Maharaja Salt Works Co. Pvt. Ltd. v. DCM Shriram Credit Investments Limited & Anr.

Petitioners and against the Respondents thereby directing the Respondents to secure the sum of claim of the Petitioner which is currently valued at Rs.30.96 Cr by either depositing the same before this Hon’ble Court and/ or furnish a bank guarantee of like amount and/ or by restraining the Respondents from dealing with, creating any Third-Party Rights alienating their assets including Immoveable Properties, Fixed Deposits, Shares and Deposits in Current Accounts;

IX. Pass an Ex-Parte Ad-Interim Injunction in favor of the

Petitioners and against the Respondents thereby directing the Respondents to maintain Status quo win respect of the Contract for the Supply of Industrial Grade Salt, Rupee Loan Agreement, Tripartite Agreement, Agreement of Hypothecation, Deed of Mortgage, Non Disposal Undertaking and Deed of Guarantee;

X. Award the cost of the present petition in favor of the

XI. Pass any further orders as this Hon’ble Court may decd fit and proper in favor of the Petitioner as the case may require in the interest of justice and equity.”

2. Mr Akhil Sibal, learned Senior Advocate appearing for the petitioner submitted that the petitioner is a Micro, Small & Medium Enterprise (MSME) Company engaged in the business of the manufacturing of the Industrial Grade Salt whereas the respondent No. 1 is a Non-Banking Financial Company engaged in the business of the advancement of loan and respondent No. 2 is a group company engaged in the manufacturing of Chemicals, Sugars and various other items.

3. The parties entered into a Long-Term Salt Supply Agreement dated 3rd March 2020 for supply industrial grade salt to avail loan for the purpose of development of the plant and business of the petitioner. It is submitted that the respondents conveyed their intention to purchase Two (2) Lakh MT Industrial Salt P.A from the petitioner, for the subsequent 5 years subject to issuance of proper Purchase Order by respondent No.2. It is submitted that Rs.13.[5] crores was required for development of Salt Works and for establishment of a New Washery Plant, i.e., 2nd Washery Plant at Versamedi Unit of petitioner, and hence, it was decided that the respondents would provide Rs.10 crores as Loan by November, 2019 and balance 3.[5] crores would be disbursed by petitioner. The burden of repayment in respect of the development loan of Rs.10 crores was decided to be on the respondent no.2 and was to be re-paid directly to the respondent no.1 under an Invoice Factoring arrangement.

4. It is submitted that the petitioner started to pour funds arranged independently by it for the development Works and establishment of New Washery Plant in accordance with the Agreement executed between the parties. Thereafter, the petitioner continuously pursued the respondent to release thier part of the funds amounting to Rs. 10 crores. However, the respondent delayed the release on one pretext or another.

5. Learned senior counsel submitted that after significant delay, the respondents vide their email dated 3rd March 2020 communicated the Draft Agreements, however, they were unconscionable and were drafted to entangle the petitioner in their malicious scheme. It is further submitted that while the petitioner disbursed Rs. 10 crores, the respondent only disbursed Rs. 6.91 crores towards the Development Works. Moreover, despite repeated requests for furnishing of signed scanned copies of the Agreement, the respondent failed to do the needful.

6. Learned senior counsel submitted that due to the delay attributable to the respondent in disbursal of funds, the supply schedule had to be amended many a times between the parties and the New Washery Plant was made operational only in mid of March 2021. The petitioner, thereafter, released a further sum of Rs. 2.[8] crores, however, the development of the Salt Works could not be progressed for various reasons, including onset of monsoon and COVID-19 pandemic.

7. It is further submitted that the respondent, thereafter, continued to default in releasing the funds as recorded in the Minutes of Meeting- Revised Plan for Pending Salt Dispatch and Release of Outstanding Payments wherein the respondents themselves agreed to immediately release such funds to the tune of Rs. 82 lakhs towards development and Rs. 33 lakhs for invoices of material already supply. The Notices of default were served on the respondents vide emails dated 2nd November 2021, 17th November 2021, 12th December 2021 and 23rd December 2021, however, the respondent did not take any steps. It is further submitted that despite the continuous failure on the part of the respondents to uphold their part of the obligations towards the Agreements signed between the parties, the respondents attempted to take over the Versamendi Unit.

