PARSOLI MOTORS WORKS PVT. LTD. vs. BMW INDIA PVT. LTD
ARB.P.204/2020
Facts:
1.Petitioner is a Private Company and is engaged in the business of selling and servicing of BMW vehicles. The respondent No. 1, Company is engaged in the business of manufacture and dealership of BMW vehicles. The respondent No. 2 is the sister concern of the respondent No. 1, Company and is engaged in the business of providing services ancillary to the sale of the vehicles by the respondent No. 1.
2.Parties entered into two separate contracts, namely the Dealership Agreement for the sale of BMW vehicles in the State of Gujarat in 2007 and the Deferred Payment Facility Agreement (DPFA) dated 15th November, 2010. The last Dealership Agreement was entered into on 14th January, 2015 between the petitioner and the respondent No. 1 the Dealership Agreement dated 14th January, 2015 which last came to be renewed for the period of one year i.e., till 31st December, 2017, vide Letter dated 09th January, 2017. Both the Agreements contain an Arbitration Clause and other agreement also contained an arbitration clause.
3.Various disputes have arisen between the petitioner and the respondents essentially in regard to respondent No. 1 permitting other dealers to sell BMW vehicles outside Gujarat thereby causing irreparable loss and injury to the petitioner. The respondent No. 1 has failed to give count of the vehicles sold outside Gujarat to Gujarat customers. The respondent No. 2 is allegedly claiming to have paid the purported outstanding dues of the petitioner towards respondent No. 1 pursuant to the DPFA which allowed the petitioner to make payments for the cars sold by respondent No. 1 in a deferred manner, the financial assistance of which was agreed to be provided by respondent No. 2.
4.CIRP was initiated against the petitioner by respondent which was admitted vide order dated 04th June, 2020. Petitioner has filed this petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “A&C Act, 1996”) has been filed on behalf of the petitioner seeking appointment of Arbitrators.
Issue: Whether the petition can be admitted?
Arguments:
For respondents:
a.It was submitted that there is no pending dispute between the petitioner and the respondent No. 2 for adjudication by the Arbitral Tribunal in terms of various Agreements and various objections had been taken by the petitioner before the NCLT, Ahmedabad, but all have been dismissed, and the petitioner has been admitted into insolvency, by observing that there was a clear admission of debts and default. Aside from this, in the petition under Section 9 of A & C Act, 1996 filed by the petitioner, the respondent No. 2 was neither a party nor any cause of action was claimed to have arisen qua respondent No 2 and all the dues and debts of the petitioner are under Corporate Insolvency Resolution Process and any reference to arbitration would result in re-determination of an already determined default.
2.It was asserted that the petitioner has entered into two different sets of Agreements executed between two different entities; the present common petition with the prayer for a composite arbitration involving four different Agreements is not maintainable in law. Petitioner is seeking a composite referral to arbitration for adjudication of all the disputes with respondent Nos. 1 and 2 respectively, this is not permissible as there is no tripartite Agreement between the parties, much less, common Arbitration Clause. If these claims which are based on separate distinct contracts are consolidated, it would run contrary to law and would also be not convenient.
Decision: Petition was admitted
Rationale:
1.Court noted that the parties have not been able to agree to the envisaged procedure and mechanism under the four Contracts and in these circumstances, the parties cannot be left without any remedy and this Court is well within its competence to entertain the petitions and appoint the Arbitrator. Determination of venue, however, does not affect the right of the parties to determine the law governing the arbitral proceedings.
2.It also noted that it is not a case where there are no arbitrable disputes. The parties may have approached NCLT or other Forums but the scope of adjudication before each of these Fora is independent and merely because the petitioner had approached Competition Commission of India or is a corporate debtor in the proceedings before the NCLT, cannot be held to be a bar to raise the disputes for adjudication by way of arbitration.
Order
