SAP India Pvt Ltd v. Zenith Software Ltd

I. Because you huve failed to mation tlrc address of your Client, the alleged 'Claimant' and hence rleliberately suppressed the idenl.ity of the said client.

2. Because lhe re/brrecl License Agreemen.t was executed bett'veen NIts. SAP fndia Systems, Applications and Produ.cts in Dala Processirtg Private Limited with nxy client and not as allegeC by yotr. )._,[1] i Arb.P.No.362i20 | | Prrge 6 ol'Jl 'r-i

3. Because the order dated 06/09/10 passed by Hon'ble High Courr o.f Delhi in C.S.(O.5.) No.340/2009, titled SAP AP & Anr. Vs. Zenith Sofnvare Ltd. v,as not a consent order". Furlher the reference was kept open to Arbin'ation.

4. Because as per the clause I I of the License Agreement the Arbilrators shall have a baclcground or training in contputer lqv,, contputer science or marlceting of computer industrl; products. Unlike the referrecl respected Mr. Rodnev- D. lb,der who is an Aclvocate.

5. Because both the parties to the License Agreement were/are of Bangalore, Karnataka State, India and agreement was executed/stanrped therein with nothing related thereto of Faridabad, Haryana State. Hence you are requested io.forthtvith v'ithdre14) your notice under reply and therefore ntv client need not to intintate any further. "

11. Vide letter dated 24th March, 2011, the petitioner replied to all the frivolous objections of the respondent. With respect to the respondent's objection to the qualification of Mr. Rodney D. Ryder, the petitioner clarificcl that Mr. Ryder is a qualified IT and computer law practitionel and rvell versed in computer science. With respect to the territorial jurisdiction, the petitioner clarified that the seat of arbitration proceeclings under Clause 11 of the Agreement was Neu' Delhi. 'the petitioner again requested the responflent to aplroint the arbitrator u'ithiu I 5 days.

12. On 24Lt'Muy, 2011, the petitioner again sent a reminder to the respondent to appoinr the arbitratoruvithin t[5] days. The respondent did not care to reply to the pctitioner's renrinders dated 24tt'March, 2011 and 24tt' May,20l 1.,l Arb.P.No.362120 | | l'jage 7 of'21 )a a \ I

13. On 8tl' November, 2011, the petitioner filed the present petition under Section 11(6) of thc Arbitration and Conciliation Act for appointment of the arbitrator. f'he shorv cause notioe was issued to the responclent returnable on 19d'December, 2011. The respondent entered appearance through his counsel on 27't December, 2011 ancl filed the rcply dated 9'l' April. 2012 in which he challenged the jurisdiction of this Court to appoint the arbitrator. The respondent also raised many other frivolous objections in the reply namely the petition was baned by limitation; the arbitrator appointe$ by the petitionel r,vas not qualified; the petition has not been instituted by a duly ar"rthorized person; and the notice dated 23'd February, 2011 for appointment of the arbitrator cloes not mention the petitioner's address.

14. On 11tr' January,2Ol[3], the counsel for the respondent sought tirne to file an undertaking on merits to put an encl to the nratter. This Coufl granted four u'ceks time in pursuancc to u'hich the affidavit dated 28tr' January,2013 rvas filed u'hich rvas not found properby the Court. On 15tr'Fcbruary, 2013, the counsel for the respondent sought ftlrther two rveeks time to file a proper affidavit by way of urrdertaking in pLrrsuauce to which the respondent filed a second affidavit dated 26d' February, 2013 which was also not found acceptable. Consequently, the case was fixed for hearing on 23'd April,2013.

15. On 23'd April, 2013. thc counsel for the responclent raised an objection to the territorialjurisdiction of this Court nhereupon the ^o/ Arb.P.No.362120 | | Page 8 ol'21 t, Managing Director of the respondent company was directed to remain present in the Cor.rrt on 1t' i\1a1', 2013.

