Calcutta High Court
Spml Infra Limited vs East India Udyog Limited on 18 January, 2022
Author: Prakash Shrivastava
Bench: Prakash Shrivastava
IN THE HIGH COURT AT CALCUTTA
ORIGINAL CIVIL JURISDICTION
(Original Side)
A.P. No. 406 of 2020
(Through Video Conference)
Reserved on: 03.01.2022
Pronounced on: 18.01.2022
SPML INFRA LIMITED
...Applicant
-Vs-
EAST INDIA UDYOG LIMITED
...Respondent
Present:-
Mr. Satadeep Bhattacharyya, Mr. S. R. Kakrania, Mr. Tanuj Kakrania, Advocates ... for the applicant Mr. Ishan Saha, Mr. Tanay Agarwal, Ms. Pallavi Ghosh, Advocates ... for the respondent Coram: THE HON'BLE JUSTICE PRAKASH SHRIVASTAVA, CHIEF JUSTICE Prakash Shrivastava, CJ:
1. This application under Section 11 of the Arbitration and Conciliation Act, 1996 has been field for appointment of arbitrator to resolve the dispute between the parties.
2. The case of the applicant is that the agreement was entered into between the applicant and the respondent in the form of a supply contract-cum-letter of intent dated 01st of October, 2018 (for short, 2 A.P. No. 406 of 2020 purchase order). In terms of the purchase order the respondent was required to supply power transformers of prescribed technical specification of SBPDCL and Rural Electrical Corporation to Gaya District of Bihar and the said contract was in nature of the sub-
contract by the applicant in favour of the respondent. The allegation of the applicant is that the respondent had acted in breach of the purchase order as a result of which applicant has suffered substantial loss, damages. The purchase order contained the arbitration clause, therefore, applicant had sent the letter dated 23rd of September, 2020 to the respondent invoking the arbitration clause and nominating his arbitrator. Respondent by communication dated 19th of October, 2020 had refused the prayer for arbitration.
3. Submission of the learned Counsel for the applicant is that the purchase order which contained the arbitration clause is undisputed and was duly acted upon and the dispute has arisen between the parties, therefore, in terms of the arbitration agreement arbitrator needs to be appointed. He further submits that this Court has jurisdiction because the seat of arbitration is at Kolkata and even otherwise cause of action has arisen within the jurisdiction of this Court.
4. Learned Counsel for the respondent has opposed the application by submitting that the unsigned purchase order is not an arbitration agreement in terms of Section 7 of the Act and that as per the purchase order Kolkata is a venue of arbitration which cannot be treated as seat of arbitration, therefore, this Court has no jurisdiction.
5. Having heard the learned Counsel for the parties and on the perusal of the record, it is noticed that the purchase order dated 01st of 3 A.P. No. 406 of 2020 October, 2018 is not in dispute between the parties. The terms and conditions which are part of the purchase order contain following arbitration clause:
Jurisdiction :- All disputes & differences arising out of or in connection with this agreement shall in the first instance be settled amicably by mutual negotiation between authorized representatives of both the parties herein, failing which the said disputes & differences shall be referred to arbitration by sole arbitrators to be appointed by the buyer herein. The arbitration shall be conducted in accordance with the Arbitration & Conciliation Act, 1996 and/or any statutory modification thereof. The venue of such arbitration shall be Kolkata and the award passed by the tribunal shall be final & binding on the parties.
6. The purchase order reveals that two copies of purchase order were sent by the applicant to the respondent with the stipulation that the respondent will retain the original and will return the second copy. Purchase order stipulates that if the acknowledgment of the receipt of the order was not done within seven days from the date of receipt, then it would be presumed that the respondent had accepted it. It is not in dispute that the purchase order was received by the respondent and that the respondent had acted upon the purchase order and had made supply in pursuance thereto. It is also not in dispute that respondent had initiated proceedings against the applicant on the 4 A.P. No. 406 of 2020 ground of non-payment in terms of purchase order under the Insolvency and Bankruptcy Code, 2016.
7. An issue has been raised that the purchase order is not signed by the parties. The Hon'ble Supreme Court in the matter of Govind Rubber Limited vs. Louis Dreyfus Commodities Asia Private Limited reported in (2015) 13 SCC 477 considering the scope of Section 7 of the Act has held that arbitration agreement need not be signed by all the parties and that in terms of Section 7 (4)(b)(c) a written document which may not be signed by the parties can be arbitration agreement. The Hon'ble Supreme Court has concluded that an arbitration agreement even though in writing need not be signed by the parties if the record of agreement is provided by exchange of letters, telex, telegrams or other means of telecommunication. If it can be shown that parties are at ad idem, then mere fact of one party not signing the agreement cannot absolve him from the liability under the agreement. It has been categorically held that signature is not a formal requirement under Section 7(4)(b) or Section 7(4)(c) or Section 7(5) of the Act.
