Delhi High Court
Uttam Chand Rakesh Kumar & Ors. vs Derco Foods on 9 November, 2020
Equivalent citations: AIRONLINE 2020 DEL 1692
Author: Rajiv Shakdher
Bench: Rajiv Shakdher
$~J-1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgement reserved on 08.09.2020
Judgement pronounced on 09.11.2020
I.A. No. 6117/2020
in
+ CS (COMM) 248/2020
UTTAM CHAND RAKESH KUMAR & ORS. .....Plaintiffs
Through: Mr. Rajiv Nayar and Mr. Gopal
Jain, Sr. Advs. with Mr. Ajay
Bhargava, Mr. Aseem Chaturvedi,
Mr. Saurabh Seth and Mr. Shivank
Diddi, Advs.
versus
DERCO FOODS .....Defendants
Through: Mr. Vikramaditya Deshmukh, Ms.
Shreni Shetty, Mr. Amit Pai and
Mr. Rahat Bansal, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
RAJIV SHAKDHER, J.:
Table of Contents Preface: - ............................................................................................................... 2 Background facts: - ............................................................................................... 2 Submissions on behalf of the plaintiffs: - ........................................................... 12 Submissions on behalf of Derco: - ...................................................................... 15 Analysis and reasons: - ....................................................................................... 20 Conclusion: - ....................................................................................................... 48 I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 1 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 Preface: -
1. This is an application filed by the defendant i.e. Derco Foods [hereafter referred to as Derco] under Order VII Rule 11 of the Code of Civil Procedure, 1908 [in short "CPC"] read with Section 45 of the Arbitration and Conciliation Act 1996 [in short "1996 Act"].
1.1. Derco, via this application, seeks a direction for referring the parties to arbitration in terms of the arbitration agreement obtaining between them.
Besides this, Derco also seeks rejection of the plaint under Order VII Rule 11 of the CPC. In addition, thereto, costs are also sought by Derco.
1.2. Notice in this application was issued on 27.07.2020. After pleadings in the application were completed, the judgement was reserved.
Background facts: -
2. To render a decision in the application, the following broad facts are required to be noticed as adverted to in the pleadings filed by the parties and based on the documents placed on record.
2.1. Plaintiff no. 1 is a partnership firm. Plaintiff no. 2 and 3 are partners in plaintiff no. 1. Plaintiff no. 4 is a company in which plaintiff nos. 2 and 3 are appointed as directors.
2.2. [Hereafter, for the sake of convenience, plaintiff no. 1/Uttam Chand Rakesh Kumar will be referred to as the "firm" while plaintiff nos. 2 and 3 will be referred to by their names i.e. "Mr. Rakesh Kumar Bhatia" and "Mr. Akshay Kumar Bhatia" respectively. Likewise, plaintiff no. 4 will, hereafter, be referred to as the "Company". However, wherever the context requires, the firm, Mr. Rakesh Kumar Bhatia and Mr. Akshay Kumar Bhatia and Company will be collectively referred to as "plaintiffs".] I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 2 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 2.3. The dispute, on merits, veers around 44 contracts titled "seller contracts". Out of 44 contracts, 36 have been executed between the firm and Derco while the remaining 8 have been executed between the Company and Derco.
2.4. Thus, the transaction between the parties concerns sale of 45,000 lbs of "almonds in-shell non-pareil" having 70% meat yield [in short "goods"] by Derco to the firm and the Company under the aforementioned seller contracts.
2.5. As per the plaintiffs, 30 containers/consignments were shipped by Derco. It is averred that the firm was the consignee qua the said shipments. It is stated by the plaintiffs that the said consignments arrived at the Nhava Sheva port in Mumbai between 27.02.2020 and 03.05.2020.
2.6. It is also averred by the plaintiffs that out of the 30 consignments, the sale documents pertaining to 21 consignments were despatched/transmitted to the firm's bankers. Insofar as the remaining 9 consignments were concerned, it is stated, Derco had not gone this far.
2.7. The plaintiffs also aver that since the Government of India [GOI] imposed a lockdown commencing from 25.03.2020 on account of the spread of the Coronavirus pandemic, the force majeure event was triggered.
2.8. The plaintiffs claim that before the lockdown i.e. between 16.03.2020 and 21.03.2020 qua other contracts [I would assume, other than the seller contracts] the firm paid Rs. 7, 69,50,973/- to Derco.
2.9. It is asserted by the plaintiffs that between Decemvir 2019 up until 21.03.2020 the firm and the Company had paid all told Rs. 54, 79,19,275/- to Derco.
3. The plaintiffs also aver that because of spread of Coronavirus and the resultant lockdown, they had requested Derco to enhance the "free time at port"
from 14 days to 25-28 days by making an endeavour, in that behalf, with the shipping line.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 3 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 3.1. The plaintiffs claim that several options were discussed including the firm offering to make payments for consignments which were lying at Nava Sheva port subject to "temporary assistance" being given by Derco. The plaintiffs claim that they also offered to make up losses suffered by Derco in future.
3.2. According to the plaintiffs, Derco suggested payment of money towards 3-5 loads per week against pending/unshipped loads. This counter-offer was not found feasible by the plaintiffs on account of financial crunch and cash flow difficulties which emanated from the Coronavirus pandemic. It is averred, though, by the plaintiffs that some contracts were amended and the period of shipment was extended to April/May 2020.
3.3. As per the plaintiffs, since parties could not arrive at a negotiated settlement Derco requested that the seller contracts be "cancelled" and that a "no objection certificate" [in short "NOC"] be issued in that behalf by the firm and the Company so that the goods could be sold to the third parties. In this behalf, the plaintiffs rely upon the e-mail dated 04.05.2020 issued by Derco.
3.4. The plaintiffs claim that Derco, thus, sought recall of all documents from the custom-house clearing agents [in short "CHAs"] of the firm and the Company concerning each consignment. Besides this, Derco also sought a copy of the import/export certificate concerning the firm and the Company and the documents despatched by it to their bankers in India.
3.5. It is emphasized that NOCs were issued by the firm and the Company in respect of all 44 consignments, although, only 30 consignments had reached the Nhava Sheva port. The plaintiffs, thus, claim that NOCs were issued to Derco to enable it to resell the goods in India. The plaintiffs aver that losses, if any, suffered by Derco would have arisen on account of its self-inflicted wounds and could not be attributed to them.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 4 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 3.6. More pertinently, the plaintiffs claim [and this is the nub of the matter] that in return for NOCs, Derco executed a declaration cum undertaking dated 07.05.2020 [in short "DCU"] which resulted in the cancellation of the seller contracts. Based on the DCU, the plaintiffs assert that neither party can lay a legal or financial claim against the other under the seller contracts. As per the plaintiffs, the DCUs were executed by Derco voluntarily without duress and/or coercion.
3.7. It appears that Derco did not have the same perspective of the matter as the plaintiffs and, therefore, took out a publication on 02.06.2020 which inter alia conveyed to the persons in the trade that the plaintiffs were defaulters. According to the plaintiffs, this publication damaged their business interest and by way of an example relied upon a letter dated 02.06.2020 issued by an entity based in California which had purportedly cancelled its contract with the firm with effect from 01.06.2020.
3.8. The plaintiffs, it appears, to stem the possible adverse impact on their business issued a letter dated 05.06.2020 to the tree nut industry to explain what they thought was the correct version of the events as they transpired between the parties.
3.9. The plaintiffs claim that Derco did not rest with the issuance of the aforementioned defamatory publication but also wrote to the Directorate General of Foreign Trade [DGFT] on 09.06.2020. Derco followed this with the invocation of arbitration proceedings via its notice dated 19.06.2020.
4. The record shows that the plaintiffs, qua the purported defamatory publication, instituted a civil suit i.e. CS (OS) 149/2020 in this Court which came up for hearing for the first time on 02.06.2020. On that date, Derco was represented by counsel. The record shows that while issuing summons in the I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 5 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 suit and notice in the interlocutory application, Derco was directed to maintain status quo as obtaining then.
4.1. The plaintiffs being aggrieved, instituted the instant suit for declaration and permanent injunction. The plaintiffs seek a declaration to the effect that the seller contracts and the arbitration proceedings pending before Judicial Arbitration and Mediation Services, Inc. California [in short "JAMS"] have become null and void, inoperative, incapable of being performed, vexatious and contrary to the public policy of India.
4.2. Further reliefs are sought in the suit in the nature of permanent prohibitor injunction against Derco from initiating and continuing arbitration proceedings either under the seller contracts or those which are pending before JAMS.
4.3. This suit came up for hearing before the Court, for the first time, on 10.07.2020, when Derco was represented by Mr. Vikramaditya Deshmukh. On that date, Mr. Deshmukh had shared on-screen an email dated 02.07.2020 which was indicative of the fact that the plaintiffs have raised a preliminary objection qua the jurisdiction of the arbitral tribunal to enter upon reference in respect of the apparent dispute obtaining between the parties. Since, on that date, the Court was informed that the coordinator, JAMS had sent a return e-mail dated 08.07.2020 that the case file was being reviewed and that he would revert qua the same, the matter was directed to be listed on 05.08.2020 with liberty to the plaintiffs to approach the Court in case such a need arose.
4.4. Even before the returnable date i.e. 05.08.2020, both sides had moved interlocutory applications which came up for hearing on 27.07.2020. In the plaintiffs' application i.e. I.A. No. 6139/2020, while issuing notice, it was observed that JAMS had, via its communication dated 21.07.2020, sought the assistance of the parties in constituting the arbitral tribunal as per its procedure.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 6 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 4.5. Given this backdrop, the plaintiffs were asked to go ahead with the exercise of the constitution of the arbitral tribunal, albeit, without prejudice to their rights and contentions in the instant proceedings. Insofar as Derco's interlocutory application was concerned i.e. I.A. No. 6117/2020 [the application in which arguments were ultimately heard and judgement was reserved], notice was issued with timelines were fixed for completion of pleadings.
4.6. After detailed arguments on various dates by counsel for both sides, judgement in the matter was reserved on 08.09.2020.
4.7. In the interregnum on 14.10.2020, when the matter came up in the usual course, counsel for the plaintiffs, at first, sought to bring on record new facts; an attempt which was given up, after consultation with the plaintiffs.
