Full Judgment Text
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
ARBITRATION APPLICATION (CIVIL) NO. 4 OF 2015
ETOILE CREATIONS …Petitioner
Versus
SARL DANSET DECO ...Respondent
J U D G M E N T
R. BANUMATHI, J.
In this petition under Section 11(5) read with Section 11(9)
of the Arbitration and Conciliation Act, 1996, the petitioner prays for
the appointment of a sole arbitrator for adjudication of disputes that
have arisen between the parties in relation to ‘Buyers Agreement’
dated 18.10.2012 executed between them.
2. Briefly stated case of the petitioner is as under:- Petitioner
is a proprietorship firm having its registered office at C-291, Suraj Mal
Signature Not Verified
Vihar, Delhi. The petitioner is engaged in the business of
Digitally signed by
NEELAM GULATI
Date: 2016.08.02
16:37:10 IST
Reason:
manufacturing of products relating to home furnishing and upholstery
etc., exclusively for the respondent since 2000. The respondent-SARL
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DANSET DECO is a concern having its office at 240 Rue De La Lys
59250, Halluin, France which is engaged in the business of purchase
and sale of the product relating to home furnishing and upholstery
and is the buyer of the products manufactured by the petitioner.
Accordingly, a ‘Buyers Agreement’ was executed on 18.10.2012 at New
Delhi between the petitioner and the respondent. As per the aforesaid
agreement, the petitioner has been selling/supplying its aforesaid
products and the respondent has been buying/purchasing the
products for resale/sale in the territory of France. There was a long
business relationship since 2000, even prior to execution of the
agreement and the petitioner was regularly supplying the products to
the respondent. At the time of execution of the aforesaid agreement, it
was acknowledged that the respondent owes a total amount of Euro
367814.80 as the outstanding amount. The details of the outstanding
dues have been mentioned in Schedule-I of the ‘Buyers Agreement’.
The petitioner has alleged that as per the terms and conditions of the
‘Buyers Agreement’ dated 18.10.2012, the respondent did not release
the said outstanding amount within seven days of the agreement.
Despite numerous reminders for the payment of dues through
e-mails, SMS messages exchanged between the parties during
November 2012 to April 2013 and subsequent legal notices sent to the
respondent, the respondent failed to pay the admitted dues of the
petitioner.
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3. Clause 2.2 of the ‘Buyers Agreement’ imposed a restriction
upon the petitioner from supplying its product to any other
person/firm or company, in the territory of France. On the other
hand, the respondent agreed and assured that the products ordered
during each year of the term shall not fall short of the target provided
in Schedule-II of the said agreement. In the event of the failure to
meet such target, the agreement stipulated termination of restriction
so imposed upon the petitioner. Petitioner supplied various materials
to the respondent at different points of time against various orders.
The respondent cancelled a few orders to the tune of Euro 272368.25.
The respondent committed breach of the terms and conditions of the
‘Buyers Agreement’ because cancelled orders were not restored. Thus,
the respondent is liable to compensate the petitioner for cancelling
orders and reimburse for cost and damages incurred in procuring
material worth Euro 272368.25, just prior to the date of shipment and
also for preparing samples as per the request of the respondent dated
25.05.2012 and 26.07.2012. As per Clause 4.1 of the ‘Buyers
Agreement’, the respondent shall not purchase/obtain/ deal with the
products or any goods that compete with them, for sale from any
person, firm or company in India other than the petitioner. The
respondent not only cancelled the orders, but also in violation of
Clause 4.1 of the ‘Buyers Agreement’ dated 18.10.2012, purchased
the same products worth approximately Euro 700000 from M/s.
Chahat Exports, 148-A, Basement, Deep Complex, Near Maharani
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Bagh, New Delhi and Dhruv Overseas, 4502, Dau Bazar, Cloth
Market, Fateh Puri, Delhi. Placing such orders with other firms,
according to petitioner, is a violation of terms and conditions of the
terms of the ‘Buyers Agreement’ which stipulates commitment
between the parties for five years to maintain the business relations;
but the respondent by diverting those orders to another agency has
clearly breached the terms and conditions of the agreement. Petitioner
sent legal notices dated 08.05.2013, 04.07.2013 and 06.07.2013
calling upon the respondent to pay unpaid invoices to the tune of
Euro 393916.95 and also unpaid invoices to the tune of Euro
209580.63 of M/s Creative International (another partnership firm of
the petitioner) alongwith interest at the rate of 24% per annum.
