9911796707
TMI Blog2012 (10) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of cars in terms of MOU on 22nd April, 2008; 24th August, 2008; and 1st April, 2009. The petitioner further claims that some time in September 2009, disputes arose between the parties. Numerous e-mails were exchanged between the parties, apart from the personal discussions between their representatives, touching and covering the disputes. It is the petitioner's claim that during the term of MOU, merely 15 cars of the petitioner had been sold in the Belgium Region. The petitioner, therefore, claimed that the respondent did not have in place the necessary resources to build the brand of the petitioner. Consequently, through e-mail dated 25th September, 2009 the petitioner requested the respondent to immediately cease sales and marketing activities on its behalf and take necessary steps of providing after sales and service to existing car owners, till such time the petitioner appointed its new distributor. The petitioner claims that the aforesaid e-mail duly constituted the termination of the contractual relationship between the parties as covered under the MOU. 3. As a consequence of the aforesaid termination, the parties have exchanged various e-mails raising claims and cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the present application for appointment of the Arbitrator in terms of Clause 11 of the MOU which reads as under:- "11. Governing Law and Jurisdiction i. This MOU shall be construed and enforced in accordance with the laws of India. ii. In the event of any dispute or difference arising at any time between the parties hereto as to the construction, meaning or effect of this Agreement or thing contained herein or the rights, duties, liabilities and obligations of the parties hereto in relation to this Agreement, the same shall be referred to a single arbitrator, in case the parties can agree upon one (1) within a period of thirty days upon being called by a party to do so and failing such agreement to three (3) arbitrators one (1) each to be appointed by GREENMOBIL and RECC and the third to be appointed by the two arbitrators so appointed. The award passed by such arbitrator(s) shall be final and binding on both the parties. All such arbitration proceedings shall be held in Bangalore as per the Arbitration and Conciliation Act, 1996 as amended from time to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the MOU was effective for a period of three to six months, from the date of arrival of the cars in Belgium. This term was to be considered as the trial period. On completion of the trial period but not later than 3rd December, 2007, the parties were to mutually decide to continue the marketing, sales, and service of the work hours by the respondent. They were also to enter into a fresh long term agreement on mutually agreed terms and conditions. He submits that till the date of the termination of the MOU, no fresh agreement had been entered into between the parties. Relying on the last sentence of the Clause 2, Mr. Narasimha submits that it was the sole discretion of the petitioner to extend the MOU in case the petitioner believed that the additional time is required to complete the trial period. The aforesaid portion of Clause 2 is as under:- "RECC, at its sole discretion, may decide to extend the MOU if RECC believes that additional time is required to complete the trial period." 12. He further submits that although the cars were being supplied to the respondent but the petitioner was not satisfied with the progress made in the number of cars sold by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re such which need to be decided by the Sole Arbitrator on merits, and can not be decided by this Court in a petition under Section 11(4) and 6 of the Arbitration and Conciliation Act, 1996. Learned counsel further submits that in accordance with the aforesaid clause the petitioner had already nominated the Sole Arbitrator. The respondent has, however, not accepted the aforesaid arbitrator. At the same time, it had expressed its willingness to negotiate the global settlement with the petitioner. 16. On the other hand, Ms. Tasneem Ahamadi, has submitted that the MOU having come to an end by efflux of time, there was no question of any termination as claimed by the petitioner. She further submits that the notice invoking arbitration was sent only as a counterblast to the summons received by the petitioner from the Brussels Commercial Court. Learned counsel further submitted that the disputes which form the basis of the claim in the Brussels Commercial Court pertained to a period subsequent to the period covered by the MOU. The arbitration clause in the MOU relates only to disputes which relate to the test and trial period. Hence, an arbitrator can not be appointed for settlement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion to be decided by the Arbitral Tribunal on taking evidence, along with the merits of the claims involved in the arbitration. The Chief Justice has to decide whether the petitioner has satisfied the conditions for appointing an arbitrator under Section 11(6) of the Act. For the purpose of taking a decision on these aspects, the Chief Justice can either proceed on the basis of affidavits and the documents produced or take such evidence or get such evidence recorded, as may be necessary. We think that adoption of this procedure in the context of the Act would best serve the purpose sought to be achieved by the Act of expediting the process of arbitration, without too many approaches to the court at various stages of the proceedings before the Arbitral Tribunal." In the case of National Insurance Co. Ltd. (supra), this Court again examined the question with regard to the scope of the jurisdiction under Section 11(6). In doing so, this Court explained the ratio of the Constitution Bench in SBP and Co. (supra). In Para 21 of the Judgment, the power of the Arbitral Tribunal in cases where the disputes are referred to arbitration without the intervention of the court has been disti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Chief Justice/his designate should leave exclusively to the Arbitral Tribunal are: (i) Whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration). (ii) Merits or any claim involved in the arbitration. " These observations were further reiterated by this Court in the case of