PRIME INDUSTRIES LTD. Vs. SEIL LTD. AND ANR.

JUDGEMENT

(1.) THE plea of the appellant to seek adjudication of disputes before a Single Arbitrator in accordance with the arbitration clause rather than a panel of arbitrators as per rules of Indian Council of Arbitration ('ICA' for short) has given rise to the present appeal from the impugned judgment of the learned Single Judge dated 23.10.2008. The learned Single Judge on the interpretation of the arbitration clause came to a conclusion that the arbitration has to be by a panel of three arbitrators and thus allowed the preliminary objection of the respondents that the composition of arbitration tribunal was not in accordance with the agreement between the parties. The award passed by the Single Arbitrator thus stood negated on this preliminary objection.

(2.) THE facts of the case are that the respondents entered into an agreement with the petitioner on 10.06.1994 in respect of its manufactured products of Vanaspati and Vegetable oils. Respondent No. 2, a unit of respondent No. 1, wanted to source the supplies of Vanaspati and vegetables products of the petitioner for marketing the same under their own established brand names. The agreement styled as MOU was valid for 2 years with a stipulation of renewal for a further period through consent of parties and could be terminated by either party giving notice in writing. It is under this MOU that the respondents placed orders on the petitioner to the extent of 1562.975 metric tons till March, 1995 whereafter no further orders were placed.

(3.) THE petitioner filed an application being AA No. 120/1996 under Section 11(6) of the Arbitration and Conciliation Act, 1996 ('the said Act' for short) for appointment of an arbitrator and that application came to be disposed of by an order dated 02.07.1999 recording the consent on behalf of the parties that an arbitrator can be appointed in terms of the aforesaid Article 18 of the MOU dated 10.06.1994. The consent of parties was also recorded that the arbitrator would be entitled to decide the question of existence of arbitration agreement or otherwise in terms of Section 16 of the said Act. The matter was referred to ICA for appointment of arbitrator.