Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 08 August, 2023
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Pronounced on: 14 August, 2023
+ ARB.P. 1204/2022, I.A.Nos.17506/2022, 7036/2023
M S TALWAR AUTO GARAGES PRIVATE LIMITED.
THROUGH ITS AUTHORIZED REPRESENTATIVE
..... Petitioner
Through: Mr.Jayant Mehta, Sr. Advocate
with Mr.Dhruva Pawan Kumar,
Ms.Shraddha Gupta and
Mr.Raghav Bhatia, Advocates.
versus
M S VE COMMERCIAL VEHICLES LIMITED..... Respondent
Through: Ms.Gunjan Sinha Jain and
Mr.Manu Bajaj, Advocates.
+ O.M.P.(I) (COMM.) 84/2022, I.A. 4147/2022 I.A. 7037/2023
TALWAR AUTO GARAGES PRIVATE LIMITED THROUGH
ITS AUTHORISED REPRESENTATIVE MR SARAL TALWAR
..... Petitioner
Through: Mr.Jayant Mehta, Sr. Advocate
with Mr.Dhruva Pawan Kumar,
Ms.Shraddha Gupta and
Mr.Raghav Bhatia, Advocates.
versus
VE COMMERCIAL VEHICLES LIMITED
..... Respondent
Through: Ms.Gunjan Sinha Jain and
Mr.Manu Bajaj, Advocates.
CORAM:
HON'BLE MR. JUSTICE YOGESH KHANNA
YOGESH KHANNA, J.
1. ARB.P. 1204/2022 is filed by the petitioner under Section 11 of
ARB.P. 1204/2022 and O.M.P.(I) (COMM.) 84/2022 Page 1 of 9
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Digitally Signed
By:PRADEEP SHARMA
Signing Date:14.08.2023 15:33
Arbitration and Conciliation Act for appointment of an arbitrator to
adjudicate the disputes between the parties. The arbitration clause 32 of
the Dealership Agreement dated 29.10.2013, renewed on 01.04.2017 is as
under:
“32) DISPUTE RESOLUTION AND JURISDICTION
The parties hereto shall endeavor to settle by mutual conciliation any
claim, dispute, or controversy ("Dispute") arising out of or in relation to,
this Agreement, including any Dispute with respect to the existence or
validity hereof the interpretation hereof the activities performed
hereunder, or the breach hereof. Any Dispute which cannot be so
resolved through such conciliation within 30 days or such extended
period as the parties may agree, shall be finally settled under the
provisions of the Indian Arbitration and Conciliation Act, 1996 and
Rules made thereunder and any statutory amendments/modifications
thereof in Delhi. The seat of arbitration shall always be at Delhi. The
Courts of Indore shall have exclusive jurisdiction in all matters arising
under this Agreement.”
2. Reference is also made to other clauses of the agreement viz. 4 and
26 , which read as under:
“ 4) TERM OF THE AGREEMENT
a) This Agreement shall Continue in force up to a period of 3 years
commencing on 01st April2017 and shall thereafter be renewed for
successive periods of 3 years as may be mutually agreed between VECVL
and the Dealer unless terminated earlier by VECVL as described in the
clause 26 hereof.
b) In case the Dealer is not interested in renewal of this agreement, the
Dealer shall intimate at least 90 days before the expiry of the term of this
agreement or extended term thereof in writing of VECVL.
26) TERMINATION
a) VECVL reserves the right to determine and/or treat this agreement at
an end forthwith on account of any breach of any of the terms and
conditions contained herein on the part of the Dealer without prejudice
to any other right or rights which may have accrued to it. Any clues
outstanding against the dealer for one month or more shall be deemed to
be a Dealers breach of this agreement within the meaning of this clause.
b) VECVL may also terminate this agreement forthwith in the event of
VECVL doubting the probity of conduct of the Dealer or on VECVL
believing that any acts of the Dealer are likely to prejudice the VECVL 's
interests, bring disrepute, cause loss of goodwill to VECVL or result in
financial loss to VECVL.
