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SUPREME COURT OF INDIA
R.F. NARIMAN, B.R. GAVAI, JJ.
AMWAY INDIA ENTERPRISES PRIVATE LIMITED - Appellant
Versus
RAVINDRANATH RAO SINDHIA AND ANOTHER - Respondent
Civil Appeal No. 810 of 2021 (Arising out of SLP(Civil) No. 15982 of 2020)
Decided on : 04-03-2021
Arbitration and Conciliation Act, 1996 – Section 11(6) read with Section 2(1)(f) – Appointment of Sole Arbitrator – International commercial arbitration – Respondents have themselves applied to become distributors of Amway products in India as a sole proprietorship concern under relevant forms issued by appellant, read with Code of Ethics – Whatever be transaction between parties, if it happens to be entered into between persons, at least one of whom is either a foreign national, or habitually resident in, any country other than India; or by a body corporate which is incorporated in any country other than India; or by Government of a foreign country, arbitration becomes an international commercial arbitration notwithstanding fact that individual, body corporate, or government of a foreign country referred to in Section 2(1)(f) carry on business in India through a business office in India – This being the case, Delhi High Court had no jurisdiction to appoint an Arbitrator in facts of this case – Judgment under appeal set aside. (Paras 15, 16 and 18)
Facts of the case:
Present appeal arises out of a petition filed under Section 11(6) of Arbitration and Conciliation Act, 1996 by respondents in the Delhi High Court for appointment of a sole arbitrator. Documentary evidence in this case would be decisive of whether the requirements of sub-clause (i) to Section 2(1)(f) have been met, in which case it is unnecessary to go to sub-clause (iii), as under Section 2(1)(f), “at least one of the parties” must fall under sub-clauses (i) to (iv) of Section 2(1)(f).
Findings of Court:
When it comes to a husband and wife’s distributorship, they are entitled not to two, but to a single distributorship, it being made clear under clause 3.17 of the Code of Ethics that they are to operate only as a single entity. The form that was filled in made it clear that the respondents applied to become a distributor as a sole proprietorship, it being made clear that husband, Ravindranath Rao Sindhia, was the sole proprietor / “primary applicant”, the wife, Indumathi Sindhia, being a “co-applicant”.
Result : Appeal allowed.
JUDGMENT :
R.F. NARIMAN. J.
1. Leave granted.
2. This appeal arises out of a petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 ["Arbitration Act"] by the respondents in the Delhi High Court for appointment of a sole arbitrator. The brief facts of the case are noted in the impugned order dated 03.12.2020 thus:
3. On the requirement of the respondent, necessary documents were executed by the petitioners including contract for distributorship, setting out the terms and conditions of the distributorship, and to inter alia confirm the Code of Ethics and Rules of Conduct, Legal Entity Authorisation Form (LEAF) etc. Since then, the contract of the petitioners has been renewed from time to time. The petitioners recorded client volume/sales from their ABO account. The petitioners have also received income on the sales generated by them for the months of January to March, 2019 by the respondent. However, in April, 2019, upon logging into the respondent's website, the petitioners noted that they could not access their ABO account, or view their LoS. They could only access their account as a PC. Accordingly, between April, 2019 and December, 2019, the petitioners raised a query with their Major Accounts Manager, who informed them that their account had been reclassified as a 'PC account, since they have not complied with the criteria of are corded re-sale related purchase in the last 12 months. The petitioners learnt that this was a criteria in the fresh set of Terms and Conditions issued by the respondent in December, 2016, which was mandatorily required to be accepted by all ADSs, by clicking on the 'By clicking here you agree to abide by the new Terms & Conditions' button, immediately upon logging in on the respondent's website, to proceed further to their account.
According to the petitioner, this requirement was never communicated to the petitioners in the past, nor was any notice of termination issued by the respondent. This criterion is also in violation of the Direct Selling Guidelines dated September 09, 2016.
4. The petitioners made repeated requests to restore their ABO account. The petitioners attempted to resolve the aforesaid disputes and differences amicably by mutual discussions with the representatives of the respondent from April till December, 2019. However, the respondent has failed to consider the petitioners' request for restoration of their ADS account. On June 26, 2020, the petitioners referred the matter for redressal and review to Mr. Jon Sherk, Vice President and Deputy General Counsel of Amway Global in January, 2020. The petitioners were communicated about the rejection of their request for restoration of their ADS account on June 26, 2020. According to the petitioners, the respondent has now, with effect from July, 2020 notified a new Code of Ethics & Rules of Conduct wherein the respondent has now been given benefit of a 2 year period for establishing sales, in acco
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