5. Derco, on its part, has, broadly, set forth the following facts and assertions.
i. Derco claims that it has been in the business of exporting tree nuts and trading with Indian traders for the past 3 decades. According to Derco, the dispute subsisting between the parties emanates from a series of contracts entered into between them over a period spanning from December 2019 till March 2020. Derco claims that these contracts required export of 1,980,000 pounds of goods via 44 containers valued at USD 4, 410,540.
ii. It is Derco's stand that each of these contracts contains an arbitration agreement and a jurisdiction clause. The term contained in the seller contracts for resolution of disputes is interlinked with the SCTC terms and conditions, in particular, Clause 30 and the JAMS Rules. [Reference to these aspects will be made in greater detail in latter part of the judgement.] I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 7 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 iii. Derco claims that out of the 44 consignments, 30 consignments/containers reached the Nhava Sheva port within agreed timelines commencing from 27.02.2020. Derco asserts that the plaintiffs had asked for delaying the shipment of 14 containers as they were unable to pay for the ones which had already arrived. Derco avers that it had offered a deferment plan against payment guarantee by the plaintiffs. It is stated that the plaintiffs conveyed to Derco that they could not commit to making any payments in the foreseeable future. Derco claims that since the plaintiffs refused to lift the goods from the Nhava Sheva port, it resulted in the burden of detention charges, to the tune of USD 355,194.74, being borne by it.
iv. Besides this, Derco was put in a position where it was also required to bear the demurrage charges imposed by the port authorities. Given the fact that Derco had to bear not only the aforesaid charges but also take the possible risk of deterioration of the goods due to heat and infestation, it had to take measures to mitigate the loss. It is Derco's assertion, given the aforesaid circumstances, it was practically left with no choice but to take steps to sell the goods to a third-party.
v. Derco claims that NOCs were required to be executed as it was advised that once the cargo is manifested by the shipping line [which occurs within 7 to 14 days before it reaches the port], it becomes the property of the consignee and, therefore, the cargo could have been reassigned or sold to third parties only after specific consent was taken of the owner. Since the firm and the company were, at that juncture, the owners of the consigned goods, the plaintiffs were asked to execute NOCs in favour of Derco.
vi. Derco avers that the plaintiffs, instead of cooperating, insisted that they would not execute the NOCs unless DCUs were issued in their favour. I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 8 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 Derco claims that since it was boxed into a corner, it was forced into executing the DCUs. It is also the assertion of Derco that the draft of the DCUs was furnished by the plaintiffs. The DCUs were executed exactly in line with the draft proposed by the plaintiffs.
vii. It is in this backdrop that Derco invoked the arbitration agreement on 19.06.2020. Derco claims that on that very date i.e. 19.06.2020, it also filed a "demand for arbitration and statement of claim" with JAMS; which was served to the plaintiffs as well.
viii. According to Derco, on 25.06.2020, the senior case manager, JAMS addressed an e-mail to the plaintiffs informing them that the arbitration process had commenced. It is averred by Derco that in response to the aforementioned communication, the plaintiffs, in and about, 02.07.2020 objected to the jurisdiction of JAMS to adjudicate the claims of Derco, even while requesting for time to engage counsel on their behalf. Derco avers that JAMS, via a response issued on the same date i.e. 02.07.2020, conveyed to the plaintiffs that it had put the arbitration proceedings in abeyance pending review by its legal department.
ix. It is averred that because of the e-mails exchanged between the plaintiffs and JAMS, the instant suit, which was filed on 07.07.2020 and came up for hearing before this Court on 10.07.2020, was adjourned to 05.08.2020.
x. It is stated that on 13.07.2020 JAMS addressed an e-mail to the parties [which enclosed a letter bearing the same date], wherein, it inter alia indicated that it will proceed with the administration of the matter and that the plaintiffs could raise objections qua jurisdiction and arbitrability under its rules, in particular, "Streamlined Rule 8(b)". The plaintiffs were, thus, requested by JAMS to participate in the constitution of the arbitral I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 9 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 tribunal, albeit, without waiving their objections as to jurisdiction and arbitrability.
xi. Apparently, on 14.07.2020, the plaintiffs addressed a letter to JAMS calling upon them to keep the matter in abeyance including the appointment of the arbitrator till the adjudication of the matter by this Court. This was opposed by Derco. JAMS, at its end, vide communication dated 21.07.2020 informed the parties that the arbitrator was vested with the authority to adjudicate upon aspects concerning jurisdiction and arbitrability as a preliminary issue.
xii. It is averred that the plaintiffs, having accepted that the arbitration proceedings have already commenced, the instant suit is filed only to delay the culmination of those proceedings.
xiii. Furthermore, it is submitted since the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) [in short "New York Convention"] applies to the subject agreement obtaining between the parties, this Court, in line with the provisions of Article II of the said convention read with Section 45 of the 1996 Act, is obliged in law to refer the parties to the arbitral process. It is asserted that since the arbitration proceedings have commenced, this Court should reject the plaint as Section 45 of the 1996 Act is a bar to the continuation of the instant suit proceedings. The provisions of Order XI Rule 11(d) of the CPC, according to Derco, make that amply clear.
xiv. As regards the issue concerning jurisdiction and arbitrability, the same can be raised, as per Derco, before the arbitral tribunal. The arbitral tribunal would be empowered to examine the validity of the DCUs and their impact on its jurisdiction in line with the well-established principle of kompetenz-kompetenz.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 10 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 xv. The plaintiffs have not made out a case, that the arbitration agreement obtaining between the parties is null and void, inoperative or incapable of being performed. The DCUs', on which reliance is placed by the plaintiffs to establish this aspect of the matter, do not specifically state that the arbitration agreement has been rescinded, terminated or repudiated by the parties.
xvi. The arbitration agreement specified that all claims of the parties including but not limited to any claim related to the contract shall be governed by the laws of the State of California. Furthermore, the jurisdiction clause provides that all disputes which are not arbitrated shall be determined by the Federal Court situated in the eastern district of California. Therefore, not only the disputes under the contract but all other disputes which are not arbitrated are subjected to the exclusive jurisdiction of the courts in California.
xvii. Derco has no place of business in India except a liaison office which has been established under the guidelines drawn up under the Foreign Exchange Management Act, 2005 [in short "FEMA"]. Derco's registered office and business place are located in the State of California. This Court, thus, does not have jurisdiction over Derco.
xviii. The claim of the plaintiffs that continuation of arbitration proceedings in California would be vexatious and/or expensive is a complete afterthought. These are aspects of which the plaintiffs were aware of when entering into a contractual relationship with Derco.
xix. The attempt of the plaintiffs to justify wriggling out of their obligations under the seller contracts by portraying that they were put in a difficult position because of the pandemic is not borne out from the facts obtaining in the matter. It is asserted 12 out of the 30 containers arrived before the I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 11 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 lockdown was announced in India. The first out of these 12 containers reached India on 27.02.2020 whereas the lockdown kicked in only on the midnight of 24.03.2020. There was no impediment between 27.02.2020 and 24.03.2020 in payments being made qua consignments which had already reached Nava Sheva port. According to Derco, even after the lockdown, it had received payments from 23 out of the 26 companies with whom it had entered into similar trade transactions.
xx. Derco sold all the containers a few days after receiving NOCs qua the same from the plaintiffs after having them cleared through the port and the customs. The plaintiffs' objection, according to Derco, was with the price and not the imposition of the lockdown.
Submissions on behalf of the plaintiffs: -
6. In this background, submissions on behalf of the plaintiffs were advanced by Mr. Rajiv Nayyar and Mr. Gopal Jain, learned senior counsels, instructed by Mr. Aseem Chaturvedi while those on behalf of Derco were advanced by Mr. Vikramaditya Deshmukh instructed by Ms. Shreni Shetty.
7. Mr. Nayyar and Mr. Jain, broadly, argued as follows.
i. With the execution of the DCUs, the seller contracts stood cancelled and/or novated. The DCUs, do not contain an arbitration agreement. The DCUs are fresh contracts. In the absence of an arbitration agreement, the arbitral tribunal cannot adjudicate either on the validity of the DCUs or the merits of the disputes obtaining between the parties.
ii. The fact that the seller contracts were novated is evident upon perusal of Clause 2 of the DCU which relates to not only goods which were shipped but also those which were in transit or had yet not been shipped.
iii. Derco having received the NOCs cannot lay any claim against the plaintiffs under the seller contracts. Derco gave up its rights to take any I.A. Signature Not No. 6117-2020 in CS (COMM) 248-2020 Verified Page 12 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 civil or criminal action including initiation of arbitration proceedings against the plaintiffs which emanate from the seller contracts. This aspect is evident upon a plain reading of Clause 4 of the DCU.
iv. The execution of the DCU by Derco was voluntary and occurred without the employment of force, coercion or duress; an aspect which is exemplified by Clause 5 of the DCU.
v. The aspect concerning coercion is not arbitrable not only because of the absence of arbitration agreement but also on account to the fact that there is no relief sought by Derco qua the DCUs in the arbitration proceedings. Derco will be required to challenge the DCUs which cancel and/or substitute the seller contracts. The DCU supersedes the seller contracts and because there is no arbitration clause contained in the DCUs, the disputes obtaining between the parties cannot be adjudicated upon by the arbitral tribunal.
vi. The proceedings are vexatious and oppressive as Derco has dragged the plaintiffs to an arbitration proceeding in California after having undertaken not to initiate any legal proceedings against the plaintiffs. This is evident from the following timelines: the DCUs were executed on 07.05.2020; the NOCs were issued on 17.05.2020; a defamatory public notice was taken out against the plaintiffs on 02.06.2020, and the arbitration was invoked on 19.06.2020.
vii. The parties, having settled their disputes as reflected in the DCUs there has been accord and satisfaction and, therefore, the initiation of arbitration proceedings, in this case, is void-ab-initio. Derco cannot proceed with arbitration proceedings till it gets the settlement i.e. the DCUs set aside by taking recourse to a remedy as may be available to it in law.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 13 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 viii. In support of the pleas advanced on behalf of the plaintiffs, reliance was placed on the following judgements.
a) National Insurance Co. Ltd. vs. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267.
b) WAPCOS Limited vs. Salma Dam Joint Venture and Another, (2020) 3 SCC 169.
c) Zenith Drugs & Allied Agencies Pvt. Ltd. vs. Nicholas Piramal India Ltd., 2019 SCC Online SC 946.
d) Samyak Projects Private Limited vs. Ansal Housing & Construction Limited, 2019 SCC Online Del 7067.
e) Young Achievers vs. IMS Learning Resources (P) Ltd., (2013) 10 SCC 535.
f) Union of India and Others vs. Hari Singh, (2010) 15 SCC 201.
g) Dr. Bina Modi vs. Lalit Modi and Others, RFA(OS) 21/2020 High Court of Delhi - Order dated 5 March 2020.
h) Dr. Bina Modi vs. Lalit Modi and Others, RFA(OS) 21/2020 High Court of Delhi - Order dated 30 July 2020.
i) Nathani Steels Ltd. vs. Associated Constructions, 1995 Supp (3) SCC 324.
j) Excalibur Ventures LLC vs. Texas Keystone Inc. and Others, 2011 EWHC 1624 (Comm).
k) Sasan Power Ltd. vs. North American Coal Corpn. (India) (P) Ltd., (2016) 10 SCC 813.
l) Spentex Industries Ltd. vs. Quinn Emanuel Urquhart & Sullivan LLP, MANU/DE/1032/2020.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 14 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51
m) Agrim Sampada Limited and Another vs. Union of India and Others, (2004) 72 DRJ 783.
n) Hardesh Ores Pvt. Ltd. vs. Hede and Company, (2007) 5 SCC 614.
o) Cauvery Coffee Traders vs. Hornor Resources (International) Co. Ltd., (2011) 10 SCC 420.
p) Order dated 05.06.2020, passed by the High Court at Calcutta, in GA 820 of 2020 filed in CS 2 of 2017, titled Lindsay International Private Limited & Others vs. Laxmi Niwas Mittal and Others.
