M/S. ZHEJIANG BONLY ELEVATOR GUIDE RAIL MANUFACTURE CO. LTD. versus M/S. JADE ELEVATOR COMPONENTS on 14 September 2018

M/S. ZHEJIANG BONLY ELEVATOR GUIDE RAILMANUFACTURE CO. LTD.

v.p

M/S. JADE ELEVATOR COMPONENTS

(Arbitration Petition (Civil) No. 22 of 2018)

SEPTEMBER 14, 2018

[DIPAK MISRA, CJI., A.M. KHANWILKAR ANDDR. D. Y. CHANDRACHUD, JJ.]

Arbitration and Conciliation Act, 1996: s. 11(5) – Arbitrationpetition under – Seeking constitution of an arbitral tribunal with asole arbitrator to adjudicate the claims of petitioner under theCommission Processing Contract – Dispute resolution clausebetween the parties that the disputes to be settled throughconsultation and in case the consultation fails, then by arbitrationor court – Held: Intention of the parties apparent from the disputeresolution clause, is that efforts have to be made to settle the disputesin an amicable manner and, therefore, two options are available,either to go for arbitration or for litigation in a court of law – Thus,there is an option and the petitioner has invoked the arbitrationclause – In view thereof, former Judge of the Supreme Court,appointed as sole Arbitrator to arbitrate upon the disputes whichhave arisen between the parties – Arbitrator to complete arbitrationproceedings as per the Arbitration & Conciliation (Amendment) Act,2015 – Arbitration & Conciliation (Amendment) Act, 2015.

INDTEL Technical Services Private Limited v. W.S. AtkinsRail Limited (2008) 10 SCC 308 – referred to.

Case Law Reference

(2008) 10 SCC 308referred toPara 8

CIVIL ORIGINAL JURISDICTION: Arbitration Petition (Civil)No. 22 of 2018.

Under Section 11(5) of the Arbitration and Conciliation Act, 1996for appointment of Arbitrator under Clause 15 of the CommissionProcessing Contract dated 11.09.2014.

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AMs. Nandini Gidwaney, Mudit Sharma, Advs. for the Petitioner.D. N. Ray, Lokesh K. Choudhary, Ms. Disha Ray, Dilip KumarNayak, Mrs. Sumita Ray, Advs. for the Respondent.

The Judgment of the Court was delivered by BDIPAK MISRA, CJI 1. In the instant arbitration petition,preferred under Section 11(5) of the Arbitration and Conciliation Act,1996 (for brevity, ‘the Act’), the petitioner seeks for constitution of anarbitral tribunal with a sole arbitrator to adjudicate the claims of thepetitioner under the Commission Processing Contract dated 11.09.2014and to pass such further order as may be deemed fit and proper in theCfacts and circumstances of the case.

2. The petitioner, company incorporated under the laws of People’sRepublic of China having its office at Sanquiao Village, Fuchun Street,Fuyang, China, is engaged in the business of, inter alia, exporting andsupplying high quality elevator guiderails, fish-plates, accessories andDallied goods. The respondent, a partnership firm based in India havingits office at Plot No.455, Road No.11, “A” Cross Road, GIDC, Kathwada,Ahmedabad – 382430, Gujarat, is engaged in the business of supplyingelevator components for use in the modernization of existing lifts and thenew design of the elevator.

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E3. The contract, namely, Commission Processing Contract(hereinafter referred to as ‘the Contract’) was entered into between theparties on 11.09.2014 in respect of supply of certain products under theContract. In the course of performance of the Contract, as certaindifferences had arisen and the parties were unable to amicably settlethe disputes which fell within the scope of the arbitration clause, theFpetitioner appointed Justice V.S. Agarwal, former Judge, High Court ofJudicature at New Delhi as the sole arbitrator. On 30.03,2018, thepetitioner called upon the respondent to consent to the appointment ofthe sole arbitrator within a period of thirty days from the receipt of thenotice. The respondent received the said notice on 31.03.2018 and theGrespondent in its reply dated 05.04.2018 refused to concur and consentto the appointment of the sole arbitrator. Because of the aforesaidsituation, the petitioner has been compelled to move this Court forappointment of the sole arbitrator. When the matter was listed beforethis Court after service of notice, the learned counsel for the respondenthas placed reliance on the reply dated 05.04.2018 given by the counselH

for the respondent. In the said reply, the facts asserted by the petitionerhave been disputed. That apart, it has been stated that the claims putforth are beyond the provisions of the Contract.

