Bangalore District Court
M/S. Shirvanthe Marketing vs Sabmiller India Limited on 20 April, 2023
IN THE COURT OF THE LXXXIII ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU CITY [CCH-84]
:Present:
Ravindra Hegde, M.A., LL.M.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated this the 20th day of April 2023
COM.M.A.No.5/2021
Applicant M/s. Shirvanthe Marketing,
A Partnership Firm,
having their place of business
at No.216, 1st Floor,
3rd Main, Jayanagar 6th Block,
Bengaluru-560082.
Represented by their Partner
Vittal Kamath .H
(By Sri.H.R.S, Advocate)
/versus
Respondents 1. SABMiller India Limited,
Unit No.301-302,
3rd Floor, Dynasty Business Park,
'B' Wing, Andheri Kurla Road,
Andheri (East),
Mumbai-400059.
Represented by its Director.
Also at:
6th Floor, Green Heart Building,
Manyata Tech Park Phase IV,
Nagavara village,
Bengaluru-560045.
Represented by its Director.
+
2
CT 1390_Com.M.A.5-2021_Judgment.doc
2. Hon'ble Shri Justice Jagannathan,
Former Judge,
Hon'ble High Court of Karnataka,
C/o Arbitration & Conciliation Centre,
Bengaluru (Domestic & International)
Khanija Bhavan, 3rd Floor,
Race Course Road,
Bengaluru-560001.
(R.1 by Sri.T.B.S, Advocate,
R.2 - Arbitrator.)
ORDER
This appeal is filed under Section 37(2) of the Arbitration & Conciliation Act by the appellant praying to set aside the order of the learned Arbitrator dated 16/7/2021 in AC No.77/2021 holding that the tribunal has no jurisdiction to entertain the claim petition and praying to remit the matter to the learned Arbitrator to adjudicate the dispute.
2. Appellant was the claim petitioner before the learned Arbitrator and respondent No.1 was the respondent and respondent No.2 is the learned Arbitrator.
3. Brief facts of the appellant's case is as under:
The appellant filed claim petition before the learned Arbitrator stating that respondent No.1 had entered into two kinds of agreements which are Customer Information and Service Provider Agreement (CISP) and Disbursing Agent Agreement (DA). As per CISP Agreement appellant was required to carry out research activity for collation of data and aid the business of the respondent No.1 and in the DA 3 CT 1390_Com.M.A.5-2021_Judgment.doc agreement they were required to disburse trade discounts on behalf of the respondent No.1 as per various schemes offered by the respondent No.1. Agreements were entered into from the year 2010 till 2016 and the last of such agreements were entered into on 24/6/2016 for the period from 1/4/2016 till 31/3/2017. The dispute of the present case is arises for the period subsequent to 31/3/2017. Though the written agreements concluded on 31/3/2017, parties extended their transaction beyond this period through their continuous on- going trade and business activities. Respondent No.1 issued mandates time and again as practiced under the earlier agreements and the appellant complied with these mandates as per the terms of the earlier agreements. These mandates related to both the CISP and DA agreements and the respondent No.1 had paid the amounts towards the expenses incurred by the appellant towards the services rendered. The respondent No.1 did not pay any amount towards the remuneration and fell due towards the same as much as towards rents paid and other dues. For the expenses incurred by the appellant, the respondent has made payment. Regarding this amount parties exchanged legal notice on two occasions and respondent No.1 denied the liability and taken the contention of arbitration at the first instance and then took contention that the matter would fall within the jurisdiction of civil court. Thereafter, appellant approached Hon'ble High Court in CMP No.23/2020 under Section 11 of Arbitration & Conciliation Act and the petition was allowed 4 CT 1390_Com.M.A.5-2021_Judgment.doc and 2nd respondent was appointed as learned Arbitrator. Before the learned Arbitrator statement of claim along with documents were produced by the appellant and respondent No.1 filed statement of objection with records. Learned Arbitrator has framed two preliminary issues, one about subsisting arbitration agreement between the parties subsequent to 31/3/2017 and another regarding Section 69(2)(3) of Indian Partnership Act on the ground that claimant was not a registered partnership firm. The learned Arbitrator has rejected the contention regarding bar under Section 69(2) of the Indian Partnership Act, but upheld the contention of respondent No.1 about non-existence of arbitration agreement and held that there is no valid or subsisting arbitration agreement between the parties for the period subsequent to 31/3/2017 and accordingly the learned Arbitrator has held that the tribunal has no jurisdiction to entertain the claim petition and held that the claimant is at liberty to pursue any other remedy that may be available to it in respect of its monetary claim against the respondent and terminated the arbitration proceedings.
