TMI Blog2020 (1) TMI 1625X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent's preliminary objection is rejected. The petitioner's contention on the basis of Section 21 of the Act is wholly unmerited. The provision requires a party to send a request to the counter-party for the dispute to be referred to arbitration. The respondent's communication dated 14.12.2012 meets that requirement - The petitioner's reliance on Rule 15 of the ICA Rules also does not take its case much further. Rule 15(i) requires a notice of request for arbitration to be sent to the ICA and to the other party. The respondent herein had already given the notice of request for arbitration to the petitioner as aforesaid. Its communication dated 16.04.2013 to the Registrar of the ICA included all the documents contemplated by Rule 15(ii). The Rules, on a plain reading, require compliance of Rule 15(ii) in the communication addressed to the Registrar. Rule 15(i) requires that the proposed respondent in the arbitration also be given notice of the request for arbitration, but does not necessitate that the same communication be addressed both to the Registrar and the respondent. It is, in fact, specifically contemplated by Rule 18 that the statement of claim and attac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly incurred in the risk sale. 4. The petitioner approached the City Civil Court, Calcutta by filing Title Suit No. 1297/2013, in which it appears that the validity of the agreement itself was challenged. The respondent filed an application in the suit under Sections 8 and 21 of the Act (for reference of the matter to arbitration). Although the pleadings and records of the suit and the orders passed by the City Civil Court are only partially produced on the record of this petition, it is undisputed that the City Civil Court did not grant any stay of the arbitration. In the circumstances, the learned Arbitrator rejected the repeated requests of the petitioner for adjournment. There was some correspondence between the petitioner and ICA relating to the pending arbitration, but the petitioner did not participate in the proceedings. The learned Arbitrator therefore made the impugned award, after recording the evidence led on behalf of the respondent. Submissions 5. The principal legal ground urged by Mr. Jayant Mehta, learned counsel for the petitioner, was that the proceedings of the arbitration themselves were vitiated by an improper invocation of the arbitration. He cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or difference in respect of any matter relating to or arising out of the Contract will be settled in accordance with the Rules of Arbitration of Indian Council of Arbitration, Delhi and the award made in pursuance thereof shall be final and binding on the parties. The venue of the Arbitration will be New Delhi. 9. Section 21 of the Act, which governs the invocation of proceedings, provides as follows: 21. Commencement of arbitral proceedings. Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. 10. The arbitration clause makes the ICA Rules applicable to the arbitral proceedings. Rules 15 and 18 of the ICA Rules, which are relevant for adjudication of the present disputes, are reproduced below:- Initiation of Arbitration Rule 15 (i) Any party wishing to commence arbitration proceedings under these rules (Claimant) shall give a notice of request for arbitration to the Registrar of ICA and to the Respondent. (ii) The notice of request (application) for arbitration to the Registrar s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some controversy between the parties regarding the exact text of the Rules as applicable at the relevant time, learned counsel for both parties ultimately agreed that the above extracted provisions governed the proceedings in question.] Analysis 11. The petitioner's contention is that it had not received any notice of commencement of arbitration in terms of Section 21 of the Act, and Rule 15 of the ICA Rules. This contention must be examined in the context of the correspondence between the parties. In view of the fact that much will turn on the nature of the correspondence exchanged, the communications between the parties are dealt with in some detail hereinbelow:- (a) The first communication which is relevant in this connection is a legal notice dated 14.12.2012 addressed by counsel for the respondent to the petitioner. After setting out the facts as contended by the respondent, it was stated in the said notice as follows:- 9. That in view of the said risk sale carried out by my clients and in view of your failure to lift the said materials, my clients had suffered losses on account of risk sale of the said material amounting to Rs. 54,27,500/-. My cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r charges of Rs. 1,103/- thereby to a alleged total amount of Rs. 88,08,932/- along with interest from my client as alleged or at all. I say that on the contrary in view of the aforesaid facts and circumstances and the illegal and wrongful method which had been adopted by your client in dealing with my client with respect to the aforesaid purported acts, my client is entitled to a sum of Rs. 10,75,000/-@ 18% interest per annum for the aforesaid sum for loss and damages suffered by my client and for further sum which my client would be entitled to for losses and damages from third parties caused by the aforesaid wrong acts and omissions of your client and accordingly your client are requested to make payment of aforesaid sum within a period of 15 days from receiving the instant notice and reply to your notice dated 14th December, 2012 which my client had received on 19th December, 2012 or my client would be compelled to initiate proceedings in accordance with law for which you will be responsible for all costs and consequences. (c) On 16.04.2013, the respondent addressed its first communication to the ICA enclosing therewith a copy of its statement of claims, documents in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that we can take appropriate steps for challenging the initiation of reference before you also adjourn this reference till the supply of documents as aforesaid. (g) The petitioner has placed on record two further communications to the ICA. Its letter dated 03.12.2013 does not appear to be relevant to the dispute at hand. However, in its further communication dated 23.12.2013 (in response to a letter dated 16.12.2013, which is not on record), the petitioner contended as follows:- We are very much interested about your statements made in paragraph number 3 of your letter under reference and particularly point 'C' of the said paragraph. Firstly we are not interested in any sort of arbitration as