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2022 Supreme(Raj) 2348
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
Pankaj Bhandari, J.
United Spirits Limited – Appellant
Versus
Rajasthan State Beverages Corporation Limited – Respondent
S.B. Arbitration Application No. 3 of 2022
Decided On : 27-07-2022
Mr. Rajendra Prasad, Senior Advocate, assisted by Mr. Vijay Choudhary, Ms. Harshita Thakral and Mr. Yugam Taneja, for the Appellant
Mr. M.S. Singhvi, Advocate General assisted by Mr. Darsh Pareek and Mr. Tarang Gupta, for the Respondent.
The Court emphasized the importance of arbitration clauses in agreements and the need to refer disputes to arbitration as per the agreed terms.
Headnote:
Arbitration - Appointment of Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - Clause 10 of the agreement - [Section 11(6) of the Arbitration and Conciliation Act, 1996, Clause 10 of the agreement]
Fact of the Case:
The applicant filed an arbitration application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator. The non-applicant disputed the assertions made in the application, alleging fraud and misconduct by the applicant.
Finding of the Court:
The Court found that the dispute regarding the amount wrongfully received by the applicant in the year 2019-2020 should be adjudicated by the arbitrator as per the arbitration clause in the agreements of both years. The Court referred the dispute to arbitration and appointed a sole arbitrator.
Issues: Dispute over the amount wrongfully received by the applicant, entitlement of the non-applicant to adjust the amount, and appointment of a sole arbitrator.
Ratio Decidendi: The Court held that the dispute regarding the amount wrongfully received and the entitlement to adjust the same should be adjudicated by the arbitrator as per the arbitration clause in the agreements.
Final Decision: The arbitration application was allowed, and Mr. Justice G.S. Sarraf (Retired) was appointed as the sole arbitrator to adjudicate the dispute arising between the parties pertaining to the agreements of years 2019-2020 and 2020-2021.
ORDER
1. The applicant has filed the present arbitration application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act of 1996") for appointment of an arbitrator.
2. It is pleaded in the application that the applicant vide notice dated 19.10.2021 invoked the arbitration under Clause 10 of the agreement and proposed the name of Mr. Justice G.R. Moolchandani, Former Judge of the Rajasthan High Court as sole arbitrator. The non-applicant did not respond to the said notice and the period of 30 days has expired. It is contened by the counsel for the applicant that the non-applicant is adjusting the amount, which was due in the agreement of the year 2019-2020, for which the non-applicant is not entitled in accordance with the agreement of the year 2020-2021.
3. The non-applicant in its reply has disputed the assertions made in the application. It is mentioned in the application that the applicant did not inform the non-applicant about the reduction in the custom duty and committed fraud with the non-applicant. It is admitted that adjustments were made. It is also mentioned in the reply that in terms of Clause 3.6 of the Policy, the suppliers desirous of supplying liquor imported from abroad are required to submit a cost sheet containing the details of basic price and duties in the form as specificed in Annexure-9 to the Liquor Sourcing Policy 2019-20 (hereinafter referred to as "the Policy 2019-20"). The entire break-up of the cost is required to be disclosed by the supplier, which includes custom duty. The applicant did not supply the revised proposals for approval in terms of Policy 2019-20 and a result thereof, the old MRP approved was continued. The applicant took undue advantage by reduction in the custom duty. It is contended by the non-applicant that non-applicant Company came to know about this mischief practiced by the applicant and therefore, issued notices to the applicant. The applicant has deliberately withheld the notices issued by the non-applicants and has not pleaded about the same in the arbitration application. On this ground, the arbitration application filed by the applicant deserves to be dismissed.
4. It is mentioned in the reply that finally, the applicant submitted the relevant documents and the non-applicant computed the amount recovered by the applicant illegally from the non-applicant and consequently, the amount was deducted from the weekly payment payable to the applicant. It is also mentioned that the amount of custom duty, which has not been paid by the applicant, but has been recovered by the applicant from the non- applicant by playing a mischief could not be retained by the applicant. It is further contended that after the substantial recovery was made by way of adjustments, the applicant with a view to retain the amount recovered from the non-applicant unauthorizedly by practicing cheating, started raising absolutely frivolous and filmsy pleas.
5. It is contended in the reply that there are nine suppliers to the non-applicant, who during the period of 2019-2020 did the same act as that of the applicant and from all the suppliers adjustments were made and none of them have objected to such adjustments.
6. Learned Advocate General appearing for the non-applicant contends that the applicant has played fraud and has not disclosed the reduction in the custom duty and a person, who has played fraud, cannot approach the Court for claiming arbitration. Learned Advocate General has placed reliance on Pravin Electricals Private Limited Versus Galaxy Infra and Engineering Private Limited: (2021) 5 SCC 671. Learned Advocate General has fruther placed reliance on Mayavati Trading Private Ltd. Versus Pradyuat Deb Burman: (2019) 8 SCC 714, Vidya Drolia Versus Durga Trading Corporation: (2021) 2 SCC 1, DLF Home Developers Ltd. Versus Rajapura Homes Private Ltd. & Anr.: 2021 SCC Online SC 781, S.P. Chengalvaraya Naidu Versus Jagannath: (1994) 1 SCC 1, Bharat Rasi