Submissions on behalf of Derco: -
8. Mr. Deshmukh, in reply, made the following submissions.
i. The seller contracts are subject to the terms and conditions provided in the Speciality Crop Trade Council [in short "SCTC"]. Clause 29 of the SCTC provides that the seller contracts will be governed by the law of State of California. The arbitration agreement obtaining between the parties is engrafted in Clause 30 of the SCTC. This clause provides that all disputes concerning export sales between the buyer and the seller including disputes arising under the terms and conditions of the SCTC shall be determined via the JAMS streamlined arbitration rules and procedures [in short "JAMS rules"]. Thus, both parties are bound by JAMS rules.
ii. The place of arbitration is in California, United States of America and, therefore, only those courts which are located therein will have supervisory jurisdiction in the matter. [See: BGS SGS Soma JV vs. NHPC Ltd., 2019 SCC OnLine SC 1585] I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 15 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 iii. Every order given to the seller is subject to the terms and conditions contained in the SCTC. Reliance, in this behalf, was placed on Clause 33 of the SCTC.
iv. Furthermore, all disputes which are not arbitrated under the SCTC are to be determined by the Federal Courts in the eastern district of California. These courts, thus, have exclusive jurisdiction concerning all such matters.
v. The DCUs were executed based on a template provided by the plaintiffs vide email dated 06.05.2020. Clause 4 of the DCU advert to the undertaking given by Derco not to initiate legal proceedings including arbitration proceedings against the plaintiffs "arising either directly or indirectly out of the abovementioned Seller Contracts." The arbitration agreement is not contained in the seller contracts but is provided in Clause 30 of the SCTC.
vi. The seller contracts are, thus, subject to the terms and conditions contained in the SCTC which inter alia includes clauses 29, 30 and 33.
vii. The execution of the DCUs did not entail the cancellation of the terms and conditions contained in the SCTC. Therefore, the logical sequitur is that there is no cancellation of the arbitration agreement obtaining between the parties, as alleged, or at all.
viii. The instant suit is barred under Section 45 of the 1996 Act. Section 45 finds a place in part II of the 1996 Act. This section commences with a non-obstante clause and specifically overrides the provisions contained in part I of the 1996 Act and those contained in the CPC. Therefore, the territorial jurisdiction of this Court, which is sought to be triggered by taking recourse to Section 20 of the CPC is erroneous as the same cannot be taken cognisance of having regard to Section 45 of the 1996 Act.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 16 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 ix. The expression "barred by any law" in clause (d) of Rule 11 of Order VII of the CPC is not restricted to Indian law alone, it includes foreign law as well. Since the terms and conditions of SCTC and the seller contracts are governed by Californian law, this Court cannot exercise jurisdiction under Indian law. The present suit is also barred under the Californian law.
x. The instant suit is also barred under Section 41(h) of the Specific Relief Act, 1963 [in short "SRA"] as the plaintiffs have an alternate remedy under Rule 8(b) of the JAMS Rules. The plaintiffs can raise the issues concerning jurisdiction and arbitrability under the said rule. Consequently, the plaintiffs cannot be granted the relief of permanent injunction. If such a situation arises, a suit for declaration simpliciter will not be maintainable. [See: Section 34 of the SRA] xi. The DCU does not cancel the terms and conditions of the SCTC which contains the arbitration agreement obtaining between the parties. Therefore, whether or not the parties intended to cancel the arbitration agreement can only be ascertained if a full-fledged trial is held in the matter. This Court, thus, cannot arrive at prima facie finding that the arbitration agreement is null and void, inoperative or incapable of being performed which are the only exceptions to the mandatory obligation cast on the Court to refer the parties to arbitration once it is found that such an agreement is obtaining between them. An arbitration agreement is a contract which is independent of the transactional-contract and, hence, the fact that the latter is rescinded will not impact the arbitration agreement. [See: World Sport Group (Mauritius) Ltd. vs. MSM Satellite (Singapore) PTE Ltd., (2014) 11 SCC 639] xii. This Court cannot rule on the existence and validity of the arbitration agreement. [See: Kavaerner Cementation India Ltd. vs. Bajranglal I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 17 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 Agarwal & Anr., (2012) 5 SCC 214; Sasan Power Ltd. vs. North American Coal Corporation (India) Pvt. Ltd., (2016) 10 SCC 813; Judgement dated 12.05.2020, passed in CS (OS) No. 568/2017, titled Spentex Industries Ltd vs. Quinn Emanuel Urquhart & Sullivan LLP; and judgement dated 03.03.2020, passed in CS (OS) 84/2020, titled Dr. Beena Modi vs. Lalit Modi. [The judgement in Dr. Bina Modi has been assailed before the division bench and is pending adjudication, although, there is no stay on its operation.] xiii. The guidelines laid down in paragraph 127 of the judgement rendered in Himachal Sorang Power Pvt. Ltd vs. NCC Infra Holdings, 2019 SCC Online Del 7575 would apply in this case and, therefore, the plaint should be rejected.
xiv. The DCU is not a contract in the eyes of law for the reason that it is bereft of any consideration and was obtained through employment of duress and coercion. [See: Section 10 and Section 25 of the Indian Contract Act, 19872 (in short "Contract Act")] xv. NOCs cannot be construed as consideration for the execution of DCUs as they were issued only to facilitate the resale of the goods to enable Derco to mitigate its losses.
xvi. There is no averment in the plaint or the interlocutory applications filed by the plaintiffs concerning the aspect of novation or discharge of the seller contracts. For the plaintiffs to establish novation, they would have to first make a plea in that behalf and only then an issue would be framed. Evidence can be led by the plaintiffs only if an assertion in that behalf is made in the plaint. [See: Babu Ram vs. Indra Pal Singh, AIR (1998) 6 SCC 358; and Lata Construction vs. RameshchandraRamniklal Shah (2000) 1 SCC 586] Assuming without admitting that novation or I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 18 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 discharge is read into the pleadings, it would have to be borne in mind that it is not even the plaintiffs' case that DCUs brought about a novation or discharge of the terms and conditions contained in the SCTC.
xvii. The plaintiffs will have to plead and establish that DCUs novated and discharged the terms and conditions contained in the SCTC. The plaintiffs will be required to do so for the following reasons:
a) The arbitration agreement is contained in the SCTC.
b) The seller contracts are subject to all terms and conditions contained in the SCTC.
c) The terms and conditions contained in the SCTC together with the seller contracts constitute the entire agreement between the parties.
[See: Clause 33 of the SCTC] xviii. The contention of the plaintiffs that Derco has not challenged the DCUs is erroneous as that stage has not arisen. What the plaintiffs construed as the statement of claim is, in fact, a "notice of claim" issued under Rule 7 of the JAMS rules which is nothing but a "demand for arbitration". The demand for arbitration, which was filed on 17.06.2020, is nothing but a short statement of facts and remedies claimed by the aggrieved party. It is after Derco had submitted a demand for arbitration under Rule 7 of the JAMS Rules, that JAMS issued an intimation qua commencement of the arbitration proceedings via communication dated 26.06.2020 in terms of Rule 5 of the JAMS Rules.
xix. At no point before the institution of the suit did the plaintiffs ever complain that the seller contracts were onerous, oppressive or vexatious. The portrayal of Derco as a large multinational American company which is seeking to oppress a small-time Indian firm, by its actions, is contrary to the plaintiffs' pleadings. The plaintiffs have averred that they are a I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 19 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 market leader in the industry and have presence all over the world including the USA, Australia, Singapore, Hongkong, United Arab Emirates etcetera. The plaintiffs have also averred that they have a "transnational presence" and thus carry out trade and commerce with entities all over the world. The plaintiffs have asserted that they have bailed out several US entities in the past. [See: Paragraph 4 and 5 of the plaint] Therefore, it does not lie in the mouth of the plaintiffs to submit that the arbitration proceedings, if allowed to continue, would be oppressive or vexatious.
xx. The judgements cited by the plaintiffs are those which concern part I of the 1996 Act i.e. Section 5, 8, or 11. Part I and Part II contain provisions that operate in their respective fields. The provisions of part I have no application insofar as chapter I of part II is concerned. [See: Fuerst Day Lawson vs. Jindal Exports, (2011) 8 SCC 333] Analysis and reasons: -
9. Having heard learned counsel for the parties and perused the record, what has emerged, are the following facts and circumstances.
i. Parties entered into various seller contracts between December 2019 and March 2020.
ii. These seller contracts concerned a total of 44 shipments. Out of 44 shipments, 30 shipments/containers landed in Nhava Sheva port at Mumbai. Insofar as the remaining 14 shipments/containers were concerned, these were delayed. There is a dispute as to why the shipments were delayed. It is Derco's case that the plaintiffs had conveyed that the delivery of the remaining 14 shipments/containers should be deferred.
iii. Out of the 30 shipments/containers, several shipments reached Nhava Sheva port before the lockdown was announced in the country i.e. the I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 20 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 midnight of 24.03.2020. According to Derco, 12 shipments/containers [commencing with the first one arriving on 27.02.2020] reached the aforementioned ports before the lockdown.
iv. The seller contracts are identical and inter alia contain the following term for resolution of inter partes disputes.