such we are also not interested in appointment of arbitrator of our choice. We further say that neither Section 21 of the Arbitration and Conciliation Act, 1996 has been complied with nor the arbitrator has been appointed as such our participation in arbitration proceeding is not required. We further say that paragraph numbers 4 and 5 of your letter under reference do not require any comment as there is admission that arbitral Tribunal has not been constituted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a situation was expressly contemplated. The petitioner's response of 11.01.2013 extracted above deals with the respondent's claim on merits and, in fact, raises a claim on behalf of the petitioner itself, alongwith a threat of legal action. My conclusion in this regard is supported by a judgment of the Rajasthan High Court, cited by Mr. Sanat Kumar. In RIICO Ltd. Jaipur Ors. vs. Manoj Ajmera Anr., (2008) 2 ArbLR 388, the Rajasthan High Court held that a communication claiming a disputed amount and contemplating arbitration in the alternative is sufficient notice of a request for arbitration. 14. The petitioner's reliance on Rule 15 of the ICA Rules also does not take its case much further. Rule 15(i) requires a notice of request for arbitration to be sent to the ICA and to the other party. The respondent herein had already given the notice of request for arbitration to the petitioner as aforesaid. Its communication dated 16.04.2013 to the Registrar of the ICA included all the documents contemplated by Rule 15(ii). The Rules, on a plain reading, require compliance of Rule 15(ii) in the communication addressed to the Registrar. Rule 15(i) requires that the proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 26. Thirdly, and importantly, where the parties have agreed on a procedure for the appointment of an arbitrator, unless there is such a notice invoking the arbitration clause, it will not be possible to know whether the procedure as envisaged in the arbitration clause has been followed. Invariably, arbitration clauses do not contemplate the unilateral appointment of an arbitrator by one of the parties. There has to be a consensus. The notice under Section 21 serves an important purpose of facilitating a consensus on the appointment of an arbitrator. 27. Fourthly, even assuming that the clause permits one of the parties to choose the arbitrator, even then it is necessary for the party making such appointment to let the other party know in advance the name of the person it proposes to appoint. It is quite possible that such person may be 'disqualified' to act an arbitrator for various reasons. On receiving such notice, the recipient of the notice may be able to point out this defect and the claimant may be persuaded to appoint a qualified person. This will avoid needless wastage of time in arbitration proceedings being conducted by a person not qualified to do so. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices that parties can agree to waive the requirements of Section 21. This judgment itself makes it clear that the provisions are derogable, and it is possible in a given case that agreement on the rules to be followed would constitute waiver of the statutory requirement. As I have held that the statutory requirements were in fact fulfilled in the present case, it is not necessary to consider this in greater detail in the present case. 19. The correspondence extracted above also indicates that the position taken by the petitioner was entirely baseless. After receiving three communications from the ICA, the petitioner claims (in its letter dated 23.09.2013) that the tender notice dated 31.05.2010 was never acted upon and contended that such a dead dispute cannot be the matter of arbitration. The petitioner did not disclose that, on the very same day, it had filed the suit in the City Civil Court in which its case was completely different, namely, that the material supplied by the respondent suffered from defects of quality. On 28.10.2013, the petitioner raised the contention based on Section 21 of the Act, and on 23.03.2013, it evinced its refusal to appoint an arbitrator or par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Kolkata for production of original render but the copy which was filed in the Court did not bear the seal and the signature of the respondent Company. It was stated that the Tribunal should adjourn the proceedings till disposal of the application of the respondent fixed for hearing on 27th November, 2014. The tribunal on receipt of this letter observed that as there was no stay of proceedings by the Court, the proceedings cannot be adjourned. Mr. Sanat Kumar, Ld. Counsel for the Claimant submitted that the respondent had itself admitted the submission of tender dated 7th June, 2010 in the suit filed before the Kolkata Court and placed the entire record of the said suit before the Tribunal. Arguments were heard and the award was reserved on 1st October, 2014. xxxx xxxx xxxx I have also considered the contention of the respondent that it had not submitted the tender for purchase of the material in question and there is thus no question of arbitration between the parties for adjudication of disputes. Stand of the respondent is in my view is totally baseless in as much as tender which has been placed before me bears the signature as well as stamp of the respondent. Moreover, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial within the free time. By letter dated 21st June, 2010 (exhibit CW 1/5) the respondent was asked to make full payment and lift the material by 22nd June, 2010 which was the free time for lifting of the material. The respondent, however, did not respond to the letters of the claimant and reminders dated 06.07.2010 and 15.07.2010 (marked as CW 1/6 and CW 1/7) were sent to the respondent. Final opportunity was given by letter dated 17th September, 2010 (marked as CW1/8) to lift the material upto 30th September, 2010 after making full payment of Rs. 1,07,50,000/- for the entire quantity of 250 MT of Toor whole Lemon . In the meantime, vide their letter dated 29th September, 2010 (marked as CW 1/9), the respondent came up with a false plea of the material being not as per specifications mentioned in the tender. The allegation according to the Claimant was clearly an afterthought. When the respondent failed to remit the payment and lift the material despite several reminders and notices, the claimant forfeited the earnest money of Rs. 5,75,000/-. xxxx xxxx xxxx From the record and the evidence filed by the Claimant. I am satisfied that the respondent had failed to lift the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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