4. Being aggrieved by this order, appellant who was the claimant before the learned Arbitrator has filed present appeal under Section 37(2) of the Arbitration & Conciliation Act on various grounds. It is stated that, learned Arbitrator has erred in referring to clause 6 of the CISP Agreement and clause 10 of the DA Agreement which clearly held that in the event parties deciding to amend or change the nature of their 5 CT 1390_Com.M.A.5-2021_Judgment.doc agreement during the subsistence of the agreement, same may not be changed or amended except in writing signed by both the parties. It is stated that the parties had not resorted to amend, change or alter the terms of the agreement but were carrying out the activities beyond the period of agreement with the same terms and conditions and therefore clause 6 and 10 of the agreements had no application to the present case. It is also contended that the intention of the parties was that the arbitration clauses as agreed upon would continue which fact can be gathered by the appellant raising the debit note and respondents honouring the debit note through payments made in favour of the Appellant Partnership Firm as shown in the appeal memo. It is stated that the Arbitration Agreement would subsist in view of letters, electronic communication providing records of agreement between the parties as contemplated under Section 7(4)(b) of the Arbitration & Conciliation Act and this show that the parties intended to continue the transaction as per the covenants in the agreement which fact was completely lost sight by the learned Arbitrator. It is also contended that the learned Arbitrator has failed to note that parties, impliedly continued their contractual relationship based on the earlier terms of agreement and the methodology of the understanding and the debit notes and the payments made would clearly establish that the contract was continued and the respondents have not denied the payments made as against these debit notes. It is stated that therefore it can be 6 CT 1390_Com.M.A.5-2021_Judgment.doc very well gathered that the agreements were continued and arbitration clause in the agreements also continued and this fact is ignored by the learned Arbitrator. It is also stated that the learned Arbitrator has erred in not understanding the scope of these clauses and expanded the same for the period beyond the terms of the contract which is an error apparent on record. It is stated that the learned Arbitrator grossly erred in not noticing the fact that the case presented by the appellants was in respect to the claim arising out of various activities carried out under mandates of different dates for different works from the 1st respondent which were documented. It is stated that the principles of Doctrine of Sub-Silentio was the one that was canvassed to highlight the point that dehors a written contract, if the parties have carried on work as per the earlier contractual obligations, arbitration clause that prevailed for the earlier years under an agreement should be acted upon in the event of any dispute. It is stated that the learned Arbitrator has not appreciated these vital and subtle factual matrix and has relied upon the clause 'Entire Agreement' which has absolutely no bearing to the facts in issue. It is stated that the learned Arbitrator has grossly erred in not noticing the fact that the 1 st respondent had voluntarily and consciously participated in issuing mandates and paying portion of the invoice amounts relating to the service component of the invoices and retained payments illegally relating to other charges. It is stated that the resolution of dispute was a mixed question of fact and 7 CT 1390_Com.M.A.5-2021_Judgment.doc law, which could have been ascertained only by a full-fledged trial. It is contended that documents produced by both the parties were not perused in proper perspective by the Arbitrator and Arbitrator has erred in holding that the agreements have not been extended in writing as required in clause 6 and 10 and consequently the arbitration clause will not survive. It is stated that the arguments which was addressed that the dehors an agreement, a contract could still subsist if the conduct of the parties impliedly prove and establish that they nurtured a contractual relationship is not appreciated by the learned Arbitrator. It is also stated that the learned Arbitrator has erred in holding that there cannot be any estoppel against the statute, for the reason that it was never the case of the appellant that the conduct of the parties such as issuance of mandate and receiving money should be construed as extension of agreement in writing. It is stated that the learned Arbitrator has misconstrued these documents and arrived at a finding against contents of the documents. It is stated that the decision cited are also not properly appreciated. It is stated that the decision in Roshin Lal Gupta & Sons Private Limited is not properly considered by the learned Arbitrator. It is stated that the learned Arbitrator has erred in ignoring the principles governing the field of Doctrine of Sub-Silentio and principles of Doctrine of Separability. On all these grounds, it is contended that the impugned order is erroneous, defective, illegal and not in accordance with law and is prayed to be set aside.
