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IN THE HIGH COURT OF DELHI
Vipin Sanghi, J.
Taipack Limited and Ors. - Appellants
Vs.
Ram Kishore Nagar Mal - Respondent
OMP No. 361/2001
Decided On: 23.05.2007
Arbitration Agreement - Jurisdiction - The Act - Section 34 - Summary of the acts and sections referenced and discussed by the court: The court discussed the existence of an arbitration agreement between the parties and its enforceability under Section 7(4)(a) of The Act. It also analyzed the issue of limitation under The Limitation Act, 1963 and the interpretation of acknowledgment of liability under Section 18 of the Limitation Act.
Fact of the Case:
The petitioner filed a petition challenging an arbitration award on the grounds of lack of jurisdiction and violation of public policy. The dispute arose from a purchase order for supply of BOPP films, and the respondent's claim for payment and sales tax liability.
Finding of the Court:
The court found that there was no enforceable arbitration agreement between the parties, and the arbitrator had no jurisdiction to adjudicate the disputes. The court also held that the claim was time-barred and set aside the award as contrary to public policy.
Issues: The issues involved the existence of an arbitration agreement, jurisdiction of the arbitrator, and the applicability of the Limitation Act to the claim.
Ratio Decidendi: The court held that there was no valid arbitration agreement as there was no consensus ad idem between the parties. It also ruled that the acknowledgment of liability under the Limitation Act was not established, and the claim was time-barred.
Final Decision: The petition challenging the arbitration award was dismissed, and the impugned award was set aside as contrary to public policy.
Vipin Sanghi, J.
1. This petition has been filed by M/s Taipack Ltd. under Section 34 of the Arbitration and Conciliation Act 1996 (The Act) challenging the award dated 14.8.2001 made by sole arbitrator Shri Krishan Lal Aneja in claim No. 2000-01 titled “Ram Kishor Nagar Mal v. Taipack Ltd.”
.2. The impugned award has been challenged on two broad grounds:
1. The arbitrator had no jurisdiction to enter upon the reference as there was no arbitration agreement between the parties under which the disputes could have been arbitrated upon.
2. The award is in violation of the public policy of India, as it is based on incorrect interpretation and application of laws in force in India. It violates provisions of The Limitation Act, 1963 and Sick Industrial Companies (Special Provisions) Act, 1985 and The Arbitration and Conciliation Act, 1996.
3. Brief facts, as germane to the controversy are that the petitioner had placed an order for supply of BOPP films upon the respondent. On the back of the said purchase order dated 13.2.1997, were printed some terms and conditions upon which the petitioner company made its aforesaid offer.
.4. Clauses 10 and 11 thereof read as follows:
10. Any terms stipulated in sellers confirmation or any other documents in addition or contradiction to what mentioned in this order will not be acceptable to us unless specifically agreed to in writing.
11. Any dispute arising out of this contract shall be subject to the jurisdiction of courts in Delhi and the supplier expressly agrees to submit to such jurisdiction.
5. Respondent No. 1 supplied the goods to the petitioner as per the order. However, a dispute arose regarding the payment for these goods.
6. The invoices and delivery documents raised by the Respondent No. 1, and signed and accepted by the petitioners agents also contained on its reverse certain terms and conditions of the respondent. Condition 4 of the said invoice as filed on record reads as follows:
In case of any dispute the judgment of the Tribunal of any other authority appointed by the Paper Merchants Association (Regd.) Delhi will be final & binding.
7. The respondent on 3.2.1999 and 27.9.1999 got issued legal notices to the petitioner demanding as principal liability, besides interest etc. a sum of Rs. 13,68,076.08 as balance/outstanding on account of the goods supplied to the petitioner. Vide the said notice the Respondent No. 1 also called upon the petitioner to issue the relevant C form for the value of the goods supplied, or pay a sum of Rs. 7,05,584/- towards sales tax liability.
8. The petitioner refuted the claim made by the Respondent vide its replies dated 5.4.1999 and 25.10.1999. However, C forms were issued to the respondent for a total value of Rs. 6,25,250.50 on 6.1.2000.
9. Thereafter, on 20.1.2001 a notice of the claim filed by the respondent before the Arbitrator appointed by Paper Merchants Association was received by the Petitioner.
10. The Petitioner entered appearance and raised its objections, as aforesaid, before the Arbitrator. The same, however, came to be rejected by the impugned award, and the arbitrator proceeded to allow the Respondent’s claim to the extent of Rs. 24,89,898/- along with interest at the rate of 24% per annum from the date of the award till realisation.
11. The Paper Merchants Association (Regd.) is stated to be a registered association, and its “Constitution and Regulations” as amended up to 30.11.2000 has been filed on record by the Respondent. Regulation XXX thereof is relied upon by the respondents, and the same, in so far as it is relevant reads as follows:
XXX. Rules for Arbitration Cases framed by the Executive Committee under Rule XVI(15) of the Constitution & Regulation.
1. In regard to the Aims and Objects of the Paper Merchants Association (Regd.) Delhi Rule II Sub Clause (13) the disputes including disputes of non-payment between member to member or member to an outsider shall be decided by the Arbitrator/Arbitrators appoin
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