16. On I't Muy, 2013. the leamecl Senior counsel for thc respondent raised a. new plea that there was no arbitration agreement between the parties. This plea was not raised earlier at any point of time. 1n 6-s1OS) No.340i2009, the respondent had filed IA No.511l/2009 uncler Section 8 of the Arbitration and Conciliation Act, 1996 on the qround tirat there was a valid End User Licence Agreement clatecl 26tl' De<;smber, 2006 containing the arbitration clause and therct'ore, thc disputes between the parties should be referred to arbicration. '['his court accepted the said plca and referred the dispures to arbitration. I[1] there \vas no agreement between the parties, as stated on 1ttMuy, 2013, the respondent is guilty of making a false statement on oath before this Court in CS(OS) No.340/2009. Consequently, rhis Court appointed Mr. p. Nagesh, Advocate as Amicus Curiae to assist this Court as to the consequences of raising such a plea. At this stage, leamed senior counsel for the lespondent submitted that the respondent withclraws the objcction to the ten'itorial.lurisdicrion of this Court as well as all objections to the appointment of the arbitraror by this courr and tenders unconditional apology. 'fhe respondent was directed to file written apology and the case was fixed for consideration of the apology on 6d' \,{ay, 201?.

17. The responclent has filed a rvrit[en apologl, clated l't May. 2013 for not appointing the arbir.rator carlicr and for contesting this Arb.P.No.362/20 | | Page 9 of2t l[1] ir( j petition challenging the appointment of the arbitrator. The apology ofthe respondent is reproduccd herennder:,,AFFIDAVIT TENDENNG APOLOGY BY RESPONDENT AFFIDAVIT OF SI.IRI K. VENKATAMCHALAM, S/O LATE SHRI R, KANDASWAA(Y CHETTIER, AGED 66 YEARS, DIRECTOII, ZENITI.I SOFT'WARE LIMITED HAVING ITS RE(|ISTERED OF'FICE AT ZENITH HOUSE NO.4, INDUSTRIAL LAYOUT, KOMMANGALA, BANGALURU _ 95 I, the deponent aboye nanted, do hereby solemnly alfir* and sta.te asfollows: l. Tlmt being the Director ancl authorized signatory of the Responclent Conipany, I am Juliy conyersant with thefacts of the ca,se ond competenl to depose thereto.

2. That the deponent tenders unconditional. apology to this Hon'ble Cntrt for and on behalf o/' the Respondent Company in the above nmtter,for not appointing the Arbitrator earlie.r and then contesting the aforemenl,ioned peliliorr challenging the appointment of Arbitrator.

3. That the deponent alsr; lenders apologlt Jbr any of his action, conducl or slatement made b, hint or on his behalf before this Hon'ble Court."

18. On 6tlt Muy, 2013, the learned Senior Counsel fbr the respondent submitted on instructions frcm Mr. K. I Venkatat'achalam, the Director of the respondent companv present in Court that the respondent withdt'au's all objections including the objection of tenitorial jurisdictiorr tr; lhc appointment of arbitrator. Learned senior counsel lurrhcr subrnitted that the respondent accepts the jurisdiction of this Corut to entertain and try this petition. Learned senior counsel further subnritted that this petition Arb.P.No.362120 | I t'aire l0 of 2l I ) may be allowed and a sole arbitrator be appointed to adjudicate the disputes between the parties. 'fhis Ccrurt reserved the order on 6n Muy, 2013 and directed both the palties and the learned Amicus Curiae to subrnit the briel'note of subrnissions. Both the parties and the learned Amicus Curiae have filed the submissions discussed hereunder.

19. Suniurssroxs or rHn Pn'u'uonrH The learned counsel for the petitioner submitted that the respondent has abused the process of lau, and lras committed contempt of court by interfering rvitlr the achrinistration of justice. The petitiorier referred to and relrecl on thc follor,ving judgments:- 19.[1] *22....In fact, the l'eason why a breach of clear undertaking given to the court umounts to contempt of court is that the contcmner by making a false representation to the court obtains a benefit for himself and if he lails to honour thc undertaking, he plays a serious fiaud on the court itself and thereby obstructs the course of justice and brings into disrepute the judicial institution...." eqpgrl.9.[2] Rita lvlarkardq'v. Sudi.t Slngh tlrora. (1996\ 6 SCC 14 *I[2]....I-Io'uvever. in our,Sonsiflered view even in a case where no such undertaking is given, a parry to a litigation may be held liable for such conternpt if the courl is induced to sanction a particular course of' action or inaction on the basis of the representation of such a party and the courl ultirnatell' Ilrrds that the party never intended to act on su<;ir representation or such representation r,vas talse...." 19.[1] Chandra Shashi v. Anit Xuntcu. t/ernta (lgg!)llcc_42! lr SCC 114 Arb.P.No.3621201 | Page I I of2l I "2. Anyone who takes l'eoout'se to fiaud, deflects the course of.iudicial procecding's; or if anything is done with oblique nrotivc. the same interferes r.vith the adnrinistration ol justice. Such persons are required to be properly dealt with. ltot oiriy to punish thern for the wrong done, but also to detcr other frclm inclulging in sirnilar acts, which shake the faith of people in the systern of adrninistration of ir-rstice.

