MS Axalta Coating Systems India Pvt. Ltd. v. MS NCS Auto Hub Private Limited

1. The present petition under Section 11 of the Arbitration and Conciliation Act, 1996 seeks constitution of an Arbitral Tribunal to adjudicate the disputes between the parties. The disputes between the parties have arisen in the context of a Supply Agreement dated 22.11.2022 (hereinafter ‘the Agreement’). In terms of the Agreement, petitioner agreed to supply certain products to the respondent, directly or through its authorized distributors/stock list, subject to certain terms and conditions as mentioned in the Agreement.

SACHIN DATTA, J. (Oral)

2. It is submitted that in accordance with Clause 2 of the Agreement, the respondent nominated the petitioner as the paint supply source for paint jobs at its existing body shop at Thiruvalla, Kerala and any other new body shops which come up during the period of the Agreement.

3. As per Clause 5 of the Said agreement, the respondent had assured/Committed to purchase the products of the claimant from their body shops, for the entire tenure of the Agreement i.e. three years, commencing from 01.11.2022 till 31.10.2025.

4. The disputes between the parties have arisen on account of the fact that the respondent allegedly defaulted in minimum purchase commitment/s as set out in Clause 5 of the Agreement. It is further submitted that respondent was also in breach of other Clauses in the Agreement, therefore, liable to refund the balance upfront investment and discount support that was provided by the petitioner to the respondent, alongwith interest.

5. The Agreement between the parties contains an arbitration Clause which reads as under:-

statutory modification thereof shall apply to the arbitration proceedings and the venue for the arbitration proceedings shall be New Delhi (India). All the arbitration proceeding shall be carried out in English language.”

6. As perusal of the arbitration agreement clearly reveals that Delhi is the seat of Arbitration. Not only has the agreement been made subject to the exclusive jurisdiction of the Court at New Delhi, the agreement clearly specifies that the venue of arbitration shall be New Delhi. As held in BGS SGS SOMA v. NHPC Ltd. (2020) 4 SCC 234, the choice of venue is akin to seat in the absence of any ‘contrary indicia’; the relevant observations in the said judgment are as under:-

7. Disputes having arisen between the parties, an arbitration notice dated 10.07.2024 was sent by the petitioner to the respondent. The petitioner has filed the relevant tracking reports to demonstrate that the said notice was duly received by the respondent yet, no reply thereto was sent by the respondent. Consequently, the present petition has been filed.

8. Notice in the present petition was issued on 23.09.2024; the petitioner has filed the affidavit of service which brings out that the respondents have been duly served through speed post and registered post. A copy of the relevant tracking reports have been enclosed alongwith the said affidavit of service. In the circumstances, the petition has been taken up for hearing and disposal despite non-appearance of the respondent.

9. As held in SBI General Insurance Co. Ltd. v. Krish Spinning 2024 SCC OnLine 1754, the scope of examination in Section 11 proceedings is confined to ascertaining existence of the arbitration agreement. Since the existence of the arbitration agreement is apparent from the perusal of the Clause 11.[3] of the Agreement, there is no impediment to appointing a Sole Arbitrator to adjudicate the disputes between the parties.

10. Accordingly, Ms. Prity Sharma, Advocate (Mob. No.: +91

9911028589) is appointed as the Sole Arbitrator to adjudicate the disputes between the parties under the aforesaid agreements.