4. As the respondent did not make the payment of the
invoices, the petitioner invoked arbitration clause agreed in Clause 14
of the ‘Buyers Agreement’ for the appointment of three arbitrators, one
to be nominated by each party and the third to be appointed by the
two appointed arbitrators. As per Clause 14 of the ‘Buyers
Agreement’, the petitioner sent a statutory notice dated 14.08.2013,
nominating on his behalf Mr. Subhash Chandra, LLM, Higher Judicial
Services (V.R.S.), Member Judicial, Railway Claims Tribunal (Retd.) as
an arbitrator. Petitioner requested the respondent to nominate its
arbitrator so as to enable these arbitrators nominated by the parties
to further nominate the presiding arbitrator and constitute an arbitral
tribunal.
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5. The petitioner filed a petition before the Commercial Court
in Lille to seize all the bank accounts of the respondent with the
banks Caisse d’ Epargne, GCE Trade and HSBC bank alongwith all
money, values and/or bonds held by these banks on behalf of the
respondent. The court’s bailiffs seized a total amount of Euro 48000
in HSBC bank on 11.10.2013 and Caisse d’ Epargne on 14.10.2013 in
compliance to order of Appellate Court, Douai, France dated
25.09.2014. The petitioner filed a claim before the
Tribunal-DE-COMMERCIAL DE LILLE METROPOLIS, France for
recovery of debt amounting to Euro 393916.95, the Tribunal however
dismissed the claim of the petitioner vide its order dated 30.01.2014.
Petitioner then filed an Appeal No. Minute:14/389/RG 14/01147
before the Appellate Court, Douai, France against the order dated
30.01.2014 passed by the President of the Commercial Court of LILLE,
which also came to be dismissed by its judgment dated 25.09.2014.
The appellate court declared the appeal inadmissible on the issue of
jurisdiction in view of the arbitration agreement and also held that
there was no emergency to approach the court instead of seeking
remedy under the Arbitration Agreement. According to the petitioner,
the aforesaid disputes and differences have arisen in India, are
covered by the terms and conditions of the ‘Buyers Agreement’ and are
to be resolved by the arbitrator in view of the arbitration clause 14 of
the ‘Buyers Agreement’. Hence, the petitioner has filed this petition
invoking the arbitration clause 14 of the ‘Buyers Agreement’ for
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appointment of a sole arbitrator in terms of ‘Buyers Agreement’ dated
18.10.2012 qua recovery of Euro 393916.95 payable to the petitioner
alongwith interest at the rate of 24% per annum.
6. As per the Office Report dated 06.04.2016, counsel for the
petitioner has on 23.02.2016 filed an affidavit of dasti service
alongwith proof of service on respondent and proposed respondents
and the service of notice is complete.
7. We have heard the learned counsel for the petitioner at
some length. Despite service of notice, respondent has chosen not to
appear. The material facts are not in dispute that ‘Buyers Agreement’
was executed between the parties on 18.10.2012. Clause 14 of the
said agreement provides for settlement of dispute in relation to the
agreement by way of arbitration. Clause 14 reads as under:-
“ 14. Arbitration
14.1 Any dispute, difference, controversy or claim (“Dispute”)
arising between the Parties out of or in relation to or in connection
with this Agreement, or the breach, termination, effect, validity,
interpretation or application of this Agreement or as to their rights,
duties or liabilities hereunder, shall be settled by the Parties by
mutual negotiations and agreement. If, for any reason, such Dispute
cannot be resolved amicably by the parties, the same shall be referred
to and settled by way of arbitration proceedings by three arbitrators,
one to be nominated by each Party and the third to be appointed by
the two appointed arbitrators. The arbitration proceedings shall be
held in accordance with the Arbitration and Conciliation Act, 1996, or
any subsequent enactment or amendment thereto (the “Arbitration
Act”) by a sole arbitrator appointed by the First Party. The decision of
the arbitrator shall be final and binding upon the Parties. The venue
of arbitration proceedings shall be Delhi. The language of the
arbitration and the award shall be English.”
