A Single Bench of Justice G.S. Kulkarni disposed of the present petition instituted under Section 11 of the Arbitration and Conciliation Act, 1996 whereby the applicant prayed for appointment of an Arbitral Tribunal for adjudication of the disputes and differences which arose between the parties under an agreement titled as the Infrastructure and Facility Management Agreement, dated July 14, 2018, by observing that it does not have the jurisdiction to entertain the proceedings for appointment of an arbitral tribunal ,however while observing the same, the Court granted the liberty to the applicant to file appropriate proceedings before the Court of Delhi.
The present application was filed under Section 11 of the Arbitration and Conciliation Act, 1996 whereby the applicant prayed for appointment of an Arbitral Tribunal for adjudication of the disputes and differences which arose between the parties under an agreement titled as the Infrastructure and Facility Management Agreement, dated July 14, 2018.
Factual matrix of the case was such that the respondent- company was incorporated under aegis of the Companies Act, 1956 and was stated to be engaged in the business of slimming , skin and hair services. It possessed the right to use its trademark, trade names, copyrights, designs, logos, slogans, commercial symbols and operated under the trademark VLCC.
It was the case of the applicant that the respondent being an infrastructure provider, had persuaded the applicant to become a collaborator and infrastructure provider for running the VLCC slimming, skin and hair services Centre” (for short “the centre”) for its business activities in Mumbai. Accordingly the agreement was entered into between the applicants and the respondent. The objective of the agreement was to enable the respondent to carry out business activities at the premises/centre which would be developed by the applicant (the Infrastructure Provider) as per Clause 3 of the said agreement, by using the mark and know-how of VLCC.
The applicant as an Infrastructure provider was to undertake the development of the premises by incurring all expenses through its own resources as per the approval of the respondent. The term of the agreement was for five years from the date of commencement of the operations of the centre."It was agreed that the total investment by the applicant shall be limited to Rs.1.25 crores excluding taxes.
Thereafter, the agreement was executed, however the emergence of dispute occurred between the parties somewhere around September 2019, inter alia on grounds that the centre was not functioning as per the expectations of the respondent, in respect of which prolonged correspondence was entered between the parties.
Meanwhile, the applicant claimed that she suffered loss under the agreement in question and thus demanded from the respondent to pay the applicant her undisputed investment of Rs.1.30 crores along with the interest at the rate of 24%. The applicant also demanded compensation from the respondent to the tune of Rs.50 lakhs for mental harassment and trauma. It was also stated by the applicant that she will invoke the arbitration clause at last, in case, if her demands were not accepted and acted upon. With respect to the same, the respondent stated that as per the agreement executed by the parties, the arbitrator could solely be appointed by the respondent.
In view of the same, the present application was filed by the applicant under Section 11 of the Act, 1996 in order to settle the disputes.
After hearing, the submissions of the parties, the Court observed that the contention on behalf of the respondent that as per clause 13.1 only respondent can appoint the arbitrator, In view of the same, the Court stated that the same was bad in law in view of the principles of law as laid down by the Supreme Court in TRF Ltd. Vs. Energo Engineering Projects Ltd. In relation to the same, the Court submitted that respondent cannot have unilateral authority to appoint an arbitral tribunal.
Next on the question of whether this Court had the jurisdiction to entertain this application, as the parties in Clause 13.2 of the agreement agreed that the venue of the arbitration shall be at Delhi, the Court in view of the same submitted that the part of the arbitration agreement wherein the parties agree that the venue of the arbitration shall be at Delhi would be required to be read as distinct and independent, from the arbitral mechanism as agreed between the parties, setting out the other modalities in the dispute resolution clause. There is no room for any doubt that once the parties have agreed that the seat of the arbitration was to be at Delhi, then necessarily the supervisory jurisdiction over the arbitral proceedings would be with the Courts at Delhi, the Court remarked.
Further, the legal position in regard to the “venue” and “seat” of arbitration agreement was clarified by this Court in a plethora of cases. Reliance was placed on the cases namely, Bharat Aluminium Company & Ors. vs. Kaiser Aluminium Technical Service, Mankastu Impex Pvt. Ltd. vs. Airvisual Ltd.
Thus, in light of the aforesaid principles reiterated in the judgments passed by the Apex Court, the Court noted that once the parties in the present case conceded to fact that the venue of the arbitration in its entirety shall be at Delhi, and then the seat of arbitration should be necessarily at Delhi, the Court remarked. Hence, the jurisdiction to entertain the proceedings for appointment of an arbitral tribunal would lie with the Courts of Delhi. This Court, thus, would not have jurisdiction to entertain the present application, the Court observed. However, the applicant was given the liberty to approach the appropriate Court for the same.
Case name: PRIYA MALAY SHETH Vs. VLCC HEALTH CARE LTD
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