The court upheld the arbitration agreement between parties despite claims of coercion, affirming that such claims require thorough examination by the arbitral tribunal, thereby allowing the initiation of arbitration proceedings.

JUDGMENT

Rajiv Shakdher, J.

Table of Contents

Preface:

Background facts:

Submissions on behalf of the plaintiffs:

Submissions on behalf of Derco:

Analysis and reasons:

Conclusion:

Preface:

1. This is an application filed by the defendant i.e. Derco Foods [hereafter referred to as Derco] under Order VII Rule 11 of the Code of Civil Procedure, 1908 [in short "CPC"] read with Section 45 of the Arbitration and Conciliation Act 1996 [in short "1996 Act"].

1.1. Derco, via this application, seeks a direction for referring the parties to arbitration in terms of the arbitration agreement obtaining between them. Besides this, Derco also seeks rejection of the plaint under Order VII Rule 11 of the CPC. In addition, thereto, costs are also sought by Derco.

1.2. Notice in this application was issued on 27.07.2020. After pleadings in the application were completed, the judgement was reserved.

Background facts:

2. To render a decision in the application, the following broad facts are required to be noticed as adverted to in the pleadings filed by the parties and based on the documents placed on record.

2.1. Plaintiff no. 1 is a partnership firm. Plaintiff no. 2 and 3 are partners in plaintiff no. 1. Plaintiff no. 4 is a company in which plaintiff nos. 2 and 3 are appointed as directors.

2.2. [Hereafter, for the sake of convenience, plaintiff no. 1/Uttam Chand Rakesh Kumar will be referred to as the "firm" while plaintiff nos. 2 and 3 will be referred to by their names i.e. "Mr. Rakesh Kumar Bhatia" and "Mr. Akshay Kumar Bhatia" respectively. Likewise, plaintiff no. 4 will, hereafter, be referred to as the "Company". However, wherever the context requires, the firm, Mr. Rakesh Kumar Bhatia and Mr. Akshay Kumar Bhatia and Company will be collectively referred to as "plaintiffs".]

2.3. The dispute, on merits, veers around 44 contracts titled "seller contracts". Out of 44 contracts, 36 have been executed between the firm and Derco while the remaining 8 have been executed between the Company and Derco.

2.4. Thus, the transaction between the parties concerns sale of 45,000 lbs of "almonds in-shell non-pareil" having 70% meat yield [in short "goods"] by Derco to the firm and the Company under the aforementioned seller contracts.

2.5. As per the plaintiffs, 30 containers/consignments were shipped by Derco. It is averred that the firm was the consignee qua the said shipments. It is stated by the plaintiffs that the said consignments arrived at the Nhava Sheva port in Mumbai between 27.02.2020 and 03.05.2020.

2.6. It is also averred by the plaintiffs that out of the 30 consignments, the sale documents pertaining to 21 consignments were despatched/transmitted to the firm's bankers. Insofar as the remaining 9 consignments were concerned, it is stated, Derco had not gone this far.

2.7. The plaintiffs also aver that since the Government of India [GOI] imposed a lockdown commencing from 25.03.2020 on account of the spread of the Coronavirus pandemic, the force majeure event was triggered.

2.8. The plaintiffs claim that before the lockdown i.e. between 16.03.2020 and 21.03.2020 qua other contracts [I would assume, other than the seller contracts] the firm paid Rs.7,69,50,973/- to Derco.

2.9. It is asserted by the plaintiffs that between Decemvir 2019 up until 21.03.2020 the firm and the Company had paid all told Rs.54,79,19,275/- to Derco.

3. The plaintiffs also aver that because of spread of Coronavirus and the resultant lockdown, they had requested Derco to enhance the "free time at port" from 14 days to 25-28 days by making an endeavour, in that behalf, with the shipping line.

3.1. The plaintiffs claim that several options were discussed including the firm offering to make payments for consignments which were lying at Nava Sheva port subject to "temporary assistance" being given by Derco. The plaintiffs claim that they also offered to make up losses suffered by Derco in future.

3.2. According to the plaintiffs, Derco suggested payment of