8CT 1390_Com.M.A.5-2021_Judgment.doc
5. Respondent has filed statement of objection and raised preliminary objections that there is no valid or subsisting arbitration agreement between the parties, due to non-extension of the DA agreement and CISP agreement beyond 31/3/2017. It is stated that since the transaction stated in the claim petition is for the period subsequent to 31/3/2017, it is outside the scope of CISP and DA agreements which came to an end by 31/3/2017. It is stated that the period subsequent to 31/3/2017 in respect of which the claims have been raised are not covered by any written agreement between the parties. It is stated that since the requirements of Section 7 of the Arbitration & Conciliation Act have not been satisfied and there being no valid or subsisting arbitration agreement between the parties for the period subsequent to 31/3/2017, appeal deserves to be dismissed. It is stated that according to the doctrine of implied terms, an arbitration clause of an agreement shall be implied to expire with the formal expiration of an agreement, in the same manner as other terms of the agreement stand expired. It is stated that admittedly no separate agreements are signed by both the parties or mutual extension of either the CISP Agreement or the DA Agreement beyond 31/3/2017. Therefore, there is no question of applying any of the terms of CISP Agreement and DA Agreement and therefore arbitration clause in this agreement cannot be applied. It is stated that as period is not extended and agreement is not renewed, it is clear that the respondent No.1 do not wish to avail the 9 CT 1390_Com.M.A.5-2021_Judgment.doc appellant's services in terms of these agreements beyond 31/3/2017. It is stated that even assuming that certain stray services were provided by the appellant after 31/3/2017 they are neither covered by these agreements nor do they even remotely match the value and extent of the claims raised. The respondent No.1 has also denied various averments stated in the appeal memo. It is stated that the learned Arbitrator was correct in referring to clause 6 and 10 of the CISP Agreement and clause 10 of the DA Agreement. It is stated that no separate agreement was signed by both the parties and there was no any mutual extension of the agreement beyond 31/3/2017. It is stated that these documents do not prove in any manner whatsoever that the terms of said CISP Agreement and DA Agreement continued beyond 31/3/2017. It is stated that the averment that the arbitration agreement would subsist in view of letters, electronic communications providing a record of agreement between the parties as contemplated under Section 7(4)(b) of the Arbitration & Conciliation Act and it should be gathered from those correspondences etc are also not accepted and it is stated that even assuming that any mandates were given to the claimant to carry out work after 31/3/2017, same do not attract the provisions of these agreements which was expired on 31/3/2017. It is stated that the principle of sub-silentio has no applicability in the present case, when it was expressly agreed between the parties that the arbitration agreement would have to be specifically carried out in writing, 10 CT 1390_Com.M.A.5-2021_Judgment.doc which has admittedly not taken place. It is stated that the claim petition is filed before the learned Arbitrator only to make unjust gain. It is stated that appellant is liable to pay damages caused to the respondent No.1. On all these grounds the appeal is prayed to be dismissed.
6. Now the points that arise for my consideration are:
1. Whether appellant proves that the order of the learned Arbitrator on preliminary issue No.1 in AC No.77/2021 dated 16/7/2021, by holding that he has no jurisdiction to entertain the claim petition and the arbitration proceedings stood terminated, is not valid and is liable to be set aside and matter is to be remanded to the learned Arbitrator to adjudicate the dispute as prayed, under Section 37(2) of the Arbitration & Conciliation Act?
2. What order?
7. Heard both counsels. Both the learned counsels have filed written arguments also. Perused the records.
8. My answer to the above points are:
Point No.1: In the negative.
Point No.2: As per final order for the following;
REASONS
9. Point No.1: This appeal is filed against the finding of the learned Arbitrator on preliminary issue No.1 which is to the effect that whether the respondent proves that there is no valid or subsisting arbitration agreement between the parties for the period subsequent to 31/3/2017 on account of non extension of CISP and DA agreements dated 24/6/2016. There is no dispute between the parties that the last of the 11 CT 1390_Com.M.A.5-2021_Judgment.doc CISP agreement and DA agreement entered between the parties is on 24/6/2016 and both these agreements expired on 31/3/2017. Though it is stated by the appellant that from 2010, parties have entered into transaction through such agreements, even according to appellant after 31/3/2017 no such CISP or DA agreements entered between the parties. For resolution of the dispute, arbitration was provided in CISP agreement and also DA agreement of the previous years and also agreement dated 24/6/2016 which finally expired on 31/3/2017. Since transaction stated by the appellant who was the claimant before the learned Arbitrator is in respect of the services provided subsequent to 31/3/2017, respondent No.1 raised objection before the learned Arbitrator regarding maintainability of the arbitration proceedings on the ground that, on expiry of the CISP and DA agreements on 31/3/2017 and as there is no extension of the said agreements and there is also no fresh agreement being entered between the parties, there is no subsisting arbitration agreement and therefore the tribunal has no power to decide the dispute raised by the claimant, present appellant. Learned Arbitrator has accepted the contention of the respondent and held that the tribunal has no jurisdiction to entertain the claim petition and accordingly, arbitration proceedings stood terminated. This order of the learned Arbitrator on preliminary issue No.1 is challenged in this appeal under Section 37(2) of the Arbitration & Conciliation Act.