XXX XXX

20. SunnnrssroNs or rHe Rr:spoNnEnr'

20.1. The learned counsel lbr the respondent admitted that contesting the application uuder Section 1l and by raising several pleas rryhich u,ere not urged in Section 8 application, rvas not appropriate since the respondent had already submitted ro the jurisdiction of this l-lon'ble Courl r,vithout any objection. The respondent ltitlier adrnittecl that ttiis concluct can as such be termed as liivolous and not bonalldc b.ut the same may uot be stricrly be constnred as contempt of anv order. direction, undertalting, etc. as stipulated under section 2 of thc conrempt of courts Act. It was submitted that though the acts ot'the respondent rnay rrot fall under the definition of "contempt" under the Contempt of Courts Act, but the respondent needs to be strictly r,varned fbr the manner in which XXX Alb.P.No.362i'20 | | Page l[2] or'21 '1 he has used tl're process of the court. The respondent having already submitted an unconclitional apology on affidavit may be warned of strict conseqrrences on account of his acts and conducts. if such acts are repeated in future.

21.

21.1. Mr. P. Nagesh, leamed Amicus curiae submitted that the order referring the parties to arlritratior-r is akin to a consent order but cannot lail r,vithin the meaning of an r.rndertaking to the court. The Respondents ought to have complied vyith the order instead of prolonging the litigation. The conduct of the Respondent is definitely to stall the order refering the parties to arbitration and is an abuse of the process of tlre Cour[1]. 2r.2. The Respondent be subjectecl to conclitions like not making applications for extension o1' tirne before the Ld, Arbitrator, completing the process of arbitration r,vithin a time bound manner, asking the Respondent to pay co:;ts.ancl such directions which would enable the litigants to have fbith in the Judiciary and the Altemative Dispute Resolution mechanism agreed to between the parties.

21.3. Learned Amicus curie has referrecl to Dethi Development Autlrority vs. skipper construction, (1995) 3 scc 507, in which. the supreme couft elucidated thc concept of contempt of court in the light of an interim order and held that even if the Respondent contends that his course of conduct is based on legal opinion, it still Arb.P.No.3621201 | Page l[3] of2l { */) amounts to an intentional act and a willful disobeclience of the supreme court order and amounts to civil contempt (para 60 &. 66). In paru 67, the Supreme Court held as under:- "...the contemnors irar,'c indutgecl in judicial adventurism by raiding one coun o. the other. Each of such raids is a clear abuse of the process oJ- court calculated to obstruct the due course of the j'dicial proceedings and the administration of jr-rstice. 'fhus, we concrucle that the contemnors are guilty of contempt of coui't. No doubt, the conternnors have lcndered apology. This apology is coming for aller sensing tlrat tlrc adventure has turnerj dorvn to be misadventure, r'calizing that the contemnors havc ended up in a cul-de-sctc. An apology is not a weapon of defence fbrged to purge the guilt of the otfences nor ls it intended to opcrate as a panacea. It is intended to be erridence of real contriteness, the manly consciclusness of ft \-vrong done. of an iniury inflected and eamest desire to nrake such reparation as lies in the wrongdoers' po\,ver....". In para 71 ofthe.iudgrnent, the supreme court made the followinc parting remarks: "Judiciar-v is the bt:d'ocl< a'c hancl'rado of orclerly life and civilized societv. If the people rose faith in justice imparted by the highest court of the land, woe be to orderly life. The fragrnent of the civilized sooietv would be broken up and crumbled clown.,' The Suprcme court deferred tlre sentence of imprisonmcnt imposed on the co'temnors sub.iect to the conditions statecl in para 72 of thejudgmenr. 2r.4. The learned Arnicus curic also refemed to Morati uctl,og Ltcl. vs. Moltinder c. Mehta, (2007) 13 scc 220, in which even Arb.P.No.3621201 | Page l[4] oi'21,l Jl 'r\ i,',- J though a consent order was passecl by the supreme court upon an undertaking on affidavit given by the parties, the Supreme court calne heavily on the alleged conternnors and held that the contemnors not only prevaricatecl their stand at cJifferent stages in different proceedings, they intended to prolong the litigation one way or the other. The parties accepted that the disputes and differences pending betr,vccn them should be referred to an arbitrator. The Petitionet agrcecl to relbr the parties to arbitration on the representation urade b[1], the allegecl contemncrs that they would have furnished a bank guarantee. I-Iowever, no bank guarantee was furnished and the court lielcl that the alleged contemnors have misled the supreme court and have comrnitted gross contempt of the courl.. 2r.5. The learned Amicus curie sub'ritted that the supreme court made similar observations in Bortk of Burocla v. ssdructclin Hossort Doya, (2004) I SCC 360 (para i0 at page 36g), where one of the parties to a consent o'der ciragged ihe proceeclings by filing several prr;ceedings.