c) It is agreed by the parties that in case of dissolution of or change in
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Signing Date:14.08.2023 15:33
structure/arrangement/agreement, in the Dealer's Partnership Firm, in
whatever manner, without prior intimation to and written consent of
VECVL , VECVL shall hold absolute right to terminate this Dealership
Agreement forthwith.
d) It is agreed that the Dealer will not indulge m any such
transaction/obligation/agreement /collaboration/amalgamation or any
other such business arrangement with any other organization(s); which
directly/indirectly affects VECVL's business interests, without prior
written consent of VECVL. VECVL shall hold rights to forthwith
terminate the dealership on occurrence of any such event
e) Notwithstanding anything contained in Clause 26 (a) & (b) hereof, this
agreement shall be liable to be determined without assigning any reason
upon three months' notice in writing from either side.
f) In case of the termination of the agreement by VECVL under clause 26
(a) and/or (b) VECVL shall be entitled to forfeit the security deposit
amount given by the Dealer as per clause 6 of this agreement including
interest, if any, accrued thereon till date.”
3. It is the submission of the learned senior counsel for the petitioner
since the arbitration clause provides for the seat of arbitration at Delhi,
hence this Court shall have jurisdiction to entertain the petition under
Section 11 of Arbitration and Conciliation Act and to appoint an
arbitrator. It is argued where there exists a seat of arbitration only such
Courts shall have jurisdiction to deal with its arbitration matters. It is
submitted though the agreement was entered into initially on 16.01.2002
but was extended time and again and lastly was extended on 01.04.2017.
Certain disputes arose in the year 2020 and respondent then proceeded to
terminate the agreement.
4. Reference was also made to legal notice dated 05.01.2022 and to
notice dated 04.03.2022 invoking arbitration qua Balanagar Agreement.
These notices were duly replied vide replies dated 01.02.2022 and
14.03.2022. It is submitted by the learned senior counsel for the
petitioner per clause 4 of the Agreement, though such agreement was in
force for a period of three years commencing from 01.04.2017 but was
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Signing Date:14.08.2023 15:33
renewable for successive period of three years as may be mutually agreed
and its termination could be only under clause 26 thereof.
5. Reference was also made to invoices of January, 2021 to show the
dealings continued even after 2020, hence the agreements did not expire
due to efflux of time. In any case the petitioner invoked arbitration clause
within three years from April, 2020 and hence proceedings are within
limitation. About jurisdiction of Court vis-à-vis seat of arbitration I may
refer to Indus Mobile Distribution Pvt. Ltd. vs. Data Wind Innovations
Pvt. Ltd. (2017) 7 SCC 678, wherein the Court held:
“19. A conspectus of all the aforesaid provisions shows that the moment
the seat is designated, it is akin to an exclusive jurisdiction clause. On
the facts of the present case, it is clear that the seat of arbitration is
Mumbai and Clause 19 further makes it clear that jurisdiction exclusively
vests in the Mumbai courts. Under the Law of Arbitration, unlike the
Code of Civil Procedure which applies to suits filed in courts, a reference
to “seat” is a concept by which a neutral venue can be chosen by the
parties to an arbitration clause. The neutral venue may not in the
classical sense have jurisdiction – that is, no part of the cause of action
may have arisen at the neutral venue and neither would any of the
provisions of Section 16 to 21 of the CPC be attracted. In arbitration
law however, as has been held above, the moment “seat” is determined,
the fact that the seat is at Mumbai would vest Mumbai courts with
exclusive jurisdiction for purposes of regulating arbitral proceedings
arising out of the agreement between the parties.
20. It is well settled that where more than one court has jurisdiction, it is
open for parties to exclude all other courts. For an exhaustive analysis of
the case law, see Swastik Gases Private Limited v. Indian Oil
Corporation Limited, (2013) 9 SCC 32. This was followed in a recent
judgment in B.E. Simoese Von Staraburg Niedenthal and Another v.
