Happy Exports v. PayU Payments Pvt. Ltd.

1. This is a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996[1] for reference of the disputes between the parties to arbitration.

2. The dispute arises in the context of Master Service Agreement dated 28 September 2022 (MSA, hereinafter), to which the petitioner and the respondent are signatories. Clause 25.[3] of the MSA envisages resolution of the disputes by arbitration, which reads thus: “25.[3] Force Majeure: PayU shall not be liable for its failure to “the 1996 Act”, hereinafter perform under the MSA as a result of any event of force majeure events like acts of god, fire, wars, sabotage, civil unrest, labour unrest, action of Statutory Authorities or local or Central Governments, change in Laws, Rules and Regulations, affecting the performance of PayU or the Acquiring Banks. Governing Law, Settlement of Disputes and Jurisdiction: This MSA shall be governed by and construed in accordance with the laws of India. Both Parties agree that if any dispute(s) or difference(s) shall arise between the Parties in connection with or arising out of or relating to the MSA, the Parties shall attempt, for a period of 30 (thirty) days from the receipt of a notice (“Disputes Notice”) from the other Party of the existence of a dispute(s), to settle such dispute(s) by mutual discussions. If the said dispute(s) cannot be settled by mutual discussions within the thirty-day period specified above, such disputes(s) shall be referred to arbitration for final resolution in the manner provided herein. The Parties shall mutually appoint a sole arbitrator within 60 (sixty) days from the date of the Disputes Notice who shall resolve such accordance with the provisions of the Arbitration and Conciliation Act, 1996, as amended from time to time (“Arbitration Act”). In the event the Parties fail to appoint a sole arbitrator in accordance with the procedure aforesaid and within the time period as specified above, a panel of arbitrators shall be appointed in accordance with the provisions of the Arbitration Act for the final resolution of the dispute(s). The arbitration proceedings shall be held in English language with the seat of the arbitration being New Delhi. Subject to the arbitration agreement as mentioned above, the courts at New Delhi shall have the exclusive jurisdiction over any dispute(s) as described above.”

3. Attempts at mutual reconciliation having failed, the petitioner addressed a notice under Section 21 of the 1996 Act to the respondent, alleging claims of ₹ 11,04,215/- on the respondent and seeking reference of the disputes to arbitration.

4. As the respondent did not reply, the petitioner has approached this Court by means of the present petition under Section 11(6) of the 1996 Act, seeking intervention of this Court in appointing the arbitrator.

5. Mr. Tiwari, learned Counsel for the respondent advances as the sole ground to oppose the petition, the contention that items being sold by the petitioner, figured in the list of banned items at Annexure II to the MSA.

6. Learned Counsel for the petitioner disputes this contention.

7. In any event, the recent judgment of the Supreme Court in SBI General Insurance Co Ltd v. Krish Spinning[2] permits the Court, exercising jurisdiction under Section 11(6) of the 1996 Act, only to satisfy itself that there exists, between the parties, an arbitration agreement, and that Section 11(6) petition has been filed within three years of Section 21 notice. Both these conditions being cumulatively satisfied in the present case and the parties having not been able to arrive at a consensus regarding arbitration, this Court has to step in.

8. Accordingly, this Court appoints Mr. Rakesh Kumar Dudeja, Advocate (Tel. 9810147798), to act as an arbitrator on the disputes between the parties.

9. The learned arbitrator shall be entitled to charge fees in accordance with Fourth Schedule to the 1996 Act.

10. The learned arbitrator is also directed to file the requisite disclosure under Section 12(2) of the 1996 Act within a week of entering on reference.

11. This Court has not expressed any opinion on any aspect of the matter either preliminary or on merit. All issues of fact and law shall remain open to be agitated before the learned arbitrator.

12. The petition stands allowed in the aforesaid terms.