12CT 1390_Com.M.A.5-2021_Judgment.doc
10. To challenge this order of the learned Arbitrator, appellant has mainly contended that the learned Arbitrator has not considered the doctrine of Sub-Silentio and has erred in holding that the tribunal has no jurisdiction and that the arbitration agreement is not subsisting. It is contended for the appellant that by acts and omissions of the parties, even after 31/3/2017, transaction between the parties continued and services are provided by the appellant to the respondent No.1 even after 31/3/2017 and respondent No.1 has accepted the services and has also made some payment as detailed in the appeal memo and also as evidenced from records and as such, terms and conditions of expired CISP and DA agreements were binding on the parties and therefore, arbitration clause in those agreements can be invoked by the claimant. Appellant has also contended that Respondent No.1 has admitted applicability of arbitration clause to the present dispute in the reply notice dated 22/08/2018 given for Respondent No.1 to notice given by the appellant, in which, counsel for respondent No.1 has clearly stated that there is arbitration clause in the agreement and this appellant have to invoke arbitration clause for resolution of dispute. In this reply notice, reference is made to clause 14(3) of the agreement which has expired on 31/3/2017. Finding of the learned Arbitrator on this contention, by holding that there is no estoppel against statute is seriously objected by the appellant in the present case. According to appellant, dehors the written agreement, by Sub-Silentio, agreement operates 13 CT 1390_Com.M.A.5-2021_Judgment.doc and respondent No.1, who has asked the appellant to go for arbitration, is estopped from contending otherwise.
11. On the other hand, for the respondent No.1, it is contended that though appellant voluntarily gave some services even after 31/3/2017, those services given will not extend the terms and conditions of expired agreement and there is no such deemed extension of the agreement in view of clause 6 and clause 10 of both the agreements which are even referred by the learned Arbitrator. These clauses say that, terms of the agreement can be modified only by separate writing signed by both the parties and as there is no such writing by the parties to modify or extend the operation of agreement even beyond 31/3/2017, expired agreement cannot be taken advantage to initiate arbitration and as arbitration agreement cannot as per Section 7 of the Arbitration & Conciliation Act is to be in writing and there is no such writing. Respondent no.1 also contended that the statement in reply notice given, stating that there is arbitration clause and the same is tobe invoked to resolve the dispute will not come to the aid of the appellant, when there is no arbitration agreement between the parties to refer the dispute subsequent to 31/3/2017.
12. On looking to the rival contention and also finding of the learned Arbitrator, in para 18 of the order, clause 6 of the CISP agreement and clause 10 of DA agreement which states that except by separate writing signed by both the parties, understanding between the parties cannot be 14 CT 1390_Com.M.A.5-2021_Judgment.doc changed or amended is referred. The learned Arbitrator has found that agreement dated 24/6/2016 which expired on 31/3/2017, as admitted by the parties and as found in the agreement, is neither modified nor amended nor extended by writing signed by the parties, to cover the transaction of subsequent period, as required under these clauses. It is not even the case of the appellant that, as required in clause 6 and clause 10 of these agreements, there is extension of terms and conditions of the agreement by some separate writing signed by both the parties. Appellant in his notice and also in claim petition and also in this Appeal Memo, clearly admitted that the last of the agreement entered between the parties is on 24/6/2016 for the period from 1/4/2016 to 31/3/2017 and the same has expired on 31/3/2017. Therefore, entire case of the appellant to contend that arbitration clause of the expired agreement continued to operate even subsequent to 31/3/2017, is only by application of doctrine of Sub-Silentio and statement in the reply notice dated 22/8/2018.
13. There is no dispute between the parties that from 2010 there were such agreements entered between the parties till 2016 and the last agreement is dated 24/6/2016 which is for the period from 1/4/2016 to 31/3/2017 and the dispute which was raised before the learned Arbitrator is for the period subsequent to 31/3/2017. Therefore, dispute that is raised in the claim petition filed before the learned Arbitrator is not in respect of the transaction which took place prior to 15 CT 1390_Com.M.A.5-2021_Judgment.doc 31/3/2017. All the claims of the appellant are in respect of the transaction or services provided subsequent to 31/3/2017. Admittedly, for this period beyond 31/3/2017 there was no any written agreement entered between the parties, like CISP or DA agreements which were previously operating between them. Appellant and respondent No.1 appears to have filed several documents before the learned Arbitrator which show that from 2010 to 2016 there were agreements entered between the parties in the transaction and many times, even after expiry of the period of the previous agreements after some time, such fresh agreements are executed between the parties by making its operation from the retrospective date. For example in one of the agreement dated 21/5/2015 it is mentioned that appointment shall come into effect from 1/4/2015 to 31/3/2016 showing that though agreement was entered on 21/5/2015, terms and conditions of the agreement are binding on the parties with effect from 1/4/2015. Even the last agreement dated 24/6/2016 has also come into operation from the anterior date of 1/4/2016 till 31/3/2017. However, there is one agreement which is contrary to this habit of making operation of agreement from anterior date by giving retrospective effect to the agreement. DA agreement and CISP agreements dated 01.10.2014, states that appointment shall come into effect from 1/10/2014 and shall be valid till 31/3/2015. Therefore, these agreements do not have retrospective date and period 16 CT 1390_Com.M.A.5-2021_Judgment.doc from 1/4/2014 to 30/9/2014 is not covered by these agreements.