Chhattisgarh Investment Limited, (2015) 12 SCC 225. Having regard to
the above, it is clear that Mumbai courts alone have jurisdiction to the
exclusion of all other courts in the country, as the juridical seat of
arbitration is at Mumbai. This being the case, the impugned judgment is
set aside. The injunction confirmed by the impugned judgment will
continue for a period of four weeks from the date of pronouncement of
this judgment, so that the respondents may take necessary steps under
Section 9 in the Mumbai Court. Appeals are disposed of accordingly.”
6. In BGS SGS Soma JV vs. NHPC Limited (2020) 4 SCC 234, the
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Signing Date:14.08.2023 15:33
Court held as under:
“ 58. Equally, the ratio of the judgment in Indus Mobile Distribution
Private Ltd. (supra), is contained in paragraphs 19 and 20. Two separate
and distinct reasons are given in Indus Mobile Distribution Private Ltd.
(supra) for arriving at the conclusion that the Courts at Mumbai alone
would have jurisdiction. The first reason, which is independent of the
second, is that as the seat of the arbitration was designated as Mumbai, it
would carry with it the fact that Courts at Mumbai alone would have
jurisdiction over the arbitration process. The second reason given was
that in any case, following the Hakam Singh (supra) principle, where
more than one Court can be said to have jurisdiction, the agreement itself
designated the Mumbai Courts as having exclusive jurisdiction. It is thus
wholly incorrect to state that Indus Mobile Distribution Private Ltd.
(supra) has a limited ratio decidendi contained in paragraph 20 alone,
and that paragraph 19, if read by itself, would run contrary to the 5
Judge Bench decision in BALCO (supra).
98. However, the fact that in all the three appeals before us the
proceedings were finally held at New Delhi, and the awards were signed
in New Delhi, and not at Faridabad, would lead to the conclusion that
both parties have chosen New Delhi as the “seat” of arbitration under
Section 20(1) of the Arbitration Act, 1996. This being the case, both
parties have, therefore, chosen that the Courts at New Delhi alone would
have exclusive jurisdiction over the arbitral proceedings. Therefore, the
fact that a part of the cause of action may have arisen at Faridabad
would not be relevant once the “seat” has been chosen, which would
then amount to an exclusive jurisdiction clause so far as Courts of the
“seat” are concerned.”
7. In Mr.Raman Deep Singh Taneja vs. Crown Realtech Private
Limited 2017 SCC OnLine Delhi 11966, wherein the venue of arbitration
was at Faridabad, Haryana and there was a jurisdiction clause to refer all
disputes at Delhi Courts, the Court held:
“9. In the present case we are faced with the situation where one part of
the agreement provides for exclusive jurisdiction to Courts of Delhi,
while the other, due to the venue of arbitral proceedings, vests exclusive
jurisdiction in Courts in Faridabad, State of Haryana. As was held by the
Supreme Court in the judgment of Bharat Aluminium Company (Supra),
a distinction is to be drawn between "Subject-Matter of the
Arbitration" and "Subject-Matter of the Suit". For the purposes of
identifying the Court, which shall have supervisory control over the
arbitral proceedings, it would be the Court where the 'Subject-Matter of
Arbitration' is situated that would have precedence over the Court where
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Digitally Signed
By:PRADEEP SHARMA
Signing Date:14.08.2023 15:33
the "Subject-Matter of the Suit" is situated. In this case, therefore, the
exclusive jurisdiction conferred due to venue of arbitration would take
precedence over the exclusive jurisdiction vested over the Subject-
Matter of the suit in the Courts at Delhi . There are various provisions in
the Act where the Court has to exercise supervisory jurisdiction over the
arbitration proceedings. These include not only Section 11 of the Act but
also Sections 14, 27, 29A, 34 and 37 of the Act. It is, therefore, evident
that the Court having jurisdiction over the arbitration proceedings
would have precedence over the Court which has jurisdiction over the
Subject-Matter of the suit or where the cause of action has arisen. The
purported conflict between the two parts of Clause 24 quoted above can
be resolved by holding that where the disputes are to be adjudicated
without reference to the arbitration, Courts at Delhi would have
exclusive jurisdiction, however, where they have to be resolved through
arbitration, venue being at Faridabad, Haryana, the Courts at
Faridabad, State of Haryana, would have exclusive jurisdiction.”
