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Judgment
Dr. S. Muralidhar, J.—The facts leading to these petitions are that on 3rd March 2006 an Agreement was entered into between Givo Ltd. having its registered office at Gurgaon, Haryana and Mr. Sanjay Ahuja, sole proprietor of M/s. Ahuja Apparels, having its office at Karol Bagh and New Delhi. Givo Ltd. was a manufacturer of garments being sold under the brand name of ''Givo''. In terms of the said agreement Givo Ltd. was to supply to Ahuja Apparels garments manufactured out of the raw material supplied by Ahuja Apparels. Under the Agreement Ahuja Apparels was appointed as a distributor of the products supplied by Givo Ltd. for which Ahuja Apparels agreed to pay royalty to Givo Ltd. @ 6% of the maximum retail price of each of the products supplied by Givo Ltd.
In terms of Clause 23 of the Agreement the parties agreed that if they were unable to resolve their dispute or differences ''then such dispute or difference shall be referred for Sole Arbitration to Mr. Ajay Srivastava in accordance with the Indian Arbitration and Conciliation Act, 1996.'' The venue of the arbitration was New Delhi.
With disputes having arisen between the parties arising from the said agreement, Mr. Sanjay Ahuja on 22nd September 2007 filed a petition u/s 11 as well as Section 9 of the Arbitration and Conciliation Act, 1996 (''Act'') in this Court. The petition u/s 11 of the Act was registered as Arbitration Application No. 421 of 2007 and the petition u/s 9 of the Act was registered as O.M.P. No. 521 of 2007. In Arbitration Application No. 421 of 2007, u/s 11 of the Act, a detailed order was passed by this Court on 25th September 2007 appointing Mr. Ajay Srivastava as the sole Arbitrator to adjudicate the disputes between the parties. Even at that stage Mr. Sanjay Ahuja expressed reservations about Mr. Ajay Srivastava conducting the arbitration ''inasmuch as he was of the opinion that there were circumstances which are likely to give rise to justifiable doubts as to his independence or impartiality''. Dealing with the said submissions, this Court observed in the order dated 25th September 2007 as under:
Section 12 of the said Act clearly indicates that when a person is approached in connection with his possible appointment as an Arbitrator, he has to disclose in writing any such circumstances which would give rise to justifiable doubts as to his independence or impartiality. Section 12 (3) also permits a challenge to an Arbitrator by a party and the procedure for the challenge has been prescribed in Section 13. As of now Mr. Ajay Srivastava is appointed as the sole Arbitrator to go into the disputes between the parties, it shall be open to the parties to challenge the Arbitrator in terms of Sections 12 and 13 of the said Act. That issue will be resolved by the learned Arbitrator himself, if and when such a challenge is made.
With these directions, this application stands disposed of.
On the same date, i.e., 25th September 2007 this Court passed the following order in O.M.P. 521 of 2007:
The learned Counsel for the respondent shall file a reply within two weeks. Renotify on 16.11.2007. The Counsel for the respondent states that no communication specifically with respect to the petitioner has been sent to any of the petitioner''s customers threatening any legal action in respect of sale of Givo products. The stocks available with the respondent which have been manufactured/ fabricated by the respondent out of materials supplied by the petitioner shall, if sold by the respondent in the mean while, be accounted for by maintaining a proper account.
On 18th October 2007 the learned Arbitrator conducted proceedings in which he recorded that Givo Ltd. had filed the claim with an application for interim reliefs. Learned Arbitrator also recorded that ''Counsel for the defendant as well as claimant have agreed to supply the copies of their respective account statements in support of their cases to each other and also provide a copy of the same to the Arbitral Tribunal.'' An interim order was passed that ''till the next date of hearing the defendant Shri Sanjay Ahuja is restrained from using GIVO logo in any manner or representing himself as a GIVO distributor in any manner or from selling any goods under the brand name GIVO. The defendant shall be at liberty to sell his goods without using the GIVO label in any manner.''
Aggrieved by the said interim order dated 18th October 2007 passed by the learned Arbitrator and contending that it was contrary to the interim order dated 25th September 2007 passed by this Court, Mr. Sanjay Ahuja filed the Arbitration Appeal No. 3 of 2007 in which notice was issued on 2nd November 2007. However the said interim order dated 18th October 2007 was not stayed by this Court.
It appears that on 18th October 2007, Mr. Ahuja filed an application u/s 12(3) of the Act before the learned Arbitrator who, by a letter dated 30th October 2007 informed Mr. Ahuja that he would be dealing with the said application on the next hearing. In a notice of hearing for 6th December 2007 the Arbitrator noted that while Givo Ltd. had handed over its account statement with the statement of claim on the previous hearing i.e. 18th October 2007, Ahuja Apparels was still to submit its account statement. It was accordingly directed to file its account statement and give its comments on the account statement filed by Givo Ltd. before 3rd December 2007 failing which the said account statement would be taken as correct. In a detailed order dated 15th December 2007 the Arbitrator noted what transpired at the hearing on 6th December 2007 and called upon the Petitioner herein to file a reply on the various points of explanation sought in respect of the application u/s 12(3) of the Act. The above developments were noted by this Court in an order dated 3rd January 2008 in Arb. Appeal No. 3 of 2007. This Court directed the application u/s 12 (3) to be heard by the Arbitrator on 17th January 2008 and be disposed of ''as expeditiously as possible''.
