Delhi High Court
Esys Information Technologies Pvt. ... vs M/S Polaris Retail Infotech Ltd. on 10 September, 2009
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ A.A. No.234/2009
% Date of decision:10.09.2009
ESYS INFORMATION TECHNOLOGIES PVT. LTD. ....Petitioner
Through: Mr. Asit Tewari, Advocate.
Versus
M/S POLARIS RETAIL INFOTECH LTD. ... Respondent
Through: Mr. Vijay Sharma, Advocate.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. Whether reporters of Local papers may
be allowed to see the judgment? Yes
2. To be referred to the reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
RAJIV SAHAI ENDLAW, J.
1. Petition under Section 11 of the Arbitration Act, 1996 is preferred with respect to an agreement dated 1st September, 2005 between the parties containing an arbitration clause. Clause 7.8 of the said agreement, inter-alia provides that upon any dispute or difference arising under the agreement, the parties shall endeavour to resolve the same through mutual negotiations and in the event of failure of such dialogue/discussions/negotiations the matter shall be referred to a binding arbitration under the Arbitration & Conciliation Act, 1996. Notice of the petition was issued to the respondent. The counsel for the respondent appeared before this court on 4th September, 2009 and today and sought time for filing the reply.
2. Proceedings under Section 11 of the Act for appointment of arbitrator, cannot be conducted as other proceedings before the A.A. No.234/2009 Page 1 of 6 court. The scope of enquiry in these proceedings is limited as recently reinstated in National Insurance Co. Ltd. Vs. Boghagra Polyfab Pvt. Ltd. AIR 2009 SC 170. The scope of enquiry in these applications as laid down in the said judgment is only to determine
(i) whether the appropriate High Court has been approached; (ii) whether there is an arbitration agreement; and (iii) whether the party who has applied, is a party to, such an agreement. The Chief Justice or his designate has the discretion to, also entertain but which he is not bound to entertain, whether the claim is a dead (a long barred claim) or a live claim and whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. The Chief Justice or his designate is not entitled to determine whether the claim falls within the arbitration clause and the merits of any claim involved in the arbitration.
3. It will thus be found that the submissions on the scope of enquiry involved in these applications under Section 11 of the Act can be made even without filing reply and the parties/counsels cannot claim time to file reply as a matter of right. It is worthwhile to mention that this stage is but a precursor to the determination of disputes and if this stage is unduly lengthened, it will have a cascading delay on the dispute resolution between the parties. The parties opt for arbitration instead of mechanism of ordinary courts, hoping that the same would be quicker than the time taken in the courts. By following the procedure as followed for other legal proceedings in these petitions also, the dominant purpose of "expediency" in arbitration will be lost. Thus a party/counsel served with a notice of an application under Section 11 of the Act, even if unable to file reply, ought to come prepared to address on the A.A. No.234/2009 Page 2 of 6 merits. If the court thereafter finds that anything is required to be stated on affidavit the court may grant time for the same. However, as a matter of routine adjournments cannot be sought.
4. The counsel for the respondent then stated that his reply is ready and was allowed to hand over the same in the court and the same has been taken on record. The counsels have been heard.
5. The counsel for the respondent has not disputed the agreement dated 1st September, 2005 or the arbitration clause therein. He has opposed the application on three grounds. Firstly, it is contended that the claim is barred by time. Secondly, it is contended that the disputes raised are not covered by the arbitration agreement. Thirdly, it is urged that the petitioner, on the material before the court itself has no claims as raised against the respondent and thus no purpose will be served in appointing the arbitrator.
