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IN THE HIGH COURT OF DELHI AT NEW DELHI
Sachin Datta, J.
Indus Birra Beverages – Appellant
Versus
Arun Kumar Dwivedi – Respondent
Arb.P. 1141 of 2022
Decided On : 03-07-2023
Arbitration - Sub Dealership Agreement - Arbitration & Conciliation Act, 1996, Section 11(2), (5) & (6) - 19 - The court discussed the Sub Dealership Agreement, the Cancellation Agreement, and the arbitration clause contained in the Sub Dealership Agreement. The key legal provisions discussed were the obligations of the parties under the Sub Dealership Agreement, the scope of the Cancellation Agreement, and the arbitrability of the disputes. The court's decision was to appoint an independent sole arbitrator to adjudicate the disputes between the parties.
Fact of the Case:
The petitioner sought appointment of an independent sole arbitrator to adjudicate the disputes arising from a 'Sub-Dealership Agreement' between the parties. The respondent contended that the arbitration clause in the Sub-Dealership Agreement stood discharged as a result of the Cancellation Agreement.
Finding of the Court:
The court found that the arbitration agreement contained in the Sub Dealership Agreement had not been discharged/substituted by virtue of the Cancellation Agreement. The court held that the disputes sought to be referred to arbitration were in a wider compass than those resolved by the Cancellation Agreement, and therefore, the arbitration agreement was not discharged.
Issues: The issues revolved around the discharge of the arbitration agreement by the Cancellation Agreement and the arbitrability of the disputes sought to be referred to arbitration.
Ratio Decidendi: The court's decision was based on the interpretation of the Sub Dealership Agreement, the scope of the Cancellation Agreement, and the arbitrability of the disputes. The court emphasized that the disputes sought to be referred to arbitration were not precluded by the Cancellation Agreement and required a detailed examination by a duly constituted Arbitral Tribunal.
Final Decision: The court appointed an independent sole arbitrator to adjudicate the disputes between the parties, keeping all rights and contentions of the parties in relation to the claims/counter-claims and jurisdictional objections open to be decided by the arbitrator.
JUDGMENT
Sachin Datta, J.
Factual Background
1. The present petition filed under Section 11(2), (5) & (6) of the Arbitration & Conciliation Act, 1996 ["the Act"] seeks appointment of an independent sole arbitrator to adjudicate the disputes stated to have arisen between the parties.
2. The disputes between the parties have arisen in the context of a "Sub- Dealership Agreement" dated 18.03.2021 between the following parties:
(i) M/s Mahakaal Alcobrew (MA) (referred to in the aforesaid agreement as the `Distributor');
(ii) M/s RCR Filling Station, represented by Mr. Arun Kumar Dwivedi (the respondent herein and referred to in the aforesaid Agreement as the `Sub-Dealer');
(iii) M/s Indus Birra Beverages (IBB) (the petitioner herein and referred to in the aforesaid Agreement as the `Importer').
3. The Arbitration Clause in the said Agreement is in the following terms:
"19. Arbitration
'That any dispute/difference or claims arising out of or relating to the agreement or interpretation of any provision here of or the breadth here of, shall be referred to INDUS BIRRA BEVERAGES for resolution of the dispute however if the dispute remains unsolved, a sole arbitrator shall be appointed by either of the parties and the arbitration shall be governed by the Arbitrator and Conciliation Act 1996 at jurisdiction of Bhopal (MP) and Delhi."
4. Neither of the parties has disputed the territorial jurisdiction of this Court to entertain the present petition, inasmuch as the aforesaid clause, inter-alia, confers jurisdiction on Delhi. There is also no controversy about stamping of the said agreement.
5. A reading of the Agreement reveals that the broad framework/purport thereof is as under:
(i) The "Sub-Dealer", of which the respondent is the sole proprietor, would place a purchase order alongwith advance payment upon the distributor for relevant product in question mentioned in the Agreement i.e. Tensberg beer (the product);
(ii) The distributor i.e. M/s Mahakaal Alcobrew (MA) would transmit this amount to the importer i.e. M/s Indus Birra Beverages (the petitioner herein);
(iii) The rebate and remuneration shall be disbursed directly by the petitioner (importer) to the retailer;
(iv) The distributor, being the official FL-10 B licence holder would be responsible for payment collection;
(v) Upon realization of the amount by the distributor, the investment of the sub-dealer would be returned along with an additional remuneration of Rs.160/- per case.
6. Importantly, the aforesaid Agreement makes it incumbent on the "Sub-Dealer" (the respondent), to place a purchase order at the outset, and to deposit advance amount to the extent mentioned in Annexure-I of the Agreement, to the tune of Rs.3,09,76,400/-. The agreement further makes it incumbent on the "Sub-Dealer" (the respondent) to provide a quarterly purchase schedule, to the distributor (M/s Mahakaal Alcobrew) for timely service and supply commitment. It is further contemplated that the Sub- Dealer would draw up a quarterly purchase schedule, ensure timely deposit of amount to avoid delay and hampering sales in the market due to non- availability of stock. In this regard, reference may be made to Clauses 1, 6 and 12 of the Agreement which read as under:
"1. Sub-Dealer shall provide a quarterly purchase schedule of Tensberg beer, product wise/SKU wise to the Distributor M/s Mahakaal Alcobrew for timely service and supply commitment.
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6. That the Sub dealer ensures that as per the demand from the market the sub dealer will ensure timely deposition of amount to avoid delay and hampering sales in the market because of non-availability of stock.
xxx xxx xxx
12. Sub Dealer along with the representatives of company shall have to plan out the time line for width of distribution and provide timely reports on the initial market penetration and subsequently a monthly report to be submitted on the status brand wise and SKU wise."
7. It is also relevant to note that the Agreement in question contemplates
AI
The main legal point established in the judgment is that the disputes sought to be referred to arbitration were not precluded by the Cancellation Agreement and required a detailed examination by a du....
The main legal point established in the judgment is the arbitrability of disputes arising from a dealership agreement and the nature of relief that can be granted in arbitration, as governed by the A....
The existence of a dispute under the dealership agreement justifies the appointment of an arbitrator, even without a termination order being issued.
Courts examine the existence of an arbitration agreement at a preliminary stage without delving into substantive issues or contract novation; such matters are reserved for the Arbitrator.
The main legal point established in the judgment is the court's authority to appoint a sole arbitrator under Section 11(5) of the Arbitration and Conciliation Act, 1996, and the recognition of the di....
The Court's review of the arbitration agreement was limited to a prima facie standard, and the issue of the respondents' liability was held to be within the arbitrator's jurisdiction.
The main legal point established is that lack of consensus ad idem on the arbitration procedure can justify court appointment of an arbitrator, and previous adjudication does not necessarily bar arbi....
The court upheld the doctrine of kompetenzkompetenz, allowing the Arbitral Tribunal to rule on its own jurisdiction, and emphasized the importance of arbitration clauses in agreements.
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