Benara Bearing & Pistons Ltd v. Mahle Engine Components India Pvt Ltd

NAVIN CHAWLA, J APRIL 05, 2018/rv

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + Reserved on: 18th January, 2018 Date of decision: 5th April, 2018 BENARA BEARING & PISTONS LTD ..... Appellant Through: Mr.Ramji Srinivasan, Sr.Adv. With Mr.Jayant K Mehtra, Mr.Ayush Agrawal, Mr.Himanshu Gupta & Mr.Tushar Bhardwaj, Advs. versus MAHLE ENGINE COMPONENTS INDIA PVT LTD ..... Respondent Through: Mr.Arvind Nigam, Sr. Adv. with Mr.Sudhir Sharma, Mr.Sanjeev Kumar Sharma, Mr.Akhil Anand, Mr.Abhishek Swaroop, Mr.Anirudh Krishan Gandhi & Ms.Abhilasha Vig, Mr.Mahboob Singh Sandhu, Advs. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. This appeal has been filed by the appellant under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') challenging the order dated 12.01.2017 passed by the Sole Arbitrator holding that there is no concluded Arbitration Agreement between the parties. Page 2 2. The main contention of the learned senior counsel for the appellant is that the Arbitrator in the Impugned Order has given "prima facie" findings on the non existence of the Arbitration Agreement. He submits that under Section 16 of the Act the Arbitrator is under an obligation to finally determine the issue of existence of the Arbitration Agreement and cannot refuse to proceed with the arbitration only on the basis of prima facie conclusion as to the non existence of the Arbitration Agreement between the parties. He submits that as the findings of the Arbitrator are stated to be "prima facie" in nature, the Impugned Order is liable to be set aside and parties are to be relegated to the arbitration proceedings. 3. On the other hand, the learned senior counsel for the respondent submits that though the Arbitrator has referred to his findings on the existence of the arbitration agreement as "prima facie" in nature, these are in fact, based on appreciation of the correspondence between the parties and is a final determination on this issue. He further submits that the Arbitrator has named such findings as 'prima facie' only because of the submissions of the appellant that the Arbitrator should examine the question of existence of Arbitration Agreement only on a prima facie basis as the existence of the Arbitration Agreement is interconnected with the issue of the existence and binding nature of the Distribution Agreement dated 17.03.2016. He submits that in view of the submissions of the appellant that the Arbitrator must confine his examination of the existence or otherwise of the Arbitration Agreement only on a prima facie basis, it cannot now be heard to complain against the same. He in this regard places reliance upon paragraph 42, 44 and 48 of the Impugned Order and these are quoted herein below:- Page 3 42. I am also mindful about considering the Claimant's alternative submission (as well as the Respondent's objections to this. Since they submit this was not part of the Request for Arbitration) that even if there was no concluded contract, whether there was nevertheless prima facie an arbitration agreement in the form of a "separate agreement" or in "an exchange of letters, telex, telegrams or other means of telecommunication including communication through electronic means which provide a record of the agreement" within the terms of Section 7(2) and (4) of the IACA. Xxxxxx 44. The Respondent in its submissions did not dispute the Claimant's submission that the standard in which the existence of the arbitration agreement and/or a concluded contract should be examined at this stage should be on a prima facie basis, although neither party in their submissions elaborated on this issue. Xxxxxx 48. The Claimant is dissatisfied with the 26 August 2016 High Court Judgment and is appealing against it. The Claimant's position is that I have the power to hear and decide, on a fresh prima facie basis, the issue of the existence of the arbitration agreement and concluded contract, without being bound by the said Judgment, for the following reasons: (a)