M/S. ZHEJIANG BONLY ELEVATOR GUIDE RAIL MANUFACTURE CO. LTD.versusM/S. JADE ELEVATOR COMPONENTS

                         [2018] 11 S.C.R. 645                               645


       M/S. ZHEJIANG BONLY ELEVATOR GUIDE RAIL                              A
                 MANUFACTURE CO. LTD.
                                   v.p
              M/S. JADE ELEVATOR COMPONENTS
              (Arbitration Petition (Civil) No. 22 of 2018)                 B
                        SEPTEMBER 14, 2018
      [DIPAK MISRA, CJI., A.M. KHANWILKAR AND
             DR. D. Y. CHANDRACHUD, JJ.]
       Arbitration and Conciliation Act, 1996: s. 11(5) – Arbitration
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petition under – Seeking constitution of an arbitral tribunal with a
sole arbitrator to adjudicate the claims of petitioner under the
Commission Processing Contract – Dispute resolution clause
between the parties that the disputes to be settled through
consultation and in case the consultation fails, then by arbitration
or court – Held: Intention of the parties apparent from the dispute         D
resolution clause, is that efforts have to be made to settle the disputes
in an amicable manner and, therefore, two options are available,
either to go for arbitration or for litigation in a court of law – Thus,
there is an option and the petitioner has invoked the arbitration
clause – In view thereof, former Judge of the Supreme Court,
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appointed as sole Arbitrator to arbitrate upon the disputes which
have arisen between the parties – Arbitrator to complete arbitration
proceedings as per the Arbitration & Conciliation (Amendment) Act,
2015 – Arbitration & Conciliation (Amendment) Act, 2015.
      INDTEL Technical Services Private Limited v. W.S. Atkins
                                                                            F
      Rail Limited (2008) 10 SCC 308 – referred to.
                        Case Law Reference
(2008) 10 SCC 308                referred to                  Para 8
      CIVIL ORIGINAL JURISDICTION: Arbitration Petition (Civil)
No. 22 of 2018.                                                             G

      Under Section 11(5) of the Arbitration and Conciliation Act, 1996
for appointment of Arbitrator under Clause 15 of the Commission
Processing Contract dated 11.09.2014.

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646            SUPREME COURT REPORTS                         [2018] 11 S.C.R.


A            Ms. Nandini Gidwaney, Mudit Sharma, Advs. for the Petitioner.
           D. N. Ray, Lokesh K. Choudhary, Ms. Disha Ray, Dilip Kumar
      Nayak, Mrs. Sumita Ray, Advs. for the Respondent.
             The Judgment of the Court was delivered by
B            DIPAK MISRA, CJI 1. In the instant arbitration petition,
      preferred under Section 11(5) of the Arbitration and Conciliation Act,
      1996 (for brevity, ‘the Act’), the petitioner seeks for constitution of an
      arbitral tribunal with a sole arbitrator to adjudicate the claims of the
      petitioner under the Commission Processing Contract dated 11.09.2014
      and to pass such further order as may be deemed fit and proper in the
C     facts and circumstances of the case.
              2. The petitioner, company incorporated under the laws of People’s
      Republic of China having its office at Sanquiao Village, Fuchun Street,
      Fuyang, China, is engaged in the business of, inter alia, exporting and
      supplying high quality elevator guiderails, fish-plates, accessories and
D     allied goods. The respondent, a partnership firm based in India having
      its office at Plot No.455, Road No.11, “A” Cross Road, GIDC, Kathwada,
      Ahmedabad – 382430, Gujarat, is engaged in the business of supplying
      elevator components for use in the modernization of existing lifts and the
      new design of the elevator.
E            3. The contract, namely, Commission Processing Contract
      (hereinafter referred to as ‘the Contract’) was entered into between the
      parties on 11.09.2014 in respect of supply of certain products under the
      Contract. In the course of performance of the Contract, as certain
      differences had arisen and the parties were unable to amicably settle
F     the disputes which fell within the scope of the arbitration clause, the
      petitioner appointed Justice V.S. Agarwal, former Judge, High Court of
      Judicature at New Delhi as the sole arbitrator. On 30.03,2018, the
      petitioner called upon the respondent to consent to the appointment of
      the sole arbitrator within a period of thirty days from the receipt of the
      notice. The respondent received the said notice on 31.03.2018 and the
G     respondent in its reply dated 05.04.2018 refused to concur and consent
      to the appointment of the sole arbitrator. Because of the aforesaid
      situation, the petitioner has been compelled to move this Court for
      appointment of the sole arbitrator. When the matter was listed before
      this Court after service of notice, the learned counsel for the respondent
      has placed reliance on the reply dated 05.04.2018 given by the counsel
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   M/S. ZHEJIANG BONLY ELEVATOR GUIDE v. M/S. JADE                               647
      ELEVATOR COMPONENTS [DIPAK MISRA, CJI]

