Delhi High Court
Carrier Airconditioning & ... vs M/S Linc Digital Systems Pvt. Ltd. ... on 9 April, 2009
Author: Ajit Prakash Shah
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.A. 41/2007
CARRIER AIRCONDITIONING & REFRIGERATION LTD. ..... Petitioner
Through: Mr. Samir Chugh, Adv.
Versus
M/S LINC DIGITAL SYSTEMS PVT. LTD. & ORS. ..... Respondents
Through: Mr. Mayur P. Shah, Adv.
CORAM:
HON'BLE THE CHIEF JUSTICE
ORDER
% 09.04.2009
The applicant appointed the first respondent as an authorized
sales and service dealer of the products of the appellant company vide
Dealership Agreement dated 10.1.1998. The agreement was for a
period of one year and any further renewal was to be as per mutual
agreement. The agreement was terminated by the applicant vide
notice dated 23.10.2003. The agreement contains an arbitration
clause. The applicant served a notice on the respondents dated
11.10.2006 enumerating therein the disputes, which had arisen
between the parties. As there was no named arbitrator, the applicant
proposed the names of three persons giving the option to the
respondent to appoint anyone of them as the arbitrator. By reply
dated 8.11.2006, the respondents denied the liability as well as the
subsistence of the arbitration agreement and declined to appoint the
arbitrator. Hence the applicant has approached this court under
Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter,
for brevity's sake, referred to as the Act).
2. The application is opposed by the respondents on two grounds.
First, it is contended that there is no enforceable arbitration agreement
as contemplated by Section 7 of the Act. Secondly it is alleged that
the claim is barred by limitation.
3. In so far as the first contention is concerned, it was urged on
behalf of the respondents that there was only an oral agreement to
continue the contract with the terms and conditions described in the
expired agreement. In view of the provisions of Section 7 of the Act,
the agreement could be renewed/extended only by a written
agreement. The requirement of having the written agreement cannot
be bypassed by a mutual understanding or an oral agreement. The
contention is without any merit. The agreement contains a specific
provision for renewal of the contract on the basis of the mutual
agreement. In the reply dated 8.11.2006, the respondents had
categorically admitted that the dealership agreement was extended
and renewed from time to time and renewed upto 2001. In their reply
to the termination letter dated 23.10.2003, it was not the case of the
respondents that the agreement was not renewed but on the contrary
it was stated that the abrupt termination of the contract caused to
them tremendous financial loss as well as damage to their goodwill,
reputation and image. By letter dated 28.1.2003, the respondents had
requested for grant of dealership for Surat under different dealer code
so as to segregate the two operations. It is evident from the letter of
request of the respondent that besides running business of the
applicant at Ahmedabad on the basis of dealership agreement
mutually renewed from year to year, the respondents wanted
dealership for Surat also and it is not now open for the respondents to
contend that the dealership agreement was not renewed. It is also
seen from the records that the respondent had executed an
Agreement of Representation and Warranties in favour of the applicant
on 15.4.2000/ 20.4.2000. The correspondence placed on record as
well as the subsequent conduct of the parties show that the dealership
agreement was renewed from time to time and therefore an arbitration
agreement did exist between the parties. The conduct of the parties,
as evidenced by various letters, shows that the parties continued to
bind themselves by the terms and conditions contained in the
dealership agreement which obviously included the arbitration clause.
4. In this connection, a reference may be made to the decision of
the Supreme Court in Bharat Petroleum Corporation Ltd. v. Great
Eastern Shipping Co. Ltd. (2008) 1 SCC 503. In that case, the
question before the Court was whether on the expiry of the extended
period of charter hire, the charter party came to an end and the
arbitration agreement between the parties perished with it. Answering
the question in the negative and dismissing the appeal, the Supreme
Court held:
"19. It is, no doubt, true that the general rule is that
an offer is not accepted by mere silence on the part
of the offerree, yet it does not mean that an
acceptance always has to be given in so many
words. Under certain circumstances, the offeree's
silence, coupled with his conduct, which takes the
form of a positive act, may constitute an acceptance
- an agreement sub silentio. Therefore, the terms of
a contract between the parties can be proved not
only by their words but also by their conduct.
20. ..... The conduct of the parties, as evidenced in
the said correspondence and, in particular the
appellant's silence on the respondent's letters dated
5.11.1998 and 4.1.1999, coupled with the fact that
they continued to use the vessel, manifestly goes to
show that except for the charter rate, there was no
other dispute between the parties. They accepted
the stand of the respondent sub silentio and thus,
continued to bind themselves by other terms and
conditions contained in the charter party dated
6.5.1997, which obviously included the arbitration
clause."
5. Under the circumstances, the argument raised by the
respondents that the renewal can be only by written agreement has to
be rejected.
6. Coming then to the question of limitation, it is clearly seen that
the termination of the contract was on 23.10.2003 and the arbitration
notice was given on 11.10.2006, i.e. within a period of three years.
Therefore, the argument that the claim was barred by limitation has to
be rejected.
7. Justice A.D. Singh (Retd.) is appointed as the sole arbitrator to
arbitrate upon the disputes between the parties.
8. With the above observations, the Arbitration Application stands
disposed of.
CHIEF JUSTICE
APRIL 09, 2009
Pk
