International Traceability ... vs Afc India Ltd
2019 Latest Caselaw 877 Del

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*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                 Date of Decision: 12.2.2019

+      ARB.P. 770/2018

       INTERNATIONAL TRACEABILITY
       SYSTEMS LTD                                            ..... Petitioner

                          Through:     Mr. Arunav Patnaik with Mr. Shikhar
                                       Saha, Advs.

                          versus



       AFC INDIA LTD                                    .....  Respondent
                          Through:     Mr. Kaustubh Anshuraj with

                                       Mr. Devesh Partap Singh, Advs.

       CORAM:
       HON'BLE MR. JUSTICE RAJIV SHAKDHER



       RAJIV SHAKDHER, J. (ORAL)

1. This is a petition filed under Section 11(5) of the Arbitration and Conciliation Act, 1996 (hereafter referred to as „1996 Act‟). The petitioner prays that a sole Arbitrator be appointed in the matter to adjudicate upon the disputes obtaining between the parties herein.

2. Notice in this petition was issued on 9.10.2018. Notice was made

ARB.P. 770 of 2018 Pg. 1 of 7 returnable on 11.1.2019. On that date, Mr. Kaustubh Anshuraj, Advocate, entered appearance on behalf of the respondent. Mr. Anshuraj sought time to obtain instructions in the matter.

3. Accordingly, it was clearly indicated in the order dated 11.1.2019 that in case instructions are received to resist the petition, the reply will be filed by the respondent before the next date of hearing.

3.1 I am informed by Mr. Anshuraj that the reply was filed with the Registry, albeit, on 11.2.2019 vide Diary No.123852/2019.

3.2 Though, the reply is not on record, a copy of the same has been furnished in Court, today, by the learned counsel for the respondent.

3.3 Mr. Arunav Patnaik, who, appears for the petitioner, confirms that he has also received a copy of the reply.

4. Shorn of verbiage, the broad contours of the dispute, insofar as this petition is concerned, are as follows:

4.1 It appears that an agreement dated 17.1.2008 was executed between the parties herein. It is the petitioner‟s case that the petitioner, inter alia, provided consultancy services for Customized Farmers Training (hereafter referred to as „CFT Project‟) and in relation to the preparation of District Agriculture Plans (hereafter referred to as „DAP Project‟).

ARB.P. 770 of 2018                                                 Pg. 2 of 7
 4.2    Against the services rendered, the petitioner, from time to time, raised

invoices. It is the petitioner‟s case that while some payments were made, some of the invoices raised remain outstanding. According to the petitioner, a running account was maintained and hence as and when the payments were made, they were adjusted against invoices raised qua the aforementioned Projects.

5. I may indicate, at the outset, which is the stand taken before me by Mr. Anshuraj as well, that the following facets are not disputed:

5.1 First, that there is an arbitration agreement obtaining between the parties, which is, incorporated in Clause 16 of the agreement dated 17.1.2008.

5.2 Second, that the arbitration agreement takes within its ambit, the aspects pertaining to CFT.

6. Insofar as the respondent is concerned, the dispute arises only qua the arbitrability of the DAP Project. According to the respondent, the DAP Project is not governed by the arbitration agreement.

7. As expected, Mr. Patnaik contends to the contrary. In support of his submission, Mr. Patnaik refers me to the invoices generated by the petitioner with regard to the DAP Project.

7.1 Mr. Patnaik says that a perusal of the invoices would show that they advert to the aforesaid agreement i.e. agreement dated 17.1.2008.

ARB.P. 770 of 2018                                                  Pg. 3 of 7
 7.2    By way of an example, Mr. Patnaik draws my attention to the

purchase invoice dated 12.10.2008. In particular, in this invoice, my attention is drawn to what is stated against Buyer‟s Order Number. Clearly, against Buyer‟s Order Number, there is a reference to agreement dated 17.1.2008.

8. It is in this background that the petitioner appears to have sent a legal notice dated 24.7.2018 to trigger the arbitration agreement.

8.1 In the notice, the petitioner has given a summary of claims, which it seeks adjudication of. One of the claims pertains to "Non-payment of Service tax amount and failure to reconcile accounts of the DAP Project."

