IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF NOVEMBER, 2019 BEFORE THE HON’BLE MR.JUSTICE B. VEERAPPA CIVIL MISCELLANEOUS PETITION NO.303/2019 BETWEEN:
M/s. MADHUR PHARMA & RESEARCH LABORATORIES PRIVATE LIMITED Represented by its Director Dr. Chitra Phadnis D/o L.D.Phadnis Aged about 61 years Having Factory at No.292 & 294, 4th Stage Peenya Industrial Estate Bengaluru – 560 058 (By Miss Kusuma R Prasad, Advocate for Sri L.M.Chidanandayya, Advocate) AND:
M/s THE HIMALAYA DRUG COMPANY A Partnership Firm, registered Under the Partnership Act Having its place of business at Makali, Bengaluru – 562 123 (By Sri Zulfikir Kumar Shafi, Advocate) ... Petitioner ... Respondent This Civil Miscellaneous Petition is filed under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act 1996, praying this Court to appoint an independent neutral Arbitrator to adjudicate the dispute between the petitioner and the respondent in terms of clause 27 of the Agreement dated 01.02.2013 along with addendum agreement dated 22.12.2017 vide Annexure-A.
This Civil Miscellaneous Petition coming on for admission this day, the Court made the following:
ORDER The petitioner has filed the present Civil Miscellaneous Petition under the provisions of Section 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996 (for short the ‘Act’) for appointment of Sole Arbitrator to adjudicate the dispute in terms of clause 27 of the agreement dated 01.02.2013 and addendum dated 22.12.2017 entered into between the parties.
2. It is the case of the petitioner that the petitioner company is involved in manufacturing of Ayurveda products and other products in Bengaluru City. The respondent involved in manufacturing and selling of Ayurveda products to the ultimate consumer. The petitioner has established state of the art manufacturing facility in Bengaluru City for manufacture of Ayurveda products. It is stated by the petitioner that the respondent outsources their products. Therefore the respondent approached the petitioner company for processing, manufacturing, filling, packing and shipping of Ayurveda products of the respondent to sell to the General Public. The respondent appointed a team to inspect the facilities, infrastructure built by the petitioner for producing Ayurveda products of the respondent. After inspecting the hygiene and quality, the respondent entered into an agreement with the petitioner on 01.12.2000 entrusting the petitioner to process, manufacture, filling, packing and shipping of Ayurveda products for the respondent. In terms of the agreement, the respondent would make available the raw materials to the petitioner for manufacture of Ayurveda products. As per the terms of the agreement, the respondent appointed the Quality Control Officer within the premises of the petitioner company to supervise the entire production activities on behalf of the respondent. Thereafter the parties entered into agreement dated 01.02.2013 and subsequently addendum came to be issued on 22.12.2017.
3. It is further case of the petitioner that the petitioner manufactured Eye-cream, daily face wash and Erina EP Shampoo and the same was received by the respondent and unilaterally the respondent reported the failure of products inter-alia stating the Ayurveda products produced by the petitioner has failed and therefore debited a sum of Rs.32,86,983/- towards the cost of the product and also refused to make the payment of conversion charges under the terms of the Agreement causing huge financial loss to the petitioner. The petitioner resisted the high handed illegal acts on the part of the respondent in reporting the failure of products and sent e-mail communication requesting the respondent to make payment of Rs.32,86,983/-. The respondent apart from refusing to make the payment unilaterally terminated the agreement inspite of several e-mails and the respondent has not fulfilled the conditions of the agreement.
Therefore the petitioner issued legal notice on 31.03.2019 invoking the Arbitration clause 27 of the agreement and addendum dated 01.02.2013 and 22.12.2017 respectively. Therefore the petitioner is before this Court for the relief sought for.
4. The respondent has filed objections and denied the averments made in the petition and contended that the raw materials being supplied to the respondent did not have a choice to select and instead petitioner only converted, processed and manufactured under the supervision of a respondent’s quality control supervisor. The above assertions only show a malafide intention of the petitioner. It is further contended that the petitioner has failed to fulfill the terms and conditions of the agreement and not the respondent. Further it is also contended that the respondent has also made a counter claim. Therefore sought to dismiss the Civil Miscellaneous petition.
5. I have heard the learned counsel for the parties to the lis.
6. Miss Kusuma R Prasad, learned counsel for the petitioner reiterating the averments made in the Civil Miscellaneous petition contended that there is no dispute with regard to existence of Agreement dated 01.02.2013 and addendum dated 22.12.2017. According to the petitioner, the respondent violated the terms and conditions of the agreement and to pay a sum of Rs.32,86,933/-. Therefore the petitioner invoking the arbitration clause 27 of the Agreement, issued notice to the respondent under Section 11(5) of the Act and the same is disputed by the respondent by giving untenable reply. Therefore she sought to allow the Civil Miscellaneous petition.
7. Per contra Sri Zulfikir Kumar Shafi, learned counsel for the respondent while justifying the objections contended that the petitioner has not supplied proper raw materials as agreed between the parties in terms of the agreement dated 01.02.2013. It is further contended that the petitioner himself has violated the conditions of the agreement and addendum. Therefore sought to dismiss the Civil Miscellaneous petition.
8. Having heard the learned counsel for the parties, it is an undisputed fact that both the parties entered into agreement on 01.02.2013 with various conditions i.e., about 28 conditions in the agreement, duly signed by both the parties as contemplated under Section 7 of the Act. Subsequently, both the parties mutually entered into addendum dated 22.12.2017. According to petitioner the respondent has violated the terms of the agreement and according to respondent the petitioner has violated the terms of the agreement. The Clause 27 of the agreement reads as under:
27. ARBITRATION Any dispute or difference which may arise between parties or their representatives out of or in connection with or with regard to the constructions, meaning or effect of this agreement or any part thereof of in respect of any sales indent or supply as under this agreement or any other matter, will be referred to arbitration, as per the Indian Arbitration and Conciliation Act, 1999 and the Arbitration proceedings shall be held at Bengaluru.
Any notice required to be served shall be deemed to be sufficiently served on HIMALAYA if addressed to its principal place of business at Makali, Bengaluru – 562 123. Any notice required to be served on LOAN LICENSEE shall be deemed to be sufficiently served if addressed to Madhur Pharma & Research Laboratory (P) Ltd., No.292 & 294, 4th Stage, Peenya Industrial Estate, Bengaluru – 560 058.
9. In view of the dispute between the parties and the counter claim raised by the respondent, the matter has to be decided by the learned sole Arbitrator by adjudicating the dispute. In view of the aforesaid admitted facts, there is no impediment for this Court to appoint Sole Arbitrator in terms of Clause-27 of the agreement and addendum dated 01.02.2013 and 22.12.2017 respectively, to adjudicate the dispute between the parties.
10. For the reasons stated above, the Civil Miscellaneous Petition is allowed. Shri Justice Ajit J. Gunjal, Former Judge of this Court is appointed as sole Arbitrator to adjudicate the dispute in terms of clause 27 of the Agreement and addendum dated 01.02.2013 and 22.12.2017 respectively as per Annexure-F and G entered into between the parties.
11. Registry is directed to send a copy of this order to Shri Justice Ajit J. Gunjal, Former Judge of this Court as well and Arbitration Centre forthwith for reference.
SD/- JUDGE KMV*