"... This contract contains all of the terms, provisions and conditions for the sale of the product from seller to buyer and no other terms and conditions, oral or otherwise, shall have any force or effect. If buyer & purchase order, terms and conditions or other documents state terms additional to, different from or inconsistent with this contract, this contract shall serve as a notice of seller & objection and rejection of such additional, different or inconsistent terms and the terms of this contract shall control and prevail for this transaction. This contract is subject to all of the Specialty Crop Trade Council (SCTC) terms and conditions for dried fruit, tree-nuts and kindred products including but not limited to the provision which requires buyer and seller to submit any and all disputes to binding arbitration to be administered by JAMS pursuant to its Streamlined Arbitration Rules & Procedures. Judgement on the Award may be entered in any court having jurisdiction. Any and all claims by the parties, including but not limited to, any claims relating to this contract shall be governed by the laws of the State of California. Any and all disputes which are not arbitrated shall be determined by the federal courts in the Eastern District of California and each party submits to the exclusive jurisdiction of such courts."
v. The aforesaid clause, thus, provided for the following.
a) The seller contracts were subject to the SCTC terms and conditions for dried fruits, tree nuts and kindred products including but not limited to the provisions which require buyer and seller to submit all disputes to binding arbitration to be administered by JAMS according to the JAMS Rules.
b) All the claims between the parties including but not limited to any claim relating to the seller contracts obtaining between them are governed by the laws of the State of California.
c) All or any dispute which is not arbitrated is required to be determined by the federal courts in the eastern district of California.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 21 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51
d) The provision for governing law and arbitration is made in Clause 29 and 30 of the SCTC. Insofar as Clause 29 is concerned, it provides that the validity, interpretation and performance of any sale to which the terms and conditions of SCTC apply are to be governed by the provisions on the United Nations Convention on Contracts for the International Sale of Goods [hereafter referred to as "Convention"] The clause also provides that in case the Convention does not expressly settle the rights and obligations of the parties, such matters will be governed by the domestic law State of California, USA. Insofar as Clause 30 is concerned, it provides that all disputes regarding export sales arising under the agreement between the buyer and the seller including disputes arising out of the terms and conditions of the SCTC shall be determined by final and binding arbitration under the JAMS Rules.
vi. The JAMS Rules provide an elaborate procedure for adjudication of disputes via arbitration. The JAMS Rules inter alia contain a procedure for commencement of arbitration [See: Rule 5]; submission of the notice of claim [See: Rule 7]; and resolution of issues concerning jurisdiction and arbitrability of disputes. [See: Rule 8(b)1] The arbitral tribunal, however, has, it appears, the discretion to decide as to whether or not such issues should be treated as preliminary matter.
vii. Derco, through its representative one, Mr. Ago Dermenjian via an email dated 04.05.2020 which was addressed to Mr. Akshay Kumar 1 Rule 8. Interpretation of Rules and Jurisdiction Challenges xxx xxx xxx
(b) Jurisdictional and arbitrability disputes, including disputes over the formation, existence, validity, interpretation or scope of the agreement under which Arbitration is sought, and who are proper Parties to the Arbitration, shall be submitted to and ruled on by the Arbitrator. The Arbitrator has the authority to determine jurisdiction and arbitrability issues as a preliminary matter.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 22 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 Bhatia/plaintiff no. 3 captured the options which had been put in place by the plaintiffs and their response to the same. As per this communication, the plaintiffs had given Derco two options. First, it releases the product and pays for the port and shipping line charges. Second, Derco reduces the sale price to USD 1.80 and pays for the port and shipping line charges. Since both these options did not work for Derco, it asked for issuance of NOCs for release of 30 FCLs.
viii. On 06.05.2020, Mr. Akshay Kumar Bhatia/plaintiff no. 3 wrote an e-mail to Mr. Ago Dermenjian of Derco that it would be required to carry out a "deceleration" of the seller contracts in the format enclosed with the said communication. The deceleration format furnished by Mr. Akshay Kumar Bhatia/plaintiff no. 3 was identical to the DCUs' which were executed for each contract, by Derco.
ix. The DCUs were executed on 07.05.2020 which inter alia recorded an undertaking that on receipt of NOCs, Derco would have no legal and financial claim/right/remedy/liability of whatsoever nature against the plaintiffs in respect of the seller contracts. Furthermore, Derco also undertook not to initiate any legal action which included not only civil and criminal action, but also arbitration proceedings against the plaintiffs, either directly or indirectly, which emanated out of the seller contracts.
x. The plaintiffs issued the NOCs on various dates in the second and third week of May 2020.
xi. On 02.06.2020, Derco published a statement which indicated to the world at large that Mr. Rakesh Kumar Bhatia and Mr. Akshay Kumar Bhatia had defaulted in their obligations towards it.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 23 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 xii. The plaintiffs, in turn, on 05.06.2020, issued a general communication to the tree nut industry explaining their position qua the transactions undertaken with Derco.
xiii. On 09.06.2020, Derco filed a compliant with the DGFT. In this complaint, Derco brought to the notice of the DGFT, the alleged default made by the plaintiffs in respect of goods which were subject matter of the 44 shipments/containers. Derco claimed that because of the plaintiffs' default, it had suffered a loss of USD 1, 450,000. Derco also pointed out that although Mr. Rakesh Kumar Bhatia and Mr. Akshay Kumar Bhatia claimed not to have money, immediately after the default, they commenced buying goods from California at lower prices.
xiv. This was followed by a notice dated 19.06.2020 issued via its advocates.
By this notice, Derco invoked arbitration proceedings and, in this behalf, adverted to the clause incorporated in the seller contracts.
xv. Apparently, on 22.06.2020, Derco issued another public communication regarding the conduct of the plaintiffs. The aforesaid actions of Derco propelled the plaintiffs to file a suit for damages. This suit is numbered as CS (OS) 149/2020. The suit came up, for the first time, on 26.06.2020. On that date, Derco was represented by Mr. Deshmukh who conveyed to the Court that the status quo as existing at 11:00 A.M. IST would be maintained concerning the publication of the purported defamatory material.
xvi. On 26.06.2020, the plaintiffs, through their advocates, filed their response to the complaint filed by Derco with the DGFT.
xvii. In the meanwhile, via an email dated 25.06.20220, JAMS issued a communication to the plaintiffs about the fact that it had received a demand for arbitration notice from Derco.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 24 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 xviii. On 26.06.2020, JAMS, via its case manager, sent information to the parties that it had commenced arbitration.
xix. In response to the same, the plaintiffs on 02.07.2020 sent a preliminary response to the JAMS' commencement of arbitration notice dated 26.06.2020. In this response, Mr. Akshay Kumar Bhatia informed JAMS that the plaintiffs were in the process of retaining a counsel to represent in the proceedings. In particular, reference was made to the DCUs. Based on the DCUs, it was contended that the seller contracts stood cancelled and, therefore, there was no valid and binding arbitration agreement in existence. The plaintiffs conveyed their objection to JAMS, exercising jurisdiction in the matter. The plaintiffs reserved their rights to approach a court of law for appropriate relief. Accordingly, 4 weeks were sought to engage a counsel and file an appropriate reply in the matter.
xx. Evidently, on 08.07.2020, JAMS responded to the plaintiffs' communication of 02.07.2020. In this communication, JAMS conveyed to the plaintiffs that the matter was being reviewed and that it will revert to the parties. This aspect was noticed in the order dated 10.07.2020 when the instant suit came up for hearing for the first time. Accordingly, the matter was directed to be listed on 05.08.2020.
xxi. On 09.07.2020, Derco, through its advocates, wrote to JAMS protesting against the matter being kept in abeyance. JAMS having reviewed the position, post the objection raised by Derco, informed the parties that under Rule 8 (b), the arbitrator has been conferred with the power to decide on aspects concerning jurisdiction and arbitrability of the disputes. The parties were also informed that under Rule 8(b), the arbitrator had the authority to determine jurisdiction and arbitrability issues as a preliminary matter. Accordingly, JAMS informed the parties that they will proceed with the administration of the matter and that the plaintiffs I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 25 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 could raise their objections with the arbitrator upon her/his appointment. The plaintiffs were also asked to participate in the selection process without waiving their objections qua the same. Besides this, the plaintiffs were informed that they had time till 29.07.2020 to respond to the list of arbitrator candidates and if they failed to do so by the given date or failed to respond according to the instructions provided in the commencement letter, it would be deemed that they had accepted all of the arbitrator candidates.
xxii. This propelled, Mr. Akshay Kumar Bhatia to shoot off an e-mail dated 14.07.2020 to JAMS. In this communication, it was sought to be brought to the notice of JAMS that this Court was seized of the instant suit. A copy of the order dated 10.07.2020, passed by the Court, was filed. A request was made that JAMS should keep the proceedings in abeyance (which included the appointment of the arbitrator) till the matter is adjudicated by this Court.
xxiii. JAMS, vide email dated 16.07.2020, called upon Derco's counsel to give his response. As requested, Derco's counsel provided his response via a return e-mail dated 16.07.2020. In sum, Derco's counsel stated that JAMS had the jurisdiction to hear and adjudicate upon Derco's claims. It was also emphasized that the Courts in India did not possess the jurisdiction or authority to enter into binding determination concerning claims which were the subject matter of JAMS proceedings.
xxiv. This resulted in Mr. Akshay Kumar Bhatia writing another e-mail dated 18.07.2020 to JAMS. In this e-mail, the plaintiffs reiterated their stand which was that the JAMS proceedings should await the outcome of the proceedings in the instant suit. Reference was once again made to the DCUs. Derco's counsel responded to the same via a brief e-mail dated I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 26 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 18.07.2020. Via this communication, it was reiterated that there should be no further delay in appointment of the arbitration by JAMS.
xxv. This resulted in further correspondence being exchanged with JAMS both on behalf of the plaintiffs and Derco. These were communications which were sent on 19.07.2020 and 20.07.2020. Finally, on 21.07.2020, JAMS addressed a communication to the parties, which, in effect, conveyed to the plaintiffs that the deadline to submit strikes and ranks qua the arbitrators remained as indicated earlier i.e. 29.07.2020. The communication went on to reiterate the position articulated in its previous correspondence dated 13.07.2020, which is, that the aspects concerning jurisdiction and arbitrability had to be submitted to and ruled upon by the arbitrator and the arbitrator had the authority to determine as to whether the same would be treated a preliminary matter.
xxvi. On 31.07.2020, JAMS appointed one, Hon. Ann Kough, a former judge as an arbitrator in the matter.
10. Given the aforesaid facts and circumstances, the central issue which arises for consideration is: as to whether the seller contracts which, admittedly, contained an interlinked dispute resolution mechanism [via the arbitration route] were brought to an end with the execution of the DCUs?
10.1. In the plaint, it has been averred that the execution of the DCUs resulted in the cancellation of the seller contracts. Mr. Nayar, though, in the course of his submissions, used various expressions to describe the event such as "novation"/"substitution", and even "settlement" - each of which, to my mind, are conceptually different, although, recourse to any of these methods could be taken to bring the contractual obligations to an end qua the original contract or parts of the original contract. However, the edifice of novation/substitution or settlement would be consent arrived at between the parties. The consent, inter I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 27 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 alia, should be free of coercion, duress or fraud. It is this aspect of the matter which is discussed in the latter part of the judgement.
10.2. Admittedly, in this case, the arbitral process commenced, if not earlier, certainly when JAMS issued a communication dated 26.06.2020 to the parties, wherein, it indicated the commencement of the arbitration proceedings. Since the plaintiffs had filed their preliminary response to the JAMS' commencement of arbitration notice dated 26.06.2020, correspondence flowed between JAMS and the parties [which has been detailed out hereinabove] with JAMS informing the parties, in particular, the plaintiffs, that the arbitrator under JAMS Rules has the authority to rule on aspects concerning jurisdiction and arbitrability of disputes. Furthermore, JAMS went on to emphasize that the discretion lay with the arbitrator as to whether or not to treat these issues as a preliminary matter.
