Case title : Delhivery Limited vs Far Left Retail Private Limited
Case No. ARB.P 481/2024
Dated o: 17th May, 2024
Quorum: Hon’ble Ms. Justice Neena Bansal Krishna
FACTS OF THE CASE
In this case, Delhivery Limited, the petitioner, initiated a petition under Section 11(5) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator. The petitioner, Delhivery Limited, is a logistics company incorporated under the Companies Act, 1956, with registered addresses in New Delhi and Gurugram. On the other hand, the respondent, Far Left Retail Private Limited, is a listed company engaged in the business of home decor and gifting products, incorporated under the provisions of the Companies Act, 2013, with a registered address in Mumbai, Maharashtra.
The dispute between the petitioner and the respondent arose from a Service Agreement dated June 17, 2022. Despite the agreement, the respondent failed to make payments towards the invoices raised by the petitioner in accordance with the terms and conditions of the Service Agreement.
In attempts to resolve the issue, the petitioner sent various email communications to the respondent between November 10, 2022, and January 24, 2023. Additionally, a Demand Notice was issued to the respondent on December 30, 2022, urging an amicable settlement of the dispute. However, the respondent did not respond satisfactorily to these communications nor did it make the required payments.
Further, the petitioner issued a Notice on October 27, 2023, in accordance with Clause 19 of the Service Agreement and Section 21 of the Arbitration and Conciliation Act, 1996. Despite this, the respondent did not reply or make payments according to the terms of the Service Agreement.
Subsequently, the petitioner invoked arbitration under the Service Agreement by sending a Notice dated October 27, 2023. Despite the respondent admitting the arrears in various communications, it did not engage in the arbitration process nor respond to the petitioner’s attempts to resolve the dispute.
Although the respondent raised objections regarding the procedure and sufficiency of service, the court found that the petitioner had made sufficient efforts to settle the matter amicably before initiating arbitration, as evidenced by various emails and legal notices. Therefore, the court allowed the petition, requesting the Coordinator of the Delhi International Arbitration Centre to appoint an Arbitrator in accordance with the provisions of the Act, 1996, for adjudication of the disputes between the parties.
ISSUES
- Did the petitioner (Delhivery Limited) follow the proper procedure as outlined in the Service Agreement for resolving the dispute?
- Was the service of the arbitration notice on the respondent proper?
LEGAL PROVISIONS
- The Arbitration and Conciliation Act, 1996 (the Act): This is the primary legal framework governing arbitration proceedings in India. The judgement specifically references:
- Section 11(5) of the Act: This provision empowers the court to appoint an arbitrator when the parties cannot agree on one themselves.
- Section 21 of the Act: This section deals with the commencement of arbitration proceedings.
- Companies Act, 1956: This act governs the incorporation and regulation of companies in India. The judgement mentions this act to identify the petitioner’s (Delhivery Limited) incorporation details.
- Companies Act, 2013: This is a newer act that governs the incorporation and regulation of companies in India. The judgement mentions this act to identify the respondent’s (Far Left Retail Private Limited) incorporation details.
CONTENTIONS OF THE APPELLANT
Mr. Sukrit R. Kapoor and Mr. Aviral Tripathi, Counsel for the appellant submitted that the respondents failed to make payments. The appellant, Delhivery Limited, entered into a Service Agreement with the respondent, Far Left Retail Private Limited, on 17.06.2022. However, the respondent failed to make payments towards the invoices raised by the appellant in accordance with the terms and conditions of the Service Agreement. The appellant made numerous attempts to communicate with the respondent regarding the outstanding payments. Several email communications were sent to the respondent on various dates between 10.11.2022 and 24.01.2023. Additionally, a Demand Notice was issued on 30.12.2022, but the respondent still failed to settle the dispute and make payments as per the agreement. Subsequently, the appellant invoked the Arbitration clause under the Service Agreement by sending a Notice dated 27.10.2023 to the respondent. Despite admissions of arrears by the respondent in various communications dated 09.11.2022, 19.11.2022, and 05.12.2022, the appellant was left with no option but to file the present Petition seeking appointment of a Sole Arbitrator.The appellant contends that it has diligently followed the procedures outlined in the Arbitration Clause of the Service Agreement. This includes making an endeavour for amicable settlement before initiating Arbitration proceedings. The appellant asserts that it has complied with the Arbitration Clause adequately.Insufficiency of Service Objection: The appellant acknowledges that the respondent has raised objections regarding the insufficiency of service. However, the appellant argues that such objections are to be addressed before the learned Arbitrator, as there is a valid Arbitration Agreement between the parties. In summary, the appellant contends that the respondent’s failure to make payments, despite repeated attempts at communication and adherence to the Arbitration Clause, has left no alternative but to seek arbitration.
CONTENTIONS OF THE RESPONDENT
The respondent raised objections regarding the procedural aspects of the arbitration clause. They argued that the petitioner did not follow the prescribed procedure of attempting an amicable settlement before initiating arbitration proceedings. The respondent also objected to the service rendered on behalf of the petitioner, claiming it was unsatisfactory. This objection likely pertains to the manner in which the petitioner served notices and communications related to the dispute. The respondent contended that despite the petitioner’s claim of making efforts for an amicable settlement before resorting to arbitration, they found the efforts insufficient or inadequate. The judgement mentions that the respondent has the liberty to contest the insufficiency of service before the learned Arbitrator, indicating their intention to address this issue in the arbitration proceedings. Overall, the respondent’s contentions revolve around procedural objections to the arbitration process, particularly regarding the attempted amicable settlement and the adequacy of service rendered by the petitioner. They maintain their position that the petitioner did not fulfil the necessary requirements before invoking arbitration and seek the opportunity to contest these issues before the Arbitrator.
COURT’S ANALYSIS AND JUDGEMENT
The court acknowledges the filing of the petition under Section 11(5) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator. The petitioner, Delhivery Limited, is identified along with its address and business activities. The respondent, Far Left Retail Private Limited, is also identified along with its address and business activities. It is mentioned that a dispute arose between the petitioner and respondent concerning a Service Agreement dated 17.06.2022. The respondent allegedly failed to make payments according to the terms of the agreement, despite various communications from the petitioner and a demand notice. The petitioner invoked arbitration under the Service Agreement on 27.10.2023, after the respondent allegedly admitted to the arrears in previous communications. The petitioner was left with no option but to file the present petition due to the respondent’s failure to respond adequately. The petitioner’s counsel mentions receiving an advance reply and an application for condonation of delay from the respondent’s counsel, although these were not filed formally. The copy of the reply is submitted to the court for record. The respondent raised objections regarding the procedure outlined in the arbitration clause and the sufficiency of service. The court notes that despite various communications and legal notices, the respondent did not respond adequately. It concludes that the petitioner made sufficient efforts for an amicable settlement before initiating arbitration. The court considers the existence of a valid arbitration agreement between the parties and orders the appointment of an arbitrator in accordance with the provisions of the Arbitration and Conciliation Act, 1996. It allows the parties to raise objections before the arbitrator and determines that the arbitration shall be conducted under the Delhi International Arbitration Centre within the High Court precinct. The fees of the arbitrator are to be fixed according to the Centre’s rules, and the arbitrator must make necessary disclosures as per the Act.The court concludes by disposing of the petition in the above terms, indicating the date and the judge who delivered the judgement.
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Judgement Reviewed by – Shruti Gattani
