Watson Yarn Company Pvt. Ltd. vs Shri Subhash Mittal
2006 Latest Caselaw 729 Del

JUDGMENT

Anil Kumar, J.

1. This order shall dispose of petitioner's petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator in respect of disputes which have arisen between the petitioner and the respondent. Brief facts to comprehend the controversies between the parties are that the petitioner entered into an agreement dated 10.10.1998 under which respondent had to spun the raw wool imported by the petitioner from New Zealand. The yarn was to be spun as per the specification to be provided.

2. The petitioner contended that the respondent did not have proper machinery to execute the job undertaken by him and, therefore, requested the applicant to finance him to get the requisite machines in order to perform his part of agreement dated 10.10.1998.

3. The averment of the petitioner is that he invested a sum of Rs. 5,65,000/- which was a loan to the respondent for acquiring the requisite machines from Rajiv Tex Machines Industrial Area, Panipat, Haryana and that amount was to be adjusted by deduction of 10% of the amounts from the bills to be raised by the respondent for spinning the yarn of the wool imported by the petitioner. The petitioner also contended that in the facts and circumstances it was agreed that the petitioner will have a charge and lien over the machine which was purchased from the loan advanced by the petitioner to the respondent. The petitioner supplied the raw material to be spun by the respondent pursuant to agreement dated 10.10.1998 and the agreement was to be operative till spinning of 7,20,000 kgs of yarn.

4. The complaint of the petitioner is that respondent breached the terms of the agreement and entered into an agreement with some other party for spinning his yarn and in the process neglected spinning of yarn of the petitioner's raw material though the amount for the purchase of the machinery of the respondent was given by the petitioner. The act of the respondent to enter into an agreement with some other party and neglecting spinning of yarn of the petitioner's raw material was violative of the spirit and terms of the agreement.

5. The petitioner also has a grievance that the yarn spun was not according to the quality and specification. Not spinning yarn according to the specification and quality, respondent became liable to return the raw material, however, respondent refused to return 200 kgs of imported New Zealand wool and 122 imported tetra packing bags and in the circumstances respondent became liable to the tune of Rs. 30,000/- and Rs. 12,2000/- for 200 kgs of wool and 122 imported tetra bags for which the petitioner had raised bills Nos. 7 and 8. An amount of Rs. 4,61,628.40/- also remained due on account of the balance loan payable by respondent to the petitioner and consequently the disputes arose between the petitioner and the respondent, since respondent refused to pay the amounts as claimed by the petitioner.

6. The petitioner contended that there is an arbitration agreement between the parties under Clause 30 of the agreement which is as under:- 'That both the parties ensure each other that they will struck to the terms and conditions of this agreement and in case the dispute arises the same will be referred to the sole arbitration of Sh.Jatinder Mohan Uppal son of Late Shri Des Raj Uppal, New Delhi and his decision will be final and binding upon both the parties and if any of the parties like to go against the decision of the Arbitrator then in that case the party wanting to the Court of law shall first abide by the findings of the arbitrator and follow that decision in letter and spirit and then only he shall be entitled to refer the matter to the Court of law otherwise in practice and in letter and spirit the decision of the said Arbitrator shall become final.'

7. Since the dispute arose between the parties, the petitioner sought appointment of an arbitrator in terms of arbitration agreement between the parties and adjudication of the disputes by him.

8. The petitioner, therefore, had sent a communication dated 28.12.2005 which was received by the respondent and the respondent also sent a reply, however, respondent refused to appoint an arbitrator. On refusal of the respondent to appoint an arbitrator the present petition is filed by the petitioner under Section 11(6) of the Arbitration and Conciliation Act for appointment of an arbitrator in terms of agreement between the parties.

9. The petition is contested by the respondent and a reply has been filed on behalf of the respondent to the petition under Section 11(6) of the Arbitration and Conciliation Act, 1966. The respondent contended that the petition is not maintainable since the petitioner has suppressed the true material facts. The respondent also denied the jurisdiction of the Court, however, it was also contended that till the subsistence of agreement dated 10.10.1998 the Courts at Delhi only shall have jurisdiction which can be invoked.

10. The respondent denied the averments made by the petitioner regarding non performance of the agreement and the breaches committed by the respondent and contended that the breach was, rather on the part of petitioner. The respondent also asserted that the petitioner has disentitled himself from seeking the relief of appointment of arbitrator on account of the acts on the part of the petitioner and imputable to the petitioner. Regarding the named arbitrator Sh.Jatinder Mohan Uppal, it was stated that he is a relative of the petitioner and he may be biased. The respondent also opposed the petition on the ground that the application is an abuse of the process of the Hon'ble Court.

11. I have heard the learned Counsel for the parties at length and have also perused the petition, reply and rejoinder filed by the parties.

12. This has not been denied that in terms of Clause 30 of the agreement dated 10.10.198 there is an arbitration agreement between the parties. The respondent has taken a contradictory plea that the Court does not have jurisdiction to try and entertain the present petition and at the same time relying on para 14 of the agreement it has been contended that jurisdiction will be of Courts at Delhi only. If that be so the inevitable inference is that the Court at Delhi has jurisdiction and consequently the Courts at Delhi will be competent to decide this petition as the designate of the Chief Justice of High Court of Delhi.

13. The petitioner has invoked the arbitration clause and has sought appointment of an arbitrator. The respondent has failed to appoint an arbitrator within 30 days from the receipt of a request to do so and in the circumstances the respondent has lost the right to appoint an arbitrator in terms of the arbitration clause.

14. Rather respondent himself is not agreeable for appointment of Sh.Jatinder Mohan Uppal (Sh.J.M.Uppal son of Sh.Des Raj Uppal) as an arbitrator on the ground that he is related to the petitioner. The respondent other objection is that petition is an abuse of the process of law. However, the respondent has failed to show as to how a petition seeking appointment of an arbitrator in terms of arbitration agreement is an abuse of process of law. As far as refutation of the averments regarding non performance of the terms of the agreement by the respondent and the assertion that breaches has been committed by the petitioner, the matter is to be adjudicated by the arbitrator.

15. The learned Counsel in the facts and circumstances has contended that the respondent shall be agreeable for appointment of an independent arbitrator preferably a retired Judge. The learned Counsel for the petitioner is also agreeable in the facts and circumstances and pursuant to the offer of the counsel for the respondent for appointment of an independent person, preferably a retired District Judge as an arbitrator.

16. Consequently, considering the facts and circumstances, I appoint Shri B.L. Garg, retired Additional District Judge resident of A/9, Ganpati Apartment, 6 Alipur Road, Civil Lines, Delhi ' 110054 (Ph. No. 9810827815) as a sole arbitrator to adjudicate the disputes between the parties. The fee of the arbitrator shall be Rs. 5,000/- per hearing subject to a maximum fee of Rs. 70,000.00. The parties are directed to appear before Shri B.L. Garg, retired Additional District Judge on May 8th, 2006 at 04.00 pm.

17. Copy of this order be communicated to the Arbitrator forthwith. The parties are also directed to communicate the order to the Arbitrator. Copies of this order be given also to the parties, dusty.