In an arbitration agreement, if the seat of arbitration is designated as a location outside India, Part I of the Arbitration and Conciliation Act, 1996—including Section 11 regarding the appointment of an arbitrator—is not applicable, even if both contracting parties are Indian entities.

This Court passed the following

ORDER

Heard Mr. Srikanth Hariharan, learned counsel for the Applicant. Despite service of notice, the Respondent did not enter appearance.

2. The present arbitration application has been filed under Section 11(6) of the Arbitration & Conciliation Act, 1996 (hereinafter “the Act, 1996”), seeking appointment of a sole arbitrator to resolve the disputes between the parties.

3. The Applicant claims that it is in the business of manufacturing and selling LED light sources, LED Light luminaries, and other LED products. It claims that the Respondent is also in the business of LED lights and products. According to the Applicant, in January 2019, the Respondent had approached it with a request to manufacture and supply LED products as per certain required specifications. After negotiations and factory visits, the parties entered into a Goods Procurement Contract dated 05.01.2019. As per the agreement, the Applicant was to manufacture and supply LED products as per the specifications and quality required by the Respondent.

4. The contract dated 05.01.2019 was for a period of two years, i.e., from 01.01.2019 to 31.12.2021. After the expiry of the said period, the contract was extended from 01.01.2022 to 31.12.2027. The Applicant states that between 18.07.2023 and 04.08.2023, it had supplied goods and material to the Respondent at their Bengaluru office. In relation to the said supply, the Applicant claims that the Respondent owes an outstanding sum of Rs. 32,33,938/-

5. Likewise, the Applicant claims that it had manufactured products worth Rs. 56,68,573/- on the request of the Respondent. These products, according to the Applicant, were designed and made as per the technical specifications of the Respondent. These products, being finished goods, are lying vacant and the Respondent is not taking delivery of the same. The Applicant contends that the products, being made according to the specifications of the Respondent, cannot be sold in the market. Further, the Applicant contends that the title in the finished goods has already passed to the Respondent. Therefore, the Applicant claims the monies towards the price of the finished goods, and the storage charges from 20.12.2023. The following are the amounts claimed by the Applicant:

6. The Applicant claims to have written multiple letters/emails to the Respondent seeking his dues. However, as no reply was received, the Applicant invoked Clause 26 of the contract dated 05.01.2019 seeking resolution of disputes through arbitration. For the sake of convenience, Clause 26 is extracted below:

26. DISPUTE RESOLUTION

Any dispute, controversies and differences which may arise between the Parties in relation to or in connection with this Contract or any breach thereof shall be mutually settled amicably by the Parties, by making a reference of the dispute within a period of 30 (thirty) days from the date of receipt of a written notice of such dispute by a Party from the other Party.

The attempt to bring about an amicable settlement will be considered to have failed as soon as one of the Parties hereto, after reasonable attempts, which attempt shall continue for not less than 30 (thirty) days, gives 7 (seven) days notice thereof to the other Par