M/S Greenbilt Industries Private Limited vs. M/S A B Dinesh Concrete Private Limited

This is an application for appointment of a learned Arbitrator for settlement of disputes which allegedly arose out of a transaction for acquisition of the petitioner’s ACC block manufacturing unit, by the respondent. The petitioner contended that this Court must appoint an arbitrator, in view of the termination of the arbitration proceeding by Sri Prabir Gupta, petitioner’s nominee, on April 20, 2023. 2. According to the petitioner, the respondent wanted to take over the entire ACC block manufacturing plant situated at Karga

The petitioner’s further case was that, the parties reduced the terms and conditions of the substantive agreement into a Memorandum of Understanding (in short the said MOU) dated February 9, 2022. The said MOU contained an arbitration clause. The memorandum of understanding was circulated by email. The director of the respondent had forwarded the final draft copy of the MOU to the petitioner, via e-mail, for finalization. As the petitioner did not raise any objection, for all practical purposes, the draft MOU should be treated as the final MOU and the conduct of the parties clearly displayed such intention. The respondent failed to pay the balance of the agreed advance, the remaining consideration upon finalization of the MOU and the occupational charges for the interregnum. Disputes cropped up between the parties.

It was further alleged that, by the end of the year 2020, the respondent abandoned the plant without any notice to the petitioner. On April 3, 2023, one Mr. Ashok Kumar Agarwal, a director of the respondent, who was at the helm of affairs of the 4

In terms of the agreement dated April 3, 2023, the date of the arbitration was proposed to be held on April 20, 2023, at Kolkata, subject to acceptability by the arbitrators. According to the petitioner, on the appointed day, neither the respondent nor the arbitrator appointed by the respondent, attended the sitting and as such, the mandate of the arbitral tribunal stood terminated. The minutes of the meeting scheduled on April 20, 2024, at 4.30 p.m. recorded such termination by the nominee of the petitioner. Thereafter, the petitioner issued a demand letter on September 14, 2023. The said demand letter was replied to by the respondent. The respondent denied all the disputes and claims of the petitioner. The petitioner then issued a notice under Section 15(2) of the Arbitration and Conciliation Act, 1996, by 5

In reply to the said letter, the respondent raised various objections and also disputed the nomination of the substitute arbitrator. The respondent also denied the existence of an arbitration agreement.

However, it is the contention of the petitioner that, the respondent also disputed the claims which indicated that there was a subsisting dispute between the parties and the dispute should be settled by arbitration. Accordingly, the petitioner has approached this court for appointment of an arbitrator, in terms of clause 12.3 of the MOU dated February 9, 2022. 8. Mr. Banerjee, learned Advocate for the petitioner submitted that the MOU dated December 7, 2020, was entered into as an interim arrangement, to facilitate handing over of the physical possession and operational control to the respondent. The parties did not intend the same to be the final MOU with regard to the sale of all the assets and terms and conditions of such sale. Such agreement was entered into, to make it easy for the respondent to obtain statutory permits, licenses and apply for GST registration. Later, the respondent reduced the terms and conditions of the 6

Exchange over email was a valid and accepted form of execution of an arbitration agreement. Clause 12.3 of the said MOU constituted a valid and binding arbitration clause between the parties, in terms of Section 7 (4) (b) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as the said Act). Clause 12.3 of the said MOU was a valid and a separate agreement. Even if, the MOU was invalidated for any other reason, the arbitration agreement continued to be a separate and independent agreement between the parties.

According to Mr. Banerjee, the parties acted on the basis of the MOU dated February 9, 2022. The promoters/directors representing the parties entered into an agreement on April 3, 2023, for appointment of arbitrators. The first sitting could not be held on April 20 2023, due to the absence of the respondent and its nominated arbitrator. However, the petitioner's nominated arbitrator was present. When the mandate terminated, the petitioner issued a notice under Section 15(2) of the said Act of 1996, requesting the respondent to nominate a substitute arbitrator. By an email dated February 1, 2024, the respondent

Mr. Banerjee relied on the following decisions:- via e-email by the respondent, to the petitioner, on February 9, 2022. 18. Admittedly, the MOU of December 7, 2020 was signed and executed by and between the parties as a step towards acquisition of the ACC block manufacturing plant of the petitioner, by the respondent. The said MOU contained various clauses, including a forum selection clause. It did not contain an arbitration clause. Clause 9 of the agreement provided that competent courts at Bhubaneswar, within which the agreement had been made, would have exclusive juri iction. It appears that a mail was sent by one Laba Kumar Shaha dated February 9, 2022, to the representative of the petitioner/director, which stated as follows:- “The final draft MOU is attached here with, if any clarification, please discuss with Ashokji.”

