Back
2021 Supreme(Del) 2240
IN THE HIGH COURT OF DELHI AT NEW DELHI
Sanjeev Narula, J.
M/s Hero Motocorp Limited - Appellant
Versus
M/s R K Mahajan Enterprises & Ors. - Respondents
Arb P No. 468 of 2020; O.M.P. (I) (Comm) No. 313 of 2020
Decided On : 17-03-2021
Vijay Nair, Advocate, Rahul Malhotra, Advocate, Varun Garg, Advocate, Amiteshwar Singh, Advocate, Sidharth Tewari, Advocate, Nikhil Goel, Advocate, Aniruddha Deshmukh, Advocate
The main legal point established in the judgment is the valid execution of the arbitration agreement in counterparts and the lack of compelling objections to hold the arbitration agreement as non-existent.
Headnote:
Arbitration and Conciliation Act - Authorised Dealer Agreement - Section 11(6), Section 9 - 23.16 Arbitration And Dispute Resolution - [Section 11(6), Section 9] - The court analyzed the existence of the arbitration agreement, the validity of the executed agreement, and the objections raised by the parties. The court found that the agreement was executed in counterparts, and the differences in the documents were satisfactorily explained. The email from Bank of Baroda established RKME's portrayal as a dealer of HML's goods, undermining RKME's plea of lack of possession of the Agreement. The court allowed the Arbitration petition and appointed a Sole Arbitrator. The interim orders restraining RKME from selling HML's products and parts were confirmed, and the protection was extended for four weeks from the appointment of the arbitral tribunal.
Fact of the Case:
The dispute arose from an Authorised Dealer Agreement between Hero Motocorp Limited (HML) and R.K. Mahajan Enterprises (RKME). HML sought appointment of an arbitral tribunal and interim reliefs due to outstanding dues and RKME's unauthorized sale of HML's products after termination of the Agreement. The parties contested the validity of the executed agreement and RKME's portrayal as an authorized dealer of HML's goods.
Finding of the Court:
The court found that the agreement was validly executed in counterparts, and RKME's objections were not compelling enough to hold the arbitration agreement as non-existent. The court appointed a Sole Arbitrator and confirmed the interim orders restraining RKME from selling HML's products and parts. The protection was extended for four weeks from the appointment of the arbitral tribunal.
Issues: The main issue was the existence and validity of the arbitration agreement, the objections raised by the parties, and the unauthorized sale of HML's products by RKME after termination of the Agreement.
Ratio Decidendi: The court's decision was influenced by the valid execution of the agreement in counterparts, RKME's portrayal as a dealer of HML's goods, and the lack of compelling objections to hold the arbitration agreement as non-existent.
Final Decision: The court allowed the Arbitration petition, appointed a Sole Arbitrator, and confirmed the interim orders restraining RKME from selling HML's products and parts. The protection was extended for four weeks from the appointment of the arbitral tribunal.
JUDGMENT
Sanjeev Narula, J. - The present petitions under consideration, one filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as the Act ] and the other filed under Section 9 of the Arbitration and Conciliation Act, 1996, pertain to an Authorised Dealer Agreement dated 20 th February, 2018, executed between the parties, containing an arbitration clause.
2. The facts giving rise to the disputes between the parties are summarised as follows:
i. The Petitioner - Hero Motocorp Limited, is a company incorporated under the Companies Act, 1956, and is involved in the business of manufacturing of two-wheeler automobiles [hereinafter referred to as 'HML' ]. Respondent No. 1, R.K. Mahajan Enterprises, is a partnership firm [hereinafter referred to as 'RKME' ], of which Mr. Ravi Karan Mahajan Respondent No. 2 in Arb. P. 468/2020 and Respondent No. 3 in OMP(I)(Comm) 313/2020. and Ms. Chand Rani Respondent No. 3 in Arb. P. 468/2020 and Respondent No. 2 in OMP(I)(Comm) 313/2020. are partners. For the sake of completeness of facts, it is noted that there is a sister concern of RKME, titled M/S. RKM Global, of which Mr. Ravi Karan Mahajan is the sole proprietor [hereinafter referred to as RKMG ].
ii. On the basis of the representations of RKME, vide Letter of Appointment dated 08th March, 1985, the Firm was appointed as a non-exclusive dealer of HML s products at Jalandhar, Punjab. Pursuant to the said appointment, RKME and its partners started carrying out business as authorised dealers of HML, including sale of products and spare parts, and servicing thereof.
iii. Thereafter, the parties entered into an Authorised Dealer Agreement dated 20th February, 2018, which was executed in counterparts with one original copy being available with each party [hereinafter referred to as the Agreement ]. It was executed on behalf of RKME by Mr. Ravi Karan Mahajan in his capacity as partner.
iv. Owing to the arrears of payments, HML was constrained to issue a termination letter dated 28th August, 2019 wherein, it called upon RKME to clear outstanding dues and to adhere to Clause 19.2 of the Agreement (being consequences of termination of Agreement), and further called upon RKME to refrain from carrying out any activities of an authorised seller as well as from using the trademark/trade names of HML.
v. On 18th July, 2020, HML received an email from Bank of Baroda, GT Road Branch, Jalandhar, Punjab stating that RKME had availed credit facilities from its bank, for which it had submitted the Agreement with HML, and further sought confirmation as to whether RKME was still the Dealer of HML.
vi. Thereafter, HML invoked arbitration vide notice dated 11th March, 2020, and called upon RKME to either agree to the name of a Sole Arbitrator suggested therein or to treat the said name as a nominee of HML and further called upon RKME to nominate its Arbitrator for constituting an arbitral tribunal in terms of the Arbitration Clause.
vii. According to HML, as on 22nd September, 2020, an amount of Rs. 6.45 Crores, (including Rs. 5.25 Crores as principal and Rs. 1.24 Crores on account of interest on delayed payments) is due and payable by RKME and its partners to HML towards products supplied by HML after deducting security deposit of Rs. 4 Lakhs.
3. In the above noted factual background, HML has now approached this Court by way of two separate petitions for: (a) appointment of the arbitral tribunal, and (b) seeking interim reliefs, which are dealt with separately below.
ARB. P. 468/2020
4. The present petition under Section 11 of the of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as the Act ] seeks appointment of the arbitral tribunal. The Arbitration Agreement between the parties is contained in the Agreement dated 20th February, 2018 which reads as under:
"23.16 Arbitration And Dispute Resolution
a) If no settlement can be reached through friendly consultations and negotiations as discussed in Article 23.16(