4. To appreciate the controversy, it is required to be seen whetherthere is an arbitration clause for resolution of the disputes. Clause 15 ofthe agreement as translated in English reads as follows:- “15. Dispute handling:

Common processing contract disputes, the parties should be settledthrough consultation; consultation fails by treatment of to thearbitration body for arbitration or the court.”

5. It is submitted by learned counsel for the petitioner that if theclause of ‘dispute handling’ is scrutinized appropriately, the disputes areto be settled through consultation and, if the consultation fails by treatmentof to the arbitration body for arbitration or Court and, therefore, thematter has to be referred to arbitration. It is canvassed by him that theclause is not categorically specific that it has to be adjudicated in a courtof law. It leads to choices and the choice expressed by the petitioner isarbitration.

6. Learned counsel for the respondent, in his turn, would urgethat when it is stated arbitration or Court, the petitioner should knock atthe doors of the competent court but not resort to arbitration, for theclause cannot be regarded as an arbitration clause which stipulates thatthe disputes shall be referred to arbitration.

7. To appreciate the clause in question, it is necessary to appositelyunderstand the anatomy of the clause. It stipulates the caption given tothe clause ‘dispute handling’. It states that the disputes should be settledthrough consultation and if the consultation fails by treatment of to thearbitration body for arbitration or the court. On a query being made,learned counsel for the parties very fairly stated that though the translationis not happily worded, yet it postulates that the words “arbitration or thecourt” are undisputable as far as the adjudication of the disputes isconcerned. There is assertion that disputes have arisen between theparties. The intention of the parties, as it flows from the clause, is thatefforts have to be made to settle the disputes in an amicable mannerand, therefore, two options are available, either to go for arbitration orfor litigation in a court of law.

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A8. This Court had the occasion to deal with such a clause in theagreement in INDTEL Technical Services Private Limited vs. W.S.Atkins Rail Limited[1]. In the said agreement, clause No.13 dealt withthe settlement of disputes. Clauses 13.2 and 13.3 that throw light on thepresent case were couched in the following language:-

B“13.2. Subject to Clause 13.3 all disputes or differences arisingout of, or in connection with, this agreement which cannot besettled amicably by the parties shall be referred to adjudication;13.3. If any dispute or difference under this agreement touchesor concerns any dispute or difference under either of the sub-contract agreements, then the parties agree that such dispute orCdifference hereunder will be referred to the adjudicator or thecourts as the case may be appointed to decide the dispute ordifference under the relevant sub-contract agreement and theparties hereto agree to abide by such decision as if it were adecision under this agreement.”

D9. Interpreting the aforesaid clauses, the Judge designated by thelearned Chief Justice of India held thus:- “Furthermore, from the wording of Clause 13.2 and Clause 13.3,I am convinced, for the purpose of this application, that the partiesto the memorandum intended to have their disputes resolved byEarbitration and in the facts of this case the petition has to beallowed.”

10. The aforesaid passage makes it clear as crystal that emphasishas been laid on the intention of the parties to have their disputes resolvedby arbitration.F

11. In the case at hand, as we find, Clause 15 refers to arbitrationor court. Thus, there is an option and the petitioner has invoked thearbitration clause and, therefore, we have no hesitation, in the obtainingfactual matrix of the case, for appointment of an arbitrator and,accordingly, Justice Prakash Prabhakar Naolekar, formerly a Judge ofGthis Court, is appointed as sole Arbitrator to arbitrate upon the disputeswhich have arisen between the parties. The learned Arbitrator shall beguided by the Arbitration & Conciliation (Amendment) Act, 2015. Thelearned Arbitrator shall make positive efforts to complete the arbitrationproceedings as per the Act of 2015.

H1 (2008) 10 SCC 308

M/S. ZHEJIANG BONLY ELEVATOR GUIDE v. M/S. JADEELEVATOR COMPONENTS [DIPAK MISRA, CJI]

12. The Registry is directed to send a copy of this order to thesole Arbitrator. Learned counsels for the parties are also at liberty tobring it to the notice of the Arbitrator.

13. The arbitration petition is, accordingly, allowed. There shallbe no order as to costs.

Nidhi Jain

Petition allowed.

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