Point of Law
Section 7(3) of the Act provides that the arbitration agreement shall be in writing, which is a mandatory requirement. Under Section 7(4), an arbitration agreement is in writing if it is contained in---a document signed by all the parties

ORDER :

Two companies i.e. M/s.MBS Impex Private Limited and M/s.MBS Jewellers Private Limited, both represented by its managing director, the applicant herein, filed this arbitration application under Section 11 of the Arbitration and Conciliation Act, 1996, (in short, “the Act”) seeking nomination of an Arbitrator to resolve the disputes with the respondent-Minerals and Metals Trading Corporation Limited, which is a Government of India enterprise, (in short, “the respondent-company”).

2. Section 7 of the Act prescribes what an arbitration agreement means and what constitutes an arbitration agreement. In that context, it is to be seen whether there exists an arbitration clause in the agreement, the dispute is alive between the parties and such dispute is in relation to the subject matter of the agreement; whether there is fraud to disentitle the relief sought in the arbitration application. To unravel these issues, it is necessary to note the relevant pleadings of the parties.

3. The facts stated are:- the 1st applicant is a private limited company incorporated in the year 2000 for the purpose of carrying out the business in bullion trading and export of jewellery, likewise, the 2nd applicant is also a private limited company incorporated in the year 2005 for the purpose of doing business in bullion trading, sales of gold jewellery. That the respondent-company being a nominated agency of the Government of India, permitted to import gold metal from foreign suppliers and in the course of its pursuit to do business in bullion, offered to sell gold metal on outright sale as also on loan basis to jewellery exporters and the domestic users and devised a scheme. In pursuit thereof, the Dy. Manager (PM) of the respondent-company addressed a covering letter dated 25-11-2005 while enclosing the memorandum of understanding (MOU), dated 25-11-2005 to the applicant to sign the original and return the same to them and accordingly, the applicant signed the MOU and returned the original to the respondent-company by retaining a copy thereof. Thereafter, the business between the applicant and the respondent-company commenced and continued between 2005 to 2012 during which period, the applicant is stated to have has done business of more than Rs.10,000 crores on an ongoing basis of purchasing gold on outright basis and also availing the gold on loan basis. That the applicant used to demand for statement of accounts vis-a-vis the delivery challans, final invoices and the bullion drill of gold rate, rupee values and other charges levied from time to time to reconcile accounts at his end. That in spite of repeated requests, the details of the accounts have not been furnished by the respondent-company. Therefore, the applicant sent notice dated 24-09-2012 for arbitration (in short, “1st arbitration notice”) invoking the arbitration clause under MOU dated 25-11-2005. However, the parties mutually held good faith negotiations and in pursuance thereof, with consent, entered another MOU dated 05-10-2012 and at the request of the respondent-company, the applicant withdrew the 1st arbitration notice dated 24-09-2012. That the respondent-company, despite taking jewellery worth Rs.47 crores, post dated security cheques worth Rs.130 crores and equivalent worth of corporate guarantee in addition to the mortgage of prime landed property admeasuring Ac.5-00 gts as collateral security from applicant, again defaulted in resuming the supply of gold metal to the applicant thus violated the terms of the MOU dated 05-10-2012. Therefore, the applicant has once again invoked the arbitration clause in the MOU dated 25-11-2005 vide notice dated 15-11-2012 (in short, “2nd arbitration notice”) which was received by the respondent-company on 30-11-2012, and despite receipt of notice, the respondent-company failed to consent on or before 30 days time i.e., by 30-12-2012 for resolving the dispute through arbitration. That the arbitration proceedings deemed to have commenced fro