Case title:
Blue Star Limited Vs. Rahul Saraf
Date of Order:
8th June, 2023
Bench:
Hon’ble Justice Shekhar B. Saraf
Parties:
Petitioner: Blue Star Limited
Respondents: Rahul Saraf
SUBJECT
The petitions are filed by the petitioner and these petitions are being collectively addressed in this judgement because they share a common issue. These petitions are requests made in accordance with Section 11 of the Arbitration and Conciliation Act, 1996, asking for the appointment of an arbitrator based on identical arbitration provisions included in the relevant agreements. The High Court of Calcutta in this case dismissed the petition, mentioning that there is no arbitration clause.
IMPORTANT PROVISIONS
The Arbitration and Conciliation Act, 1996
- Section 11
- Section 2(b)
- Section 7
- Section 11(6)
BRIEF FACTS
- In this case, petitioner entered a Memorandum of Understanding (MoU) with respondents for operation and maintenance services. Disputes arose regarding non-payment of certain invoices, leading petitioner to invoke an alleged arbitration clause and nominate an arbitrator.
- The respondent refused the appointed arbitrator and disputed the existence of a valid arbitration clause. As a result, petitioner filed an application seeking the appointment of an arbitrator.
ISSUES RAISED
- Whether the arbitrator should get appointed or there is no existence of the arbitration clause in the Memorandum of Understanding (MoU)?
ARGUMENTS ADVANCED BY THE APPELLANT
- The Learned Counsel on the behalf of the petitioner mentioned that, there is a binding arbitration agreement between the parties, as evidenced by clauses 7 and 13 of the MoU.
- The Learned Counsel also argued that, the intent of the parties should be analyzed, which in present case intent of the parties to refer to arbitration in order to resolve the dispute.
ARGUMENTS ADVANCED BY THE RESPONDENT
- The Learned Counsel on the behalf of the respondents argued that, the terms of the MoU's dispute resolution provisions do not constitute valid arbitration provisions. They argued that merely using the phrases "arbitration" or "arbitrator" is insufficient and that the terms should explicitly state an agreement to submit issues to arbitration and an acceptance of the arbitral tribunal's decision.
JUDGEMENT ANALYSIS
- The High court made it clear that an arbitration agreement involves more than just a potential or an agreement to engage into an arbitration agreement in the future; it requires a clear intention and a meeting of the minds between the parties to submit future conflicts to arbitration as a binding obligation.
- The Court examined, Clause 7 and Clause 13. Although "Arbitration Proceedings" were stated in clause 7, there was no clear indication that any further conflicts would be submitted to arbitration. It suggested that arbitration was a potential option but not a mandate. No party was permitted to make an interest claim, and the arbitrator was not permitted to grant interest, according to clause 13. However, when taken as a whole, these clauses did not make up an arbitration agreement.
- Therefore, the court concluded that there was no valid arbitration agreement between the parties. As a result, the petition is dismissed by the Court.
CONCLUSION
In this case, a dispute arose between the petitioner and respondents regarding the existence of an arbitration clause in a Memorandum of Understanding (MoU). The petitioner argued that clauses 7 and 13 of the MoU constituted a binding arbitration agreement. However, the court ruled that the clauses did not clearly indicate a commitment or intention to arbitration and therefore dismissed the petition seeking the appointment of an arbitrator.
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