The court highlighted the necessity of consensus on commercial terms for a binding contract and the significance of signatures on an agreement, while also emphasizing the non-specific enforceability of the Distribution Agreement under Section 14 of the Specific Relief Act, 1963.

VIBHU BAKHRU, J.

Introduction

1. The Petitioner, Benara Bearings & Pistons Ltd. (hereafter 'Benara'), is an Indian Company and is engaged in the manufacture and sale of automotive parts including Pistons, Piston Pins, Piston Rings, Engine Bearings and Bushes, Cylinder Liners and Sleeves, Air Cooled Blocks. The Respondent, Mahle Engine Components India Pvt. Ltd. (hereafter 'Mahle') is an Indian Company and is, inter-alia, engaged in the manufacturing of engine components for automotive and off-road vehicles. Benara claims that it has entered into a Distribution Agreement dated 17.03.2016 (hereafter ‘Distribution Agreement’) with Mahle for exclusively distributing Mahle's specified products in India; Mahle disputes this and contends that although discussions and negotiations were held with Benara, they could not arrive at a consensus and Mahle withdrew from the 'exercise' on 21.04.2016 and communicated the same to Benara.

2. Mahle has also imported a container of automotive parts (Container No. TEMU 682858-2 (hereafter ‘the Container’) which it intends to sell in India.

3. In the aforesaid context, Benara has filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereafter 'the Act'), inter-alia, praying that Mahle be restrained from terminating the Contract or acting in furtherance of its communication dated 21.04.2016. Benara further prays that Mahle be restrained from dealing with automotive parts - which are presently stuffed in the Container - imported by Mahle. In substance, Benara seeks specific performance of the Contract and thereby seeks to restrain Mahle from effectively carrying on any business of selling automotive parts in India except through Benara as its exclusive distributor.

Factual Background

4. In terms of an agreement dated 21.11.2006, Mahle Trading (Shanghai) Co Ltd. - a company incorporated in China and engaged in manufacture of automotive parts - appointed Benara as its authorized distributor of motor cycle pistons (qua 2 and 3 wheeler applications up to 500 CC.) in the territories of India, Nepal, Sri Lanka and Bangladesh. The said distribution agreement was valid for a period of five years from January 2007 to December 2011. Benara claims that the said Agreement was renewed even after 2011.

5. Thereafter, on 01.01.2014, Mahle (which is the Indian Arm of the Mahle group) entered into a Distribution Agreement with Benara. In terms of that agreement, Benara was appointed as an exclusive distributor for the territory of India in respect of certain specified products (hereafter ‘Mahle products’) and, Mahle agreed not to appoint or seek to appoint any other retailer or dealer in the territory of India. The term of the said Agreement was one year, that is, till 31.12.2014. Clause 7.2 of the said Agreement further provided for an automatic renewal of the Agreement for an additional period of one year and thereafter, unless either party gave a notice six months prior to the expiry of the term.

6. On 24.06.2015, Mahle gave a notice to Benara in terms of clause 7.2 of the aforementioned Agreement dated 01.01.2014 exercising its right not to renew the said Agreement on its expiry.

7. Apparently, after Mahle had issued the aforementioned notice dated 24.06.2015, the parties decided to explore the possibility of continuing their business association, albeit under a different business model.

8. Pursuant to the discussions as mentioned above, the parties entered into a Memorandum of Understanding (hereafter 'MOU') on 29.09.2015 with the objective of entering into a distribution agreement effective from 01.01.2016 subject to the business requirements of Mahle being met. Article 4 of the MOU expressly provided that MOU would be valid till 31.12.2015 or the execution of a detailed distribution Agreement between the parties, whichever is earlier.

9. The parties held discussions and exchanged a series of e-mails, inter-alia in their endeavor to agree to commercial terms and a new distribut