14. On looking to these aspects, it is clear that parties, with full knowledge and by understanding the things and as per their convenience, deliberations, consultations and negotiations were entering into the agreements by making agreement operational from anterior date or from the date of its execution. Therefore, it cannot be said that on expiry of every agreement, subsequent agreements were executed for the period starting from the end date of previous agreements. As stated above, parties with their consent appears to have executed agreements by making it operative from anterior date or from the date of execution. When the agreement is executed by making it operative from anterior date, transactions of anterior date also would be covered by such agreement. On looking to all these agreements, contention of the appellant that agreements used to be executed even after long time of expiry of previous agreement cannot be totally accepted, though many times after expiry of previous agreement after some time fresh agreement are executed by making agreement operational from previous date or from the end date of the previous agreement and that is not the strict rule followed in the transaction. Therefore, appellant cannot even contend that after 31/3/2017 he continued to provide service or have the transaction with respondent No.1 on the understanding that on a future date agreement will be entered and the transaction subsequent to 31/3/2017 would 17 CT 1390_Com.M.A.5-2021_Judgment.doc be rectified and agreement which may come into operation later would be from the retrospective date and thereby all the terms and conditions of the agreement would be continued. Admittedly, after 31/3/2017 no agreement is executed till this date.
15. Contention of the appellant that even after 31/3/2017 there were transaction between the parties and even the payments are made by the respondent No.1, are supported by several documents that are produced like debit note and some email asking for payment etc, which are subsequent to 1/4/2017. Since, learned Arbitrator has considered his jurisdiction to resolve the dispute through a preliminary issue, as rightly contended by the appellant, correctness of the documents produced by appellant are not completely adjudicated. In this situation, documents produced by the parties should be considered as it is. Therefore, documents produced by the parties is to be taken on their face value for considering as to whether there is extension of terms and conditions of expired agreement, including arbitration clause, impliedly or by correspondence or by negotiation or by agreement beyond 31/3/2017. Basis for the contention of the appellant about extension of these terms and conditions is several tax invoices, debit notes, payment made and bank statements. These documents prima facie show that even subsequent to 31/3/2017, there were claim for reimbursement of warehouse expenses and there were payment and there were debit notes and the bank 18 CT 1390_Com.M.A.5-2021_Judgment.doc statement also show some payment made by respondent No.1 to the appellant for the service provided. Therefore, prima facie, even after 31/03/2017 there were some transactions between the parties. However, as admitted, there was no fresh agreement entered between the parties for the subsequent period from 31/3/2017. Appellant strongly contends that as providing of services are continued by the appellant to respondent No.1 even after 31/03/2017, there is implied extension and doctrine of Sub-Silentio applies and all the terms and conditions of the expired agreement continued to operate including the arbitration clause.
16. Learned counsel for the appellant has relied on the decision reported in (2008) 1 SCC 503 (Bharat Petroleum Corporation Limited v. Great Eastern Shipping Company Limited). In this case the Hon'ble Supreme Court in para 19 has held as under:
"It is, no doubt, true that the general rule is that an offer is not accepted by mere silence on the part of the offeree, yet it does not mean that an acceptance always has to be given in so many words. Under certain circumstances, offeree's silence, coupled with his conduct, which takes the form of a positive act, may constitute an acceptance - an agreement Sub-Silentio.
Therefore, the terms of a contract between the parties can be proved not only by their words but also by their conduct."
