IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF NOVEMBER 2019 BEFORE THE HON'BLE Mr. JUSTICE B.VEERAPPA CIVIL MISCELLANEOUS PETITION No.280/2018 BETWEEN:
M/S. INDIA BREWERY & DISTILLERY PVT. LTD., A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT: PREGENTETI, #23, 1ST FLOOR, RENT HOUSE CRESCENT, M.G.ROAD, BENGALURU – 560 001.
REPRESENTED BY ITS MANAGING DIRECTOR, MR.BALKRISHAN MANKANI.
... PETITIONER (BY SMT. SHEELA ESSA KHAN, ADVOCATE FOR SRI.AJESH KUMAR S., ADVOCATE) AND:
M/S. UNISTIL ALCOBLENDS PRIVATE LIMITED, A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT:No.124, 10TH CROSS, INDIRANAGAR, STATE I, BENGALURU – 560 038. REPRESENTED BY ITS DIRECTOR, MR.ARUN KUMAR PRASAD.
…RESPONDENT (BY SRI.SANTOSH S GOGI, ADVOCATE) THIS CIVIL MISCELLANEOUS PETITION IS FILED UNDER SECTION 11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996, PRAYING TO (A) APPOINT AN ARBITRATOR WITH DIRECTIONS TO ENTER INTO REFERENCE, COMPLETE THE PROCEEDINGS AND TO GIVE AN AWARD WITHIN THE TIME STIPULATED BY THIS HON’BLE COURT AND ETC.
THIS CIVIL MISCELLANEOUS PETITION COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R The petitioner filed the present Civil Miscellaneous Petition under the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996, for appointment of sole Arbitrator to adjudicate the dispute in terms of clause No.30 of the agreement dated 21/02/2011 entered into between the parties.
2. It is the case of the petitioner that the petitioner is a Company incorporated under the Companies Act, 1956 and in the year 2011, it had 170 employees engaged in the manufacturing, blending and bottling of Indian Made Foreign Liquor (IMFL) including the other infrastructure necessary for the manufacture. On 21/02/2011, the petitioner entered into an agreement with the respondent, wherein the respondent had guaranteed to provide a minimum quantity of 20,000 cases of brands of different varieties per month and to increase the quantity to 1,00,000 cases per month. The respondent has defaulted the said agreement and did not provide the assured off-take of 1,00,000 cases per month thereby causing huge loss to the petitioner. On account of the failure on the part of the respondent to honour the commitment, the petitioner has suffered a loss of Rs.3,74,96,099/-. As per clause No.25 of the said agreement, the respondent is required to indemnify the petitioner of all losses, claims, liabilities and expenses etc. It is further contended that clause No.30 of the agreement provides for resolution of the dispute through arbitration. Therefore, the petitioner filed an application under Section 9 of the Arbitration and Conciliation Act, 1996, (for short, ‘the Act’) on 16.04.2018 before the City Civil Court, Bengaluru, seeking direction to the respondent – Company to deposit a sum of Rs.22,71,071/-.
3. Thereafter, the petitioner issued legal notice as contemplated under the provisions of Section 11(5) of the Act on 30/07/2018 suggesting the name of the Arbitrator to be appointed. However, the proposal made by the petitioner came to be rejected by the respondent by reply dated 18/08/2018. Therefore, the petitioner is before this Court.
4. The respondent has not filed objections.
5. I have heard learned counsel for the parties to the lis.
6. Ms. Sheela Isa Khan, learned counsel for the petitioner, reiterating the averments made in the Civil Miscellaneous Petition contended that in terms of the agreement, it is the duty and obligation on the respondent to provide minimum quantity of 20,000 cases of brands per month and to increase the same up to 1,00,000 cases. The respondent defaulted the agreement. Therefore, in terms of clause No.25 of the said agreement, the respondent has to indemnify the petitioner of all losses, claims and liabilities and in spite of the request made, the respondent has not responded and issued any tenable reply. She would further contend that existence of the agreement dated 21/02/2011 between the parties is not in dispute. The existence of arbitration clause in the agreement is also not in dispute. The petitioner has complied with the provisions of section 11(5) of the Act by issuing legal notice to the respondent. Therefore, she sought to allow the Civil Miscellaneous Petition.
7. Per contra, Sri S. Santosh, learned counsel for the respondent, contended that the respondent has not violated the agreement dated 21/02/2011 as alleged by the petitioner. In fact, the petitioner has violated the agreement and the very claim filed by him is barred by limitation. Therefore, he sought to dismiss the Civil Miscellaneous Petition.
8. Having heard the learned counsel for the parties, the undisputed fact is that the petitioner and the respondent entered into an agreement on 21/02/2011 and the respondent has agreed to provide minimum quantity of 20,000 cases of its brands of liquor per month and to increase the said quantity up to 1,00,000 cases per month. It is the case of the petitioner that the respondent defaulted the agreement. Therefore, it is liable to pay the loss / compensation in terms of clause No.25 of the agreement. The same is disputed by the respondent and it contended that it has not defaulted the agreement and it is the petitioner who violated the terms and conditions of the agreement. Thereby, dispute arose between the parties.
9. Clause No.30 of the agreement dated 21/02/2011 stipulates dispute resolution, which reads as under:
Dispute Resolution:
“Any dispute or difference or question between the Parties hereto concerning anything contained in or arising out of this Agreement or as to the rights, duties or liabilities hereunder of the Parties hereto shall be referred to arbitration in accordance with and subject to the provisions of Indian Arbitration and Conciliation Act 1996, or any statutory modification or re-enactment thereof for the time being in force and such arbitration proceedings shall take place in Bangalore in English language.
Subject to this arbitration clause all disputes pertaining to or arising out of this Agreement shall be subject to the exclusive jurisdiction of the Bangalore Courts.”
10. It is also not in dispute that the petitioner had issued legal notice in compliance with the provisions of Section 11(5) of the Act. The same is replied by the respondent. In view of the aforesaid admitted facts, there is no impediment for this Court to appoint sole arbitrator to adjudicate the dispute between the parties.
11. In view of the above, the Civil Miscellaneous Petition is allowed. Hon’ble Mr. Justice Ashok B. Hinchigeri, former Judge of this Court, is appointed as sole Arbitrator to adjudicate the dispute in terms of clause No.30 of the agreement dated 21/02/2011 entered into between the parties.
12. Registry is directed to send a copy of this order to Hon’ble Mr. Justice Ashok B. Hinchigeri, former Judge of this Court, and Arbitration Centre for reference forthwith.
Sd/- JUDGE sma