The said email is dated February 9, 2022, but the attachment that is, the final draft MOU, which has been relied upon, is dated ______ day of November 2020, at Raipur. The blank space remained unfilled.

Thus, the said MOU does not appear to have been finalized with the correct date and month. It was circulated, according to the petitioner, on February 9, 2022. The MOU contains various blank spaces, which were not filled in by the parties. These blank spaces were with regard to vital information relating to the identity of the representatives of the respondents, the approximate amount of loan which was availed of by the respondent, modalities of takeover, the outstanding liability, the consideration for purchase of assets, the bank liability, mode of payment in the first, second, third phase, etc.

The arbitration clause is quoted below:- “12.3 All disputes or claims arising between the Parties hereto during the subsistence of this MOU or thereafter, in connection with this MOU, including but not limited to disputes relating to the validity, interpretation, performance, breach, termination, rescission or nullity thereof as well as pre or post contractual obligations, even if such claims are based on other legal grounds than this MOU, shall be finally settled by arbitration in accordance with the Arbitration and Conciliation Act 1996 and Rules made thereunder.”

The said clause does not provide a forum. The last page of the said MOU does not contain the signatures of the parties and the witnesses. The schedules to the said MOU were left blank.

Thus, it appears that the said MOU was at the draft stage. The necessary incorporation of facts and figures were not made. The same does not appear to be a complete document. Even for 13

The alleged agreement dated April 3, 2023, which has been relied upon by the petitioner as a subsequent agreement between the parties regarding nomination of their arbitrators, does not contain any reference to the final MOU of November, 2020, which was circulated by email dated February 9, 2022. It is in the nature of a declaration, which is extracted here under for convenience. “To Whom It May Concern

The said document does not reveal that the disputes discussed were in relation to the subject final draft MOU of November 2020. The parties thereto were not the companies. The document was executed to solve the pending matters between Ashok Kumar Agarwal and Aditya Agarwal. The said agreement mentions that arbitration will be held at Kolkata, subject to acceptance by the arbitrator. There is nothing on record to connect the said document to the subject MOU. There is nothing on record to show that the arbitrator accepted Kolkata as the place/seat/venue.

The document indicates that the parties, that is, Ashok Kumar Agarwal and Aditya Agarwal had mutually decided to constitute an arbitral tribunal. Each party nominated an arbitrator with the intention to solve pending matters between Ashok Kumar Agarwal and Aditya Agarwal. The subject transaction or the final draft MOU of November 2020, circulated

On the date of the sitting, i.e., April 20, 2023, the nominee of the petitioner was present along with Mr. Aditya Agarwal, but neither Ashok nor Ashok's nominee was present. Accordingly, the proceeding was terminated. The demand letter dated September 14, 2023, which was issued by the learned Advocate of the petitioner much after the circulation of the email, does not contain any mention or reference to the arbitration clause.

The same was a demand notice by which the learned Advocate for the petitioner had mentioned the MOU of December 7, 2020, and raised various allegations against the respondent, including non-payment of the balance of the advance, non- payment of occupational charges and abandonment of the plant without any notice or reason. The petitioner alleged that the respondent had been in occupation of the plant from December 10, 2020 to December 2022, but suddenly vacated the premises

The tenor of the said letter clarifies the position that, the petitioner was asserting the terms and conditions of an oral agreement and the signed agreement of December 7, 2020. The last paragraph of the said letter indicates that the petitioner would make the respondent liable by instituting civil and criminal proceedings for the alleged breaches and consequences thereof. The letter does not indicate at all that, there was any arbitration clause between the parties and the petitioner was going to invoke the said clause.

There does not appear to be any notice invoking arbitration. On the contrary, reliance has been placed on the agreement of 3rd April 2023, in which Ashok Kr. Agarwal and Aditya Agarwal had mutually agreed to resolve pending matters between themselves, by a panel consisting of their nominated arbitrators, and the meeting would be at Kolkata if accepted by the arbitrators. The said document cannot be construed as an arbitration agreement between petitioner and respondent companies. The forum selection cannot be attributed to the second MOU which was forwarded by e-mail. Moreover, the proceeding was terminated by the nominee of Aditya Agarwal. It 19

In view of the discussions hereinabove and in the absence of any juri iction/forum selection clause, the High Court at Calcutta cannot act as the referral court in the instant case. The cause of action did not arise within the juri iction of this court. Receipt of a draft MOU at the office of the petitioner, cannot confer any juri iction to this Court

In the facts and circumstances of this case, the judgments relied upon by Mr. Banerjee, do not apply.

Under such circumstances, the application is dismissed.

This order will not prevent the petitioner from proceeding in accordance with law, before the appropriate forum.

This order is restricted to the adjudication of this application, seeking reference to arbitration by this Court.

There shall be no order as to cost.