Allowed

M/S Dayasheel Distributors v. Rajiv Dixit Memorial Trust

Rajasthan HC8 Feb 2024ARBAP/31/2023

Case brief

AI extract

What is this about?

The High Court of Rajasthan allowed an application under Section 11(6) of the Arbitration Act for appointment of a sole arbitrator. The Court rejected objections regarding limitation and jurisdiction, relying on a Supreme Court stay order and the fact that the dispute arose locally. A retired District Judge was appointed as the arbitrator.

What did the court decide?

Appointment of Shri Girish Kumar Pandey as sole arbitrator and fees to be paid as per Fourth Schedule of the Act.

M/S Dayasheel Distributors Vs Rajiv Dixit Memorial Trust — Arbitration | Rajasthan HC (2024)

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[2024:RJ-JD:6512]

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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S.B. Arbitration Application No. 31/2023

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M/s Dayasheel Distributors through its Proprietor Jaya Choudhary W/o Shri Deepak Choudhary, Aged About 42 Years, having Registered Office At 3-D-5, New Housing Board, Shastri Nagar, Bhilwara.

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----Petitioner

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Versus

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Rajiv Dixit Memorial Trust through its Trustee Shri Pradeep R Dixit, 9, Chaudhary Layout, Village Warud, Post Sewagram, District Wardha, Maharashtra-442102.

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----Respondent

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For Petitioner(s) : Mr. Pushkar Taimni For Respondent(s) : Mr. Pradeep Choudhary

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HON'BLE MS. JUSTICE REKHA BORANA

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Order

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08/02/2024

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The present application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act of 1996’) has been preferred for appointment of an independent and impartial sole arbitrator. 2. The facts as submitted in the application are that a ‘Distributor Agreement’ was executed between the parties on 25.09.2017. Vide the said agreement, the applicant was granted a contract for distribution and sale of ‘Ayurvedic Products’ as manufactured by the respondent-Trust. As the sales of the products kept on declining, the applicant distributor did not wish to continue with the distributorship and hence, communicated to the respondent-Trust for non-continuance of the distributorship. The respondent Trust agreed for the same and suggested the

[2024:RJ-JD:6512]

[ARBAP-31/2023]

(2 of 7)

applicant that the goods whatsoever, in possession of the applicant, be returned and assured that the amount qua the same shall be refunded/repaid to the distributor. The assurance/promise to refund the amount qua the returned goods was reiterated vide email dated 19.06.2018.

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As per the submission of the applicant, one month’s notice also was served on the respondent-Trust, it being a condition of the agreement, to terminate the contract. Subsequently, all the unsold goods, in possession of the applicant, valuing to Rs.8,93,500/- were transported back to the respondent-Trust. The last invoice of the returned goods was of 29.11.2018. Despite return of the said goods, amount qua the same was not received by the applicant firm and hence the dispute arose.

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Vide notice dated 03.05.2019, the respondent-Trust was called upon to repay the amount but the same was not responded to. With an attempt to settle the dispute amicably, the applicant approached the Mediation Centre, Ajmer vide application dated 01.04.2021. However, despite service of the notice for mediation, respondent-Trust did not appear and the mediation proceedings failed.

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In the above circumstances, the applicant firm, vide notice dated 02.03.2023, invoked Clause 16 of the agreement being the arbitration clause. Vide the said notice, the applicant called upon the respondent- Trust to appoint an arbitrator for resolution of the disputes. However, even the said notice was not responded to and hence, the present application for appointment of a sole arbitrator has been preferred.

[2024:RJ-JD:6512]

[ARBAP-31/2023]

(3 of 7)

Although no reply to the application has been preferred on behalf of the respondent, learned counsel for the respondent raised two preliminary objections regarding maintainability of the present arbitration application. Learned counsel firstly, submitted that the cause of action, if any, arose to the applicant way back in the year 2017 and the present application has been preferred in the year 2023, which proves that the claim, if any, is stale and the present application is time barred. Learned counsel raised the second objection that this Court would not have the jurisdiction to entertain the present application as the agreement was signed at Maharashtra.