17. In this decision, facts were that the Great Eastern Shipping Company had given one vessel by name Jag Praja on hire to Bharat Petroleum Corporation and contract was 19 CT 1390_Com.M.A.5-2021_Judgment.doc upto 30/6/1998. Extension of agreement beyond 31/8/1998 was denied by the Oil Coordination Committee and fresh tender was floated and the same was challenged by one of the bidder, consequent to which, vessel Jag Praja continued to be chartered by Bharat Petroleum Corporation Limited till 31/8/1999. When the dispute arose between the parties, as to the payment of charges for this period, matter was referred to Arbitral Tribunal. Wherein Arbitral Tribunal held that it has no jurisdiction to decide on the reference which was relatable to the period subsequent to 31/8/1998 when there was no agreement and it was challenged before the Hon'ble High Court successfully and the said order was challenged before the Hon'ble Supreme Court, wherein, whether on the expiry of the extended period of agreement on 31/8/1999, the agreement dated 6/5/1997 came to an end and the Arbitration Agreement between the parties perished with it, is considered. Hon'ble Supreme Court, by considering the conduct and the offeree's silence and as vessel continued to be charged by Bharat Petroleum Corporation even after expiry of this agreement, has held that Doctrine of Sub-Silentio is applicable and therefore, arbitration agreement which expired on 31/8/1998 continued and the matter can be adjudicated by the Arbitrator. This decision was even cited before the learned Arbitrator and learned Arbitrator has held that the decision is not applicable. Learned Arbitrator has noted that when the license and conduct takes the form of a positive act, it may constitute acceptance of an agreement sub silentio and 20 CT 1390_Com.M.A.5-2021_Judgment.doc this do not apply to the case on hand as the facts and circumstances of the case are entirely different and in the case before the Hon'ble Supreme Court pending finalization of a new agreement for the period commencing from 1/9/1998, there were various offers and counter offers exchanged between the parties, as to the terms on which the agreement was to continue and existing terms and conditions of the agreement continued to apply and there were several exchange of letters for continuing to use the vessel on existing terms and conditions. Learned Arbitrator has noted that as against those facts before the Hon'ble Supreme Court, there has been no extension of two agreements beyond 31/3/2017 and there has been no compliance of clause 6 and 10 of the respective agreements and the claim before the learned Arbitrator are not in respect of the contractual period which expired on 31/3/2017, but on the other hand they pertain to the post expiry period and therefore, decision is not applicable.
18. On going through the facts of the decision before the Hon'ble Supreme Court and the present facts, as rightly held by the learned Arbitrator, decision cannot be applied to the present case. Doctrine of Sub-Silentio cannot be applied in the present case for many reasons. On 31/3/2017 admittedly agreement came to an end. It was the practice of the parties, as could be seen from the previous agreements, that even after expiry of the agreements they used to enter into subsequent agreements, with retrospective effect by 21 CT 1390_Com.M.A.5-2021_Judgment.doc showing anterior date for its operation. That is not the case in the present case. For best reason known to the parties, after 31/3/2017, parties have not entered into any fresh agreements at all and there is no communication between the parties stating that the terms and conditions of the previous expired agreement would continue even subsequently, during the period in which transaction continued. As rightly stated by the learned Arbitrator, as per clause 6 and clause 10 of those agreements, terms of the agreement cannot be altered, modified or amended except in writing signed by the parties. Admittedly, there is no modification, alteration or extension of the time of those agreements beyond 31/3/2017 by writing signed by the parties. So the agreement which expired on 31/3/2017 would not modify or create any right or obligation on the parties for the transaction subsequent to 31/3/2017. There are no documents produced to show that there were some correspondence for extension of the period of the agreement or for execution of fresh agreement which used to be done earlier. In the decision before the Hon'ble Supreme Court, it is held that in certain circumstances by offeree's silence and conduct, by principle of Sub-Silentio contract between the parties may continue. In the present case, except some transactions, which are said to have taken place between the parties, as highlighted in the appeal memo, there is no any positive act between the parties to extend the agreement or to enter into fresh agreement. No such correspondence between the parties is placed before the 22 CT 1390_Com.M.A.5-2021_Judgment.doc court. If appellant or the respondent had made some offer or made some correspondence seeking extension or execution of fresh agreement and to said correspondence, other party remains silent, then definitely doctrine of Sub-Silentio could be applied, due to offeree's silence, as there was agreement earlier and transaction continued and correspondence offering extension of agreement or seeking fresh agreement are not responded by the other party. This is not the case in the present case. In the case before the Hon'ble Supreme Court there were communication stating that till new agreement is entered, on the same terms and conditions vessel will continue to be with the lessor. Therefore, this decision cannot be applied to the present case.
19. Learned counsel for the appellant has also relied on the decision reported in 2009 (109) DRJ 456 (Roshin Lal Gupta & Sons Private Limited v. Delhi Tourism & Transportation Development Corporation). This decision was also cited before the learned Arbitrator and the learned Arbitrator has noted that as per para 15 of the decision it is only when the contract is still in existence for certain purposes in respect of disputes arising under it or in connection with it Arbitration Clause can continue to operate, as the contract subsists for certain purposes. In the present case, agreement expired on 31/3/2017 and entire claim of the appellant is in respect of the transaction which took place subsequent to 31/3/2017. Therefore, these transactions regarding which the dispute arose cannot be considered as 23 CT 1390_Com.M.A.5-2021_Judgment.doc with regard to or under the contract or in respect of the contract. Therefore arbitration agreement of the expired agreement cannot be applied in respect of a dispute which arose after expiry of the agreement and not connected to the transaction covered by the agreement.