10.3. In this behalf, reference was made to Rule 8(b) of the JAMS Rules. Since this communication, once again, led to the exchange of correspondence both, between disputants as well as JAMS, JAMS, once again, vide its communication dated 21.07.2020 informed the parties that its position, as articulated in the communication dated 13.07.2020, stands unchanged. Accordingly, the plaintiffs were directed to participate in the appointment of the arbitrator; the deadline for which was to expire on 29.07.2020.
10.4. Resultantly, on 31.07.2020, Hon. Ann Kough was appointed as an arbitrator.
11. The question, therefore, which arises for consideration is: as to whether this Court should stymie the arbitration proceedings, at this stage, albeit without a trial by acceding to the request of the plaintiffs to injunct the process of adjudication of disputes qua a mechanism agreed to by the parties solely based on the factum of execution of the DCUs which, Derco says, were executed under duress and coercion.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 28 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 11.1. It is in this background that Derco has moved the captioned application under Section 45 of the 1996 Act. Section 45, which falls in Part II, Chapter I of the 1996 Act, commences with a non-obstante clause. It casts an obligation on the judicial authority i.e. the Court, in this case, to refer the parties to arbitration when it is seized with an action in a matter (in respect of which parties have made an agreement referred to in Section 44 of the 1996 Act) upon a request being made by one of the parties or any person claiming through him.
11.2. This obligation is mandatory as the provision contains the expression "shall" and opens with the words "Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908)". The only exception to the rule requiring the judicial authority/Court to refer the parties to arbitration is when the judicial authority/Court reaches a "prima facie" conclusion that the arbitration agreement is "null and void, inoperative or incapable of being performed".
12. Therefore, the arguments advanced on behalf of the plaintiffs have to be examined, in my view, only in this framework. The facts, which have emerged, to which I have referred to hereinabove, demonstrate, albeit prima facie, the following, quite clearly.
i. The parties had entered into seller contracts. Derco was required to
supply goods which were the subject matter of 44
consignments/containers. Out of 44 consignments/containers, 30
consignments/containers had reached Nhava Sheva port. Furthermore, out of the 30 consignments/containers, 12 consignments/containers had arrived at Nhava Sheva before the midnight of 24.03.2020 i.e. the date when the lockdown was triggered in the country. The e-mail dated 04.05.2020 issued on behalf of Derco is suggestive of the fact that plaintiffs had raised an issue as to how the financial burden had to be borne. According to Derco, the following 2 options were given:
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 29 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 • "Derco releases product and Derco pays for port and shipping line charges; or • Derco reduces the sale price to $1.80 and Derco pays port and shipping line charges"
ii. Derco did not accept either of the two options and accordingly requested plaintiffs to issue NOCs for the 30 consignments which had reached Nhava Sheva port.
iii. Mr. Akshay Kumar Bhatia/plaintiff no. 3 via e-mail dated 06.05.2020 communicated the following to Derco. [This e-mail has also been filed by Derco in CS (OS) 149/2020] "Dear Sir, We need a letter from your end as a "Deceleration" for our all the contracts. Kindly find attached the format in which we need this Deceleration from your end on your letter heard [sic: head] duly signed and stamped that is required. We would need a separate letter for all the contracts and accordingly please do the needful and send us scanned color copies of the same on email. Thanks and Best Regards, Akshay K. Bhatia Partner Uttam Chand Rakesh Kumar 573, Katra Ishwar Bhawan , Khari Baoli, Delhi - 110006, India. Mobile - + 91 9810714805 / 9810024805"
iv. The DCUs were executed concededly in line with the format given by Mr. Akshay Kumar Bhatia/plaintiff no. 3.
v. The NOCs which enabled Derco to resell the goods to third parties were issued by the plaintiffs only after the DCUs were executed by Derco.
vi. Derco has claimed that it decided to resell the goods to third parties as it was required to mitigate its losses concerning port charges, demurrage and loss on account of the goods perishing due to heat and infestation.
13. What emerges is that the plaintiffs have not been able to furnish any good reason as to why Derco would have decided to sell its goods to third parties I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 30 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 when it had a valid and a viable arrangement in place with them for sale of its goods.
13.1. Derco's contention that it was made to execute DCUs in the format given by Mr. Akshay Kumar Bhatia/plaintiff no. 3 when it refused to accept the options put on the table on behalf of the plaintiffs, prima facie, has a ring of credibility in it. As to whether Derco is able to substantiate its stand with robust evidence can be known only after a trial is held in the matter.
13.2. It cannot be doubted that the parties had agreed to resolve their disputes via arbitration. The mechanism for the same is found in the seller contracts which is interlinked with Clause 30 of SCTC. Clause 30 of SCTC reads as follows.
"ARBITRATION:
30. All disputes regarding export sales arising under the agreement between Buyer and Seller, including disputes arising out of these terms and conditions, shall be determined by final and binding arbitration pursuant to the JAMS Streamlined Arbitration Rules & Procedures. A copy of the JAMS Streamlined Arbitration Rules & Procedures may be viewed at www.shipsctc.org or www.jamsadr.com. Both parties shall review and familiarize themselves with the contents of the JAMS Streamlined Arbitration Rules & Procedures and agree to be bound by them. The place of arbitration shall be held in the State of California, USA. The language to be used in the arbitral proceeding will be English. If neither of the parties to the dispute is a member of SCTC, JAMS has no obligation to conduct the arbitration and the parties will be required to utilize another organization qualified to conduct a commercial arbitration.
The parties shall bear the costs of arbitration, including administrative expenses and arbitrators' fees, in equal proportions or as otherwise ordered by JAMS.
Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Failure of a member of SCTC to comply with an award shall be grounds for suspension or expulsion pursuant to Sections 2.08 and 2.09 of SCTC's Bylaws.
The results or outcome of any arbitration proceeding conducted pursuant to JAMS Streamlined Arbitration Rules & Procedures, as well as information relating to a party's compliance with or enforcement of an arbitration award, may be posted or otherwise published by SCTC online on SCTC's website. SCTC members may post such information on the SCTC website pursuant to SCTC's Terms of Use then in effect for the use of its site. The SCTC Terms of I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 31 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 Use may be viewed at www.shipsctc.org and are expressly referred to and incorporated herein by this reference."
13.3. A perusal of Clause 30 of SCTC would show that the parties have agreed to the application of the JAMS Rules for adjudication of their disputes. This clause would also show that parties have agreed to arbitration being held in the State of California.
13.4. Clause 29 of the SCTC provides that for interpretation and performance of any sale transaction to which the terms and conditions of SCTC apply, the provisions of the Convention will govern the same and to the extent, the Convention does not expressly settle the rights and obligations of the parties, they shall be governed by the domestic law of the State of California.
13.5. Therefore, if the DCUs are taken out of the equation, as they are by me, given my prima facie conclusion that they were a product of coercion and duress employed by the plaintiffs, it cannot be said that there is no arbitration agreement in existence which binds the parties. The arbitration agreement which is in existence, to my mind, does not fall in the exception which is carved out in Section 45 of the 1996 Act. In other words, the arbitration agreement obtaining between parties is neither null and void, nor inoperative, nor is it incapable of being performed.
13.6. The foundation of the plaintiffs' argument is that the DCUs which, to my mind, are fraught with the legal lacunae concerning not only coercion and duress but also lack of consideration cannot, at this stage, be used to lull this Court into granting an injunction over an arbitration process which commenced even before the instant action was moved.
13.7. Furthermore, an anti-arbitration injunction ought to be granted by a court only if a clear case is made out by the plaintiff that the proceedings before the arbitral tribunal would be vexatious and/or oppressive as it is, in my opinion, incumbent upon the Court before which such an action is instituted to encourage I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 32 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 parties to have their disputes determined by the forum chosen by them. This principle would apply with greater force where, in the Court's assessment, a trial would be necessary qua issues which have arisen between the disputants. [See: Himachal Sorang Power Private Limited vs. NCC Infrastructure Holdings Limited2, 2019 SCC OnLine Del 7575] 13.8. The judgements cited on behalf of the plaintiffs pertain to Part I of the 1996 Act and deal with accord and satisfaction. These judgements3 pertain to a period before the Arbitration and Conciliation (Amendment) Act, 2015 [in short "2015 Amendment Act"] came into force on 23.10.2015 and was published in the Gazette of India on 01.01.2016.
13.9. Amongst the amendments brought about via the 2015 Amendment Act was the insertion of subsection (6A) in Section 11 and amended subsection (1) 2 "Parameters for grant of anti-arbitration injunctions
127. Thus, if I were to attempt an encapsulation of the broad parameters governing anti- arbitration injunctions, they would be the following:
i) The principles governing anti-suit injunction are not identical to those that govern an anti-arbitration injunction.
ii) Court's are slow in granting an anti-arbitration injunction unless it comes to the conclusion that the proceeding initiated is vexatious and/or oppressive.
iii) The Court which has supervisory jurisdiction or even personal jurisdiction over parties has the power to disallow commencement of fresh proceedings on the ground of res judicata or constructive res judicata. If persuaded to do so the Court could hold such proceeding to be vexatious and/or oppressive. This bar could obtain in respect of an issue of law or fact or even a mixed question of law and fact.
iv) The fact that in the assessment of the Court a trial would be required would be a factor which would weigh against grant of anti-arbitration injunction.
v) The aggrieved should be encouraged to approach either the Arbitral Tribunal or the Court which has the supervisory jurisdiction in the matter. An endeavour should be made to support and aid arbitration rather than allow parties to move away from the chosen adjudicatory process.
vi) The arbitral tribunal could adopt a procedure to deal with "re-arbitration complaint"
(depending on the rules or procedure which govern the proceeding) as a preliminary issue."3
[See: Union of India and Others vs. Hari Singh, (2010) 15 SCC 201; and Nathani Steels Ltd. vs. Associated Constructions, 1995 Supp (3) SCC 324.] I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 33 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 in Section 8 of the 1996 Act. Section 11 (6A) confines the enquiry of the Supreme Court/High Court while considering the application for appointment of the arbitrator under subsection (4) of subsection (5) or even subsection (6) to the existence of an arbitration agreement notwithstanding any judgement, decree or order of the Court. Likewise, under Subsection (1) of Section 8, a judicial authority before whom an action is brought in a matter, which is a subject matter of an arbitration agreement, is bound to refer the parties to arbitration if a party to such an agreement or any person claiming through or under him so applies albeit not later than the date of submitting his first statement on the dispute, notwithstanding any judgement, decree or order of the Supreme Court or any Court unless it concludes that "prima facie no valid arbitration agreement exists".