8. In My Preferred Transformation and Hospitality Pvt. Ltd. vs.
Sumithra Inn. 2021 SCC OnLine Delhi 1536, the Court held:
“33. The Supreme Court, therefore, held that the very fixation of the seat
of arbitration at Mumbai resulted in courts at Mumbai being conferred
with exclusive jurisdiction to entertain the petitions. The "exclusive
jurisdiction clause", i.e. Clause 19 in the agreement was held only to
"further to make it clear". The manner in which the Supreme Court has
phrased its findings, in the afore-extracted passage, is important because,
though conferment of exclusive jurisdiction on courts at Mumbai, to deal
with the petitions initiated under Sections 9 and 11 of the 1996 Act, could
be justified both under the "seat of arbitration" clause, as well as under
the "exclusive jurisdiction" clause, the Supreme Court chose to decide
the issue on the basis of the "seat of arbitration" clause, rather than
the "exclusive jurisdiction" clause, observing, in the process, that the
"exclusive jurisdiction" clause merely underscored the legal position
that emanated from the "seat of arbitration" clause. In other words, the
Supreme Court held that the designation of Mumbai as the "seat of
arbitration", ipso facto, conferred exclusive Section 9 and Section 11
jurisdiction on courts at Mumbai, and that the "exclusive jurisdiction"
clause merely fortified this legal position. The pre-eminence of the fixing
of the seat of arbitration, in the agreement, therefore, stands emphasized
in this decision as well.
D. Cases in which the contract contained a "seat of arbitration" and an
"exclusive jurisdiction" clause, vesting jurisdiction in courts at different
territorial locations”
9. In Aniket SA Investments LLC vs. Janapriya Engineering Syndicate
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Signing Date:14.08.2023 15:33
Pvt. Ltd. 2021 (4) Mah LJ 123, the Court held:
“22. We are also not able to agree with either of these findings and
conclusions in the Impugned Order. It is a well settled rule of
interpretation of agreements that the Courts must give effect to the plain
language used by the parties and that the intention of the parties must
be gathered from the plain meaning of words used . Clause 20.3, which
confers exclusive jurisdiction on the Courts at Hyderabad is not a part of
the arbitration agreement clause which is Clause 20.4 of the Agreement
with a heading "Arbitration". The choice of Court at Hyderabad is made
clearly 'subject to' Clause 20.4. Therefore, the plain language used in
Clause 20.4.2 (c) of the Agreement, which is part of the arbitration
clause, is that Mumbai is chosen as the seat of the arbitration
proceedings. For the reasons stated above this would have the efect of
conferring exclusive jurisdiction on the Courts at Mumbai. It cannot be
said, as contended by Respondent Nos. 3 to 6 in this Appeal, that the
choice of 'seat' in the year 2008 when the Agreement was entered into
was not understood as a choice of Courts of the 'seat' and that this cannot
be the intention attributed to parties. The law as laid down by the
Supreme Court in BGS SGS as to the effect of choice of 'seat' as
conferring exclusive jurisdiction is by no means prospective or
applicable only after a particular date. Even the judgment in BALCO, as
explained in BGS SGS, must be understood as stating the legal position
under the Act and which must be given effect to even if the Agreement in
question was of a date prior to the judgment. We therefore, see no merit
in this submission.”
10. The learned counsel for the respondent referred to clause 32 of the
agreement to say the clause mentions an exclusive jurisdiction of the
Courts at Indore, hence would take away the jurisdiction from this Court.
I do not agree to the submissions in view of the law discussed above.