20. Learned counsel for the appellant has also relied on the decision reported in (2009) 2 SCC 55 (Visa International Limited v. Continental Resources (USA) Limited) in which Hon'ble Supreme Court has considered the arbitration agreement as mentioned in Section 7 of the agreement. Hon'ble Supreme Court has held that existence of a valid arbitration agreement should be determined from the facts and circumstances of the case, including the intention of the parties gathered from the correspondence exchanged between them, surrounding circumstances and conduct of the parties and the agreement need not be in any particular form and the terms of any other contract not relevant to determine the said question and when the intention of the parties to seek arbitration in case of any future disputes is clear, then inartistic drafting of arbitration clause cannot be taken advantage of by any party. As per Section 7(3) of the Arbitration & Conciliation Act, arbitration agreement should be in writing. As per section 7(4), Arbitration agreement is in writing if it is contained in a document signed by the parties, an exchange of letters, telex, telegrams or other means of telecommunication which provides a record of agreement or an exchange of statements of claim and defence in which the 24 CT 1390_Com.M.A.5-2021_Judgment.doc existence of the agreement is alleged by one party and not denied by the other. In those cases which answers Section 7(3) and 7(4) or section 7(2) there would be an Arbitration agreement and the parties can resolve the dispute through arbitration. In the present case, as stated above, Arbitration agreement though was available in the previous agreement, that agreement has come to an end. Therefore, after 31/3/2017 there is no arbitration agreement in writing entered between the parties. Though the letters, telex, telegrams or other means of telecommunication also could provide arbitration agreement, that should provide record of agreement. In the present case, admittedly no such exchange of communications are found and there is no correspondence between the parties and as discussed above, doctrine of Sub- Silentio is not available and do not come to the aid of the appellant. There is absolutely no material to show that there were some letters, telex, telegrams or other means of communication which provides record of agreement or exchange of statements of claim etc. Under such circumstances, arbitration agreement as required under Section 7 of the Arbitration & Conciliation Act is not present in the present case and the arbitration agreement which was there in the previous expired agreement by any stretch of imagination cannot be held to be continued even for the transaction of subsequent period.
21. Similarly another decision reported in (2012) 2 SCC 93 (Reva Electric Car Company Private Limited v.
25CT 1390_Com.M.A.5-2021_Judgment.doc Green Mobil) is also cited in which the Hon'ble Supreme Court has held that the arbitration clause continues to be enforceable even if contract is terminated. Since in the present case, dispute is not in respect of the transaction which took place upto 31/3/2017 and admittedly the dispute is in respect of subsequent transaction, Arbitration clause of the expired agreement cannot be applied for the transaction of the subsequent period. Therefore, this decision also do not help. In the decision before the Hon'ble Supreme Court, though the MOU had come to an end there were correspondence between the parties which show that the petitioner had proposed a draft distribution agreement and thereafter series of e-mails were exchanged between the parties, but no final consensus was reached and therefore it appeared that MOU was duly extended till it was terminated. Present case is not similar to those facts. Therefore, decision in Reva Electric Car Company is not applicable to the present case.
22. On looking to all these aspects, contention of the appellant that though the agreement expired on 31/3/2017, by conduct of the parties and through subsequent transaction and as per the doctrine of Sub-Silentio, arbitration clause in the previous agreement continued to operate even for the transaction which took place subsequent to 31/3/2017 cannot be accepted. Appellant has failed to show that the arbitration agreement of the expired agreement continued even for the transaction subsequent to expiry of 26 CT 1390_Com.M.A.5-2021_Judgment.doc such agreement. Therefore, learned Arbitrator's finding on this point cannot be said to be not correct.
23. One more contention is that in the reply notice, respondent had contended that there is arbitration clause and as such the dispute is to be resolved only through arbitration. In the reply given on 22/8/2018, to the notice of the appellant, it is stated by counsel for the respondent No.1 about existence of arbitration agreement. According to appellant, this is a clear admission of existence of arbitration agreement. However, learned Arbitrator has found that this statement of the counsel in the reply notice do not bind the respondent and also held that there cannot be any estoppel against the statute.
24. Learned counsel for the respondent has relied on the decision of Hon'ble Supreme Court reported in (2004) 3 SCC 628 (Union of India and others v. Mohanlal Likumal Punjabi and others) in which, Hon'ble Supreme Court in para 8 has referred to another decision and has observed that "....in our view the concession, if any, is really of no consequence, because the wrong concession made by a counsel cannot bind the parties when statutory provisions clearly provided otherwise...." The Hon'ble Supreme Court has also referred to the decision in Central Council for research in Ayurveda & Siddha v. Dr. K.Santhakumari in which it is held that "...If the learned counsel has made an admission or concession inadvertently or under a mistaken impression of law, it is 27 CT 1390_Com.M.A.5-2021_Judgment.doc not binding on his client and the same cannot enure to the benefit of any party..." On the basis of this decision, it is argued that, statement made by the counsel for respondent in the reply would not bind respondent No.1 and would not create an arbitration agreement between the parties.