14. Thus, the scope of enquiry by the courts was, considerably, narrowed down. In the context of Section 11, the Supreme Court in Duro Felguera, S.A. vs. Gangavaram Port Ltd.4, (2017) 9 SCC 729 stated, in as many terms, that the 4 This extract is taken from Duro Felguera, S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764 : 2017 SCC OnLine SC 1233 at page 759 "48. Section 11(6-A) added by the 2015 Amendment, reads as follows:
"11. (6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement."
(emphasis supplied) From a reading of Section 11(6-A), the intention of the legislature is crystal clear i.e. the court should and need only look into one aspect--the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple--it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement.
xxx xxx xxx
59. The scope of the power under Section 11(6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. [SBP and Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] . This position continued till the amendment brought about in 2015. After the amendment, all that the courts need to see is whether an arbitration agreement exists--nothing more, nothing less. The legislative policy and purpose is I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 34 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 view taken by it in SBP and Co. vs. Patel Engg. Ltd., (2005) 8 SCC 618 and National Insurance Co. Ltd. vs. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 was no longer viable as after the insertion of subsection (6A) in Section 11, the Court was only required to examine as to whether or not the arbitration agreement was in existence.
14.1. It may be relevant to note, at this point in time, that in United India Insurance Co. Ltd. vs. Antique Art Exports (P) Ltd., (2019) 5 SCC 362, which was also a case dealing with accord and satisfaction, the Supreme Court had rejected the plea to refer the matter to an arbitral tribunal and had distinguished the judgement rendered in Duro Felguera.
14.2. However, a three-judge bench of the Supreme Court in Mayavati Trading (P) Ltd. vs. Pradyuat Deb Burman, (2019) 8 SCC 714 after tracing the history of the amendments made to the 1996 Act right up until the amendment made in 2019 via the Arbitration and Conciliation (Amendment) Act, 2019 [Act 33 of 2019] (in short "2019 Amendment Act") reiterated the view taken in Duro Felguera and overruled its own judgement in Antique Art Exports which comprised a bench of 2 judges.
14.3. The judgement in WAPCOS Ltd. vs. Salma Dam Joint Venture, (2020) 3 SCC 169, which has been relied upon by the plaintiffs, inter alia relied upon the judgement in Antique Art Exports. The judgement of the larger bench i.e. Mayavati Trading was not brought to the notice of the Court.
14.4. The Supreme Court in Mayavati Trading, even while noticing that subsection (6A) of Section 11 of the 1996 Act had been omitted by virtue of Section 3 of the 2019 Amendment Act [although not notified], by an interpretative process, which included placing reliance on the report rendered in 2017 by Hon'ble Mr. Justice B.N. Krishna, sustained the view held in Duro essentially to minimise the Court's intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected." I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 35 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 Felguera that the Court has to narrow down its scrutiny to whether or not an arbitration agreement is in existence. The relevant observations in Mayavati Trading are extracted hereafter.
"3. Having said this, however, during the course of argument, a recent decision of this Court was pointed out, namely, United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd. [United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd., (2019) 5 SCC 362 : (2019) 2 SCC (Civ) 785] In this judgment, purportedly following Duro Felguera, SA v. Gangavaram Port Ltd. [Duro Felguera, SA v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764] , this Court held: (Antique Art Exports (P) Ltd.
case [United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd., (2019) 5 SCC 362 : (2019) 2 SCC (Civ) 785] , SCC p. 372, para 20) "20. The submission of the learned counsel for the respondent that after insertion of sub-section (6-A) to Section 11 of the Amendment Act, 2015 the jurisdiction of this Court is denuded and the limited mandate of the Court is to examine the factum of existence of an arbitration and relied on the judgment in Duro Felguera, SA v. Gangavaram Port Ltd. [Duro Felguera, SA v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764] The exposition in this decision is a general observation about the effect of the amended provisions which came to be examined under reference to six arbitrable agreements (five agreements for works and one corporate guarantee) and each agreement contains a provision for arbitration and there was serious dispute between the parties in reference to constitution of Arbitral Tribunal whether there has to be Arbitral Tribunal pertaining to each agreement. In the facts and circumstances, this Court took note of sub-section (6-A) introduced by the Amendment Act, 2015 to Section 11 of the Act and in that context observed that the preliminary disputes are to be examined by the arbitrator and are not for the Court to be examined within the limited scope available for appointment of arbitrator under Section 11(6) of the Act. Suffice it to say that appointment of an arbitrator is a judicial power and is not a mere administrative function leaving some degree of judicial intervention; when it comes to the question to examine the existence of a prima facie arbitration agreement, it is always necessary to ensure that the dispute resolution process does not become unnecessarily protracted.
21. In the instant case, prima facie no dispute subsisted after the discharge voucher being signed by the respondent without any demur or protest and claim being finally settled with accord and satisfaction and after 11 weeks of the settlement of claim a letter was sent on 27-7-2016 for the first time raising a voice in the form of protest that the discharge voucher was signed under undue influence and coercion with no supportive prima facie evidence being placed on record in absence thereof, it must follow that the claim had been settled with accord and satisfaction leaving no arbitral dispute subsisting under the agreement to be referred to the arbitrator for adjudication."
4. Section 11(6-A) was added by the Amendment Act of 2015 and states as follows:
"11. (6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement."
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5. Mr Mukul Rohatgi, learned Senior Advocate, has pointed out that by an Amendment Act of 2019, which has since been passed, this sub-section has now been omitted. Section 3 of the Amendment Act of 2019 insofar as it pertains to this omission has not yet been brought into force. The omission is pursuant to a High Level Committee Review regarding institutionalisation of arbitration in India, headed by Justice B.N. Srikrishna. The Report given by this Committee is dated 30-7-2017. The omission of the sub-section is not so as to resuscitate the law that was prevailing prior to the Amendment Act of 2015. The reason for omission of Section 11(6-A) is given in the Report as follows:
"Thus, the 2015 Amendments to Section 11 are geared towards facilitating speedy disposal of Section 11 applications by: (a) enabling the designation of any person or institution as an appointing authority for arbitrators in addition to the High Court or Supreme Court under Section 11; (b) limiting challenges to the decision made by the appointing authority; and (c) requiring the expeditious disposal of Section 11 applications, preferably within the prescribed 60-day time period. While these amendments no doubt facilitate the speedy disposal of Section 11 applications to a large extent, they do not go all the way in limiting court interference. Pursuant to the amendments, the appointment of arbitrators under Section 11 may be done: (a) by the Supreme Court or the High Court; or (b) by a person or institution designated by such court in exercise of an administrative power following Section 11(6-B). In either case, the amendments still require the Supreme Court/the High Court to examine whether an arbitration agreement exists, which can lead to delays in the arbitral process as extensive evidence and arguments may be led on the same. The Committee notes that the default procedure for appointment of arbitrators in other jurisdictions does not require extensive court involvement as in India. For instance, in Singapore, the relevant provision of the IAA provides that where the parties fail to agree on the appointment of the third arbitrator, within 30 days of the receipt of the first request by either party to appoint the arbitrator, the appointment shall be made by the appointing authority (the President of the SIAC) by the request of the parties. [See Section 9-A(2) read with Sections 2(1) and 8(2), IAA.] The arbitration legislation of Hong Kong incorporates Article 11 of the UNCITRAL Model Law relating to the appointment of arbitrators. Like in the case of Singapore where the SIAC is the appointing authority for arbitrators, the default appointment of arbitrator(s) is done by the HKIAC. [Section 13(2) read with Section 24, AO.] In the United Kingdom, in the case of default of one party to appoint an arbitrator, the other party may appoint his arbitrator as the sole arbitrator after giving notice of 7 clear days to the former of his intention to do so. (Section 17, AA) The defaulting party may apply to the court to set aside the appointment. [Section 17(3), AA] In case of a failure of the appointment procedure, any party may apply to the court to make the appointment or give directions regarding the making of an appointment. [Section 18(2), AA] The Committee recommends the adoption of the practice followed in Singapore and Hong Kong in the Indian scenario -- apart from avoiding delays at court level, it may also give impetus to institutional arbitration.
*** Recommendations I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 37 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51
1. In order to ensure speedy appointment of arbitrators, Section 11 may be amended to provide that the appointment of arbitrator(s) under the section shall only be done by arbitral institution(s) designated by the Supreme Court (in case of international commercial arbitrations) or the High Court (in case of all other arbitrations) for such purpose, without the Supreme Court or High Courts being required to determine the existence of an arbitration agreement."
6. Thus, it can be seen that after the Amendment Act of 2019, Section 11(6-A) has been omitted because appointment of arbitrators is to be done institutionally, in which case the Supreme Court or the High Court under the old statutory regime are no longer required to appoint arbitrators and consequently to determine whether an arbitration agreement exists.
7. Prior to Section 11(6-A), this Court in several judgments beginning with SBP & Co. v. Patel Engg. Ltd. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] has held that at the stage of a Section 11(6) application being filed, the court need not merely confine itself to the examination of the existence of an arbitration agreement but could also go into certain preliminary questions such as stale claims, accord and satisfaction having been reached, etc.
8. In ONGC Mangalore Petrochemicals Ltd. v. ANS Constructions Ltd. [ONGC Mangalore Petrochemicals Ltd. v. ANS Constructions Ltd., (2018) 3 SCC 373 : (2018) 2 SCC (Civ) 405] , this Court in a case which arose before the insertion of Section 11(6-A) dismissed a Section 11 petition on the ground that accord and satisfaction had taken place in the following terms: (SCC p. 390, para 31) "31. Admittedly, no-dues certificate was submitted by the contractee company on 21-9-2012 and on their request completion certificate was issued by the appellant contractor. The contractee, after a gap of one month, that is, on 24-10-2012, withdrew the no-dues certificate on the grounds of coercion and duress and the claim for losses incurred during execution of the contract site was made vide letter dated 12-1-2013 i.e. after a gap of 3½ (three-and-a-half) months whereas the final bill was settled on 10-10-2012. When the contractee accepted the final payment in full and final satisfaction of all its claims, there is no point in raising the claim for losses incurred during the execution of the contract at a belated stage which creates an iota of doubt as to why such claim was not settled at the time of submitting final bills that too in the absence of exercising duress or coercion on the contractee by the appellant contractor. In our considered view, the plea raised by the contractee company is bereft of any details and particulars, and cannot be anything but a bald assertion. In the circumstances, there was full and final settlement of the claim and there was really accord and satisfaction and in our view no arbitrable dispute existed so as to exercise power under Section 11 of the Act. The High Court was not, therefore, justified [ANS Constructions Ltd. v. ONGC Mangalore Petrochemicals Ltd., 2015 SCC OnLine Kar 1401] in exercising power under Section 11 of the Act."
