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IN THE HIGH COURT OF DELHI
Chandra Dhari Singh, J.
Biba Apparels Private Limited - Appellant
Versus
Shabnam Enterprises - Respondent
O.M.P.(I)(COMM.) 245 of 2019
Decided On : 13-12-2022




A party seeking interim relief under Section 9 of the Arbitration & Conciliation Act must demonstrate a manifest intention to invoke arbitration proceedings, which was not established by the petitioner in this case.

Headnote:(A) Arbitration & Conciliation Act, 1996 - Sections 2(1)(c), 9, 17, and 21 - Petition under Section 9 for interim relief - The petitioner sought an injunction against the respondent to prevent transfer of copyrighted material; also sought return of goods and recovery of amount due as per the agreement - It was held that the petitioner has failed to manifest intention to invoke arbitration clause - The court noted that more than three years have elapsed without invoking arbitration, resulting in the dismissal of the petition for lack of merit. (Paras 1, 20, 27-29)

Facts of the case:
The petitioner company entered into an agreement with the respondent for processing orders but alleged failure by the respondent to complete work orders, subsequently seeking relief from the court to prevent any transfer of materials or goods resulting in significant commercial loss.

Findings of Court:
The court concluded that the petitioner did not demonstrate intent to invoke arbitration under the agreement and thus dismissed the petition along with pending applications.

Issues: The primary issue addressed was whether the petitioner had invoked the arbitration clause appropriately before seeking interim relief.

Ratio Decidendi: The court ruled that an application under Section 9 of the Act must be accompanied by a manifest intention to initiate arbitration proceedings, which was not established in this case.

Result: The petition is dismissed.

Table of Content
1. petitioner's claim and agreement background. (Para 1 , 2 , 3 , 4)
2. contractual obligations regarding materials. (Para 5 , 10 , 11 , 12)
3. issue of non-completion of work orders. (Para 6 , 7 , 8 , 9)
4. respondent's defense against claims. (Para 13 , 14 , 15 , 16 , 17)
5. petition details and respondent's objections. (Para 20 , 21)
6. jurisdiction and authority for interim orders. (Para 22 , 23 , 24 , 25 , 26)
7. conclusion on petition merits and dismissal. (Para 27 , 28 , 29)

ORDER

Chandra Dhari Singh, J. (Oral)--The Petitioner has filed the instant petition under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as `the Act, 1996') read with Section 2(1)(c) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Ordinance, 2015, praying for the following reliefs:

    "a) Pass an ex-parte ad-interim injunction in favor of the Petitioner and against the Respondent thereby directing that the Respondent should not create any third party rights or sell or transfer the copyrighted raw material of the Petitioner to any third party; or

    b) Pass an ex-parte ad-interim order in favor of the Petitioner, directing the Respondent to return all the finished products as has been contemplated in the Agreement dated 08.12.2016; or

    c) Pass an Order directing the Respondent to furnish a sum of Rs.2,93,01,418/- as per the terms of the Agreement dated 08.12.2015, in the event that the Respondent fails to provide the finished goods to the Petitioner; and

    d) Pass any other order(s) that this Hon'ble Court may deem fit and proper under the facts and circumstances of the present case."

2. The petitioner, M/s Biba Apparels Private Limited is a company registered under the provisions of the Companies Act, 1956 (hereinafter referred to as `the Companies Act'), having its registered office at 13th Floor, Capital Cyberscape, Ullahwas, Sector 59, Golf Course Extension Road, Gurugram.

3. The respondent is a proprietorship firm, M/s. Shabnam Enterprises having its registered office at RZ-172A, Main Dabri Nasirpur Road, Durga Park, New Delhi and its factory at RZ-87, Gali No.2, Dabri Extension, New Delhi-45.

4. Allegedly, the respondent firm had previously contacted the petitioner company in an effort to become its registered vendor. Agreement dated 8th December, 2016 (hereinafter referred to as the "Agreement") effective for a period of 3 years from the date of commencement, was executed between the parties in pursuance of numerous rounds of negotiations between the petitioner company and the respondent firm.

5. Learned counsel appearing for the petitioner has referred to the relevant provisions of the Agreement during the course of his submissions. Following is the reproduction of the relevant clauses from the agreement dated December 8th, 2016: Clause 2(i), 2(j), 3(i), 3(r), and Section 11 (Dispute Resolution Clause):

    "2(i) THE PROCESSOR undertakes that he shall not hold any fabric/materials, goods, articles, received from BIBA or any dresses, outfits and costumes which belongs to BIBA prepared or to be prepared by THE PROCESSOR, for the non-payment against any previous delivery. In the event of THE PROCESSOR resorts to any such means, BIBA shall have the right to terminate this Agreement and take civil and criminal action against THE PROCESSOR.

    2(j) The Debit notes (other than aforesaid invoices), if any, will be cleared by either Party immediately.

    3(j) THE PROCESSOR shall be responsible for all the material and goods entrusted to THE PROCESSOR by BIBA till the finished dresses, outfits and costumes are handed over to BIBA. THE PROCESSOR will check all the fabrics, materials, dress, outfits and costumes as the case may be on a daily basis to ensure consistent quality. THE PROCESSOR being only a job work contractor, all fabrics/materials, goods and other articles including design supplied by BIBA shall be the sole 'I property of BIBA and THE PROCESSOR shall always be the

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