Full Judgment Text
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NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
ARBITRATION CASE (CIVIL) NO.37 OF 2014
SANGHI BROTHERS (INDORE)
PVT. LTD. ...PETITIONER
VERSUS
MUKTINATH AIRLINES PRIVATE
LIMITED & ANR. ...RESPONDENTS
J U D G M E N T
1. This application has been filed under Section
11(6) of the Arbitration and Conciliation Act, 1996
(hereinafter referred to as the “Arbitration Act”) for
appointment of an arbitrator to go into the disputes and
differences that the petitioner claims to have arisen between
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the petitioner–Company and the respondents under an
Agreement/Memorandum of Understanding dated
17.07.2013.
2. According to the petitioner, the respondent No.1 -
Muktinath Airlines Private Limited is the owner of a
Helicopter Robinson R44 Raven II. The petitioner contends
that the respondent No.1 – Company executed a power of
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attorney dated 20 June, 2013 authorising the respondent
No.2 – Galaxy Aviation Incorporation Private Limited to sell
the said Helicopter. A Memorandum of Understanding (for
th
short “MOU”) dated 4 July, 2013 was entered into between
the respondent No.1 and the respondent No.2 incorporating
the terms for the sale of the Helicopter. The petitioner
th
states that on 17 July, 2013 a MOU was executed between
the petitioner and the respondent No.1 represented by its
power of attorney i.e. respondent No.2 for sale of the
Helicopter in question. The price was agreed upon and an
advance amount of Rs. 5,00,000/- (Five Lakhs only) was
paid by the petitioner to the respondent No. 1.
3. The petitioner has contended that it was agreed
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by and between the parties in the MOU dated 17 July,
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2013 that the sale of the Helicopter would be completed
within two months. The respondents failed to handover
possession of the Helicopter within the aforesaid period.
According to the petitioner, an addendum to the MOU dated
th
17 July, 2013 was executed between the petitioner and the
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respondent No.2 for extension of time upto 16 December,
2013 for the delivery of the Helicopter. It appears that the
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respondent No.2 demanded a sum of Rs.15 lakhs over and
above the agreed sale price [Rs.2,04,00,000 (Rupees Two
crore four lakhs)] which was responded to by the petitioner
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on 10 December, 2013, inter alia, informing the
respondent No.2 of its failure to comply with clause 4 and
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clause 13 of the MOU dated 17 July, 2013. Accordingly,
legal notice was issued by the petitioner to the respondents.
As the petitioner apprehended that the respondents may
sell the Helicopter to a third party it had approached the
Delhi High Court by means of a petition under Section 9 of
the Arbitration Act. Accordingly, interim orders were passed
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by the Delhi High Court on 14 March, 2014. The
petitioner invoked the arbitration clause (clause 24) of the
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MOU dated 17 July, 2013 by notice dated 13 February,
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2014 and as the same had not been responded to the
instant petition has been filed.
4. The respondent No.2 has chosen not to appear
before the Court. The respondent No.1, who is represented,
has filed an affidavit contending that in terms of MOU dated
th
4 July, 2013, between the respondents, it was agreed that
if the respondent No.2 failed to make payment within one
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month from the date of the MOU (i.e. 4 July, 2013) then
the said MOU would stand terminated. It was stated that
the respondent No.2 had failed to make such payment and,
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therefore, the MOU between the respondents dated 4 July,
2013 had become non-est in law. The respondent No.1 has
further contended that it is not bound by the MOU dated
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17 July, 2013 as it was not a party to the same. It is the
further contention of the respondent No.1 that the power of
attorney was forged by the respondent No.2 and also that
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the MOU dated 4 July, 2013 between the respondents has
been materially altered in respect of clause 12 and clause
19 thereof altering the periods specified in the said clauses
from one month to three months.