6. The agreement between the parties was of the appointment of the petitioner as a dealer on a non-exclusive basis of the respondent, for promoting the software solutions developed by the respondent. The counsel for the respondent has urged that the agreement between the parties being of 1st September, 2005, the limitation of three years therefrom expired on 31st August, 2008 and the present petition filed on 30th May, 2009 is barred by time. The petitioner has pleaded that the petitioner had made payments to the respondent conditionally and upon the goods being found to be not marketable, became entitled to return the said goods to the respondent and to claim refund of the monies paid to the respondent. The counsel for the respondent has not argued anything whatsoever of the claim made in the petition being barred from the cause of action A.A. No.234/2009 Page 3 of 6 therefrom. The only argument is that since the petition has been filed after more than three years from the date of the agreement, the claim is a dead one and the petition is not maintainable. However, the transactions between the parties always start after the agreement and the period of limitation cannot be counted from the date of the agreement. The respondent, in the reply to the legal notice got issued by the petitioner prior to the institution of this petition also had taken the same defence only to the demand of the petitioner for agreeing on a sole arbitrator. The respondent has in its reply handed over today also, treated the limitation as commencing from the date of the agreement only. In the absence of the counsel for the respondent showing anything that the claim for refund is barred by time, no defence of the claim being a long dead one or a time barred one is made out.
7. On the claims being not covered by arbitration the counsel for the respondent has drawn attention to the recitals in the agreement wherein it is mentioned that the respondent is in a position to license and provide service of its "software solutions such as Retail Excel". It is also stated in Clause 1 of the agreement that the respondent has appointed the petitioner as its authorized dealer to market the respondent's IT solutions "such as Retail Excel". Thereafter, it is stated that "the product, service and solution that are covered by this agreement is limited to Retail Excel, unless otherwise agreed explicitly in writing by the parties". The counsel for the respondent has also drawn attention to the petition wherein it is pleaded that the claims of the petitioner against the respondent for refund are not only with respect to Retail Excel but also with respect to another software solution of the respondent titled "Billing Basic Master Refund Standard". It is urged that since Billing Basic Master Refund A.A. No.234/2009 Page 4 of 6 Standard software is not the subject matter of the agreement aforesaid containing an arbitration clause, the claims of the petitioner against the respondent with respect to the said software are not arbitrable. It is further urged that the petitioner has not filed any writing whereby the software Billing Basic Master Refund Standard of the respondent was agreed to be included in the agreement.
8. Upon enquiry, the counsel for the respondent admits that the software Billing Basic Master Refund Standard is also of the respondent and was provided to the petitioner. It is also admitted that no separate agreement was entered into between the parties with respect to the said software.
9. As noticed above in the agreement, Retail Excel is only mentioned as one of the softwares of the respondent with respect whereto the petitioner was appointed as the dealer. It is significant that the petitioner had in the legal notice under Section 11 (5) of the Act issued prior to the petition also referred to the other software and the respondent had in the reply to the legal notice while admitting having supplied the said software also to the petitioner, not contended that the disputes with respect thereto were not arbitrable. In fact, it was contended that the disputes with respect to the said softwares also were barred by time counted from the agreement deed 1st September, 2005. The respondent thus admitted that the supplies of the other software were also in terms of the agreement containing the arbitration clause. In view of the said stand of the respondent in the reply to the legal notice, no merits are found in the said contention of the respondent also. A.A. No.234/2009 Page 5 of 6
10. The counsel for the respondent has lastly urged that in the written statement between the parties there is no provision whatsoever for the respondent to refund the monies to the petitioner or to take back the software. However, this defence of the respondent would be on the merits of the dispute and under Section 11 of the Act cannot be gone into.
11. Axiomatically, the petition is allowed. The parties having been unable to mutually decide on the appointment of the sole arbitrator, Mr. Amitabh Narayan, Advocate, Chamber No.112, Lawyers Chamber, Delhi High Court, New Delhi -110 003 [Ph. No.23384939 & 23265269 (R)] is appointed as the arbitrator to adjudicate the disputes in terms of the arbitration agreement. Since the claims of the petitioner are of approximately Rs.30 lacs, the consolidated fee of the arbitrator is fixed at Rs.40,000/- besides out of pocket expenses. However, in the facts of the case, the fee and other expenses of the arbitration be borne in the first instance by the petitioner alone, subject to award as to costs. It is clarified that this court has herein above expressed view on the plea of limitation only to the extent raised and if any other plea of limitation is raised, the same shall be open for adjudication in arbitration.
The petition is disposed of.
The parties to appear before the arbitrator with prior appointment on 22nd September, 2009.
RAJIV SAHAI ENDLAW (JUDGE) September 10th, 2009.
PP A.A. No.234/2009 Page 6 of 6