The court resolves arbitration jurisdiction conflict, affirming Delhi as the arbitration seat, and appoints a presiding arbitrator amidst allegations of forgery and jurisdictional challenges.
In a significant ruling, the Delhi High Court has appointed Justice (Retd.) Kurian Joseph, Former Judge of the Supreme Court of India, as the Presiding Arbitrator in the arbitration dispute between M/s VE Commercial Vehicles Limited and M/s Singh Enterprises. The decision came after a contentious legal battle regarding the enforcement of an arbitration clause in a Dealership Agreement dated March 18, 2021, amidst claims of forgery and jurisdictional disputes.
The dispute arose when VE Commercial Vehicles Limited, through its authorized representative Ms. Swati Kumari, filed a petition under Sections 11(5) and (6) of the Arbitration and Conciliation Act, 1996. The company sought the appointment of an arbitrator due to alleged non-compliance with the Dealership Agreement by Singh Enterprises, which included delayed vehicle deliveries and failure to provide adequate manpower and capital.
The respondent, Singh Enterprises, contested the petition, arguing that the Dealership Agreement was an unexecuted draft due to the absence of the petitioner's signature, thus rendering the arbitration clause unenforceable. They further alleged forgery, asserting that the petitioner altered the agreement term from three years to "4 years and 3 months."
In response, the petitioner contended that the agreement, duly signed by both parties, was binding and that the respondents had acted upon its terms since 2021. The court observed that the respondents had themselves invoked the arbitration clause, thus acknowledging its existence and validity.
The Delhi High Court examined the arbitration clause, which designated Delhi as the arbitration seat, and held that this conferred jurisdiction to the Delhi courts. The court dismissed the respondents' objections regarding territorial jurisdiction and allegations of forgery, noting that the arbitration clause was on a different page from the alleged forgery.
The court's judgment emphasized the parties' autonomy to agree on the arbitration seat, citing previous Supreme Court rulings that equate the designated arbitration venue with the juridical seat in the absence of contrary indicia. Consequently, the court asserted its jurisdiction and proceeded to appoint a presiding arbitrator due to the lack of consensus between the parties' nominated arbitrators.
Justice (Retd.) Kurian Joseph's appointment as the Presiding Arbitrator aims to facilitate the resolution of claims, which include a monetary demand of Rs. 1,41,66,283 from the petitioner and a counter-claim of Rs. 40,66,73,457 by the respondents. The court directed that the arbitrator's remuneration align with the Arbitration Act's Schedule IV and left all claims and counter-claims open for adjudication.
This ruling underscores the judiciary's role in upholding arbitration agreements and providing a framework for resolving commercial disputes efficiently and fairly, even amidst complex challenges.
Bottom line:-
Arbitration Clause in Dealership Agreement clearly designating Delhi as the "seat" of arbitration - Clause 34 stipulates a panel of three arbitrators with one appointed by each party and the third nominated by the appointed arbitrators - Appointment of Presiding Arbitrator due to lack of consensus between parties.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Sections 11(5), 11(6), 20, 12