A.P. Tourism Development Corporation Ltd. vs. Pampa Hotels Ltd.6. The aforesaid ratio of law has been reiterated by this Court in Alva Aluminium Limited, Bangkok vs. Gabriel India Limited7. Upon consideration of the entire case law, it has been observed as follows:- "18. It is in the light of above pronouncements, unnecessary to delve any further on this issue. It is clear that once the existence of the arbitration agreement itself is questioned by any party to the proceeding initiated under Section 11 of the Act, the same will have to be decided by the Chief Justice/designate as the case may be. That is because existence of an arbitration agreement is a jurisdictional fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroduced by REVA at the Frankfurt IAA. Thereafter it requests the respondents to immediately cease all sales and marking activities on behalf of REVA brand. This termination of the agreement has been acknowledged by the respondents in its e-mail dated 7th October, 2009. A perusal of this e-mail would also demonstrate that the disputes had clearly arisen between the parties at that time. The e-mail makes a grievance that the respondents had not been notified of the termination of its dealership activities a few weeks ago when it had informed the petitioner of its negotiations with potential Dutch partners. The respondents also repeated its disappointment that the win-win soft-landing solution it proposed on 25th September, 2009 was rejected by the petitioner. Rest of the correspondence between the parties continues in the same tenor. Clearly, therefore, the MOU has been extended till its termination on 25th September, 2009. It is also evident that the parties had failed to reach any fresh agreement with regard to sale of REVA cars in Europe by the respondents. In my opinion, the pleadings and the material on record has clearly established that there was a valid arbitration agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from January, 2008 onwards. In paragraph 19 of the writ of summons, it is clearly admitted as follows:- "Whereas on the 25th of September, 2009, as soon as the first REVA cars fitted with Lithium batteries and of the new REVA NXR model arrive in Belgium the petitioner is going to be ejected all of a sudden by the party summoned below. That during a telephone conversation on 25th September, 2009, confirmed in an email of the same date the party summoned below suddenly announced its decision to terminate the concession granted to the petitioner for the Belelux, with immediate effect; That the party summoned below asked the petitioner to immediately stop the sale and promotion of the REVA cars as well as the use of the REVA mark." 25. The claims made by the respondents clearly pertained to the contract which was terminated on 25th September, 2009. In paragraph 30 of the writ of summons, it is pleaded as under:- "That the parties summoned below terminated the contract in any untimely and brutal manner on 25th September, 2009." 26. On the aforesaid basis, the respondents claim compensation and damages amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1998, they had no jurisdiction to decide the reference. The tribunal held that the charter party agreement dated 6th May, 1997 was superseded by a fresh agreement. Therefore, original charter party dated 6th May, 1997 got extinguished. The respondents challenged the said award before the High Court. Learned Single Judge set aside the award and held that the Arbitral Tribunal has the jurisdiction to adjudicate the disputes between the parties as the vessel continued to be hired by the appellant for the period subsequent to 31st August, 1998 on the same terms and conditions, as were contained in charter party agreement dated 6th May, 1997. It was held that the charter party dated 6th May, 1997 did not come to an end by efflux of time and it was extended by the party on the same terms and conditions. Correctness of this order was challenged in this Court. On examination of the entire fact situation, it was held as follows:- "19. It is, no doubt, true that the general rule is that an offer is not accepted by mere silence on the part of the offeree, yet it does not mean that an acceptance always has to be given in so many words. Under certain circumstances, offere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctober, 2004. Since the disputes between the parties were not resolved, the petitioner invoked the arbitration clause. Respondent No. 1 in reply to the notice refuted the claim of the petitioner and also refused to refer the matter to arbitration on the ground that the JVA between the petitioner and the respondent No.1 is not in existence as the same had been terminated by respondent No.2. It was stated that in view of the aforesaid position, there could be no invocation of Clause 14.3 of JVA. 32. Considering the aforesaid fact situation, this Court observed that under Clause 14.2, the parties had agreed that they would use all reasonable efforts to resolve the disputes, controversy or claim arising out of or relating to these agreements. Since the parties have failed to resolve their differences, the same had to be referred to Arbitration under Clause 14.3. It was held that there is a valid Arbitration Agreement between the parties as contained in the JVA, which the parties are required to adhere to and are bound by the same. In other words, if there is any dispute between the parties to the agreement arising out of or in relation to the subject matter of the said JVA, all such d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mind the provisions contained in Article 16 of the UNCITRAL Model Law. The aforesaid Article reads as under:- "Article 16 - Competence of arbitral tribunal to rule on its jurisdiction - (1) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (2).............................................................. (3)..............................................................." Under Section 16(1), the legislature makes it clear that while considering any objection with respect to the existence or validity of the arbitration agreement, the arbitration clause which formed part of the contract, has to be treated as an agreement independent of the other terms of the contract. To ensure that there is no misunderstanding, Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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