietorship firm having its registered office at C-291, Suraj Mal Vihar, Delhi. The petitioner is engaged in the business of manufacturing of products relating to home furnishing and upholstery etc., exclusively for the respondent since 2000. The respondent-SARL DANSET DECO is a concern having its office at 240 Rue De La Lys 59250, Halluin, France which is engaged in the business of purchase and sale of the product relating to home furnishing and upholstery and is the buyer of the products manufactured by the petitioner. Accordingly, a ‘Buyers Agreement’ was executed on 18.10.2012 at New Delhi between the petitioner and the respondent. As per the aforesaid agreement, the petitioner has been selling/supplying its aforesaid products and the respondent has been buying/purchasing the products for resale/sale in the territory of France. There was a long business relationship since 2000, even prior to execution of the agreement and the petitioner was regularly supplying the products to the respondent. At the time of execution of the aforesaid agreement, it was acknowledged that the respondent owes a total amount of Euro 367814.80 as the outstanding amount. The details of the outstanding dues have been mentioned in Schedule-I of the ‘Buyers Agreement’. The petitioner has alleged that as per the terms and conditions of the ‘Buyers Agreement’ dated 18.10.2012, the respondent did not release the said outstanding amount within seven days of the agreement. Despite numerous reminders for the payment of dues through e-mails, SMS messages exchanged between the parties during November 2012 to April 2013 and subsequent legal notices sent to the respondent, the respondent failed to pay the admitted dues of the petitioner.
3. Clause 2.2 of the ‘Buyers Agreement’ imposed a restriction upon the petitioner from supplying its product to any other person/firm or company, in the territory of France. On the other hand, the respondent agreed and assured that the products ordered during each year of the term shall not fall short of the target provided in Schedule-II of the said agreement. In the event of the failure to meet such target, the agreement stipulated termination of restriction so imposed upon the petitioner. Petitioner supplied various materials to the respondent at different points of time against various orders. The respondent cancelled a few orders to the tune of Euro 272368.25. The respondent committed breach of the terms and conditions of the ‘Buyers Agreement’ because cancelled orders were not restored. Thus, the respondent is liable to compensate the petitioner for cancelling orders and reimburse for cost and damages incurred in procuring material worth Euro 272368.25, just prior to the date of shipment and also for preparing samples as per the request of the respondent dated 25.05.2012 and 26.07.2012. As per Clause 4.1 of the ‘Buyers Agreement’, the respondent shall not purchase/obtain/ deal with the products or any goods that compete with them, for sale from any person, firm or company in India other than the petitioner. The respondent not only cancelled the orders, but also in violation of Clause 4.1 of the ‘Buyers Agreement’ dated 18.10.2012, purchased the same products worth approximately Euro 700000 from M/s. Chahat Exports, 148-A, Basement, Deep Complex, Near Maharani Bagh, New Delhi and Dhruv Overseas, 4502, Dau Bazar, Cloth Market, Fateh Puri, Delhi. Placing such orders with other firms, according to petitioner, is a violation of terms and conditions of the terms of the ‘Buyers Agreement’ which stipulates commitment between t
