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2021 Supreme(Del) 1643
IN THE HIGH COURT OF DELHI AT NEW DELHI
C. Hari Shankar, J.
Ashwani Kumar - Appellant
Versus
Nav Bharat International Ltd - Respondent
Arb P No. 556 of 2020; I.A. No. 2491 of 2021
Decided On : 18-02-2021
Sparsh Goyal, Advocate, Chander Prakash Sharma, Advocate, Kuljeet Rawal, Advocate, Vikram Alung, Advocate
Disputes of fact do not impinge on the court's jurisdiction to appoint an arbitrator under Section 11(6) of the Arbitration & Conciliation Act, 1996.
Headnote:
Section 11(6) of the Arbitration & Conciliation Act, 1996 - Appointment of Arbitrator - Delay Condonation
Fact of the Case:
The petitioner sought appointment of an arbitrator to arbitrate on disputes arising from a Memorandum of Understanding (MoU) for a loan transaction. The respondent contested the petition, claiming termination of the MoU before any loan was sanctioned.
Finding of the Court:
The court found that the issues raised by the respondent were disputes of fact and did not impinge on the court's jurisdiction under Section 11(6) of the 1996 Act. The court allowed the petition and appointed an arbitrator to arbitrate on the disputes.
Issues: The main issue was whether the disputes raised by the petitioner should be referred to arbitration under Section 11(6) of the 1996 Act.
Ratio Decidendi: The court held that disputes of fact regarding the termination of the MoU and the loan transaction did not affect the court's jurisdiction to appoint an arbitrator under Section 11(6) of the 1996 Act.
Final Decision: The court allowed the petition and appointed an arbitrator to arbitrate on the disputes, granting the respondent the opportunity to contest the claim and raise any counterclaim.
JUDGMENT
C Hari Shankar, J. -
I.A. 2491/2021(under Section 151 of CPC, 1908- for condonation of delay)
1. For the reasons stated in the application, the delay in filing reply is condoned.
2. The application stands allowed.
1. Reply to the petition has been filed by the respondent.
ARB.P. 556/2020
2. Learned counsel for the petitioner submits that he does not seek to file any rejoinder thereto.
3. This is a petition under Section 11(6) of the Arbitration & Conciliation Act, 1996, for appointment of an arbitrator to arbitrate on the disputes between the parties.
4. According to the recital of facts in the petition, the respondent was desirous of securing a loan from M/s Caparo Financial Solutions Limited (hereinafter referred to as "CFSL") for which they availed the services of the petitioner as an intermediary, vide Memorandum of Understanding (MoU) executed on 23rd August, 2019.
5. Under this MoU, it is averred that the respondent was bound to pay, to the petitioner, amounts, in accordance with Clause b of the MoU, which reads thus;
"The Second party hereby agree to pay consultancy fee 1 %+ GST of loan amount to first party for arranging their financial requirements by means of cheque/cash, necessary deduction like TOS shall be deducted as per prevailing laws. 0.5% of consultancy fee will be payable to the first party at the time of sanction of loan facility and 0.5% shall be paid by the second party to the first party at the time of disbursement of loan amount in the bank account of second party."
6. It is further averred that CFSL agreed to advance a loan of ? 11 crores to the respondent, in connection with which a sanction letter dated 13th September, 2019, was executed, whereafter, allegedly for mala fide reasons, the respondent backed out of the transaction. The case of the petitioner is that, despite this, the MoU bound the respondent to pay, to the petitioner, ? 11 lakhs, as the petitioner has performed its part of the contract.
7. The petition further recites that according to the petition, attempts at settling the dispute with the respondent proved futile, whereafter, on 18th August, 2020, the petitioner addressed a legal notice to the respondent, followed by a further notice invoking the clause, in the MoU providing for arbitration as the mode of resolution of disputes vide second notice dated 31stAugust, 2020. The arbitration Clause in the MoU reads thus:
"In case of any dispute in execution of the assignments as agreed above, the matter may be referred to an arbitrator in whom both have faith, or go with legal proceedings as per related to the subject shall be with the jurisdiction of Delhi court."
8. As the respondent did not agree to resolution of the dispute by arbitration, the petitioner has invoked the jurisdiction of this court under Section 11 of the 1996 Act.
9. A reply has been filed, to the petition, in which there is no dispute regarding the existence of the arbitration agreement. The only ground, on which the reply seeks to contest the petition, is that the MoU was terminated on 1st November, 2019, before it was acted upon, no note was sanctioned to the respondent, either of ? 11 crores or of any other amount in September, 2019 and that, after termination of the MoU, the respondent independently negotiated with CFSL and obtained a loan.
10. These assertions, in my opinion, do not make out any case for refusing reference of the disputes raised by the petitioner to arbitration. They are clearly dispute issues of fact, which do not impinge on the jurisdiction of this court under Section 11(6) of the 1996 Act, especially in view of the law enunciated of the Supreme Court in several decisions, including Vidya Drolia v. Durga Trading Corporation,2020 SCCOnLineSC 1018.
11. As such, the prayer in the petition is allowed, the petitioner is permitted to raise this dispute before Mr. Setu Niket, Advocate (Mob. No. 91+ 9873109672), who is appointed by this court as the arbitrator to arbitrate thereon.
12. Needless to say, the res
