Delhi High Court: In a present petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (A&C Act) seeking appointment of arbitration, Jasmeet Singh*, J., held that the arbitration clause was valid despite specifying an even number of arbitrator and thus appointed a sole arbitrator in accordance with the agreement between the parties.
The Court noted that, ‘Arbitration clause was not invalidated merely on the ground that the numbers of arbitrators, as per the arbitration clause, were an even number.’
Facts:
In a present case, the petitioner being an integrated sealing solution and gasket company was interested in buying machinery from the respondents. The respondent issued a Commercial Offer dated 27-06-2020 along with an arbitration clause, which was accepted by the petitioner, the petitioner issued a purchase order no. 154 dated 02-07-2020 for machinery worth Rs. 25 lacs. The petitioner invoked the arbitration vide legal notice dated 07-06-2022. The petitioner then filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator.
Arbitration Clause:
“Clause 8 Arbitration Clause – The order placed on us whether directly or through our branch offices shall in all respect be considered as an Indian Contract and all disputes and differences arising out of the contract or touching the same be referred to two arbitrators one to be appointed by each party for the decision. The venue of Arbitration shall be at Delhi and the award of the Arbitrators shall be filed in a competent court at Delhi. Provisions of Indian Arbitrators Act, 1940 shall govern the Contract. All disputes shall be subjected to Delhi Jurisdiction only.”
Contentions:
The Counsel for the petitioner stated that arbitration clause categorically states that any purchase order will be governed by the arbitration clause which provides for arbitration in Delhi, thus giving the jurisdiction to the instant court.
The Counsel for the respondent opposed the petition and stated that the disputes arose from the purchase order dated 02-07-2020, made in Faridabad, Haryana, and the machinery was also supplied in Faridabad, thus in the view of the exclusion clause, this Court had no jurisdiction the dispute. Apart from jurisdiction, the counsel further stated that the Clause 8 of the Agreement was not a valid arbitration clause as it envisages reference of disputes to two arbitrators i.e., providing an even number of arbitrators, contrary to Section 10 of the Arbitration and Conciliation Act, 1996.
Analysis:
The Court, after perusal of facts, arbitration clause and contentions, was of the view that this Court would have territorial jurisdiction to entertain and try the petition.
On the question of legality of arbitration clause regarding even no. of arbitrator, the Court referred to M.M.T.C. Limited v. Sterlite Industries (India) Ltd., (1996) 6 SCC 716 wherein the Court said that, “It is, therefore, clear that an arbitration agreement specifying an even number of arbitrators cannot be a ground to render the arbitration agreement invalid under the New Act.”
The Court further referred to the judgement of Sara International Ltd. v. Arab Shipping Co., 2009 SCC OnLine Del 122 wherein it was stated that, ‘arbitration clause is not invalidated merely on the ground that the number of arbitrators, as per the arbitration clause, were an even number.
On the basis of the abovementioned reason, counsels from both sides agreed for reference of disputes to a sole arbitrator, the Court appointed a sole arbitrator.
[Talbros Sealing Materials v. Slach Hydrates Equipments, 2024 SCC OnLine Del 4384, order dated: 06-05-2024]
Advocates who appeared in this case :
For petitioner: Arjun Mahajan, Neha Rai & Rishabh Bhalla, Advocates.
For respondent: Anchal Budhraja, Sangeeta, Advocates.
Buy Arbitration and Conciliation Act, 1996 HERE
