SK Enmove Gabriel India Private Limited vs United Petrochem Private Limited

The Petitioner has approached this Court under Section 9 of the Arbitration and Conciliation Act, 1996^{11.“Act” hereinafter} seeking interim protection in relation to the inventory, raw materials, packaging materials and finished goods, allegedly lying at the Respondent’s premises.

The dispute arises between the Petitioner, engaged in business of marketing, sales and distribution of engine oils and lubricants, and the Respondent, which provides toll blending, packing and repacking services. The dispute arose between the parties regarding the division of repackaging charges proposed by the Respondent and invoices raised towards alleged minimal quantity shortfall.

While the Petitioner disputed the claims and continued issuing job work orders for pending production and repacking activities, the Respondent contended that continuation of operation was subject to resolution of the pending commercial disputes.

Learned Counsel for the Petitioner contends that the Respondent being a toll blender and a service provider, is only in possession of the said materials for the purpose of carrying out blending, filling and repacking activities and has no ownership rights over the same.

It is further submitted that the Respondent has withheld access to the said goods and linked continuation of production operations with resolution of disputed claims relating to revision of repacking charges and alleged minimum order quantity shortfalls.

It is further submitted that these claims are disputed contractual issues which are required to be adjudicated in arbitration and cannot justify obstruction of its ongoing business operations or retention of its goods.

It is further contended that despite repeated job work orders, the Respondent failed to complete pending operation, resulting in disruption of customer supplies, container detention and financial losses.

Since the disputes between the parties arise out of the Service Agreement containing an arbitration clause and the issue raised involves contractual claims relating to repacking charges and continuation of operations, in view of this Court, the Petitioner is directed to take necessary steps for commencement of arbitral proceedings within a period of four weeks from today.

The Petitioner shall invoke arbitration and take steps for constitution of the Arbitral Tribunal within the said period.

The Petitioner shall be at liberty to seek appropriate interim relief under Section 17 of the Act before the Arbitral Tribunal.

Till such time, the Respondent shall maintain a complete inventory of all raw materials, packaging materials, work-in-progress and finished goods allegedly belonging to the Petitioner.

The Respondent shall also maintain such records and preserve the goods.

The Respondent shall not dispose of such goods, packaging materials and raw materials, except in accordance with further orders.

Needless to add, the issue of ownership, entitlement to charge, alleged minimum order quantity and other issues shall remain open for adjudication before the Arbitral Tribunal.

The petition is disposed of in the aforesaid terms.