Allowed

Toyota Kirloskar Motor Private Limited v. Cosmic Motors India Private Limited

Karnataka HC18 Dec 2023CMP/485/2022

Case brief

AI extract

What is this about?

The High Court allowed a petition under Section 11(5) of the Arbitration and Conciliation Act, 1996 filed by Toyota Kirloskar Motor against Cosmic Motors. Finding a mediation clause in the dealership agreement, the court referred the dispute to mediation before constituting the arbitration tribunal.

What did the court decide?

Allow the petition and direct the parties to refer the dispute to mediation with Sri. S.N. Prashanth Chandra as mediator for two months; failing which proceed to arbitration.

Toyota Kirloskar Motor Private Limited Vs Cosmic Motors India… — Arbitration | Karnataka HC (2023)

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1 - NC: 2023:KHC:46195 CMP No. 485 of 2022

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18^TH DAY OF DECEMBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR CIVIL MISC. PETITION NO. 485 OF 2022

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BETWEEN:

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TOYOTA KIRLOSKAR MOTOR PRIVATE LIMITED HAVING ITS REGISTERED OFFICE AT PLOT NO.1, BIDADI INDUSTRIAL AREA RAMANAGAR DISTRICT-562 109 KARNATAKA.

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…PETITIONER

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(BY SRI. JIDESH KUMAR M D.,ADVOCATE)

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AND:

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COSMIC MOTORS INDIA PRIVATE LIMITED HAVING ITS REGISTERED OFFICE AT

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Digitally signed by VANDANA S Location: HIGH COURT OF KARNATAKA

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DSC 117, THE SOUTH COURT, SAKET NEW DELHI-110017 ALSO AT 115-119, THE SOUTH COURT SAKET NEW DELHI-110017, 39^TH MILE STONE BEGAMPUR KHATOLA, GURGAON HARYANA-122 001.

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MR PRADEEP CHHABRA MANAGING DIRECTOR COSMIC MOTORS INDIA PRIVATE LIMITED 115-119, THE SOUTH COURT, SAKET, NEW DELHI-110017 ALSO AT 39^TH MILESTONE BEGAMUR KHATOLA GURGAON HARYANA-122 001. PLOT NO.23, ROAD NO.M-1 DLF CITY, PHASE 2 GURUGRAM, HARYANA-122 002.

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…RESPONDENTS

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(BY SRI. SAMARTHA S.,ADVOCATE)

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NC: 2023:KHC:46195 CMP No. 485 of 2022

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THIS CIVIL MISC. PETITION UNDER SEC.11(5) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO A) TO AGREE TO EXERCISE POWERS FOR APPOINTMENT OF ARBITRATOR IN TERMS OF SECTION 11 OF THE ARBITRATION AND CONCILIATION ACT, 1996 AND APPOINT EITHER MR. JUSTICE AJIT.J.GUNJAL, FORMER JUDGE, HIGH COURT OF KARNATAKA OR MR. KUKKAJJE RAMAKRISHNA BHAT, DISTRICT AND SESSIONS JUDGE (RETD.), BENGALURU, AS AN ARBITRATOR AND THEREBY EFFECTING THE SETTLEMENT OF DISPUTE BETWEEN THE PARTIES IN ACCORDANCE WITH CLAUSE I OF SECTION P OF THE DEALERSHIP AGREEMENT DATED: 04.07.2016 RENEWED VIDE AGREEMENT FOR RENEWAL OF DEALERSHIP DATED: 08.02.2018 PRODUCED AS ANNEXURE-A AND B TO THE INSTANT PETITION AND ETC.

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THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The present petition under Section 11 (5) of the Arbitration and Conciliation Act, 1996, has been filed by the petitioner - Toyota Kirloskar Motor Private Limited, against the respondents - Cosmic Motors India Private Limited and another, appointment of an Arbitrator in pursuance of Clause-1 of Section P of the Dealership Agreement dated 04.07.2016 renewed vide Agreement for renewal of Dealership dated 08.02.2018 produced as Annexure A and B to the instant Petition.