On the same day, 3rd January 2008, an order was passed in O.M.P. No. 521 of 2007 in which, after recording that the pleadings were complete, this Court observed as under:
Counsel for the parties agree that both the parties shall file a statement of accounts as also pending stocks available with them including raw-material, finished goods and accessories, as on 1st January, 2008, within three weeks.
Contempt petition CCP No. 1 of 208 filed by Mr. Sanjay Ahuja against Givo Ltd. and the Arbitrator alleging that they had acted in violation of the order dated 25th September 1997 was also listed before the Court on 3rd January 2008 but no notice was issued on the said petition. It was simply asked to be listed with the other pending petitions between the parties.
On 26th February 2008 the Arbitrator passed a detailed order rejecting the Petitioner''s application u/s 12(3) of the Act. This order was not challenged by the Petitioner. However, alleging that the Givo Ltd. has suppressed the fact that the Arbitrator was a Director and Vice-Chairman of Givo Ltd. and, therefore, would not act impartially, the Petitioner filed I.A. No. 1355 of 2008 in the disposed of Arbitration Application No. 421 of 2007. However, this was withdrawn as not pressed by Mr. Sanjay Ahuja and the Court by an order dated 7th May 2008 granted him leave ''to file another application, if necessary''.
The learned Arbitrator in the meanwhile held proceedings on 28th April and 23rd August 2008. When O.M.P. No. 521 of 2007 was heard in this Court on 26th November 2008, the parties informed the Court that they had filed their respective statement of stocks and had also exchanged copies thereof. They requested that the matter ''may be deferred to approach the Arbitrator for resolving the issues once and for all''. The Arbitrator thereafter passed the following order on 3rd December 2008:
Mr. Sanjay Ahuja, Proprietor of M/s. Ahuja Apparels was not present on the last date of hearing i.e. 20th November, 2008 despite the order dated 23rd August, 2008, wherein he has been specifically asked to appear. On the last date of hearing proceedings carried on for about 2 hours. The accounts statements and stock statement of both parties were placed and the same were discussed at length.
At the conclusion of hearing, it was stated by the Counsels appearing for M/s. Ahuja Apparels that they might like file certain additional statement to which the Counsel for Givo Ltd. objected stating that M/s. Ahuja Apparels is unnecessarily trying to delay the arbitration proceedings.
However, in the interest of justice and to resolve the issue opportunity was given to M/s Ahuja Apparels.
It was agreed by the parties that in case the said statement is not filed within a period of one week, the arbitration proceedings shall be deemed to be closed.
On 24th November, 2008 the Accounts Statement as stated above has been received from the Counsel appearing for M/s. Ahuja Apparels. M/s. Givo Ltd. is directed to file reply to the same within a period of two weeks. In case the same is not filed, it shall be deemed that they do not intend to file any reply to the same.?
On 17th December 2008 Mr. Ahuja filed O.M.P. No. 690 of 2008 in this Court under Sections 14 and 15 of the Act praying that Mr. Srivastava should not be permitted to act as a sole Arbitrator and that his mandate should be terminated. Notice was directed to issue in the said petition on 20th February 2009. This Court recorded that ''both the parties are agreeable that they will be taking the adjournment before the Arbitrator without prejudice to their respective rights''.
Thereafter, the petitions have been adjourned time and again to enable the parties to explore the possibility of a settlement. In fact the order sheets in all these matters over the past three years show that many efforts were made to arrive at a settlement, even by referring the parties to the Delhi High Court Mediation and Conciliation Centre. On the last two occasions the parties were subjected to costs by this Court for seeking further adjournment for the same purpose.
Today in the morning Mr. Rajiv Garg, learned Counsel appearing for Mr. Sanjay Ahuja prayed for one more adjournment on the ground that the parties are still exploring the possibility of a settlement. This Court was not inclined to accept the said plea for the reasons already mentioned. This Court therefore made it clear to Mr. Garg that on no account would the matters be adjourned any further and requested Mr. Garg to proceed with the arguments. He then stated that he would address arguments when the matter was called out in its regular course. Mr. Garg was thereafter not present on the first call and one Mr. Ravi Jindal who was present in Court and claimed to be an ''interested party'' sought a pass over which was granted. When the matter was again called out after a pass over Mr. Garg was again not present and was stated to be held up in another Court. This Court then proceeded to hear the submissions of Ms. Raavi Birbal, learned Counsel appearing for the Respondent. Although he held no power of authority, and was therefore not entitled to address this Court, this Court showed indulgence to Mr. Ravi Jindal and heard him at length since he claimed to be conversant with the case of the Petitioner. This Court also examined the pleadings and orders in each of the matters.