22. Falsn Cr,lrrvrs axn Drrnncrs 22.r rn Maris Mmgaricla sequeriu lTernondes v. Erosnro Jack de sequeria, (2012) 5 SCC 370, rhe Supreme court held that false claims and defences are seriours problerns with the litigation. The Supreme Court held as under:- 66False claims and false defences

84. False claims and dofences are really serious problems r,vith real estate ritigation, predominantly Arb.P.No.3621201 | Page l[5] of2l { t a I _< I because of ever escalating prices of the real estate. Litigation per-taining to valuable real estate properties is dragged on by unscrupulous litigants in the hope that the othcr pan), will tire out and ultimately r.vould settle rvith thern by paying a huge amount. This happens becarrse of the euonnolrs delay in adjudication of cases in our Courts. If pragmatic approach is adopted, then this problern can be minimized to a large extent.,, 22.[2] In Dalip Singh v. Stste of U.p.,(2010) 2 SCC 114, rhe supreme court observed that a nerv creed of litigants have cropped up in the last 40 years who do not have any respect for truth and shamelessly resort to falsehood and unethical means for achieving their goals. The observations ol'the supreme court are as under:-

cropped up. Those who bclong to this creed do not have any respect for truth. They shamelessly resort to falsehood and unethical means for achieving their goals. In ordel.to meet the challenge posed by Arb.P.No.3621201 | Page l[6] ot'21;,i.(:- I a -',+: this 'ew creed of litigantso the courts have, from tirne to timeo evolvecl new rules and it is now werl established that a litigant, wh' attempts to pollute the stream of justice or who touches the pure fountain of justice with lainted hands, is not cntitled to any relief, interim or final.,' (Emphasis sttpplied) 22..[3] rn Satyender singh v. Gulob sirtgtr, MANU/DE/104712012, the Di'ision Bench of this.rour[1] ltrllowing Datip singtt v. stute of u.P. (supra) obsen,ed that the Courts are floodetl with litigation with false and incoherent pleas and tainted evidence led by the parties due to which the.judicial system in the country is choked and such litigants are consulning courts' time for a \vrong cause. The observati<lns of this Court are as uncler:- "2. As rightly observed "b), th. Supreme Court, satya is a basic valuc of rii'e which was iequired to be followed by everybody and is rcoognized iincc many centuries- In spite of c:rution, courts are continuccl to be tlooded rvith litigation with lalse and incoherent pleas and tai'ted evidence lerl by the parties. The judicial system in the country is choked and such litigants are consuming courts, time for a wrong cause. Efforts ure *ade by the parties to steal a lnarch over their. rivals by resorting to false and incoherent statenrents made before the court. ['deed, it is a nightmare faced by a Trier of Facts; required to stitch a gannent, when confronted with a fabric r.vhere the weft, shuttling back and forth across tho vvarp in weaving, is nothing but lies. As the th'cacls of'the u'efl tbil, the yam ol the warp also collapscs; ancl therc is no fabric left.',

1 Ii rnp h as i s sttltpl i ed) 22.[4] rn sky Lsnd Internationa! pvt. Ltd. v. Ikrvita p. L.olwani. Arb.P.No,362120 | | Page l 7 ol'21 a ' fr-l !,| I. tt --^, I (2012) 191 DLT 594, this Court held as under:- "26.20 Dishonelt and unnecessaly litigations are a huge strain on the judicial system. The Courts are continued to be flooded rvith litigation with false and incoherenl pleas and taintcd evidence led by the parties. The judicial system in the country is choked and such litigants are consLrnring courts' tirne fbr a wrong cause. l,fforts are madc by the parties to steal a march over their rivals by resorting to lalse and incoherent statements made before the Court.