9. The 246th Law Commission Report dealt with some of these judgments and felt that at the stage of a Section 11(6) application, only "existence" of an arbitration agreement ought to be looked at and not other preliminary issues. In a recent judgment of this Court, namely, Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd. [Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209 : 2019 SCC OnLine SC 515] , this Court adverted to the said Law Commission Report and held: (Garware Wall Ropes Ltd. case [Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209 : 2019 SCC OnLine SC 515] , SCC paras 8-14) I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 38 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 "8. The case law under Section 11(6) of the Arbitration Act, as it stood prior to the Amendment Act, 2015, has had a chequered history.
9. In Konkan Railway Corpn. Ltd. v. Mehul Construction Co. [Konkan Railway Corpn. Ltd. v. Mehul Construction Co., (2000) 7 SCC 201] (Konkan Railway 1), it was held that the powers of the Chief Justice under Section 11(6) of the 1996 Act are administrative in nature, and that the Chief Justice or his designate does not act as a judicial authority while appointing an arbitrator. The same view was reiterated in Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd. [Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd., (2002) 2 SCC 388] (Konkan Railway 2).
10. However, in SBP & Co. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] , a seven-Judge Bench overruled this view and held that the power to appoint an arbitrator under Section 11 is judicial and not administrative. The conclusions of the seven-Judge Bench were summarised in para 47 of the aforesaid judgment. We are concerned directly with sub-paras (i), (iv) and (xii), which read as follows: (SCC pp. 663-64) '(i) The power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the Act is not an administrative power. It is a judicial power.
***
(iv) The Chief Justice or the designated Judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be his own jurisdiction to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or the designated Judge would be entitled to seek the opinion of an institution in the matter of nominating an arbitrator qualified in terms of Section 11(8) of the Act if the need arises but the order appointing the arbitrator could only be that of the Chief Justice or the designated Judge.
***
(xii) The decision in Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd. [Konkan Railway Corpn. Ltd. v. Rani Construction (P) Ltd., (2002) 2 SCC 388] is overruled.'
11. This position was further clarified in Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] as follows: (SCC p. 283, para 22) '22. Where the intervention of the court is sought for appointment of an Arbitral Tribunal under Section 11, the duty of the Chief Justice or his designate is defined in SBP & Co. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] This Court identified and segregated the preliminary issues that may arise for consideration in an application under Section 11 of the Act into three categories, that is, (i) issues which the Chief Justice or his designate is bound to decide; (ii) issues which he can also decide, that is, issues which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide.
22.1. The issues (first category) which the Chief Justice/his designate will have to decide are:
(a) Whether the party making the application has approached the appropriate High Court.
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(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement. 22.2. The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the Arbitral Tribunal) are:
(a) Whether the claim is a dead (long-barred) claim or a live claim.
(b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection.
22.3. The issues (third category) which the 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.'
12. As a result of these judgments, the door was wide open for the Chief Justice or his designate to decide a large number of preliminary aspects which could otherwise have been left to be decided by the arbitrator under Section 16 of the 1996 Act. As a result, the Law Commission of India, by its Report No. 246 submitted in August 2014, suggested that various sweeping changes be made in the 1996 Act. Insofar as SBP & Co. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] are concerned, the Law Commission examined the matter and recommended the addition of a new sub-section, namely, sub-section (6-A) in Section 11. In so doing, the Law Commission recommendations which are relevant and which led to the introduction of Section 11(6-A) are as follows:
'28. The Act recognises situations where the intervention of the Court is envisaged at the pre-arbitral stage i.e. prior to the constitution of the Arbitral Tribunal, which includes Sections 8, 9, 11 in the case of Part I arbitrations and Section 45 in the case of Part II arbitrations. Sections 8, 45 and also Section 11 relating to "reference to arbitration" and "appointment of the Tribunal", directly affect the constitution of the Tribunal and functioning of the arbitral proceedings. Therefore, their operation has a direct and significant impact on the "conduct" of arbitrations. Section 9, being solely for the purpose of securing interim relief, although having the potential to affect the rights of parties, does not affect the "conduct" of the arbitration in the same way as these other provisions. It is in this context the Commission has examined and deliberated the working of these provisions and proposed certain amendments.
29. The Supreme Court has had occasion to deliberate upon the scope and nature of permissible pre-arbitral judicial intervention, especially in the context of Section 11 of the Act. Unfortunately, however, the question before the Supreme Court was framed in terms of whether such a power is a "judicial" or an "administrative" power -- which obfuscates the real issue underlying such nomenclature/description as to--
-- the scope of such powers -- i.e. the scope of arguments which a court (Chief Justice) will consider while deciding whether to appoint an arbitrator or not
-- i.e. whether the arbitration agreement exists, whether it is null and void, whether it is voidable, etc.; and which of these it should leave for decision of the Arbitral Tribunal.
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-- the nature of such intervention -- i.e. would the court (Chief Justice) consider the issues upon a detailed trial and whether the same would be decided finally or be left for determination of the Arbitral Tribunal.
30. After a series of cases culminating in the decision in SBP & Co. v. Patel Engg. Ltd. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] , the Supreme Court held that the power to appoint an arbitrator under Section 11 is a "judicial" power. The underlying issues in this judgment, relating to the scope of intervention, were subsequently clarified by Raveendran, J. in National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd. [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] , where the Supreme Court laid down as follows:
(SCC p. 283, para 22) '22.1. The issues (first category) which Chief Justice/his designate will have to decide are:
(a) Whether the party making the application has approached the appropriate High Court?
(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement?
22.2. The issues (second category) which the Chief Justice/his designate may choose to decide are:
(a) Whether the claim is a dead (long barred) claim or a live claim?
(b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection?
22.3. The issues (third category) which the Chief Justice/his designate should leave exclusively to the Arbitral Tribunal are:
(a) 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)?
(b) Merits of any claim involved in the arbitration.'
31. The Commission is of the view that, in this context, the same test regarding scope and nature of judicial intervention, as applicable in the context of Section 11, should also apply to Sections 8 and 45 of the Act -- since the scope and nature of judicial intervention should not change upon whether a party (intending to defeat the arbitration agreement) refuses to appoint an arbitrator in terms of the arbitration agreement, or moves a proceeding before a judicial authority in the face of such an arbitration agreement.
32. In relation to the nature of intervention, the exposition of the law is to be found in the decision of the Supreme Court in Shin-EtsuChemical Co. Ltd. v. Aksh Optifibre Ltd. [Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd., (2005) 7 SCC 234] , (in the context of Section 45 of the Act), where the Supreme Court has ruled in favour of looking at the issues/controversy only prima facie.
33. It is in this context, the Commission has recommended amendments to Sections 8 and 11 of the Arbitration and Conciliation Act, 1996. The scope of the judicial intervention is only restricted to situations where the court/judicial authority finds that the arbitration agreement does not exist or is null and void. Insofar as the nature of intervention is concerned, it is recommended that in the event the court/judicial authority is prima facie satisfied against the argument challenging the arbitration agreement, it shall appoint the arbitrator and/or refer the parties to I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 41 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 arbitration, as the case may be. The amendment envisages that the judicial authority shall not refer the parties to arbitration only if it finds that there does not exist an arbitration agreement or that it is null and void. If the judicial authority is of the opinion that prima facie the arbitration agreement exists, then it shall refer the dispute to arbitration, and leave the existence of the arbitration agreement to be finally determined by the Arbitral Tribunal. However, if the judicial authority concludes that the agreement does not exist, then the conclusion will be final and not prima facie.
The amendment also envisages that there shall be a conclusive determination as to whether the arbitration agreement is null and void. In the event that the judicial authority refers the dispute to arbitration and/or appoints an arbitrator, under Sections 8 and 11 respectively, such a decision will be final and non-appealable. An appeal can be maintained under Section 37 only in the event of refusal to refer parties to arbitration, or refusal to appoint an arbitrator.'
13. Pursuant to the Law Commission recommendations, Section 11(6-A) was introduced first by Ordinance and then by the Amendment Act, 2015. The Statement of Objects and Reasons which were appended to the Arbitration and Conciliation (Amendment) Bill, 2015 which introduced the Amendment Act, 2015 read as follows:
'Statement of Objects and Reasons ***
6. It is proposed to introduce the Arbitration and Conciliation (Amendment) Bill, 2015, to replace the Arbitration and Conciliation (Amendment) Ordinance, 2015, which inter alia, provides for the following, namely--
(i) to amend the definition of "Court" to provide that in the case of international commercial arbitrations, the Court should be the High Court;
(ii) to ensure that an Indian Court can exercise jurisdiction to grant interim measures, etc., even where the seat of the arbitration is outside India;
(iii) an application for appointment of an arbitrator shall be disposed of by the High Court or Supreme Court, as the case may be, as expeditiously as possible and an endeavour should be made to dispose of the matter within a period of sixty days;
(iv) to provide that while considering any application for appointment of arbitrator, the High Court or the Supreme Court shall examine the existence of a prima facie arbitration agreement and not other issues;
(v) to provide that the Arbitral Tribunal shall make its award within a period of twelve months from the date it enters upon the reference and that the parties may, however, extend such period up to six months, beyond which period any extension can only be granted by the Court, on sufficient cause;
(vi) to provide that a model fee schedule on the basis of which High Courts may frame rules for the purpose of determination of fees of Arbitral Tribunal, where a High Court appoints arbitrator in terms of Section 11 of the Act;
(vii) to provide that the parties to dispute may at any stage agree in writing that their dispute be resolved through fast-track procedure and the award in such cases shall be made within a period of six months;
(viii) to provide for neutrality of arbitrators, when a person is approached in connection with possible appointment as an arbitrator;
(ix) to provide that application to challenge the award is to be disposed of by the Court within one year.
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7. The amendments proposed in the Bill will ensure that arbitration process becomes more user-friendly, cost effective and leads to expeditious disposal of cases.'
14. A reading of the Law Commission Report, together with the Statement of Objects and Reasons, shows that the Law Commission felt that the judgments in SBP & Co. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] required a relook, as a result of which, so far as Section 11 is concerned, the Supreme Court or, as the case may be, the High Court, while considering any application under Sections 11(4) to 11(6) is to confine itself to the examination of the existence of an arbitration agreement and leave all other preliminary issues to be decided by the arbitrator."
(emphasis supplied)
10. This being the position, it is clear that the law prior to the 2015 Amendment that has been laid down by this Court, which would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgment [United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd., (2019) 5 SCC 362 :
(2019) 2 SCC (Civ) 785] , as Section 11(6-A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment in Duro Felguera, SA [Duro Felguera, SA v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764] -- see paras 48 & 59 [Ed.: The said paras 48 & 59 of Duro Felguera, SA v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764, for ready reference, read as follows:"48.
Section 11(6-A) added by the 2015 Amendment, reads as follows:"11. (6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement."(emphasis supplied)From a reading of Section 11(6-A), the intention of the legislature is crystal clear i.e. the court should and need only look into one aspect--the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple--it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement.***59. The scope of the power under Section 11(6) of the 1996 Act was considerably wide in view of the decisions in SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618 and National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117. This position continued till the amendment brought about in 2015. After the amendment, all that the courts need to see is whether an arbitration agreement exists--nothing more, nothing less. The legislative policy and purpose is essentially to minimise the Court's intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected."] .