As regards the allegation of bias of the Arbitrator on the ground that he was the Vice-Chairman and Director of Givo Ltd., it appears that the Petitioner was aware of this fact even at the time of his appointment as such by the order dated 25th September 2007 in Arbitration Application No. 421 of 2007. The Arbitrator Mr. Srivastava became the honorary Director and Vice-Chairman of Givo Ltd. on 31st July 2006 and 13th December 2006 respectively. Even earlier, at the time of the agreement, Mr. Srivastava was involved with Givo Ltd. Mr. Sanjay Ahuja was the distributor of Givo Ltd. and was aware of this position. Further, this Court left it to the Petitioner to file an application before the Arbitrator u/s 12(3) of the Act, which he did. The learned Arbitrator''s detailed order dated 26th February 2008 rejecting the said application has for some reason not been challenged by Mr. Sanjay Ahuja. This coupled with the fact that the parties on 26th November 2008 informed this Court that they are willing to go before the Arbitrator for settling all issues shows that the challenge to the Arbitrator was not seriously pursued by the Petitioner fill the hearing on 3rd December 2008. This apart, this Court finds that none of the orders of the Arbitrator give rise to any reasonable apprehension that the Arbitrator is not impartial. The proceedings before the Arbitrator are yet to conclude. The examination of witnesses has not commenced. There is nothing as of date to indicate that the Arbitrator is acting in a biased manner.
Ms. Raavi Birbal, learned Counsel appearing for the Givo Ltd. submitted that her client would not have an objection if direction is issued that the learned Arbitrator will adhere to the rules of evidence as would apply to the trial of a civil suit. It is accordingly directed that the Arbitrator will, in adjudicating the disputes between the parties, adhere as far as is practicable to the rules of evidence that would apply to the trial of a civil suit. In a time-bound schedule, he will first permit party to file their respective documents along with their originals and their respective affidavits by way of examination-in-chief. After admission and denial of the documents he will permit the parties to cross-examine witnesses. This should allay the apprehension expressed by Mr. Sanjay Ahuja as regards the fairness of the procedure that would be adopted by the Arbitrator.
A reading of the order dated 3rd December 2008 passed by the learned Arbitrator gives an impression that Mr. Sanjay Ahuja/Ahuja Apparels has not filed a statement of claim yet. Ms. Birbal however confirms that the Petitioner has filed the statement of claim. Mr. Sanjay Ahuja is permitted to place on the record of the learned Arbitrator one more copy of the said statement of claim within two weeks from today. If Givo Ltd.''s reply thereto is not already on record, the same will be filed before the learned Arbitrator within two weeks thereafter.
As regards O.M.P. No. 521 of 2007, the controversy turns around the furnishing of statement of accounts by Givo Ltd. in terms of the order dated 25th September 2007 passed by this Court. It is the case of Mr. Sanjay Ahuja that although statement of stocks have been filed by the parties as recorded in the order dated 26th November 2008, the statement of accounts of the fabrics sold by Givo Ltd. has not been filed. This is countered by Ms. Birbal by pointing out that statement of accounts have in fact been filed both in the petitions in this Court as well as before the learned Arbitrator. Without expressing any opinion on the above contentions, it is directed that the learned Arbitrator will ensure that this Court''s order dated 25th September 2007 is complied with by the parties. The parties are at liberty to again place before the learned Arbitrator documents that have been placed on record with these proceedings or any further document that they wishes to file within a period of four weeks from today. In view of the fact that the learned Arbitrator will now resume hearings, this Court finds no purpose in keeping O.M.P. No. 521 of 2007 or O.M.P. No. 690 of 2008 pending. The Petitioner is at liberty to seek appropriate interim reliefs and directions before the learned Arbitrator.
No further orders are called for in CCP No. 1 of 2008 or Arb. Appeal No. 3 of 2007. O.M.P. No. 699 of 2010 is a petition by Givo Ltd. u/s 9 of the Act. Ms. Birbal states that in view of the fact that the arbitration proceedings are commencing before the learned Arbitrator she does not wish to press the reliefs prayed for in this petition. The respondent is at liberty to seek appropriate interim reliefs and directions before the learned Arbitrator.
The parties will now appear before the learned Arbitrator on 1st December 2011 at 4.30 p.m. and proceedings will re-commence from the stage at which they were when they were last adjourned before the learned Arbitrator. It is clarified that this Court has not expressed any view whatsoever on the merits of the contentions of the parties in all these petitions and appeal. The learned Arbitrator will proceed with the matter uninfluenced by any observations on merits that may have been made either in this order or any of the previous orders of this Court. The arbitral record be returned forthwith to the Arbitrator together with certified copy of this order.
O.M.P. No. 521 of 2007, Arb. Appeal No. 3 of 2007, O.M.P. No. 690 of 2008, CCP (O) No. 1 of 2008 and O.M.P. No. 699 of 2010 are disposed of in the above terms.