An arbitration agreement must be explicitly extended in writing; mere conduct or implied renewal does not suffice to extend the arbitration clause.

JUDGEMENT :

Context and Background:

1. This Petition is an appeal filed under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996 (“the Act”), challenging an order dated October 4, 2023 (“Impugned Order”), by which a Learned Arbitral Tribunal upheld a challenge to its jurisdiction under Section 16 of the Act. The core issue that has to be adjudicated in this Petition is whether the agreement between the parties stood extended beyond its stated term, bringing within the scope of the arbitration clause contained in it, disputes relating to activities conducted during such extended term.

Context and Factual Background:

2. The Petitioner, Raymond Ltd. (“Raymond”) is a manufacturer of ready-made branded garments while Respondent No. 1, M/s Miltex Apparels (“Miltex”), a partnership firm, is a distributor of such branded garments manufactured by Raymond in the territories of Mumbai, Navi Mumbai and Thane up to Dahanu Road and Raigad District (“Territory”). The other Respondents are partners of Miltex.

3. A company called Raymond Apparel Ltd. and Miltex executed a Distributor Agreement dated June 9, 2015 (“Distributor Agreement”) by which Raymond granted Miltex exclusive rights to distribute products to Raymond’s dealers in the Territory for a period of two years. The parties continued to engage commercially. Miltex continued to distribute Raymond’s products in the Territory beyond the two-year period provided for in the Distributor Agreement.

4. Disputes and differences had arisen between the parties over payments due to Raymond from Miltex. Arbitration was invoked under Clause 18.1 of the Distributor Agreement by a notice dated July 11, 2022. The business of Raymond Apparel Ltd. (which would include the activity covered by the Distributor Agreement) was vested in Raymond pursuant to a Scheme of Arrangement, which was approved on March 23, 2022. The Learned Arbitral Tribunal was appointed by an order dated March 14, 2023 passed by this Court under Section 11 of the Act.

5. Raymond’s Statement of Claim was filed on June 5, 2023 (“Statement of Claim”). On July 14, 2023, Miltex filed an application under Section 16 of the Act (“Section 16 Application”), primarily contending that the claims made in the Statement of Claim relate to a period during which there was neither any written contract nor any subsisting arbitration agreement between the parties.

6. The Impugned Order upholds Miltex’s contention that no valid arbitration agreement existed between the parties during the period to which the claims made in the Statement of Claims can be attributed.

Contentions of the Parties:

7. Mr. Rohaan Cama, Learned Counsel on behalf of the Petitioner would primarily rely upon a letter dated September 2, 2022, by which advocates for Miltex had categorically asserted that the Distributor Agreement continued on the same terms and conditions even after the two-year period covered by it. It had been asserted on behalf of Miltex that the Distributor Agreement was impliedly renewed by the parties by their conduct – among others, by way of emails, whatsapp chats and verbal calls. That apart, Mr. Cama would submit that interpreting the provisions of the Distributor Agreement would show that only the exclusivity feature was meant to have a shelf life of two years.

8. Mr. Karl Tamboly, Learned Counsel on behalf of the Respondents would focus on the Statement of Claim to show that the claims related to the period between October 25, 2019 and May 17, 2021. Learned Counsel would submit that this period to which claims are made by Raymond were crystallised for the first time in the Statement of Claim. According to him, such period would fall out of the scope of the arbitration clause contained in the Distributor Agreement, which had a scheduled lifespan of two years. He would submit that the Impugned Order correctly relies on AN Traders, [A.N. Traders Private Limited vs. Shriram Distribution Services Private Limited – 2018 SCC OnLine Del 12416.] (a decision of a