M/S. Apl Polyfab Pvt. Ltd. vs Technology Information, ...
2011 Latest Caselaw 3967 Del

*          HIGH COURT OF DELHI : NEW DELHI

+                     Arb. P. No.62/2011

%                                Judgment decided on : 16.08.2011

M/s APL Polyfab Pvt. Ltd.                       .......Petitioner
                     Through: Mr. Lalit Gupta, Adv. with
                              Mr. Deepak aggarwal and
                              Mr. M.H. Khan, Advs.

                      Versus


Technology Information, Forecasting And assessment
Council (TIFAC)                                    .....Respondent
                    Through: Mr. R.P. Aggarwal, Adv. with
                                Ms. Priaydarshani Verma, Adv.
Coram:
HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?

2. To be referred to Reporter or not?                  Yes

3. Whether the judgment should be reported             Yes
   in the Digest?

MANMOHAN SINGH, J.

1. The present petition has been filed by the petitioner under

Section 11 of the Arbitration & Conciliation Act, 1996 (hereinafter

referred to as „the Act‟) for appointment of the Secretary Department

of Science and Technology, Government of India, New Delhi as the

sole arbitrator to adjudicate upon all the disputes and differences

between the parties.

2. The brief facts of the case are that the petitioner is engaged

in the business of manufacturing POLYFAB brand cotton

stiffened/coatedfabric/sheets, Toe Puff and Counter stiffeners and

marketing them to the footwear manufacturers all over the country.

3. The respondent is a registered society which assists in

implementation, inter alia of Technology Projects In the Mission Mode

on Advanced Composites, development of technologies / processes

from "concept to utilisation‟ and "until Commercial Exploitation" as

one of its activities.

4. It is averred in the petition that on 10.08.2000 the petitioner

and respondent entered into a Technological Development Assistance

(TDA) Agreement. Under the said agreement, the respondent was to

provide financial assistance to the petitioner for the purpose of

development of new viable technologies, use, exploit and practice the

know how using the jute composites components for use in footwear

"until commercial exploitation", with technical support from the Indian

Jute Industries Research Association (IJIRA) Kolkata. The amount

required for the said project was Rs.1,37,63,500.00 out of which the

respondent agreed to finance Rs.67,11,500.00 and the remaining

amount of Rs.70,52,000.00 was to be paid by the petitioner itself.

5. The agreement dated 10.08.2000 contained an arbitration

clause i.e. clause xi (a) of the agreement which reads as under:

"If any dispute or difference arises between the parties hereto as to the construction, interpretation, effect and implication of any provision of this Agreement including the rights or liability or any claim or demand of any party against other or in regard to any matter under these presents but excluding any matters, decisions of determination of which is expressly provided for in this agreement, such disputes or differences shall be referred to the sole arbitration of the secretary of the department of Science and Technology, Government of India or that of his nominee and his decision shall be binding on all parties."

6. It was agreed that the petitioner shall pay an amount of

Rs.80,53,800 as per the repayment schedule of the agreement and it

was payable in five anuual installments of Rs.16,10,760/- each,

commencing form February 2003 to February 2007. The agreement

also provided for an Advisory & Monitoring Committee to be

appointment by the respondent in consultation with other parties for

reviewing and monitoring the progress of the project and to inspect the

work. The said project was to be completed within a period of 18

months.

7. It is stated by the petitioner that vide Deed of

Hypothecation dated 10.08.2000, the petitioner created the first charge

in favour of the respondent by way of hypothecation. The respondent

released a sum of Rs.67,11,500/- in favour of the petitioner and the

same was utilized by the petitioner for purchasing plant and machinery

to set up a project at 48/C Matheswartolla Road, Kolkata.

8. It stated by the petitioner that due to a number of reasons

the petitioner could not create the viable technology of four product nd

complete the project. Therefore the petitioner requested the respondent

to reschedule the payment of TDA and explained it to the respondent

that due to acute financial hardships the petitioner needed further time

for realization of the post dated cheques given to the respondent and

requested the respondent not to present the old cheques, as the bank

accounts of the same had been closed. The petitioner further clarified

the issue of post dated cheques was not a part of the agreement, and

the cheques were only issued by the petitioner on the request of the

respondent.

9. Vide letters dated 16.01.2004, 18.09.2006, 25.08.2006 and

16.03.2004 the petitioner requested the respondent not to present the

cheques to the Bank. Further, the petitioner also made repayments of

Rs.3,00,000/- and 400,000/- during 2003-2004 and Rs.17,16,140/- in

six installments of Rs.2,00,000/-, Rs.2,00,000/-, Rs.6,00,000/-,

Rs.3,00,000/-, Rs.3,00,000/-, and Rs1,16,140/- respectively during

2005-2006.

10. It is further stated by the petitioner that despite knowing the

financial constraints of the petitioner, the respondents still filed various

criminal cases against the petitioner in different courts of Delhi and has

also foiled a recovery suit for recovering Rs.82,19,533/- before this

court.