11. However, I agree to the submissions of the learned counsel for the
respondent only the disputes arising out of the Balanagar agreement
dated 01.04.2017 need be referred to arbitration and not other disputes as
are mentioned in legal notices.
12. Reliance placed by the respondent on the decision of the High
Court of Madhya Pradesh in V. E. Commercial Vehicles Ltd. v. Grand
Motor Sales & Services Pvt. Ltd. in AC No. 16/2019 , in view of the
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Signing Date:14.08.2023 15:33
dismissal of the SLP filed in the Hon'ble Supreme Court, is misplaced.
Firstly, the decision of the High Court of Madhya Pradesh is contrary to
Indus Mobile and BGS Soma in that it applies the CPC principles as
opposed to the 'seat' principle; secondly, if the said judgment is to be
considered, it does not bind this Court. Thirdly, dismissal of the SLP in
limine does not mean the Hon'ble Supreme Court had approved the said
judgment. This is clear in view of Kunhayammed & Ors. v. State of
Kerala & Anr. (2000) 6 SCC 359.
13. The respondent has also placed reliance on para 96 of the decision
of BALCO v. Kaiser Aluminium , (2012) 9 SCC 552 contending the
conferring jurisdiction on Delhi shall be against the principle of party
autonomy. The said paragraph was explained by the Hon'ble Supreme
Court in BGS Soma wherein, at para nos. 49 and 50 , the Court held:
"49... If, therefore, the conflicting portion of the judgment of BALCO in
para 96 is kept aside for a moment, the very fact that parties have chosen
a place to be the seat would necessarily carry with it the decision of both
parties that the courts at the seat would exclusively have jurisdiction over
the entire arbitral process.
50. In fact, subsequent Division Benches of this Court have understood
the law to be that once the seat of arbitration is chosen, it amounts to an
exclusive jurisdiction clause, insofar as the courts at that seat are
concerned...."
14. It was next contended by the respondent there is no arbitration
agreement between the parties as the Dealership Agreement stands
expired by efflux of time. Firstly, this is a disputed fact to be adjudicated
by the arbitral tribunal, as and when appointed. Secondly, the petitioner
relies on, inter alia, the invoices on record to show dealings between the
parties post 01.04.2020. These invoices are not denied or disputed by the
respondent. Thirdly, even otherwise, this issue would be significant if the
respondent were to argue bar of limitation. However, the respondent has,
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Digitally Signed
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Signing Date:14.08.2023 15:33
fairly, not so argued since the petitioner had invoked arbitration on
04.03.2022, within two years of 01.04.2020. As such, whether agreement
continued to subsist is immaterial to appointment of an arbitrator.
Fourthly, the arbitration agreement in Clause 32 of the Dealership
Agreement is widely worded and covers disputes arising out of or in
relation to.
15. As the seat of arbitration is at Delhi, this Court thus shall have the
jurisdiction to decide this application.
16. In the circumstances, Mr.Justice R.K.Gauba (Retd.)
(Mob.No.9650411919) is hereby appointed as an arbitrator to adjudicate
the disputes between the parties.
17. The rights and contentions of the parties are left open. The
proceedings be conducted under the aegis of the Delhi International
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Arbitration Centre (DIAC) and fee be governed by 4 Schedule of the
Arbitration and Conciliation Act, 1996.
18. Since the arbitrator has been appointed in the ARB.P. 1204/ 2022,
hence O.M.P.(I) (COMM.) 84/2022 be treated as a petition under Section
17 of the Arbitration and Conciliation Act, which shall be dealt with by
the learned Arbitrator.
19. In view of above, both petitions stands disposed of. All pending
applications also stand disposed of.
YOGESH KHANNA, J.
AUGUST 14, 2023
DU
ARB.P. 1204/2022 and O.M.P.(I) (COMM.) 84/2022 Page 9 of 9
Signature Not Verified
Digitally Signed
By:PRADEEP SHARMA
Signing Date:14.08.2023 15:33