5. I have heard the learned counsels for the parties
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and I have considered the submissions advanced. Clause 24
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of the MOU dated 17 July, 2013 which provides for
arbitration is in the following terms:
“24) This MOU will be governed by the
provision of Indian Arbitration and
Conciliation Act, 1996 and any other
modification or re-enactment thereof. The
arbitration proceedings shall be held in New
Delhi and the language of arbitration shall
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be English.”
6. There is no manner of doubt that the said MOU
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dated 17 July, 2013 was executed by and between the
petitioner on one hand and respondent No.1 represented by
respondent No.2 as its power of attorney holder on the
other. Clearly and evidently, sale and purchase of the
Helicopter and delivery thereof in terms of the aforesaid
th
MOU dated 17 July, 2013 has not materialized till date.
Whether the petitioner is entitled to performance of the
th
terms of the said MOU dated 17 July, 2013 is the precise
dispute between the parties. Therefore, in terms of the
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arbitration clause contained in the said MOU dated 17
July, 2013, the dispute is liable to be referred to arbitration
by appointment of an arbitrator under Section 11(6) of the
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Arbitration Act. The grounds on which the respondent No.1
seeks to resist the appointment of an arbitrator, namely,
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that the period contemplated under the MOU dated 4 July,
2013 (one month) within which payment was to be made to
the respondent No.1 by the respondent No.2 is over; that
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clause 12 and clause 19 of the MOU dated 4 July, 2013
had been materially altered by changing the period of
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payment from one month to three months; and further that
the power of attorney was forged by the respondent No.2 are
questions that cannot be gone into by the court in exercise
of jurisdiction under Section 11(6) of the Arbitration Act.
These are matters which can be raised before the learned
Arbitrator and answered by the said authority. In this
regard, Section 16 of the Arbitration Act may be extracted
below.
“ 16. Competence of arbitral tribunal to
rule on its jurisdiction .—
(1) The arbitral tribunal may rule on its
own jurisdiction, including ruling on
any objections with respect to the
existence or validity of the arbitration
agreement, and for that purpose,-
(a) an arbitration clause which forms
part of a contract shall be treated
as an agreement independent of
the other terms of the contract;
and
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(b) a decision by the arbitral tribunal
that the contract is null and void
shall not entail ipso jure the
invalidity of the arbitration
clause.
(2) A plea that the arbitral tribunal does
not have jurisdiction shall be raised
not later than the submission of the
statement of defence; however, a party
shall not be precluded from raising
such a plea merely because that he has
appointed, or participated in the
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appointment of, an arbitrator.
(3) A plea that the arbitral tribunal is
exceeding the scope of its authority
shall be raised as soon as the matter
alleged to be beyond the scope of its
authority is raised during the arbitral
proceedings.
(4) The arbitral tribunal may, in either of
the cases referred it, in sub-section (2)
or sub-section (3), admit a later plea if
it considers the delay justified.
(5) The arbitral tribunal shall decide on a
plea referred to in sub section (2) or
sub-section (3) and, where the arbitral
tribunal takes a decision rejecting the
plea, continue with die arbitral
proceedings and make an arbitral
award.
(6) A party aggrieved by such an arbitral
award may make an application for
setting aside such an arbitral award in
accordance with section 34.”
7. Consequently and in the light of the above, the
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court allows the present petition and appoints Shri Justice
Mukul Mudgal, Chief Justice (Retd.), Punjab & Haryana
High Court, as the Arbitrator.
8. All the disputes including the disputes raised in
the present petition are hereby referred to the learned sole
Arbitrator. The learned Arbitrator shall be at liberty to fix
his own fees/ remuneration/other conditions in
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consultation with the parties.
9. Let this order be communicated to the learned
Arbitrator so that the arbitration proceedings can
commence and conclude as expeditiously as possible.
10. The Arbitration Petition is disposed of
accordingly. No costs.
………......................,J.
(RANJAN GOGOI)
NEW DELHI
OCTOBER 15, 2015
JUDGMENT
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