8. It is submitted that the petitioner tried to resolve the disputes between the parties, however, all attempts failed. Therefore, the petitioner is before this Court seeking the reliefs as aforesaid till the final adjudication of its claims to protect the rights and interests of the petitioner which are in grave threat by the actions of the respondents.

9. Per contra, Mr. Harish Malhotra, learned Senior Advocate for the respondents vehemently opposed the contentions and averments raised by the learned senior counsel for the petitioner and stated that the injunction being prayed for is wholly unwarranted and uncalled for in the facts and circumstances of the case. Learned senior counsel, however, stated that the respondent has no objection if an independent arbitrator is appointed by this Court to adjudicate upon the issues raised by the parties by way of the instant petition.

10. Heard learned counsels for the parties and perused the record.

11. The petitioner has approached this Court by way of the instant petition seeking urgent relief against the respondent. Upon perusal of the record as well as the arguments advanced on behalf of the parties it is evident that there are disputes between the parties, which may be raised before and be adjudicated by an Arbitrator.

12. At this juncture, this Court finds it relevant to also reiterate the spirit of the Arbitration Act which encourages that the parties to a dispute to be referred to arbitration where there exists an arbitration clause/agreement and the disputes between the parties are arbitral in nature.

13. In the instant case, Section 27.[7] of the Supply Agreement dated 3rd March 2020 deals with Dispute Resolution and provides for arbitration as a method for resolution. The disputes have arisen between the parties which are arising from the said Agreement and are arbitrable in nature. Further, the learned senior counsel for the parties have also consented to the appointment of an arbitrator to adjudicate the disputes between the parties.

14. Accordingly, keeping in view the aforesaid, this Court finds it appropriate to refer the said disputes and differences arising between the parties to Arbitration by appointment of an Arbitrator. Hence, the following Order: ORDER i. Justice (Retd.) Pradeep Kumar Singh Baghel is appointed as Sole Arbitrator to adjudicate the disputes between the parties which have arisen under the Agreement dated 3rd March 2020; ii. The learned sole arbitrator, before entering the arbitration reference, shall ensure the compliance of Section 12(1) of the Arbitration and Conciliation Act, 1996; iii. The learned sole arbitrator shall be paid fees as prescribed under The Delhi International Arbitration Centre (Administrative Cost and Arbitrators Fees) Rules, 2018 as amended vide notification dated 15th November, 2022; iv. At the first instance, the parties shall appear before the learned sole arbitrator within 10 days from today on a date which may be mutually fixed by the learned sole arbitrator; b. All contentions of the parties are expressly kept open.

15. A copy of the order be forwarded to the learned sole arbitrator on the following address: Justice (Retd.) Pradeep Kumar Singh Baghel Flat No. 008, Ground Floor, Mahagun Mastero Sector 50F, Noida 201307 E-mail ID: psbaghel6@gmail.com Phone no. - 9936931931/9415237424

16. Mr. Harish Malhotra, learned senior counsel appearing on behalf of respondents, on instructions, submitted that the respondents shall not take any further action qua the letters dated 6th March, 2022 and 7th March, 2022 till 16th April, 2023.

17. Learned counsel for the petitioner is directed to approach the concerned Arbitrator and also file an application under Section 17 of the Arbitration Act before the learned Arbitrator before 16th April, 2023. It is also directed that the learned Arbitrator may adjudicate the said application under Section 17 of the Arbitration Act filed on behalf of the petitioner in accordance with law.

18. With the aforesaid directions, the instant petition stands disposed of, along with pending applications, if any.

19. The order be uploaded on the website forthwith.