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Responding to the above objections, learned counsel for the applicant submitted that no cause of action arose in the year 2017 as vide email dated 19.06.2018, it was agreed to by the respondent Trust that on the goods being returned, the amount qua the same would be refunded. The same was a clear acknowledgment and on the said assurance only, the goods were returned and the last invoice is of 29.11.2018. When the amount as promised was not refunded, the demand notice dated 03.05.2019 was served on the respondent Trust and the cause of action, if any, arose only from the date of service of said notice. Further, in terms of guidelines as issued by the Hon’ble Apex Court in Suo Moto Writ Petition (Civil) No. 3 of 2020; (decided on 10.01.2022), the limitation, even if deemed to have expired in the year 2021, definitely stood extended and hence the present application is within limitation.

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Heard learned counsel for the parties and perused the material available on record.

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(4 of 7)

So far as the ground of jurisdiction raised by the learned counsel for the respondent is concerned, the same is not tenable because of the sole fact that admittedly, the work in question was to be executed/undertaken at Bhilwara and the work contract was also qua distributorship for sale of goods at Bhilwara. Therefore, the cause, whatsoever, definitely arose at Bhilwara and hence, the jurisdiction definitely lies with this Court.

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So far as the ground of limitation is concerned, there is no denial of the fact that the contract was terminated by the applicant vide a notice served in terms of the contract. Further, there is no specific denial on part of the respondent Trust of the assurance to repay/refund the amount qua the goods returned. The averments pertaining to email dated 19.06.2018 have also not been denied and return of the goods, last being of 29.11.2018, is also not denied.

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In view of the said facts, it is clear that the cause of action, if any, arose to the applicant only when the amount qua the goods returned, lastly on 29.11.2018, was not paid/refunded. Therefore, it is clear that no cause of action arose prior to 29.11.2018. When the amount was not refunded, the demand notice was served in the month of May 2019. Therefore, the cause of action, definitely arose only from the date of service of said notice.

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However, even if it is assumed that the cause of action arose on 29.11.2018, keeping into consideration the period from 15.03.2020 to 28.02.2022 excluded by the Hon’ble Apex Court for the purposes of limitation, the present application is definitely within limitation.

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(5 of 7)

12. In Suto Moto Writ Petition (Supra), the Hon’ble Apex

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Court held as under :

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“I. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi judicial proceedings.

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II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022.

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III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply.

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IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.”

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(6 of 7) [ARBAP-31/2023]

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[2024:RJ-JD:6512]

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Applying the above ratio/exclusion, the limitation, if computed from 29.11.2018 expired somewhere in the month of November 2021. Applying the period of exclusion of 715 days (15.03.2020 – 28.02.2022), as directed by the Hon’ble Apex Court and further adding the period of 90 days to the same, the limitation definitely stood extended upto the month of November 2023. The present application having been preferred on 21.09.2023, is clearly within limitation.

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Coming on to the facts of the present case, it is an uncontroverted fact on record that a dispute has arisen between the parties. Clause 16 of the Agreement provides as under :

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“16. Any and all disputes, controversies, differences arising between the parties hereto out of or in relation to this agreement or any breach thereof shall be finally settled by arbitration by two arbitrators, one to be appointed by each party to the dispute and the arbitrators shall, before taking upon themselves the burden of reference appoint an umpire. The awards as given by the arbitrators or umpire as the case may be, shall be, final and binding on the parties.”

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It is also clear on record that the process provided vide Clause 16 of the agreement has failed and hence, a sole arbitrator deserves to be appointed by this Court. Learned counsel for the respondent suggested that Shri Girish Kumar Pandey, a retired District Judge of Rajasthan be appointed as an arbitrator to which counsel for the applicant also agreed.

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In view of the same, the application under Section 11(6) of the Act of 1996 is allowed. Shri Girish Kumar Pandey, Former

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District Judge, is appointed as the sole arbitrator to adjudicate upon the disputes as raised vide communication/notice dated 03.05.2019.

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The arbitration fee and the costs shall be in accordance with the Fourth Schedule of the Act of 1996. The above appointment shall be subject to the necessary disclosure being made in terms of Section 12 of the Act of 1996.

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The intimation of the appointment as aforesaid be given by the Registry to Shri Girish Kumar Pandey, Former District Judge, Educatio Public School, Just Across Kothari River, Paladi (Suwana), Bhilwara (Mobile No.9414114284). The parties would also be at liberty to intimate Shri Girish Kumar Pandey and to call upon appropriate date for necessary directions.

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(REKHA BORANA),J

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283-Vij/-

M/S Dayasheel Distributors v. Rajiv Dixit Memorial Trust

Case brief

What is this about?

What did the court decide?

M/S Dayasheel Distributors v. Rajiv Dixit Memorial Trust

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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