26.22 lJnless the Courts ensLrre that wrongdoers are denied profit or undue benefit from the frivolous litigation, it r,vould be difficult to control li'ivolous and uncalled for litigations. In order to curb uncalled for and frivolous litigation. the Courts harre to ensure that there is no incentive or motive for uncalled for litigation. It is a matter of common experience that the Courts' scarce and valuable time is consumed or more appropriately wasted in a large number of uncalled for cases. It becomes tho dr"rty of the Clourts to see that such lvrong doers ale discouraged at every step and even if they succeed in prolonging the litigation, ultimately they must suffer the costs. Despite settled legal positions, the obvious wrong doers, use one after another tier ofjudicial review mechanism as a gamble, knowing fully well tliat the dice is alr.r,ays loaded in their favour. since evon iI'they lose, the time gained is the real gain. 1'his situation rnust be redeemed by the Courls."

23. FrNorNcs

23.1. There is a valid arbitration agreement contained in Clause 11 of the End User Licence Agreement clated 26"' l)ecember, 2006 Arb.P.No.362/201 | ['age l[8] ot'21 a 1-.:.i'v 7 tt tl,*>4 "! I, betrveen the parties rvh jch oontains arbitration clause no.l I reproduced in para 8 abc,,r'e.

23.2. Vide order dated 6th Scptember, 2010 in CS(OS) No.340/2009, this Courl referred the parties to arbitration whereupon the petitioner invokcd the arbitration vide notice dated 23'd February,2011 in replv to rvhich the respondent raisecl may frivolous objections including the objection to the territorial jurisdiction of this Courl. 23.[3] In IA No.5ilIl2009 filed in CS(OS) No.340/2009 under Section 8 of the Arbitration ancl Conciliation Act for reference of disputes by this Court to arbitration, the respondent had specifically accepted the jurisdiction of this Court. In para 5 of the application, the respondent stated that the "aforesaid actions are subject to be ret-erred to the arbitrator by this Hon'ble Cour1". In that vicw of the matter, thc respondent should have gracefully appointed the arbitrator upon the requcst having made by the petitioner on 23'o February, 2011. However, the respondent raised all possible frivolous pleas to the notice and compelled the petitioner to approach this Court foi' appointment o1' arbitrator under Section 1l(6) of the Arbitration and Conciliation Act. In this petition also, the respondent raised all possible frivolous objections, including the ob.jection to the territorial jurisdiction of this Court as a result of u,hich the case is pending for more than one ancl a half years. As if this was not sufficient" on lt'May, 2073, the respondent raised a nt;w plea that there was no agreement between the parties. Upon this Court taking a serious view of the rl Arb.P.No.362120 | i Pagc l[9] ol'21 B.. r-t !l I \-{, '1t I matter, the respondent immediately withdrew all objections and consented to the appointment of the arbitrator. The respondent has now tendered a written apology for not appointing the arbitrator earlier and contesting the petition. I-Iowever, the apology of the respondent does not appear to be sincere. 'l'he respondent has no respect for truth and has attempl.ed to pollute the pure fountain of justice with tainted hands. The respondent has played tricks with this court resulting in the appointment of the arbitrator being delayed by more than trvo vears. 'I'his case warrants strict action to be taken. Florvevcr. <:onsiderin.g that the courts are overloaded with litigation, the action against the respondent is deferrecl and the responclent is let off for the time being rvith a warning that if the respondent behavcs in this manncr either cluring thc arbitration proceedings or therealler at anv stage or attempts to delay the arbitration proceedings, the petitioner would be at liberry to approach this Court for appropriate action against the respondent.

24. CoNcr,uslox

24.1. In the lacts and circumstances of this case, thc pctition is allowed and Mr. Nakul f)ewan, Advocate (Mobile No.9891325005) is appoirrted as sole arbirraror to adjudicate the -U disputes between the parlics. 'ihc f-ees of the arbitrator shall be in tenns ot' Delhi l-Iigh Court Arbitratiorr Ccntrc (Administrative Costs and Arbitrator's Fee) I{ules. Arb.P.No.362120 | | Page 20 of2l i t a,-a IJ Y{ ),].e

24.2. Copy of this order be givcn dasti to the learned ccunsel fbr the parties.

27.3. Copy of this order be sent to learned Arbitrator. w" J.R. MIDHA. J MAY l{zag Arb.P.nNo.362120 | I Page 2l of2l