Allowed

M/S Amarnath Milk Food Private Ltd. v. Rajasthan Co-Operative Dairy FEDERATIONand

Rajasthan HC11 Aug 2017ARBAP/44/2017

Case brief

AI extract

What is this about?

In this arbitration application, the Appellant sought appointment of an independent arbitrator after challenging the agreement clause naming the Respondent's Managing Director. The Court upheld the arbitration agreement and appointed an independent sole arbitrator.

What did the court decide?

Appointment of Mr. Kamal Sahay Bhatnagar as an independent sole Arbitrator; costs payable per the Fourth Schedule of the Amendment Act 2015.

M/S Amarnath Milk Food Private Ltd. Vs Rajasthan Co-Operative… — Arbitration | Rajasthan HC (2017)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

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S.B. Arbitration Application No. 44 / 2017

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M/s. Amarnath Milk Food Private Limited, Having Its Registered Office 31, Nehru Nagar Agra Up And Factory Office At B-77, Growth Center, Extension, Riico Dholpur Through Its Director Shri Mahesh Chand Singhal

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----Appellant

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Versus

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Rajasthan Co-Operative Dairy Federation Limited, Registered Office, Saras Sankul, Jawaharlal Nehru Marg, Jaipur Through Managing Director

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The General Manager (Dpm And Project), Rajasthan CoOperative Dairy Federation Limited, Registered Office, Saras Sankul, Jawaharlal Nehru Marg, Jaipur

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----Respondents

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For Appellant(s) : Mr. Nirmal Kumar Goyal For Respondent(s) : Ms. Anita Aggarwal

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HON'BLE MR. JUSTICE MOHAMMAD RAFIQ

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Order

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11/08/2017

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This application under Sections 10 and 11 of the Arbitration and Conciliation Act, 1996, has been filed by petitioner praying for appointment/constitution of independent Arbitral Tribunal to resolve the dispute between the petitioner and the respondents.

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The respondents issued notice inviting tender vide NIT dated 13.07.2015 and invited tenders for manufacturing of Ag-marked Ghee and ISI marked Skimmed Milk Powder/Whole Milk Powder from the excess milk available with the respondents. The petitioner participated in the tender process. The respondents accepted the tender of the petitioner on being found the same to

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(2 of 5)

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[ARBAP-44 / 2017]

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be the lowest and suitable. The petitioner furnished bank guarantee of Rs.50,00,000/- with the respondents and the respondents issued supply order/work order dated 07.11.2015. An agreement was executed between the petitioner and the respondents on 10.11.2015. The agreement contains arbitration clause no.8, which provides that all disputes and differences arising of or any way of altering the document concerning to agreement, whatsoever shall be referred to the sole arbitration of the Managing Director, R.C.D.F. Ltd., Jaipur, and the decision of the Managing Director shall be final and binding for both the parties. During the contract period, the petitioner maintained quality in supplying the items but the respondents did not adhere to terms and conditions of the agreement and without any fault on the part of the petitioner and despite providing less raw material for manufacturing, the respondents issued letter dated 29.02.2016 for suspension of agreement due to quality issue. The respondents did not make payment of Rs.23,09,548/- to the petitioner and therefore the petitioner demanded damages of Rs.4,06,88,424/- on account of transportation costs, packing costs and penalty. The petitioner sent e-mails to the respondents on 09.09.2016 and 14.09.2016 followed by several reminders to pay off the outstanding dues but the same was not released by the respondents. The respondents sent a letter dated 15.03.2017 to the Bank for invoking the bank guarantee. The petitioner filed an application under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim measure against the action of the respondents before the court of Additional District Judge No.2, Jaipur Metropolitan, wherein the court passed an interim order on

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(3 of 5)

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[ARBAP-44 / 2017]

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28.03.2017. Thereafter, the petitioner sent a notice to the respondents demanding appointment of an independent Arbitrator.

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Mr. Nirmal Kumar Goyal, learned counsel for petitioner, argued that as per arbitration Clause 8 of the Agreement executed between the parties, the Managing Director, Rajasthan Cooperative Dairy Federation Limited, is named as Arbitrator but in view of provisions of Arbitration and Conciliation Act, 2015 (Amended) the Managing Director, being interested person, cannot act as an Arbitrator. The petitioner served a notice upon the respondents demanding appointment of an independent Arbitrator but the request was turned down by the respondents on the pretext that no name has been suggested by the petitioner. Hence this application.

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Ms. Anita Aggarwal, learned counsel for the respondents, opposed the application and submitted that the notice sent for appointment of Arbitrator did not contain the name of Arbitrator and the same was rightly turned down. The respondents, vide letter dated 18.03.2017, informed the petitioner that substandard skimmed milk powder will be recovered on the basis of its costs as per the terms and conditions of the tender. The respondents rightly took steps to invoke the bank guarantee as the amount of Rs.62,51,880/- was recoverable by the respondent. When the bank was about to release the bank guarantee in favour of the respondents, the court of Additional District Judge No.2, Jaipur Metropolitan, vide order dated in case No.104/2017, stayed release of bank guarantee for a period of one month for initiating proceedings for arbitration, failing which it was ordered that the

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(4 of 5)

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[ARBAP-44 / 2017]

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said order would become ineffective. The respondent has been suffering on account of non-payment of the difference of costs of skimmed milk powder being replaced. The petitioner manufactured substandard milk product and as per clause 10.12 of the agreement, the respondent was expected to accept only the powder manufactured as per Ag-mark standard and the products not conforming to the standard would be liable for rejection. The petitioner failed to name any arbitrator in the notice and as such the respondents turned down the request of the petitioner and it was suggested in the reply dated 24.04.2017 that the petitioner may suggest the name of Arbitrator for initiation of the arbitration proceedings.

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Having regard to the facts of the present case and considering that there exists a dispute between the parties and the parties agreed to resolve the same by way of arbitration as the agreement contains arbitration clause, such dispute is liable to be resolved through arbitration proceedings, present application deserves to succeed and same is allowed. Mr. Kamal Sahay Bhatnagar, (Retired Officer of RHJS), R/o Flat No.4606, Southern Heights - UDB, Haldighati Marg, Opposite Raj Aangan - NRI Colony, Pratap Nagar Jaipur (Cell Number 9414358030), is hereby appointed as an independent sole Arbitrator to resolve the disputes between the parties. Payment of the costs of arbitration proceedings and the arbitration fees shall be made as per the Fourth Schedule of the Arbitration and Conciliation (Amendment) Act, 2015 read with Manual of Procedure for Alternative Dispute Resolution, 2009 of this Court, as amended from time to time.

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(5 of 5)

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[ARBAP-44 / 2017]

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A copy of this order be sent to Mr. Kamal Sahay Bhatnagar, (Retired Officer of RHJS), R/o Flat No.4606, Southern Heights - UDB, Haldighati Marg, Opposite Raj Aangan - NRI Colony, Pratap Nagar Jaipur (Cell Number 9414358030), for needful.

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(MOHAMMAD RAFIQ), J
//Jaiman//19

M/S Amarnath Milk Food Private Ltd. v. Rajasthan Co-Operative Dairy FEDERATIONand

Case brief

What is this about?

What did the court decide?

M/S Amarnath Milk Food Private Ltd. v. Rajasthan Co-Operative Dairy FEDERATIONand

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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