for the respondent. In the said reply, the facts asserted by the petitioner      A
have been disputed. That apart, it has been stated that the claims put
forth are beyond the provisions of the Contract.
       4. To appreciate the controversy, it is required to be seen whether
there is an arbitration clause for resolution of the disputes. Clause 15 of
the agreement as translated in English reads as follows:-                        B
       “15. Dispute handling:
       Common processing contract disputes, the parties should be settled
       through consultation; consultation fails by treatment of to the
       arbitration body for arbitration or the court.”
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        5. It is submitted by learned counsel for the petitioner that if the
clause of ‘dispute handling’ is scrutinized appropriately, the disputes are
to be settled through consultation and, if the consultation fails by treatment
of to the arbitration body for arbitration or Court and, therefore, the
matter has to be referred to arbitration. It is canvassed by him that the
clause is not categorically specific that it has to be adjudicated in a court    D
of law. It leads to choices and the choice expressed by the petitioner is
arbitration.
       6. Learned counsel for the respondent, in his turn, would urge
that when it is stated arbitration or Court, the petitioner should knock at
the doors of the competent court but not resort to arbitration, for the          E
clause cannot be regarded as an arbitration clause which stipulates that
the disputes shall be referred to arbitration.
        7. To appreciate the clause in question, it is necessary to appositely
understand the anatomy of the clause. It stipulates the caption given to
the clause ‘dispute handling’. It states that the disputes should be settled     F
through consultation and if the consultation fails by treatment of to the
arbitration body for arbitration or the court. On a query being made,
learned counsel for the parties very fairly stated that though the translation
is not happily worded, yet it postulates that the words “arbitration or the
court” are undisputable as far as the adjudication of the disputes is
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concerned. There is assertion that disputes have arisen between the
parties. The intention of the parties, as it flows from the clause, is that
efforts have to be made to settle the disputes in an amicable manner
and, therefore, two options are available, either to go for arbitration or
for litigation in a court of law.
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648               SUPREME COURT REPORTS                          [2018] 11 S.C.R.


A            8. This Court had the occasion to deal with such a clause in the
      agreement in INDTEL Technical Services Private Limited vs. W.S.
      Atkins Rail Limited1. In the said agreement, clause No.13 dealt with
      the settlement of disputes. Clauses 13.2 and 13.3 that throw light on the
      present case were couched in the following language:-
B            “13.2. Subject to Clause 13.3 all disputes or differences arising
             out of, or in connection with, this agreement which cannot be
             settled amicably by the parties shall be referred to adjudication;
             13.3. If any dispute or difference under this agreement touches
             or concerns any dispute or difference under either of the sub-
             contract agreements, then the parties agree that such dispute or
C            difference hereunder will be referred to the adjudicator or the
             courts as the case may be appointed to decide the dispute or
             difference under the relevant sub-contract agreement and the
             parties hereto agree to abide by such decision as if it were a
             decision under this agreement.”
D           9. Interpreting the aforesaid clauses, the Judge designated by the
      learned Chief Justice of India held thus:-
               “Furthermore, from the wording of Clause 13.2 and Clause 13.3,
               I am convinced, for the purpose of this application, that the parties
               to the memorandum intended to have their disputes resolved by
E              arbitration and in the facts of this case the petition has to be
               allowed.”
             10. The aforesaid passage makes it clear as crystal that emphasis
      has been laid on the intention of the parties to have their disputes resolved
      by arbitration.
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             11. In the case at hand, as we find, Clause 15 refers to arbitration
      or court. Thus, there is an option and the petitioner has invoked the
      arbitration clause and, therefore, we have no hesitation, in the obtaining
      factual matrix of the case, for appointment of an arbitrator and,
      accordingly, Justice Prakash Prabhakar Naolekar, formerly a Judge of
G     this Court, is appointed as sole Arbitrator to arbitrate upon the disputes
      which have arisen between the parties. The learned Arbitrator shall be
      guided by the Arbitration & Conciliation (Amendment) Act, 2015. The
      learned Arbitrator shall make positive efforts to complete the arbitration
      proceedings as per the Act of 2015.
      1
H         (2008) 10 SCC 308
    M/S. ZHEJIANG BONLY ELEVATOR GUIDE v. M/S. JADE                           649
       ELEVATOR COMPONENTS [DIPAK MISRA, CJI]

       12. The Registry is directed to send a copy of this order to the       A
sole Arbitrator. Learned counsels for the parties are also at liberty to
bring it to the notice of the Arbitrator.
      13. The arbitration petition is, accordingly, allowed. There shall
be no order as to costs.
                                                                              B
Nidhi Jain                                                Petition allowed.




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