J U D G M E N T

% 28.02.2017

1. The Petitioner, Alupro Building Systems Private Limited, has in this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (‗Act‘) challenged the impugned Award dated 14th November 2014 passed by the sole Arbitrator in the disputes between the Petitioner and the Respondent, Ozone Overseas Private Limited, arising out of the four Purchase Orders (‗POs‘) for the supply of materials for the execution of various works awarded by the Delhi Metro Rail Project to the Petitioner.

Background facts

2. The facts are that the Petitioner, a company based in Bangalore, had placed four separate POs dated 4th October 2010, 10th November 2010, 7th December 2010 and 22nd February 2011 on the Respondent for the supply of material specifically described therein. The full payments in respect of each of the POs were made in advance by the Petitioner to the Respondent.

3. The case of the Petitioner is that sometime in February 2013, it received a notice from one Mohd. Arif describing himself as a sole Arbitrator having been appointed as such by the Respondent. The Petitioner was called upon to appear before the Arbitrator in respect of a statement of claim that was filed before the Arbitrator by the Respondent for the alleged recovery of price of goods sold to the Petitioner. Upon making enquiries from the Arbitrator, the Petitioner learnt that the arbitration proceedings had been initiated by the Respondent in December 2012 by filing a statement of claim before the Arbitrator. An order was passed by the Arbitrator on 29th January 2013 setting the Petitioner ex parte.

4. The case of the Petitioner, inter alia, is that the unilateral appointment of the Arbitrator by the Respondent is bad in law. It is further contended that without issuing notice under Section 21 of the Act invoking the arbitration clause, the Respondent could not have proceeded to arbitration.

5. Before the Arbitrator, the Petitioner appeared on 3rd April 2013 and raised a preliminary objection inter alia that there was no arbitration agreement between the parties; the unilateral appointment of the arbitrator was contrary to the Act, and the arbitral proceedings were without jurisdiction. By an order dated 7th May 2013, the Arbitrator rejected the above preliminary objection. Thereafter, the Petitioner continued to participate in the arbitral proceeding and denied the claim of the Respondent.

6. By the impugned Award dated 14th November 2014, the claims of the Respondent were allowed in the aggregate amount of Rs. 7,95,173.83 together with Rs. 33,000 towards Arbitrator’s fees and pendente lite and future interest @ 12% per annum from 26th December, 2012 till its realization.

Submissions of counsel for the Petitioner

7. Ms. Ekta Kapil, learned counsel for the Petitioner, submitted as under:

(i) There was no arbitration agreement between the parties as contemplated under Section 7 of the Act. It is pointed out that none of the POs issued by the Petitioner contained any arbitration clause. They merely stated that “disputes, if any, will be subject to jurisdiction of the Courts in Bangalore, India.”

(ii) The invoices raised by the Respondent, pursuant to the POs, and which purportedly contained an arbitration clause, did not constitute themselves constitute an agreement a sale. Reliance is placed on the decisions in Taipack Limited & Ors. v. Ram Kishore Nagar Mal 2007 (3) Arb.LR 402 (Del) and NSK India Sales Company Private Limited v. Proactive Universal Trading Company Pvt. Ltd. AIR 2016 Mad 19.

(iii) The Respondent straightway filed its claim before the Arbitrator on 26th December 2012 and the Arbitrator promptly issued notice to the Petitioner. The letter dated 13th December 2012 claimed by the Respondent to have been sent to the Petitioner seeking reference of disputes to the arbitration was never received by the Petitioner. Therefore, the arbitration proceedings did not commence as contemplated in Section 21 of the Act. Consequently, the procee