25. On looking to this reply notice dated 22/8/2018, counsel for respondent No.1 has stated about expiry of the earlier agreement, after denying claim of the appellant. He has stated about existence of an arbitration agreement. Since as per Section 7, Arbitration Agreement is to be in writing and it should be signed by the parties, this statement of the counsel for the respondent No.1 in the reply notice cannot be considered as an arbitration agreement. As stated above, arbitration agreement which was in the previous agreement had already expired on 31/3/2017 and the same was not extended by act or omission and even by applying the doctrine of Sub-Silentio. There is no correspondence between the parties for extension of the agreement or clause of the agreement providing arbitration. Though the transactions were had between the parties as stated by the appellant, there is no written contract between the parties. Interestingly contract can be orally or in writing, but arbitration agreement should be in writing only. Therefore, even extension of other terms of the contract also may not be sufficient to consider extension of arbitration agreement. In this case, there is no correspondence for extension of the agreement subsequent to 31/3/2017 and there is no correspondence, no negotiation 28 CT 1390_Com.M.A.5-2021_Judgment.doc for extension. However, there were some transaction between the parties even subsequent to 31/3/2017. For resolving the dispute in respect of those transactions, though the appellant may be justified in relying on the terms and conditions of the expired agreement by implication, in the absence of any correspondence between the parties for extension of the arbitration agreement, there would be no arbitration agreement between the parties. Mere continuation of the transaction would not extend the arbitration agreement for the period beyond the period of contract. For example, if lease of premises is expired after particular period mentioned in the lease deed which also provide for arbitration and lessee continue in the premises even after period of lease, arbitration agreement in the lease deed would not continue to operate between the parties and in such case, for eviction of such lessee, landlord may have to take recourse to general law and seek possession. Therefore, mere continuation of the transaction will not prove extension of arbitration agreement, as contract may be oral or in writing, but arbitration agreement should be in writing.
26. Statement made by the counsel in the reply, in the absence of any other correspondence exchanged between the parties cannot create an arbitration agreement. Such statement in the reply would not be an estoppel against respondent No.1. When the parties have not extended the arbitration agreement from 31/3/2017, this statement in the reply notice by the counsel would not bind the respondent.
29CT 1390_Com.M.A.5-2021_Judgment.doc Even after this notice dated 22/8/2018, appellant has not taken any steps to initiate arbitration immediately. On looking to all these aspects, this reply notice of the respondent also will not come to the aid of the plaintiff to make a claim before the arbitrator.
27. On looking to the order of the learned Arbitrator, learned Arbitrator has considered all these aspects and then come to the conclusion that there is no arbitration agreement subsequent to the period of 31/3/2017 and therefore he has no jurisdiction to entertain the petition. Therefore, the learned Arbitrator was right in terminating the arbitration proceedings by answering preliminary issue No.1 in the affirmative. Appellant has failed to establish that the arbitration agreement continued even after expiry of the agreement dated 24/6/2016 which expired on 31/3/2017 for the dispute arose between the parties in respect of the transaction subsequent to 31/3/2017.
28. The learned Arbitrator has rightly held that the claimant is at liberty to avail other remedy available to it in respect of its monetary claims. Since the arbitration agreement has expired, appellant cannot initiate arbitration. However, it cannot be said that appellant is remedy-less. Remedy under the general law is very well available to the appellant to resolve the dispute. On the facts of the case, remedy of resolution of the dispute through arbitration is not available to the appellant. Therefore, there are no grounds to interfere with the finding of the learned Arbitrator and tehre 30 CT 1390_Com.M.A.5-2021_Judgment.doc are no grounds to set aside the order of the learned Arbitrator. Hence, this appeal is to be dismissed. Accordingly, point No.1 is answered in the negative.
29. Point No.2: In view of the discussion made on above point, I proceed to pass the following;
ORDER Appeal filed under Section 37(2) of the Arbitration & Conciliation Act praying to set aside the order of the learned Arbitrator in AC No.77/2021 dated 16/7/2021, by holding that the tribunal has no jurisdiction to entertain the claim petition, is dismissed.
[Dictated to the Judgment Writer; transcript thereof corrected, signed and then pronounced by me, in the Open Court on this the 20th day of April 2023] [Ravindra Hegde] LXXXIII Additional City Civil Judge.
BENGALURU.
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