YASH TRADERS Vs. INSPIRATION CLOTHES & U

JUDGEMENT

(1.) CURTAIN RAISER:

(2.) THE parties entered into an agreement for sale of garments. The agreement would provide, the appellant would place order on the respondent and the respondent would supply the same. The appellant would remain responsible for payment within thirty days from the date of shipment without any deduction, in exchange they would get an incentive of 7.5% of the FOB value against timely payments received by the respondent. In effect, it was an agency and/or dealership agreement by and between the parties under which the appellant was responsible for shipment of the goods abroad in exchange of commission or incentive. Accordingly, the respondent exported goods to Italy, after giving due credit to the sums paid by the respondent, a sum of US dollars 24,296.90 equivalent to Indian Rs. 122696.55 became due and payable. The dispute arose by and between the parties when the respondent demanded outstanding sums from the appellant that the appellant denied. The respondent filed a civil suit before the City Civil Court for money decree for Rs. 9,48,143.55 whereas the appellant referred the dispute to the arbitration of Bharat Chamber of Commerce as according to them, the agreement stipulated an arbitration clause. The appellant filed an application for stay of the civil suit under Section 8 of the Arbitration and Conciliation Act that the City Civil Court dismissed vide judgment and order dated April 30, 2004. On appeal, the Division Bench set aside the order of dismissal of the application under Section 8. The Apex Court, by an order dated December 8, 2005, initially stayed the arbitration proceeding. The Apex Court ultimately held, the suit and the arbitration would involve different subject of controversy and as such the same could proceed independently. Accordingly, Bharat Chamber of Commerce continued with the arbitration. Respondent never appeared however, made correspondence with the Tribunal inter -alia, challenging the competency of the Tribunal to deal with the subject issue. The Tribunal ultimately published an award that became subject matter of an application under section 34 of the Arbitration and Conciliation Act. The learned Judge allowed the said application and set aside the award holding it vitiated under Section 34(2)(a)iii of the said Act of 1996. Being aggrieved, the appellant preferred the instant appeal that we heard on the above mentioned dates.

(3.) BEFORE the learned Judge, the respondent sought to contend, the decision of the Apex Court holding that there was no arbitration clause, would lead to the conclusion, there could be no arbitration clause and as such the arbitration held by the Tribunal would have no consequence. The learned Judge held, such contention was fallacious in view of the clear finding of the Supreme Court, two sets of documents would govern the field, one set would give rise to the civil suit and the other set would be involved in arbitration. The Apex Court did not decide the said issue pertaining to the arbitration proceeding. The Apex Court only observed, the set involved in the suit would have no arbitration clause and would have no nexus with the other proceeding being the arbitration proceeding. Hence, the learned Judge held in favour of the appellant on such issue.