9. Furthermore, in respect of this very claim, amongst others, interest is sought by the petitioner, albeit, under a separate head. In response to the said notice, the respondent served a reply on the petitioner. This reply is dated 23.8.2018.

10. A perusal of the reply would show that the respondent, as indicated above, seeks to contend that the DAP Project does not fall within the ambit of the arbitration agreement.

11. As a matter of fact, it is averred in paragraph 3(E) of the said reply that the petitioner vide letter dated 1.3.2018, admitted that the DAP Project was awarded to the respondent on 30.5.2008 and the same was thereafter assigned to the petitioner on 13.6.2008. In other words, the stress appears to be on the fact that the DAP Project was awarded only on 30.5.2008, that is, after the date of execution of the agreement dated 17.1.2008.

ARB.P. 770 of 2018 Pg. 4 of 7

12. On being queried, the respondent has admitted that the petitioner‟s letter dated 1.3.2018 has not been placed on record.

13. Mr. Patnaik, on the other hand, says that this aspect, which is touched upon in reply dated 23.8.2018, would not impact the relief claimed by the petitioner in the instant petition, for the reason that the agreement dated 17.1.2008 had a broad framework and therefore, as and when the work, whether it concerned the CFT or DAP Project, was awarded by various State Governments to the respondent, such work, in turn, was assigned to the petitioner. Thus, it is Mr. Patnaik‟s stand that even works pertaining to the CFT Project were awarded to the respondent after the execution of the agreement dated 17.1.2008.

14. To my mind, having regard to the record placed before me, and given the fact that there is no dispute with respect to the existence of the arbitration agreement, reliefs claimed in the petition will have to be granted, with liberty, though, to the respondent to move the Arbitral Tribunal with an appropriate application for adjudication of its stand that the disputes pertaining to DAP Project are not arbitrable.

15. The reason that I have come to this conclusion is that it is a case where there is contestation as to whether or not invoices generated qua DAP Project fall within the ambit of the arbitration agreement. The matter, to my mind, in such a situation, will have to be referred to an Arbitral Tribunal unless on a bare perusal of the arbitration agreement, the Court is able to reach a conclusion that dispute is not relatable to the arbitration agreement. The Arbitral Tribunal under the 1996 Act, is conferred with the power to

ARB.P. 770 of 2018 Pg. 5 of 7 determine the width and the amplitude of its own jurisdiction in consonance with the doctrine of Kompetenz Kompetenz (See judgment of this Court dated 08.02.2019, passed in ARB.P. 115/2018, titled: NCC LIMITED vs. INDIAN OIL CORPORATION LIMITED). This case, to my mind, is not one where, at this juncture, I can, on a bare perusal, come to the conclusion one way or another that the dispute vis-a-vis DAP Project is not relatable to the arbitration agreement obtaining between parties.

16. Accordingly, the captioned petition is disposed of with the following directions:

(i) Hon‟ble Mr. Justice V.S. Aggarwal, former Judge, Delhi High Court (Cell No.9891175550), is appointed as an Arbitrator in the matter.

(ii) Since, the parties agree that the arbitration could be conducted under the aegis of the Delhi International Arbitration Centre (DIAC), the rules applicable in respect of proceedings conducted under the aegis of DIAC shall also apply to the instant proceedings as well.

(iii) The learned Arbitrator‟s fee will also be governed by the Rules made in that behalf by the DIAC.

(iv) The learned Arbitrator will make a declaration under Section 12(5) read with attendant provisions of the 1996 Act before entering upon reference.

       (v)     The respondent will have liberty to move an appropriate



ARB.P. 770 of 2018                                                Pg. 6 of 7

application before the learned Arbitrator in respect of aspect touched upon by me hereinabove concerning the DAP Project.

17. The Registry will dispatch a copy of the order to the Coordinator, DIAC.

18. Furthermore, for the purpose of good order and record, the Registry will scan and upload a copy of the reply received by me in the Court, today.

                                                      RAJIV SHAKDHER
                                                          (JUDGE)
FEBRUARY 12, 2019/pmc




ARB.P. 770 of 2018                                              Pg. 7 of 7