SANGHI BROTHERS (INDORE) PVT LTD Vs. MUKTINATH AIRLINES (P) LTD AND ANR.
Supreme Court of India (Single Judge)
Arbitration Case, 37 of 2014, Judgment Date: Oct 15, 2015
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
ARBITRATION CASE (CIVIL) NO.37 OF 2014
SANGHI BROTHERS (INDORE)
PVT. LTD. ...PETITIONER
VERSUS
MUKTINATH AIRLINES PRIVATE
LIMITED & ANR. ...RESPONDENTS
J U D G M E N T
1. This application has been filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as the
“Arbitration Act”) for appointment of an arbitrator to go into the disputes
and differences that the petitioner claims to have arisen between the
petitioner–Company and the respondents under an Agreement/Memorandum of
Understanding dated 17.07.2013.
2. According to the petitioner, the respondent No.1 - Muktinath
Airlines Private Limited is the owner of a Helicopter Robinson R44 Raven
II. The petitioner contends that the respondent No.1 – Company executed a
power of attorney dated 20th June, 2013 authorising the respondent No.2 –
Galaxy Aviation Incorporation Private Limited to sell the said Helicopter.
A Memorandum of Understanding (for short “MOU”) dated 4th July, 2013 was
entered into between the respondent No.1 and the respondent No.2
incorporating the terms for the sale of the Helicopter. The petitioner
states that on 17th July, 2013 a MOU was executed between the petitioner
and the respondent No.1 represented by its power of attorney i.e.
respondent No.2 for sale of the Helicopter in question. The price was
agreed upon and an advance amount of Rs. 5,00,000/- (Five Lakhs only) was
paid by the petitioner to the respondent No. 1.
3. The petitioner has contended that it was agreed by and between
the parties in the MOU dated 17th July, 2013 that the sale of the
Helicopter would be completed within two months. The respondents failed to
handover possession of the Helicopter within the aforesaid period.
According to the petitioner, an addendum to the MOU dated 17th July, 2013
was executed between the petitioner and the respondent No.2 for extension
of time upto 16th December, 2013 for the delivery of the Helicopter. It
appears that the respondent No.2 demanded a sum of Rs.15 lakhs over and
above the agreed sale price [Rs.2,04,00,000 (Rupees Two crore four lakhs)]
which was responded to by the petitioner on 10th December, 2013, inter
alia, informing the respondent No.2 of its failure to comply with clause 4
and clause 13 of the MOU dated 17th July, 2013. Accordingly, legal notice
was issued by the petitioner to the respondents. As the petitioner
apprehended that the respondents may sell the Helicopter to a third party
it had approached the Delhi High Court by means of a petition under Section
9 of the Arbitration Act. Accordingly, interim orders were passed by the
Delhi High Court on 14th March, 2014. The petitioner invoked the
arbitration clause (clause 24) of the MOU dated 17th July, 2013 by notice
dated 13th February, 2014 and as the same had not been responded to the
instant petition has been filed.
4. The respondent No.2 has chosen not to appear before the Court.
The respondent No.1, who is represented, has filed an affidavit contending
that in terms of MOU dated 4th July, 2013, between the respondents, it was
agreed that if the respondent No.2 failed to make payment within one month
from the date of the MOU (i.e. 4th July, 2013) then the said MOU would
stand terminated. It was stated that the respondent No.2 had failed to
make such payment and, therefore, the MOU between the respondents dated 4th
July, 2013 had become non-est in law. The respondent No.1 has further
contended that it is not bound by the MOU dated 17th July, 2013 as it was
not a party to the same. It is the further contention of the respondent
No.1 that the power of attorney was forged by the respondent No.2 and also
that the MOU dated 4th July, 2013 between the respondents has been
materially altered in respect of clause 12 and clause 19 thereof altering
the periods specified in the said clauses from one month to three months.
5. I have heard the learned counsels for the parties and I have
considered the submissions advanced. Clause 24 of the MOU dated 17th July,
2013 which provides for arbitration is in the following terms:
“24) This MOU will be governed by the provision of Indian
Arbitration and Conciliation Act, 1996 and any other
modification or re-enactment thereof. The arbitration
proceedings shall be held in New Delhi and the language of
arbitration shall be English.”
6. There is no manner of doubt that the said MOU dated 17th July,
2013 was executed by and between the petitioner on one hand and respondent
No.1 represented by respondent No.2 as its power of attorney holder on the
other. Clearly and evidently, sale and purchase of the Helicopter and
delivery thereof in terms of the aforesaid MOU dated 17th July, 2013 has
not materialized till date. Whether the petitioner is entitled to
performance of the terms of the said MOU dated 17th July, 2013 is the
precise dispute between the parties. Therefore, in terms of the
arbitration clause contained in the said MOU dated 17th July, 2013, the
dispute is liable to be referred to arbitration by appointment of an
arbitrator under Section 11(6) of the Arbitration Act. The grounds on which
the respondent No.1 seeks to resist the appointment of an arbitrator,
namely, that the period contemplated under the MOU dated 4th July, 2013
(one month) within which payment was to be made to the respondent No.1 by
the respondent No.2 is over; that clause 12 and clause 19 of the MOU dated
4th July, 2013 had been materially altered by changing the period of
payment from one month to three months; and further that the power of
attorney was forged by the respondent No.2 are questions that cannot be
gone into by the court in exercise of jurisdiction under Section 11(6) of
the Arbitration Act. These are matters which can be raised before the
learned Arbitrator and answered by the said authority. In this regard,
Section 16 of the Arbitration Act may be extracted below.
“16. Competence of arbitral tribunal to rule on its
jurisdiction.—
(1) The arbitral tribunal may rule on its own jurisdiction,
including ruling on any objections with respect to the
existence or validity of the arbitration agreement, and for
that purpose,-
(a) an arbitration clause which forms part of a contract
shall be treated as an agreement independent of the
other terms of the contract; and
(b) a decision by the arbitral tribunal that the contract
is null and void shall not entail ipso jure the
invalidity of the arbitration clause.
(2) A plea that the arbitral tribunal does not have
jurisdiction shall be raised not later than the submission
of the statement of defence; however, a party shall not be
precluded from raising such a plea merely because that he
has appointed, or participated in the appointment of, an
arbitrator.
(3) A plea that the arbitral tribunal is exceeding the scope of
its authority shall be raised as soon as the matter alleged
to be beyond the scope of its authority is raised during
the arbitral proceedings.
(4) The arbitral tribunal may, in either of the cases referred
it, in sub-section (2) or sub-section (3), admit a later
plea if it considers the delay justified.
(5) The arbitral tribunal shall decide on a plea referred to
in sub section (2) or sub-section (3) and, where the
arbitral tribunal takes a decision rejecting the plea,
continue with die arbitral proceedings and make an arbitral
award.
(6) A party aggrieved by such an arbitral award may make an
application for setting aside such an arbitral award in
accordance with section 34.”
1
7. Consequently and in the light of the above, the court allows
the present petition and appoints Shri Justice Mukul Mudgal, Chief Justice
(Retd.), Punjab & Haryana High Court, as the Arbitrator.
8. All the disputes including the disputes raised in the present
petition are hereby referred to the learned sole Arbitrator. The learned
Arbitrator shall be at liberty to fix his own fees/ remuneration/other
conditions in consultation with the parties.
9. Let this order be communicated to the learned Arbitrator so
that the arbitration proceedings can commence and conclude as expeditiously
as possible.
10. The Arbitration Petition is disposed of accordingly. No costs.
………......................,J.
(RANJAN GOGOI)
NEW DELHI
OCTOBER 15, 2015