8. In the matter of Caravel Shipping Services Private Limited vs. Premier Sea Foods Exim Private Limited reported in (2019) 11 SCC 461 it has been reiterated that an arbitration agreement needs to be in writing though it need not be signed. Hence, in view of the aforesaid judicial pronouncement of the Supreme Court and in the circumstances of the case, arbitration agreement in the form of purchase order exists between the parties, hence the applicant is not entitled to the benefit of the earlier judgments of Delhi, Calcutta and Madras High Courts in the matter of Taipack Limited & Ors. vs. 5 A.P. No. 406 of 2020 Ram Kishore Nagar Mal, 2007 SCC OnLine Del 804, in the matter of M/s. Inspiration Cloths & U vs. Yash Traders, 2014 SCC OnLine Cal 19825 and in the matter of NSK India Sales Company Private Ltd., Chennai vs. Proactive Universal Trading Company Private Ltd., New Delhi, 2015 SCC OnLine Mad 14146.
9. The next objection raised by the Counsel for the respondent is that this Court does not have jurisdiction to entertain the application under Section 11. The arbitration clause quoted above contains the stipulation that venue of the arbitration shall be Kolkata. There is no other clause in the arbitration agreement providing for the seat of arbitration specifically. The Hon'ble Supreme Court in the matter of BGS SGS SOMA JV vs. NHPC LIMITED, (2020) 4 SCC 234 in this regard has held that:
"61. It will thus be seen that wherever there is an express designation of a "venue", and no designation of any alternative place as the "seat", combined with a supranational body of rules governing the arbitration, and no other significant contrary indicia, the inexorable conclusion is that the stated venue is actually the juridical seat of the arbitral proceedings."
10. In the present case also similar circumstances exist and apart from the express designation of venue of arbitration as Kolkata, there is no separate designation of seat and there is no contrary clause in the agreement. Hence in terms of the above the judgment Kolkata is actually the juridical seat of arbitral proceedings.
11. That apart, it has been disclosed by the applicant that the applicant's corporate office is at Kolkata, the purchase order was issued from the corporate office at Kolkata, Section 21 notice was 6 A.P. No. 406 of 2020 issued from corporate office and the respondent had sent the reply to the notice, addressed to the corporate office at Kolkata. Hence, this Court has jurisdiction to entertain the application under Section 11.
12. Learned Counsel for the respondent has placed reliance upon the judgment of the Hon'ble Supreme Court in the matter of Mankastu Impex Private Limited vs. Airvisual Limited, (2020) 5 SCC 399 but that was a case where observations were made in the background of the fact that in addition to providing Hong Kong as place of arbitration in the arbitration agreement in that case, it was also provided that any controversy, difference arising out of or relating to MoU shall be resolved by arbitration administered in Hong Kong. Both the judgments in the case of BGS SGS SOMA JV vs. NHPC LIMITED and also Mankastu Impex Private Limited vs. Airvisual Limited three-Judge Bench judgment, and the ratio of the earlier judgment is not diluted by the subsequent judgment. Hence, the objection raised by the respondent in respect of the jurisdiction is overruled.
13. The record further reflects that in reply to the notice under Section 21 of the Act, the respondent had not disputed the arbitration agreement but his only objection was that in view of the subsequent development there was nothing left for adjudication of any dispute.
14. Having regard to the aforesaid, I am of the opinion that the arbitration agreement exists between the parties and the dispute has arisen, therefore, an independent arbitrator needs to be appointed to resolve the dispute, hence I propose the name of Mr. Ajeya Matilal, retired District Judge, resident of 18B, Durga Pituri Lane, Kolkata - 700 012 (Mobile No. 9477207862) for appointment as arbitrator. Let 7 A.P. No. 406 of 2020 his declaration in terms of Section 12(1) of the Act in the form prescribed in Schedule VI of the Act be obtained.
15. List on 01.02.2022 on top of the list.
(PRAKASH SHRIVASTAVA) CHIEF JUSTICE Kolkata 18.01.2022 ___________ PA(SS)