Delhi High Court
Hero Motocorp Limited vs 1. M S Anamika Automobiles & Ors. on 25 August, 2022
$~7
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 25th August 2022
+ ARB.P. 968/2021
HERO MOTOCORP LIMITED ..... Petitioner
Through: Mr. Rahul Malhotra, Advocate with
Ms. Himanshi Madan, Advocate.
Versus
M S ANAMIKA AUTOMOBILES & ORS. ..... Respondents
Through:
CORAM:
HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI
J U D G M E N T
(Judgment released on 29.08.2022)
ANUP JAIRAM BHAMBHANI, J.
By way of the present petition under section 11 of the
Arbitration & Conciliation Act 1996 ('A&C Act' for short), the
petitioner seeks appointment of an arbitrator to adjudicate upon the
disputes that are stated to have arisen with the respondent from
Authorized Dealership Agreement dated 16.12.2017. The petition is
premised on clause 23.16 contained in the said agreement, which
contemplates reference of disputes between the parties to arbitration
under the Arbitration & Conciliation Act 1996; with the arbitral
proceedings to be held at New Delhi; and upon notice dated
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14.07.2021 sent by the petitioner raising its demands and invoking
arbitration.
2. Pursuant to notice issued on 30.09.2021, the petitioner has filed 02
affidavits of service dated 26.11.2021 and 23.02.2022. In addition
there is also a report of the process server dated 26.11.2021.
3. Upon a conjoint reading of the aforesaid, it appears that though the
respondents have not been served by speed-post/courier, the
respondents have been served by affixation of notice on their
premises. In addition, Mr. Rahul Malhotra, learned counsel for the
petitioner has also drawn the attention of this court to affidavit dated
14.05.2022, affirming that on 24.02.2022 the petitioner sent an e-mail
to the respondent No. 2 apprising him of the next date of hearing in
the matter i.e., 25.02.2022 in compliance with a direction issued by
this court. Affidavit of service dated 14.05.2022 also affirms that on
13.05.2022, respondent No.2 was present before this court via video-
conferencing, although the order of that date does not record his
presence.
4. Mr. Malhotra has also pointed-out that in response to e-mail dated
24.02.2022, whereby respondent No.2 was informed of the next date
of hearing in the matter; respondent No.2 sent a reply via e-mail
expressing his intention to have an out-of-court settlement in the
matter.
5. In view of the above, this court is satisfied that the respondents have
been served in the matter. However, no one is present on behalf of
respondents today; nor has any reply to the petition been filed.
6. In view of the above, respondents are set ex-parté.
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7. Clause 23.16 (d) of the dealership agreement contemplates reference
of disputes to arbitration by a panel of three arbitrators, one to be
appointed by each of the parties and the third to be appointed by the
two arbitrators so appointed. The provision further contemplates that
if a party fails to appoint its arbitrator within 15 days of receiving a
request from the other party, such arbitrator would be appointed in
accordance with the provisions of the A&C Act.
8. Counsel has also drawn attention to notice dated 14.07.2021
addressed by the petitioner to the respondents invoking arbitration and
nominating Hon'ble Mr. Justice R.C. Chopra (former Judge of the
Delhi High Court) as their nominee to the three-member arbitral
tribunal to adjudicate upon the disputes between the parties; to which
however, the respondents have sent no reply.
9. For ease of reference, the relevant portions of section 11 of the A&C
Act read as under:
"11. Appointment of arbitrators.
(1) ...
(2) ...
(3) Failing any agreement referred to in sub-section (2), in an arbitration
with three arbitrators, each party shall appoint one arbitrator, and the
two appointed arbitrators shall appoint the third arbitrator who shall act
as the presiding arbitrator.
(3-A) ...
(4) If the appointment procedure in sub-section (3) applies and--
(a) a party fails to appoint an arbitrator within thirty days from
the receipt of a request to do so from the other party; or
(b) the two appointed arbitrators fail to agree on the third
arbitrator within thirty days from the date of their appointment,
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[the appointment shall be made, on an application of the party, by the
arbitral institution designated by the Supreme Court, in case of
international commercial arbitration, or by the High Court, in case of
arbitrations other than international commercial arbitration, as the case
may be.]"
(emphasis supplied)
10. This position is further clarified by the decision of the Hon'ble
Supreme Court in Dakshin Shelters Pvt. Ltd vs. Geeta S. Johari1
where relying on an earlier decision, the court holds that:
"16. In view of the above, it cannot be said that the Designate Judge committed
any error in nominating Mr D.V. Seetharama Murthy, Senior Advocate as an
arbitrator on behalf of the petitioner. The order of the learned Single Judge is in
conformity with the decision of this Court in Bharat Battery Mfg. Co. (P) Ltd.
[(2007) 7 SCC 684] wherein this Court stated as follows:
"12. ... Once a party files an application under Section 11(6) of the Act,
the other party extinguishes its right to appoint an arbitrator in terms of
the clause of the agreement thereafter. The right to appoint arbitrator
under the clause of agreement ceases after Section 11(6) petition has been
filed by the other party before the court seeking appointment of an
arbitrator."
(emphasis supplied)
11. In view of the aforesaid circumstances, it is evident that since the
respondents have failed to appoint their nominee arbitrator, in
accordance with the agreed procedure in terms of clause 23.16 of the
dealership agreement, they should be deemed to have forfeited their
right to do so.
12. Upon a conspectus of the averments contained in the petition, the
document filed on record and the submissions made, this court is
(2012) 5 SCC 152
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satisfied that there is a valid and subsisting arbitration agreement
between the parties; that this court has territorial jurisdiction to
entertain and decide the present petition; and further that none of the
disputes sought to be raised by the petitioner appears to be ex-facie
non-arbitrable.
13. Accordingly, the present petition is allowed, and in accordance with
clause 23.16 (d) of the Dealership Agreement and the mandate of
section 11 of the A&C Act, this court nominates Hon'ble Mr. Justice
Manmohan Singh, former Judge of the Delhi High Court (Cellphone
No. : +91 9717495001) as the second arbitrator on the arbitral
tribunal; with a further direction to the two learned Arbitrators, to
appoint a third Arbitrator in compliance with the procedure
contemplated in the Dealership Agreement.
14. The learned Arbitral Tribunal may proceed with the arbitral
proceedings subject to the arbitrators furnishing to the parties
requisite disclosures as required under section 12 of the A&C Act;
and in the event there is any impediment to the appointment on that
count, the parties are given liberty to file an appropriate application in
this court.
15. The learned Arbitral Tribunal shall be entitled to fee in accordance
with Fourth Schedule to the A&C Act; or as may otherwise be agreed
to between the parties and the learned Arbitral Tribunal.
16. Parties shall share the arbitral tribunal's fee and arbitral costs,
equally.
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Signing Date:29.08.2022
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17. All rights and contentions of the parties in relation to all claims and
counter-claims are left open to be considered and decided by the
learned Arbitral Tribunal, in accordance with law.
18. Parties are directed to approach the learned arbitrators named above
within 10 days, to take forward the process of constitution of the
learned Arbitral Tribunal.
19. The petition stands disposed of in the above terms.
20. Other pending applications, if any, also stand disposed of.
21. Let a copy of this order be sent by the Registry to the address and on
the e-mail ID of the respondent as appearing on the record.
ANUP JAIRAM BHAMBHANI, J
AUGUST 25, 2022
Ne
Signature Not Verified
Digitally Signed
Signing Date:29.08.2022
17:55:02
