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Prime Interglobe Private Limited vs Super Milk Products Private Limited on 6 March, 2023

Author: Prateek Jalan

Bench: Prateek Jalan

                            $~33
                            *    IN THE HIGH COURT OF DELHI AT NEW DELHI

                            +      ARB.P. 608/2022

                                   PRIME INTERGLOBE PRIVATE LIMITED        ..... Petitioner
                                                Through: Mr. Sameer Jain, Mr. Suvigya
                                                         Awasthy, Mr. Vivek Joshi, Mr.
                                                         Rohan Gulati, Ms. Radha Gupta,
                                                         Advocates.

                                                               versus

                                   SUPER MILK PRODUCTS PRIVATE LIMITED ..... Respondent
                                                Through: Mr. Ashish Dholakia, Sr. Adv.
                                                         with Mr. Shivank Diddi, Ms.
                                                         Abhipriya Singh, Mr. Arpit Singh,
                                                         Advocates.

                            CORAM:
                            HON'BLE MR. JUSTICE PRATEEK JALAN

                                                    ORDER

% 06.03.2023 I.A. 11713/2022 (waiver of costs)

1. This application has been filed by the respondent for wavier of costs imposed upon it by order dated 18.07.2022. Costs were imposed for delay in filing of the reply.

2. It is stated that the delay was occasioned inter alia by the fact that several lawyers in the learned counsel's office were affected by COVID-

3. In view of the aforesaid averment, the application is allowed and the costs imposed by order dated 18.07.2022 are waived.

4. The application stands disposed of in these terms.

1. By way of the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 ["the Act"], the petitioner seeks appointment of an arbitrator to adjudicate its claims arising under a Master Franchise Agreement dated 03.10.2016 ["MFA"] between the parties.

2. It is common ground that certain claims of the respondent under the same agreement are pending adjudication in an ongoing arbitration. The petitioner sought permission to file its counter-claims in the said arbitration, which was rejected by order dated 14.03.2022 passed by the learned arbitrator. The petitioner, therefore, sought to initiate independent arbitration proceedings by a letter dated 09.04.2022, addressed by its counsel to the respondent. The present petition has been necessitated by the fact that the respondent did not consent to the appointment of an arbitrator by its response, through counsel, dated 09.05.2022.

3. In the course of the present proceedings, Mr. Ashish Dholakia, learned Senior Counsel for the respondent, objected to the maintainability of the present petition on the ground that disputes between the parties under the MFA had already been referred to arbitration by order of this Court dated 26.07.2019 in ARB.P. 474/2019. Learned counsel for the parties have addressed arguments on the said question.

4. In the meanwhile, Mr. Dholakia also brought it to the attention of this Court, as recorded in the order dated 30.11.2022, that the pendency of the present petition is being cited as a ground for adjournment in the ongoing arbitration proceedings, wherein the respondent's claims are being adjudicated. On 30.11.2022, this Court made it clear that the pendency of the present petition would not come in the way of the Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:07.03.2023 15:56:11 ARB.P. 608/2022 Page 2 of 5 ongoing arbitration proceedings.

5. I am informed that arguments have since concluded in those proceedings and the award reserved.

6. The petitioner has filed a further application dated 03.03.2023 before the learned arbitrator seeking a deferment of the passing of the arbitral award until the present petition is decided. I am informed that the learned arbitrator has fixed a hearing on that application on 10.03.2023.

7. I have put it to Mr. Sameer Jain, learned counsel for the petitioner, that filing of such an application before the learned arbitrator is really an attempt to overreach the order of this Court dated 30.11.2022. He submits that this is not the case and the petitioner, in fact, participated in the proceedings before the learned arbitrator thereafter. He further draws my attention to an order dated 27.08.2022 passed by the learned arbitrator, whereby the learned arbitrator has observed as follows: -

"xxxx xxxx xxxx I do not see any reason not to hear argument on the statement of Claim, especially when no Award is being passed today. The entire date fixed for today's hearing will be wasted. I therefore, do not find any reason to defer the present hearing fixed for today on the ground urged by the Learned Counsel for the Respondent. Whether an Award has to be passed prior to the disposal of the Section 11 petition before the High Court will be considered at a later stage. For the present the application dated 26.08.2022 U/s 17 of the Arbitration and Conciliation Act is dismissed, with liberty to the Respondent to file a fresh application, if so advised, on the outcome of the pending Petition under section 11 of the A&C Act."

8. I find these contentions to be misconceived. The liberty granted by the learned arbitrator to the petitioner was to file a fresh application "on the outcome of the pending petition under Section 11". The present petition, under Section 11 of Arbitration and Conciliation Act, 1996 ["the Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:07.03.2023 15:56:11 ARB.P. 608/2022 Page 3 of 5 Act"], remains pending and the contingency contemplated by the learned arbitrator has not yet come to pass. In any event, the order of the Court dated 30.11.2022 was passed subsequent to the order of the learned arbitrator dated 27.08.2022. The said order was not challenged and is, therefore, binding upon the parties.

9. In view of the repeated attempts of the petitioner to defer the conclusion of the pending arbitral proceedings, in which the respondent's claims are being adjudicated, I have requested learned counsel for the parties to address me on the question as to whether the award being published in those proceedings would have any affect upon the right of the petitioner to relief in this petition. Curiously, Mr. Jain states that the petitioner's right to seek appointment of an arbitrator in the present proceedings, i.e. to adjudicate the claims of the petitioner, would not be affected by the pendency or conclusion of the ongoing arbitral proceedings, in respect of the respondent's claims.

10. Mr. Dholakia takes the same position. He, however, submits that some of the questions which may arise in the arbitration proceedings proposed by the petitioner are the very same questions which are being decided in the proceedings arising out of the respondent's claims. In such an event, he reserves the right of the respondent, in the event the present petition succeeds, to raise contentions regarding abandonment of claims, issue estoppel, res judicata, etc., which the respondent may be entitled to raise in defence to the petitioner's claims Mr. Jain does not dispute that these issues would be open for consideration by the learned arbitrator in the prospective arbitral proceedings in either event, i.e. whether the award is rendered before or after the conclusion of the present petition.

11. In these circumstances, it appears to me that this issue is really akin to a storm in a teacup. If the petitioner does succeed in the present application, the rights of the parties to argue before the learned arbitrator on the question of abandonment of claims, issue estoppel, res judicata or any other consequence of the ongoing arbitral proceedings, whether or not the award has been rendered yet, will remain reserved to them. It is, therefore, made abundantly clear that this Court has not passed any orders with respect to the ongoing arbitral proceedings

12. Mr. Dholakia also submits that, subject to the reservations noted herein, the only question which requires consideration in the present petition is whether the petitioner's request for appointment of an arbitrator is barred on the ground that an arbitrator had already been appointed in ARB.P. 474/2019, and the petitioner was obliged to prosecute its claims only in those proceedings.

13. Learned counsel for the parties have concluded their submissions on this aspect. Judgment is reserved.

PRATEEK JALAN, J MARCH 6, 2023 'Bhupi'/ Signature Not Verified Digitally Signed By:SHITU NAGPAL Signing Date:07.03.2023 15:56:11 ARB.P. 608/2022 Page 5 of 5