11. By letter dated 07.12.2010 the petitioner requested the

Secretary, Department of Science and Technology, Government of

India, New Delhi to act as an Arbitrator and resolve the disputed

between the parties. But vide letter dated 21.12.2010 the respondent

refused to appoint any Arbitrator. Therefore the petitioner filed the

present petition.

12. The main contention of the respondent is that its civil suit

No.1580/2009 for recovery of Rs.82,19,533.00 along with interest

against the petitioner is pending before this Court. The petitioner

herein has filed the written statement in support of its case instead of

filing of an application under Section 8 of the Arbitration and

Conciliation Act, 1996 by invoking the clause of arbitration. In view

thereof, the petitioner has lost its right to invoke arbitration. Thus, the

present petition is not maintainable. The following decisions have

been referred to by the learned counsel for the respondent regarding

the objection of waiver:

a. Orchid Electronics (M/s.) v. M/s Vinitec Electronics Pvt. Ltd.; 2007 VI AD (Delhi) 538. b. Ardy International (P) Ltd. and Another v. Inspiration Clothes & U and Another; (2006) 1 SCC 417.

c. Eastern Medikit Ltd. v. R.S. Sales Corporation & Anr.; 137 (2007) DLT 626.

13. On the other hand, learned counsel for the petitioner has

referred to the written-statement filed by the petitioner in the suit filed

by the respondent. It appears from the written-statement that in fat the

petitioner has taken a specific plea of existence of agreement between

the parties which provides arbitration clause. Para 5 of the preliminary

objections reads as under:

"5. That the suit of the plaintiff is not maintainable as the same is barred by the provisions of section 8

Arbitration & Conciliation Act 1996 Categorically provides that where an action is a subject matter of arbitration is bought before a judicial authority, the matter should be referred to the arbitration. The agreement entered between the parties in the present matter provides for an Arbitration clause in case of dispute between the parties. Clause XVI(a) of the agreement dated 10/08/2000 provides "If any dispute or difference arises between the parties hereto as to the construction, interpretation, effect and implication of any provision of this Agreement including the rights or liability or any claim or demand of any party against other or in regard to any matter under these presents but excluding any matters, decisions of determination of which is expressly provided for in this Agreement, such disputes or differences shall be referred to the sole arbitration of the secretary of the department of Science & Technology, Government of India or that of his nominee and his decision will be final and shall be binding on all the parties."

14. The said written-statement was filed in the month of

February 2010. Later on, the petitioner also filed an application for

reference to the arbitration and stay of proceedings. The said

application is pending for disposal.

15. So admittedly, in the written statement, it was pleaded by

the petitioner that there arbitration clause and the petitioner also filed a

separate application for reference. In view of the latest decisions

passed by the Supreme Court and the facts of the present case I feel

that there is no force in the submission of the respondent that even if

the application in civil suit is filed for invoking the arbitration clause

and specific averment made in the statement which was filed earlier to

the said application, the Court has no power to appoint the arbitrator

as per arbitration clause and refer the matter to the arbitration for

adjudication of the disputes between the parties. In the similar

situation, the Supreme Court in the case of Vijay Kumar Sharma @

Manju v. Raghunandan Sharma @ Baburam & Ors.; 2010 (1)

SCALE 688 has dealt with almost same issue in para 9 of the

judgment which reads as under:

"9. It is evident from sub-section (3) of section 8 that the pendency of an application under section 8 before any court will not come in the way of an arbitration being commenced or continued and an arbitral award being made. The obvious intention of this provision is that neither the filing of any suit by any party to the arbitration agreement nor any application being made by the other party under section 8 to the court, should obstruct or preclude a party from initiating any proceedings for appointment of an arbitrator or proceeding with the arbitration before the Arbitral Tribunal. Having regard to the specific provision in section 8(3) providing that the pendency of an application under section 8(1) will not come in the way of an arbitration being commenced or continued, we are of the view that an application under section 11 or section 15(2) of the Act, for appointment of an

arbitrator, will not be barred by pendency of an application under Section 8 of the Act in any suit, nor will the Designate of the Chief Justice be precluded from considering and disposing of an application under Section 11 or 15(2) of the Act. It follows that if an arbitrator is appointed by the Designate of the Chief Justice under section 11 of the Act, nothing prevents the arbitrator from proceeding with the arbitration. It also therefore follows that the mere fact that an appeal from an order dismissing the suit under Order 7 Rule 11 CPC (on the ground that the disputes require to be settled by Arbitration) is pending before the High Court, will not come in the way of the appointment of an arbitrator under section 11 read with section 15(2) of the Act, if the Authority under section 11 finds it necessary to appoint an Arbitrator. Therefore the first contention of the appellant is liable to be rejected."

16. In view of above, the present petition is allowed and

consequently the Secretary Department of Science and Technology,

Government of India, New Delhi, is appointed as sole Arbitrator to

adjudicate the disputes and differences between the parties arising out

of or in connection with agreement dated 10.08.2000 as per the

provisions of the Arbitration and Conciliation Act, 1996.

17. He shall commence the proceedings as per the terms and

conditions of the agreement after serving the proper notice to the

parties.

18. The present petition is disposed of with these directions.

No costs.

MANMOHAN SINGH, J.

AUGUST 16, 2011
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