In a recent legal development, the Delhi High Court has appointed a Sole Arbitrator in the dispute between Marine Drive Franchise Outlet and the Respondent. The Court’s decision is expected to bring clarity and resolution to the ongoing legal conflicts between the two parties.
Facts
- Respondent illegally terminated the Franchise Agreement without prior notice to cure defects
- Petitioner invoked Article 26 for amicable resolution of disputes
- Petitioner invoked Clause 28 for arbitration
- Petitioner granted franchise outlet at Marine Drive, Raipur by the Respondent
- Petition filed under Section 11(6) for appointment of sole Arbitrator
- Respondent unilaterally appointed an Arbitrator despite Notice of Invocation
- Parties engaged in negotiations but failed to reach a settlement
- Petitioner asserts that the unilateral appointment of the Arbitrator is ineligible
- Petition filed for the appointment of a sole Arbitrator
Arguments
- The respondent claimed that the Notice of Invocation dated 26.12.2023 is not valid as it was issued by a third party, Mr. Siddharth Sharma from Delayed Payment Consultants, who is not a party to the Agreement.
- The respondent argued that the Notice of Termination dated 27.07.2023 was replied to by Mr. Siddharth Sharma on behalf of the petitioner.
- The respondent contends that the Notice under Section 29 of the Act, 1996 is invalid as it was not signed by the petitioner or his representative, making the present petition not maintainable.
- The petitioner’s counsel relied on the case of Parsoli Motors Works Pvt. Ltd. vs BMW India Pvt. Ltd. where it was held that a valid Notice of Invocation is essential to inform the other party about disputes intended for arbitration.
- The definition of ‘party’ in the 1996 Act indicates a person directly involved in the Arbitration Agreement, and does not include agents or advocates empowered to act on behalf of a party.
- The Notice of Invocation was criticized for lacking details of the disputes to be referred to arbitration.
- The petitioner clarified that Delayed Payment Consultants were authorized to act on their behalf for dispute resolution with the respondent.
Analysis
- The judgment in Benarsi Krishna Committee (supra) relied upon by the respondent is in the context of Section 34 of the Act, 1996 which specifically provides that the copy of the award can be handed over to the party.
- The Notice of Invocation was part of the Termination Notice and subsequent negotiations between the parties.
- Section 21 of the Act, 1996 does not apply to the present case as it does not mention that the Notice of Invocation must be given by a party.
- The scope of disputes was clearly defined in the Notice of Termination dated 27.07.2023, which formed the basis for subsequent negotiations and settlement talks.
- Mr. Siddharth Sharma, as a duly authorised representative of the petitioner, was valid in engaging with the respondent for settlement talks and negotiations.
- The objection raised by the respondent regarding the competency of Mr. Siddharth Sharma to represent the petitioner is deemed hyper-technical and not tenable.
- Correspondence between the parties further validated Mr. Siddharth Sharma’s representation of the petitioner, with no objections raised by the respondent.
- The respondent even suggested the appointment of an Arbitrator in response to the Notice of Invocation, showing acceptance of the ongoing arbitration process.
- Nature and scope of dispute evident from negotiations and Notices
- Notice of Invocation following Notice of Termination
- Requirements of Notice of Invocation met, parties aware of dispute scope
- Respondent’s technical objection baseless
Decision
- The Arbitrator must make necessary disclosures under ARB.P. 336/2024 Section 12(1) of the Act, 1996.
- The Arbitrator should not be ineligible under Section 12(5) of the Act, 1996.
- Parties have the liberty to raise objections before the Arbitrator.
- The fees of the Arbitrator will be fixed as per the Fourth Schedule of the Act, 1996 or with the consent of the parties.
- Mr. Anant Vijay Palli, Senior Advocate, is appointed as the sole Arbitrator to adjudicate the disputes.
- Arbitration to be conducted under the Delhi International Arbitration Centre, Delhi High Court.
- Parties must contact the Arbitrator within one week of the Court directive.
Case Title: AMANDEEP SINGH UBEROI Vs. TRIPPING MR PINK PRIVATE LIMITED (2024:DHC:4127)
Case Number: ARB.P.-336/2024