11. We, therefore, overrule the judgment in Antique Art Exports (P) Ltd. [United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd., (2019) 5 SCC 362 : (2019) 2 SCC (Civ) 785] as not having laid down the correct law but dismiss this appeal for the reason given in para 3 above."
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 43 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 14.5. I must indicate herein, just as an aside, that even in cases of accord and satisfaction, the Supreme Court in Boghara Polyfab5 [a case decided prior to the enactment of the 2015 Amendment Act] had opined that the Chief Justice or his delegate could either decide this category of cases on his own or wherever thought fit leave such an issue for a decision to be rendered by the arbitral tribunal. The relevant observations in this behalf are extracted hereafter.
"22. Where the intervention of the court is sought for appointment of an Arbitral Tribunal under Section 11, the duty of the Chief Justice or his designate is defined in SBP & Co. [(2005) 8 SCC 618] This Court identified and segregated the preliminary issues that may arise for consideration in an application under Section 11 of the Act into three categories, that is, (i) issues which the Chief Justice or his designate is bound to decide; (ii) issues which he can also decide, that is, issues which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide. 22.1. The issues (first category) which the Chief Justice/his designate will have to decide are:
(a) Whether the party making the application has approached the appropriate High Court.
(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement.
22.2. The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the Arbitral Tribunal) are:
(a) Whether the claim is a dead (long-barred) claim or a live claim.
(b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection."
[Emphasis is mine] 14.6. In a recent judgement rendered in Oriental Insurance Company Limited and Another vs. Dicitex Furnishing Limited, (2020) 4 SCC 621 the Supreme Court sustained the view taken by the High Court that the disputes were 5 Also see: Kvaerner Cementation India Limited vs. Bajranglal Agarwal and Another, (2012) 5 SCC 214. [This case was decided prior to the enactment of the 2015 Amendment Act. In this case, the Court applied the principle of Komeptenz-Kompetenz i.e. Section 16 of the 1996 Act, although, one of the parties had taken a position that one of the parties had not signed the arbitration agreement] I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 44 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 required to be referred to the arbitral tribunal, despite a plea of accord and satisfaction, following the principles articulated in Boghara Polyfab. The Court after examining the material on record came to a prima facie conclusion that there was an element of economic coercion and, hence, the matter required examination, in greater detail, by the arbitral tribunal.
14.7. In the instant case, after prima facie examination of the material placed on record, I have concluded that DCUs were executed by Derco under coercion and duress. All that Derco managed to retrieve was the remanence of the economic value of its goods. In my view, this case does not fall, as indicated above, within the exception carved out in Section 45 of the 1996 Act, that is, the seller contracts, which are interlinked with the SCTC, are neither null and void nor inoperative nor incapable of being performed. [See: World Sport Group (Mauritius) Limited vs. MSM Satellite (Singapore) PTE Limited6, (2014) 11 SCC 639] 6 This extract is taken from World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd., (2014) 11 SCC 639 : (2014) 4 SCC (Civ) 226 : 2014 SCC OnLine SC 58 at page 660 "33. Mr Gopal Subramanium's contention, however, is also that the arbitration agreement was inoperative or incapable of being performed as allegations of fraud could be enquired into by the court and not by the arbitrator. The authorities on the meaning of the words "inoperative or incapable of being performed" do not support this contention of Mr Subramanium. The words "inoperative or incapable of being performed" in Section 45 of the Act have been taken from Article II(3) of the New York Convention as set out in para 27 of this judgment. Redfern and Hunter on International Arbitration (5th Edn.) published by the Oxford University Press has explained the meaning of these words "inoperative or incapable of being performed" used in the New York Convention at p. 148, thus:
"At first sight it is difficult to see a distinction between the terms 'inoperative' and 'incapable of being performed'. However, an arbitration clause is inoperative where it has ceased to have effect as a result, for example, of a failure by the parties to comply with a time-limit, or where the parties have by their conduct impliedly revoked the arbitration agreement. By contrast, the expression 'incapable of being performed' appears to refer to more practical aspects of the prospective arbitration proceedings. It applies, for example, if for some reason it is impossible to establish the arbitral tribunal."
34. Albert Jan Van Den Berg in an article titled "The New York Convention, 1958 -- An Overview" published in the website of ICCA (www.arbitration-icca.org/media/0/12125884227980/new_york_convention_of- 1958_overview.pdf), referring to Article II(3) of the New York Convention, states:
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 45 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 "The words 'null and void' may be interpreted as referring to those cases where the arbitration agreement is affected by some invalidity right from the beginning, such as lack of consent due to misrepresentation, duress, fraud or undue influence. The word 'inoperative' can be said to cover those cases where the arbitration agreement has ceased to have effect, such as revocation by the parties. The words 'incapable of being performed' would seem to apply to those cases where the arbitration cannot be effectively set into motion. This may happen where the arbitration clause is too vaguely worded, or other terms of the contract contradict the parties' intention to arbitrate, as in the case of the so-called co-equal forum selection clauses. Even in these cases, the courts interpret the contract provisions in favour of arbitration."
(emphasis in original)
35. The book Recognition and Conferment of Foreign Arbitral Awards: A Global Commentary on the New York Convention by Kronke, Nacimiento, et al.(ed.) (2010) at p. 82 says:
"Most authorities hold that the same schools of thought and approaches regarding the term null and void also apply to the terms inoperative and incapable of being performed. Consequently, the majority of authorities do not interpret these terms uniformly, resulting in an unfortunate lack of uniformity. With that caveat, we shall give an overview of typical examples where arbitration agreements were held to be (or not to be) inoperative or incapable of being performed.
The terms inoperative refers to cases where the arbitration agreement has ceased to have effect by the time the court is asked to refer the parties to arbitration. For example, the arbitration agreement ceases to have effect if there has already been an arbitral award or a court decision with res judicata effect concerning the same subject-matter and parties. However, the mere existence of multiple proceedings is not sufficient to render the arbitration agreement inoperative. Additionally, the arbitration agreement can cease to have effect if the time-limit for initiating the arbitration or rendering the award has expired, provided that it was the parties' intent no longer to be bound by the arbitration agreement due to the expiration of this time-limit. Finally, several authorities have held that the arbitration agreement ceases to have effect if the parties waive arbitration. There are many possible ways of waiving a right to arbitrate. Most commonly, a party will waive the right to arbitrate if, in a court proceeding, it fails to properly invoke the arbitration agreement or if it actively pursues claims covered by the arbitration agreement."
(emphasis in original)
36. Thus, the arbitration agreement does not become "inoperative or incapable of being performed" where allegations of fraud have to be inquired into and the court cannot refuse to refer the parties to arbitration as provided in Section 45 of the Act on the ground that allegations of fraud have been made by the party which can only be inquired into by the court and not by the arbitrator. N. Radhakrishnan v. Maestro Engineers [(2010) 1 SCC 72 : (2010) 1 SCC (Civ) 12] and Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak [AIR 1962 SC 406] were decisions rendered in the context of domestic arbitration and not in the context of arbitrations under the New York Convention to which Section 45 of the Act applies. In the case of such arbitrations covered by the New York Convention, the Court can decline to make a reference of a dispute covered by the arbitration agreement only if it comes to the conclusion that the arbitration agreement is null and void, inoperative or incapable of being I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 46 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51
15. Therefore, whichever way one were to examine the arguments advanced by the plaintiffs qua the DCUs, in my opinion, given the facts which have emerged up until now before me, it would be appropriate for the arbitral tribunal to rule on the issue after evidence is recorded as to whether in the execution of the said documents, Derco was subjected to coercion and duress.
15.1. The argument of the plaintiffs that the proceedings would be vexatious and oppressive, to my mind, is completely untenable. The plaintiffs were aware of the fact (at the time they executed the seller contracts) that in case of disputes arising between the parties, recourse would be taken to an arbitration mechanism which would entail the appointment of an arbitrator by JAMS and conduct of the proceedings in consonance with the rules formulated by the said entity.
15.2. The aspect of costs and dislocation, if any, would have been factored in by the plaintiffs while entering into the seller contracts. It requires to be noticed that this is not a battle between the proverbial David and Goliath. It has been averred by the plaintiffs that they have a business in several jurisdictions across the world including the United States of America, Australia, Singapore, Hong Kong, Dubai, Iran, Turkey, Afghanistan.
15.3. The plaintiffs have also averred that with Derco alone they have carried out a business to the tune of Rs. 54, 79,19,275 between December 2019 and March 2020.
16. Therefore, in my view, it cannot be said that the plaintiffs do not have the wherewithal to contest the action instituted by Derco before the arbitral tribunal.
16.1. Under Rule 8(b) of the JAMS Rules, the plaintiffs are entitled to seek a decision from the arbitral tribunal on the aspects concerning jurisdiction and performed, and not on the ground that allegations of fraud or misrepresentation have to be inquired into while deciding the disputes between the parties." I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 47 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 arbitrability of the disputes. The arbitral tribunal under the said rule is entitled to take a view as to whether or not, in a given case, the same should be treated as a preliminary matter.
16.2. The plaintiffs, in their communication of 02.07.2020, addressed to JAMS have already flagged these issues. In fact, in the said communication, there is a specific reference to the execution of DCUs by Derco. Therefore, the arbitral tribunal has already been put to notice by the plaintiffs as regards their objection to the viability of the arbitration proceedings.
16.3. There is another aspect of the matter, which is, that the seat of arbitration is in the State of California. The closest connection that the arbitration proceedings have is with the State of California. Therefore, to my mind, the supervisory jurisdiction would vest with the concerned courts in California, which is, another reason I would be slow in acceding to the request of the plaintiffs for grant of an injunction.
Conclusion: -
17. Thus, for the foregoing reasons, I am inclined to allow the captioned application. Since the arbitration proceedings have already commenced, referring them to arbitration would, only, be a formality. It is ordered accordingly.
18. There shall, however, be no order as to costs.
19. Needless to add, the observations made hereinabove will not impact the proceedings which are ongoing before the arbitral tribunal. The observations that have been made in the judgement are made only for the purposes of disposal of the captioned application.
I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 48 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51 CS (COMM) No. 248/2020, I.A. Nos. 5389/2020 & 6139/2020
20. Given the decision rendered in I.A. No. 6117/2020, the suit and the pending application(s) shall stand closed.
21. The case papers shall stand consigned to record.
RAJIV SHAKDHER, J NOVEMBER 09, 2020 Click here to check corrigendum, if any I.A. Signature Not No. 6117-2020 Verified in CS (COMM) 248-2020 Page 49 of 49 Digitally Signed By:VIPIN KUMAR RAI Signing Date:10.11.2020 15:23:51