Matter Cannot Be Referred To Arbitration In Absence Of An Agreement With An Arbitration Clause: Delhi HC
The Delhi High Court observed that in absence of any agreement containing the arbitration clause and the arbitrable dispute between the parties, the matter cannot be referred to arbitration.
Pertinently, Section 8(1) of the Arbitration and Conciliation Act, mandates a judicial authority to refer parties to arbitration unless there is a prima facie finding that no valid arbitration agreement exists.
The present petition was filed under Section 11 (5) of the Arbitration and Conciliation Act, 1996 seeking appointment of an Arbitral Tribunal comprising of a Sole Arbitrator to adjudicate the disputes inter se the parties.
Accordingly, a Bench of Justice Dinesh Kumar Sharma observed, “The Scheme of A&C Act, 1996 makes it clear that Sections 8 and 11 are similar in character, regarding reference to arbitration, and have the same reach and extent in terms of court intervention. If the party has prima facie proven the existence of an arbitration agreement, the Court is required by Sections 8 and 11 to send the issue to arbitration or appoint an arbitrator”.
Advocates Sukrit R. Kapoor and Aviral Tripathi appeared for the petitioner and Advocate Jayashree Shukla Dasgupta appeared for the respondent.
In the present matter, Aerosource India Pvt Ltd (AIPL), the petitioner filed a petition under Section 11(5) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator to resolve disputes with Geetanjali Aviation Pvt Ltd (respondent). AIPL, a professional aviation consulting company, entered into an agreement with the respondent on October 30, 2020. The agreement involved AIPL assisting the respondent in acquiring a new/pre-owned midsize aircraft.
AIPL facilitated the acquisition of a Bombardier Learjet 45XR aircraft, and raised an invoice dated February 22, 2022, for Rs. 48,67,500 in the name of VSR Ventures Private Limited. AIPL claims the respondent assured payment for this invoice. The respondent opposes the petition, arguing that the agreement was solely between AIPL and the respondent, with no involvement of VSR Ventures Private Limited. They contend that they cannot be held liable for payment against an invoice raised upon VSR Ventures Private Limited.
The respondent's counsel vehemently opposed the petition, stating that the agreement was solely between AIPL and the respondent, without any mention of VSR Ventures Private Limited. It was argued that the respondent cannot be held responsible for payment against an invoice raised upon a third party not involved in the agreement.
The Court, thus, while referring to Sections 8 and 11 of the A&C Act, the court was of the opinion that it was required to only see whether prima facie, an agreement containing the arbitration clause exists between the parties or not. “Section 8(1), which was replaced by the amendment of 2015, mandates a judicial authority to refer parties to arbitration unless there is a prima facie finding that no valid arbitration agreement exists”, the Bench noted.
The Bench was further of the opinion that there was also no document to show that in any manner the respondent was connected with VSR Ventures Private Limited.
Appearances:
Petitioner: Advocates Sukrit R. Kapoor and Aviral Tripathi
Respondent: Advocate Jayashree Shukla Dasgupta
Cause Title: Aerosource India Pvt Ltd. Geetanjali Aviation Pvt Ltd.
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