IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.J. Kathawalla, J.
Quick Heal Technologies Limited - Appellant
Versus
Ncs Computech Private Limited - Respondent
Arbitration Petition No.43 of 2018
Decided On : 05-06-2020
Arbitration - Software Distribution Agreement - Arbitration and Conciliation Act, 1996, Section 11(6) - 17 - The court discussed the interpretation of Clause 17 of the Software Distribution Agreement, emphasizing the mandatory reconciliation process and the requirement for fresh consent to refer disputes to arbitration. The court found that there was no binding Arbitration Agreement, leading to the dismissal of the Arbitration Petition.
Fact of the Case:
The Petitioner sought the appointment of a Sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, due to disputes arising from a Software Distribution Agreement. The Respondents disputed the allegations and raised defenses regarding the maintainability and prematurity of the Petition.
Finding of the Court:
The court found that the parties had agreed to a specific procedure for settlement of disputes, requiring amicable discussion and fresh consent for arbitration. It noted that there was no scope for amicable settlement and dismissed the Petition due to the absence of a binding Arbitration Agreement.
Issues: The main issues were the maintainability and prematurity of the Arbitration Petition, focusing on the interpretation of the Dispute Resolution Clause in the Software Distribution Agreement.
Ratio Decidendi: The court's decision was based on the interpretation of Clause 17, emphasizing the mandatory reconciliation process and the requirement for fresh consent to refer disputes to arbitration. It found that there was no binding Arbitration Agreement, leading to the dismissal of the Arbitration Petition.
Final Decision: The Arbitration Petition was dismissed on the ground that there was no binding Arbitration Agreement in the present case. No costs were awarded.
JUDGMENT
1. The above Arbitration Petition is fled by the Petitioner - Quick Heal Technologies Ltd. against NCS Computech Pvt. Ltd. (''Respondent No.1'') and Innovative Edge (''Respondent No.2''), for appointment of a Sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (''the Act''), to adjudicate the disputes and differences that have arisen between the parties relating to the Software Distribution Agreement dated 2nd April, 2011 (Exhibit A to the Petition).
2. According to the Petitioner, the facts in brief leading to the fling of the present Petition, are as under :
2.1 The Petitioner Company is engaged in the business of development and manufacture of anti-virus software under the brand name "Quick Heal", whose products are popularly known as "Quick Heal Range of Products". Respondent No.1 is a Private Limited Company and is carrying on the business of distribution of software products. Respondent No.2 is a Partnership Firm and the sister concern of Respondent No.1 Company.
2.2 In or around 2011, the Directors of Respondent No.1 and the Partners of Respondent No.2 approached the Petitioner and represented that they were desirous of selling and distributing the "Quick Heal Range of Products" developed and manufactured by the Petitioner and requested the Petitioner to appoint them as ''Distributors'' for the same.
2.3 Pursuant to the discussions between the said parties, on 2 nd April, 2011, the Petitioner entered into a Software Distribution Agreement (''the said Agreement'') with the Respondents. Clause 17 of the said Agreement pertains to Dispute Resolution and is reproduced hereunder :
'' 17. Dispute Resolution :
a. All disputes under this Agreement shall be amicably discussed for resolution by the designated personnel of each party, and if such dispute/s cannot be resolved within 30 days, the same may be referred to arbitration as stated below.
b. Disputes under this Agreement shall be referred to arbitration as per the Arbitration and Conciliation Act, 1996 as amended from time to time. The place of arbitration shall be at Pune and language shall be English. The arbitral tribunal shall comprise one arbitrator mutually appointed, failing which, three (3) arbitrators, one appointed by each of the Parties and the third appointed by the 2 so appointed arbitrators and designated as the presiding arbitrator and shall have a decisive vote.
c. Subject to the provisions of this Clause, the Courts in Pune, India, shall have exclusive jurisdiction and the parties may pursue any remedy available to them at law or equity." (emphasis supplied)
2.4 Under the said Agreement, the parties had set out details for sale and distribution of the Petitioner''s product in the region/areas mentioned therein.
2.5 Pursuant to the said Agreement, the Respondents from time to time placed orders with the Petitioner for Quick Heal Range of Products and the Petitioner supplied the same to the Respondents.
2.6 As on 31st March, 2013, the balance amount payable by the Respondent No.1 to the Petitioner was Rs.32,78,43,886/-. Despite confirmation of balance, the Respondents failed to pay the amounts due to the Petitioner.
2.7 Since disputes arose between the parties, the Petitioner, through their Advocate''s Letter dated 7th August, 2017 addressed to the Respondent No.1 and a Letter dated 2nd January, 2018 addressed to the Respondent No.2, invoked the Arbitration Agreement contained in Clause 17 of the said Agreement and proposed the name of the Hon''ble Mr. Justice S.R.Sathe (Retired) as the Sole Arbitrator.
2.8 Sub-clause (a) of Section 17 of the said Agreement, inter alia, provides that prior to commencing the arbitration, the parties through their designated personnel, ''shall'' amicably discuss all the disputes under the Agreement in an attempt to reach a resolution. The said process has in a realistic sense been exhausted, as the repeated requests made by the Petitioner to the Respondents to pay the outstanding amounts a
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