8. As is evident from the averments in the petition, disputes
have actually arisen between the parties in relation to the agreement
and in view of clause 14 such disputes could be resolved only by way
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of arbitration. Whether the respondent is bound to pay Euro
393916.95 alongwith interest at the rate of 24% per annum; whether
the respondent has committed breach of Clause 2.2 of the agreement
in cancelling the orders; whether the respondent is liable to
compensate for cancelling the orders and reimburse the cost and
damages incurred by the petitioner; whether the respondent acted in
violation of Clause 4.1 of ‘Buyers Agreement’ dated 18.10.2012 by
diverting the orders to another agency and, if so, whether the
respondent is liable to compensate the petitioner and such other
incidental questions can be examined only by the arbitrator. When an
arbitration agreement exists between the parties, the present petition
under Section 11 (5) read with Section 11 (9) of the Arbitration and
Conciliation Act, 1996, shall have to be allowed with appropriate
directions.
9. In the result, we allow this petition and appoint Mr.
Justice Kailash Gambhir, a Former Judge, Delhi High Court as a Sole
Arbitrator for adjudication of the disputes that have arisen between
the parties in relation to the ‘Buyers Agreement’ dated 18.10.2012
executed between them. We leave it open for the parties to make their
claims and counter claims in relation to the agreement
aforementioned before the Arbitrator. All contentions otherwise open
to the parties on facts and in law shall be open to be urged before the
arbitrator. The arbitrator shall fix his own fee. The petition, is
accordingly, allowed with the above directions leaving the parties to
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bear their own costs. Parties are directed to appear before the
arbitrator on 14.09.2016.
……………………….CJI.
(T.S.THAKUR)
…………………………..J.
(R.BANUMATHI)
..…………………………J.
(UDAY UMESH LALIT)
New Delhi;
July 25, 2016
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ITEM NO.1B COURT NO.13 SECTION XVIA
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Arbitration (Civil) No(s). 4/2015
ETOILE CREATIONS Petitioner(s)
VERSUS
SARL DNSET DECO Respondent(s)
Date : 25/07/2016 This petition was called on for Judgment today.
For Petitioner(s) Mr. Vivek Gupta,Adv.
For Respondent(s)
Hon'ble Mrs. Justice R. Banumathi pronounced the
judgment of the Bench comprising Hon'ble the Chief Justice,
Her Lordship and Hon'ble Mr. Justice Uday Umesh Lalit.
Arbitration Petition is allowed with the directions
mentioned in the Signed Reportable Judgment.
Mr. Justice Kailash Gambhir, a Former Judge, Delhi High
Court is appointed as a Sole Arbitrator for adjudication of
the disputes that have arisen between the parties in relation
to the ‘Buyers Agreement’ dated 18.10.2012 executed between
them. We leave it open for the parties to make their claims
and counter claims in relation to the agreement aforementioned
before the Arbitrator. All contentions otherwise open to the
parties on facts and in law shall be open to be urged before
the arbitrator. The arbitrator shall fix his own fee.
Parties to bear their own costs. Parties are directed to
appear before the arbitrator on 14.09.2016.
(NEELAM GULATI)
COURT MASTER
(MADHU NARULA)
COURT MASTER
(Signed Reportable Judgment is placed on the file)
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R E V I S E D
ITEM NO.1B COURT NO.13 SECTION XVIA
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Arbitration (Civil) No(s). 4/2015
ETOILE CREATIONS Petitioner(s)
VERSUS
SARL DNSET DECO Respondent(s)
Date : 25/07/2016 This petition was called on for Judgment today.
For Petitioner(s) Mr. Vivek Gupta,Adv.
For Respondent(s)
Hon'ble Mrs. Justice R. Banumathi pronounced the
judgment of the Bench comprising Hon'ble the Chief Justice,
Her Lordship and Hon'ble Mr. Justice Uday Umesh Lalit.
Arbitration Petition is allowed with the directions
mentioned in the Signed Reportable Judgment.
Mr. Justice Kailash Gambhir, a Former Judge, Delhi High
Court is appointed as a Sole Arbitrator for adjudication of
the disputes that have arisen between the parties in relation
to the ‘Buyers Agreement’ dated 18.10.2012 executed between
them. We leave it open for the parties to make their claims
and counter claims in relation to the agreement aforementioned
before the Arbitrator. All contentions otherwise open to the
parties on facts and in law shall be open to be urged before
the arbitrator. The arbitrator shall fix his own fee.
Parties to bear their own costs. Parties are directed to
appear before the arbitrator on 14.09.2016.
All the pending applications including application for
Impleadment shall stand disposed of.
(NEELAM GULATI)
COURT MASTER
(MADHU NARULA)
COURT MASTER
(Signed Reportable Judgment is placed on the file)