Spml Infra Limited vs East India Udyog Limited
2022 Latest Caselaw 112 Cal/2

              IN THE HIGH COURT AT CALCUTTA
                 ORIGINAL CIVIL JURISDICTION
                        (Original Side)


                                               A.P. No. 403 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-purchase order dated 10th January, 2018. 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

10.01.2018 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

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.

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

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

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)