The Single Bench of the Delhi High Court in the case of Extramarks Education India Pvt Ltd vs Mes Central School consisting of Justice Sanjeev Sachdeva observed that the petitioner cannot be held to be deemed to have waived his right to invoke arbitration under the subject agreements by merely filing a written statement in the Suit which is not connected with the subject agreements and is in respect of disputes that do not arise from the subject agreements.
Facts
Petitioner in ARB.P. 207/2022 seeks reference of disputes to arbitration pursuant to agreement dated 03.05.2014. Petitioner in ARB.P. 327/2022 seeks reference of disputes to arbitration pursuant to agreement dated 25.03.2015. Both agreements are identical in nature and terms. Under the said agreements, petitioner was, inter-alia, to provide education services besides sale of certain hardware which was specified in the said agreements. The Agreements specifically provided the nature of services to be provided by the petitioner as also the hardware which was to be sold to the respondent for provision of the said services. Subsequently a purchase order was placed on the petitioner on 25.02.2016 for provision of certain Chrome Books (Laptops).
Contentions Made
Respondent: Respondent filed a civil suit for recovery of the payment made towards Chrome Books because the same were not per the specifications. In the said suit petitioner has filed a written statement without taking a plea of the disputes being covered by the arbitration agreements and has not sought reference of disputes to arbitration and as such petitioner is prohibited from invoking Section 11 of Arbitration & Conciliation Act, 1996 and is deemed to have waived his rights. The last payment made to the petitioner was on 05.10.2016 and as such the claim is ex-facie barred by limitation.
Petitioner: The Suit was for an independent transaction i.e., supply of Chrome Books and was not emanating from the subject agreements or related thereto. The agreements have been sought to be terminated by letter dated 26.04.2019 and as such claim is still within limitation and arbitration has been invoked within time.
Observations of the Court
The Bench observed that the agreements in Clause 4 provides for the sale of hardware that was to be sold by the petitioner to the respondent and is subject matter of the agreements. The Chrome Books are not part of the said list of hardware items to be supplied by the petitioner as part of the agreements.
It was noted that there was no reference to the subject agreements or any connection between the supply of Chrome Books with the services as well as the hardware to be supplied by the petitioner under the subject agreements. So, petitioner cannot be held to be deemed to have waived his right to invoke arbitration under the subject agreements by merely filing a written statement in the Suit which is not connected with the subject agreements and is in respect of disputes that do not arise from the subject agreements. Furthermore, the objections of learned counsel for the respondent with regard to limitation, is not sustainable for the reasons that respondent has specifically issued a letter on 26.04.2017 alleging that the services rendered by the petitioner are not satisfactory and as such they have requested the petitioner to cancel the software agreements with effect from May, 2017 and close the contract.
Judgment
Termination of the subjects agreement is sought to be done by the Respondent by letter dated 26.04.2017 with effect from May, 2017. Arbitration has been invoked by letter dated 07.12.2021. The Bench, in view of the order of the Supreme Court in Court its own Motion Suo Moto Writ Petition (Civil) No.3 of 2020, noted that the invocation is within the period of limitation.
So, the disputes were referred to the Delhi International Arbitration Centre (DIAC), which would appoint a common sole arbitrator to arbitrate the disputes arising in both the petitions. The arbitration shall take place under the aegis of the DIAC as per its rules and regulations.
Case: Extramarks Education India Pvt Ltd vs Mes Central School
Citation: ARB.P. 207/2022 & ARB.P. 327/2022
Bench: Justice Sanjeev Sachdeva
Decided on: 11th May 2022
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