The seat of arbitration is determined by the explicit terms of the arbitration agreement, and the designation of a venue as the seat excludes jurisdiction of Indian courts when the seat is outside India.

JUDGMENT

J.B. PARDIWALA, J.:

For the convenience of exposition, this judgment is divided into the following parts: -

1. The present petition has been filed under Section 11 sub-section (6)(a) read with Section 11 sub-section (12)(a) of the Arbitration and Conciliation Act, 1996 (for short, the “Act, 1996”) seeking a referral of the disputes that have arisen between the parties to arbitration and consequent appointment of an arbitrator by this Court in terms of clauses 26 and 27 of the Consumer Distributorship Agreement respectively dated 09.11.2010 (hereinafter referred to as the “Agreement”) entered into between the petitioner and the respondent herein.

2. The petitioner, ‘M/s Arif Azim Co. Ltd.’, is a company based in Afghanistan, having its registered office at 1st Floor, Zarnigar Hotel, Mohammed Jan Khan Watt, Kabul, Afghanistan and is inter-alia engaged in the business of distribution of handsets which are manufactured by the respondent no. 1 in the territory of Kabul, Afghanistan. The respondent no. 1, ‘M/s Micromax Informatics FZE’ is a Free Zone Establishment company incorporated under the laws of United Arab Emirates having its office at 28, Shed No. 18, Technology Park, Free Trade Zone, Ras-Al-Khaimah, UAE. Whereas, the respondent no. 2, ‘M/s Micromax India’ is a public limited company incorporated in India having its registered office at Block A, Plot No. 21/14, Naraina Industrial Area, Phase-II New Delhi. The respondent no. 1 company is a wholly owned subsidiary of the respondent no. 2 company with the same Board Members in both the companies, and together they are engaged in the business of manufacturing, importing and supplying various mobile handsets under its brand name ‘Micromax’ worldwide. We may clarify at the outset, that the respondent no. 2 company herein is a non-signatory to the arbitration agreement in respect of which the present Section 11 petition has been filed.

A. FACTUAL MATRIX

3. The petitioner herein and the respondent no. 1 company entered into a Consumer Distributorship Agreement dated 09.11.2010 (for short, the “Distributorship Agreement”) inter-alia for the distribution of handsets which are manufactured by the respondent no. 1 and the same was executed by the parties in Kabul, Afghanistan. As per the terms of the aforesaid agreement, the petitioner herein became the authorized distributor of the respondent’s products including mobile handsets and was granted a non- exclusive right to market and distribute the same under its own account in the territory of Afghanistan as allotted and delineated under the said agreement.

4. Before proceeding further, it would be apposite to first highlight some of the salient features of the aforesaid Distributorship Agreement which are relevant to the case at hand. Under the terms of the aforesaid Distributorship Agreement, it is stipulated that all payments shall be made by the distributor in full before the physical delivery of the products, and it further specifies that the mode of such payment shall be through a letter of credit (L/C). The Distributors