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IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
JINDAL STAINLESS LIMITED - Petitioner
Versus
DAMCO INDIA PRIVATE LTD. - Respondent
ARB.P. 347 of 2016
Decided on : 14-12-2016
Arbitration - Logistics Contract - Arbitration and Conciliation Act, 1996 - Section 11 - 24. DISPUTE RESOLUTION & ARRBITRATION - Summary of the Acts and Sections: The court discussed the existence of the arbitration clause, the disputes settled by accord and satisfaction, and the role of the court in appointing an arbitrator under Section 11 of the Act. The court emphasized the need to minimize the role of courts and expedite the arbitration process, highlighting the changes in the Act by the introduction of sub-section 6A in Section 11.
Fact of the Case:
M/s Jindal Stainless Limited filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator to adjudicate disputes arising from a Logistics Contract with DAMCO. JSL alleged coercion, excess payment, and non-delivery of cargo by DAMCO.
Finding of the Court:
The court found that the existence of the arbitration agreement was not disputed, and the dispute regarding accord and satisfaction fell into the category that the court may choose to decide. The court emphasized the need to expedite the arbitration process and appointed an arbitrator to consider the controversy relating to accord and satisfaction.
Issues: The issues included the existence of the arbitration agreement, disputes settled by accord and satisfaction, and the role of the court in appointing an arbitrator under Section 11 of the Act.
Ratio Decidendi: The court's decision was based on the need to minimize the role of courts and expedite the arbitration process, as well as the changes in the Act by the introduction of sub-section 6A in Section 11.
Final Decision: Justice Sunita Gupta (Retired) was appointed as the sole Arbitrator to adjudicate the disputes between the parties, with a directive to consider the controversy relating to accord and satisfaction in the first instance. The petition was disposed of with no order as to costs.
VIBHU BAKHRU, J
1. M/s Jindal Stainless Limited (hereafter 'JSL') has filed the present petition under Section 11of the Arbitration and Conciliation Act, 1996 (hereafter ‘the Act’), inter alia, praying that an Arbitrator be appointed to adjudicate the disputes that have arisen between the parties in connection with a contract dated 01.07.2013 (hereafter 'the Logistics Contract').
2. JSL had entered into the Logistics Contract with respondent (hereafter 'DAMCO') to provide inbound and outbound logistics and supply chain management services for import of raw materials and export of stainless steel coils, plates and sheets, etc. from its site. The term of the Logistics Contract was for a period of two years: 01.07.2013 till 30.06.2015.
3. JSL alleges that it was coerced to make a payment of Rs.12.38 crores to DAMCO for release of the shipments and documents. It is stated that the said payment was made on 11.03.2015 under duress. JSL claims that on reconciliation of accounts, it was observed that JSL had made an excess payment of Rs.3,36,84,814/-to DAMCO. It is further stated that JSL sent several e-mails for recovering the aforesaid amounts but DAMCO did not respond to any of the said e-mails. It is further alleged that on 21.05.2015, DAMCO had de-stuffed 469 tons of Cargo at Vizag Container Freight Station, which was not delivered to JSL.
4. JSL claims that it signed a No Due Certificate (NDC) on 12.03.2015, after succumbing to the pressure of DAMCO.
5. Thereafter, on 28.10.2015, JSL issued a notice of demand calling upon DAMCO to hand over the cargo of 469 tons of material having cumulative value of Rs.5,60,34,123/-and to refund the excess amount of Rs.3,36,84,814/-received by DAMCO from JSL. However, DAMCO did not respond to the aforesaid notice of demand. Thereafter, JSL issued a notice dated 07.01.2016 invoking the arbitration clause and called upon DAMCO to consent for appointment of an arbitrator but DAMCO did not respond to the said notice either.
6. The Logistics Contract includes an arbitration clause, which is set out below:-
"24. DISPUTE RESOLUTION & ARRBITRATION:
Each of the parties herein agrees that in the event of any dispute or difference arising or occurring between the parties in relation to or any matter arising out of or under this Contract, the parties shall attempt to resolve the same amicably within 30 days from the receipt of a notice of such dispute or difference, failing which it will be referred for arbitration to a sole Arbitrator to be mutually appointed by JSL and DAMCO. The arbitration shall be conducted as per the provisions of the Arbitration and Conciliation Act, 1996 as may be amended or re-enacted from time to time.
Services under the Contract shall be continued by DAMCO during the arbitration proceedings, unless otherwise directed in writing by JSL or unless the matter is such that the Services cannot possibly be continued until the decision of the Sole Arbitrator, as the case may be, is obtained. The Seat of arbitration shall be at New Delhi, India. The language of arbitration shall be English. The award of the sole arbitrator shall be final, conclusive and binding on the parties."
7. DAMCO does not dispute the Logistics Contract, however, submits that the said contract is no longer in existence and the arbitration clause has also perished by "accord and satisfaction". DAMCO claims that it had performed all obligations under the Logistics Contract as amended and a sum of Rs.15,15,60,052/-was payable by JSL to DAMCO, which JSL had failed to pay. It is stated that after protracted discussions between JSL and DAMCO, a settlement arrangement was agreed between them in a meeting held on 17.02.2015. It is stated that as per the settlement agreement, DAMCO agreed to give a concession to the extent of Rs.2,35,00,000/-to settle all pending issues raised by JSL including those in respect of loose cargo shortage and pending debit notes. It is stated that as against the sum of Rs.12,80,60,052/-, JSL paid a
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