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Clause-1 of Section P of the said Agreement, which is an Arbitration clause reads as under:-

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NC: 2023:KHC:46195 CMP No. 485 of 2022

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“All disputes or differences whatsoever arising between the parties to this Agreement out of or relating to the construction, meaning and operation or effect of this Agreement or breach thereof shall be resolved by mutual discussion, failing which the same shall be referred to the arbitration of the sole arbitrator to be appointed by the consent of both the parties. In case the consensus is not reached for the appointment of the sole arbitrator within 15 days, the matter shall be referred to the sole arbitration of the Managing Director of the Company of his nominee including any officer of the Company or any other person appointed by the Managing Director of the Company and Dealer shall not raise any objection to such arbitration on the ground that the arbitrator is an officer of the Company and as such is an interested party or that the arbitrator so appointed as earlier dealt with the subject matter of this Letter of Intent. Any order/directions/awards of the arbitrator shall be final and binding on both the parties Arbitrator shall pass a speaking award. The arbitration proceedings shall be held in Bangalore in accordance with the Arbitration and Conciliation Act, 1996.”

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It is submitted that requisite notice of request for reference to arbitration to the said notice was given by the petitioner to the respondents vide Annexure-L dated 24.02.2022.

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NC: 2023:KHC:46195 CMP No. 485 of 2022

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However, despite having received the said notice, the respondents have neither sent any reply nor complied with the requests and demands made in the aforesaid arbitration notice.

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Subsequently, the parties have not only failed to resolve their disputes but they have also not reached any consensus / agreement for appointment of an arbitrator and as such, petitioner is before this Court by way of the present petition.

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Learned counsel for the respondents submits that in view of the pre-arbitration dispute resolution mechanism provided in the Agreement by way of mediation, the present petition is premature and is liable to be dismissed.

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Per contra, learned counsel for petitioner submits that petitioner has no objection to refer the dispute to mediation for amicable settlement before the same is referred to arbitration and the petition may be disposed of accordingly.

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In view of the aforesaid facts and circumstances coupled with the submissions made by the learned counsel from both sides, since the Arbitration clause exists in the aforesaid Agreement entered into between the parties and an arbitrable dispute also

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5 - NC: 2023:KHC:46195 CMP No. 485 of 2022

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exists and by directing the parties to attempt to resolve the dispute by way of mediation, this Court is of the opinion that the present petition deserves to be allowed under Section 11 (5) of the Act by directing the matter to be referred to mediation by appointing an independent Mediator who will try to amicably resolve the dispute and in the event of failure of mediation, the dispute is to be referred

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to Arbitration.

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In the result, I pass the following:

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ORDER

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(i) Petition is hereby allowed .

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(ii) In the first instance, the dispute between the petitioner and respondents are referred to mediation by appointing the following Mediator to resolve the dispute between the parties.

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Sri.S.N.Prashanth Chandra, Advocate, No.1432/2, 'SLR Arcade', I Floor, Krishna Devaraya Road, Opp. to KASSIA Building, Vijayanagar, Bengaluru-40 Mobile No: 98807 37800

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(iii) The learned Mediator is directed to mediate and resolve the dispute between the parties within a period of two months from the date of the first session/sitting of mediation.

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6 - NC: 2023:KHC:46195 CMP No. 485 of 2022

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(iv) The fees payable to the learned Mediator is tentatively fixed at Rs.50,000/- (Rupees Fifty Thousand only) to be shared equally by both petitioner and respondents.

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(v) In the event the dispute between the parties does not get resolved by mediation as stated supra, the matter shall stand referred to the Arbitration and Conciliation Centre, Khanija Bhavan, Bengaluru to take up the matter for arbitration.

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(vi) Learned Mediator is directed to submit a status report to this Court.

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(vii) In the event of failure of mediation, the learned Mediator shall also forthwith send a copy of the report to this Court as well as to the Arbitration and Conciliation Centre, Khanija Bhavan, Bengaluru to take further steps in the matter for arbitration.

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(viii) Upon receipt of a failure report by the learned Mediator, the

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arbitration centre is directed to proceed with arbitration by constituting an arbitral Tribunal comprising of sole Arbitrator as hereunder:

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Sri.P.Krishna Bhat, Former Judge,

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High Court of Karnataka.

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NC: 2023:KHC:46195 CMP No. 485 of 2022

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(ix) All claims and contentions of any of the parties including jurisdiction, limitation, etc., are left/kept open to be decided by the Arbitral Tribunal.

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(x) Registry is directed to return all original documents produced by any of the parties after obtaining Photostat copies of the same.

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(xi) Registry is directed to communicate this order to the learned Mediator, learned Sole Arbitrator at the aforementioned address as well as to the Arbitration and Conciliation Centre,

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Bengaluru, forthwith.

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Sd/JUDGE

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DHA/SRL

Toyota Kirloskar Motor Private Limited v. Cosmic Motors India Private Limited

Case brief

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Toyota Kirloskar Motor Private Limited v. Cosmic Motors India Private Limited

Case brief

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