The judgment emphasizes the requirement for a valid arbitration agreement and the need for written amendments to the agreement.

JUDGMENT :

G.S. SISTANI, J.

1. The present appeal, filed under Section 37 of the Arbitration and Conciliation Act,1996 (hereinafter the ‘Act’) read with Section 13 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, is directed against the order dated 30.10.2018 passed by a learned Single Judge of this Court in O.M.P. (COMM) 169/2018, by which the learned Single Judge has set aside the arbitral award dated 11.01.2018.

2. Brief facts required to be considered for disposal of this appeal are that an agreement dated 25.01.2008 (hereinafter referred to as the ‘said agreement’) was executed between Shriram Value Services Pvt. Ltd. (‘SVS’) and the respondent for supply of the approved food products for the locations set out in Schedule ‘A’ to the said agreement. The said agreement was to be effective for the period between 25.01.2008 to 25.01.2009. The appellant submits that vide e-mail dated 18.12.2009, the respondent had been informed that all rights and obligations under the said contract are now to be discharged by the appellant herein.

3. The appellant is a business process management Company leveraging its domain knowledge in the field of supply chain in the food service industry, primarily in the Quick Service Restaurant segment.

4. In the year 2009, the Foods Division of Shriram Value Services was hived off into the newly formed appellant Company.

5. The respondent company, inter-alia, owned and operated restaurants under the franchisee/brand name of KFC, having their outlets in Delhi and at other locations in North India. Being a franchisee of Yum Brands Inc., the respondent under its agreement with Yum Brands Inc. assigned to the appellant sole distributorship for managing the supply chain. Therefore, the respondent under an obligation to procure all the materials required for running the KFC restaurants from the appellant, entered into the said agreement with SVS.

6. By the third quarter of the financial year 2013-2014, the balance amounts due to the appellant were totalling Rs.12,00,00,000/-and were unpaid. Subsequently, the appellant again approached the respondent for clearing of the dues, against which the respondent issued 24 cheques of Rs. 50,00,000/-each, as an assurance for clearance of the unpaid balance amounts. The respondent however requested the appellant not to encash the same for the present, keeping in mind the respondent’s financial situation.

7. The appellant in the fourth quarter of the financial year 2013-2014, refused to make further supplies to the respondent company until the previous dues amounting to approximately Rs.12,00,00,000/-were cleared. Pursuant to this stand of the appellant Company, one of the Directors of the respondent company agreed to execute a Personal Guarantee for the abovementioned amount, and a Personal Guaratnee Agreement dated 21.01.2014 for the same was signed by the parties.

8. Thereafter in February 2014, the appellant received communication from the respondent to present the earlier cheques for payment. However, all 24 cheques on presentation were returned with an endorsement, “payment stopped by drawer”. Against the said dishonouring of cheques, separate criminal proceedings have been initiated against the respondent by the appellant.

9. Dishonouring of the said cheques also led to the appellant herein filing O.M.P. 647/2014 before this Court, under Section 9 of the Act, wherein this Court vide order dated 30.05.2014 restrained the respondent herein from creating any third party rights in respect of certain immovable properties.

10. The appellant vide notice dated 03.07.2014, invoked the Arbitration Clause, in the said agreement dated 25.1.2008, requesting the respondent to appoint an Arbitrator to adjudicate the dispute with respect to the outstanding dues from the respondent. The respondent in reply to said notice, while appointing an Arbitrator in the matter, raised the objection that the said agreement stood expired by efflux