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MADRAS HIGH COURT
Nova Air Technologies Private Limited – Appellant
Versus
ZTT India Private Limited – Respondent
OA 1071 2023
ARBITRATION - ARBITRABLE DISPUTE - AGREEMENT - INTERPRETATION - DISPUTE BETWEEN PARTIES ARBITRABLE - COURT DIRECTED PARTIES TO ARBITRATION - APPOINTED SOLE ARBITRATOR - RESPONDENT DIRECTED TO PROCURE GAS ONLY FROM APPLICANT TILL FURTHER ORDERS
Fact of the Case:
Dispute between parties regarding termination of agreement for supply of Nitrogen and Argon gas. Respondent terminated the agreement and started procuring gas from a third party. Applicant filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 seeking to restrain the respondent from procuring gas from a third party and to appoint an arbitrator.
Finding of the Court:
The court held that the dispute between the parties was arbitrable under the arbitration clause in the agreement. The court appointed a sole arbitrator to resolve the dispute and directed the respondent to continue procuring gas from the applicant until further orders from the arbitrator.
Issues: Whether the dispute between the parties was arbitrable under the arbitration clause in the agreement.
Ratio Decidendi: The court held that the dispute between the parties was arbitrable under the arbitration clause in the agreement. The court relied on the following provisions of the Arbitration and Conciliation Act, 1996:* Section 7: Arbitration agreement and its enforcement* Section 11: Appointment of arbitrator* Section 17: Interim measures by court
Final Decision: The court appointed a sole arbitrator to resolve the dispute and directed the respondent to continue procuring gas from the applicant until further orders from the arbitrator.
O.A.Nos.1071 to 1074 of 2023
C.SARAVANAN, J.
The dispute between the parties is arbitrable in terms of Arbitration
Clause on the agreement executed between the applicant and the respondent on
23.07.2021. The relevant Clause reads as under:
20.0 GOVERNING LAW, CONCILIATION AND ARBITRATION
20.1 . This Agreement shall be governed by the laws of India.
20.2. All and any disputes and claims arising out of or
relating in any manner to this Agreement or the
breach, termination, non-performance, interpretation
or validity thereof, shall first be discussed in good
faith by officers duly nominated for the purpose by
each party, with a view to resolving the same.
20.3 All and any disputes and claims as aforesaid, which
cannot be fully and satisfactorily resolved or settled
by the parties as aforesaid, shall at the request of
either party, be submitted to, and be settled by
arbitration of the sole arbitrator and if there is no
concurrence on the appointment of the sole Arbitrator
then it must be resolved by appointing 3 (three)
arbitrators in accordance with the Arbitration and
Conciliation Act, 1996 or any other statute as may be
in force for the time being. The venue of arbitration
shall be at Mumbai.
20.4 Nothing contained in this clause will preclude either
party from applying for and obtaining any injunctive,
prohibitory or other similar urgent or interim relief
from a competent Court of law.
20.5 In respect of any matters pertaining to arbitration or
to any injunctive, prohibitory or other relief sought
by either party as aforesaid, the Courts of law in
Chennai will have exclusive jurisdiction and the
parties hereby submit to such jurisdiction.
Page No.1/7
https://www.mhc.tn.gov.in/judis
2. The agreement is for supply of Nitrogen gas and Argon gas at a
particular fixed rate for a period of five years under the aforesaid agreement.
The agreement also contemplates for termination of the agreement. Clause 15
reads as under :
15.0 TERMINATION
15.1 This Agreement shall be terminable -
a. By either Party giving not less than Six (6) Calendar
Month's notice in writing to the other party for breach
by the other Party of any of the terms and conditions of
this Agreement save as otherwise stated in the
subsequent clause 14.0 and provided such breach shall
not have been rectified by the end of the said notice
period.
b. By either Party forthwith by giving notice in writing to
the other, in the event of the other going into liquidation
compulsorily or voluntarily, being declared insolvent or
in the event of the other consenting to amalgamation,
merger or take-over.
c. Notwithstanding anything contained in clauses herein
above timely payment of the equipment usage charges
and price for the product supplied is the essence of this
agreement and in the event of breach of this obligation
by the Buyer is a breach of terms of this agreement and
notwithstanding any other remedy stated herein above
will entitle NovaAir at its discretion to terminate this
agreement forthwith.
3.It appears that the applicant was unable to effect supply of Argon gas
as it had certain technical problems in its plant and therefore, under the
Page No.2/7
https://www.mhc.tn.gov.in/judis
agreement, the respondent was allowed to procure the same from a third party
supplier with no objection from the applicant. There are E-Mails that have been
exchanged in this regard between the parties which precede notice dated
09.08.2023 seeking to terminate the Agreement dated 23.07.2021.
4. The Agreement is for the terms of five years. The contract under the
Agreement can be terminated before the terms of five years under special
circumstances. As per Clause 15.1.a, of the Agreement either of the party are
entitled to terminate the Agreement by giving six calendar month's notice in
writing to the other party of the breach of any of the terms and conditions of t
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