Samarth Lifestyle Retailing PVT. LTD. Through Authorized Signatory Having Its Registered Office vs. Inceptra Lifestyle PVT. LTD.

Facts

The petitioners, M/s Inceptra Retail India Pvt. Ltd. and M/s. Inceptra Lifestyle Pvt. Ltd., filed arbitration applications seeking the appointment of an arbitrator. They are engaged in manufacturing and retailing wearing apparels. The respondent, M/s Iconic Fashion Retailing Pvt. Ltd., is involved in display, distributorship, and supply of readymade garments. The parties entered into an agreement on October 5, 2017, on a Sale or Return (SOR) basis. Disputes arose concerning GST payments and security deposits, leading to a notice for arbitration by the petitioners on April 12, 2021, after the respondent allegedly denied the agreements and transactions. The respondent, in turn, filed counter-applications against the petitioners' sister concerns, alleging non-payment of dues amounting to Rs. 7,41,39,679/- plus interest.

Held

The Court held that a dispute had indeed arisen between the parties, as evidenced by the arbitration applications filed by both sides. The agreement executed between the parties in S.B. Arbitration Application No.3/2023 was placed on record, and Clause 28 of this agreement clearly provided for referring disputes to arbitration in accordance with the Arbitration and Conciliation Act, 1996. The Court found the objection raised by the respondent's counsel to be without merit and therefore rejected it. Consequently, the application filed by the petitioner was allowed. The Court exercised its power under Section 11 of the Act to appoint Hon’ble Mr. Justice Mohammad Rafiq (Retired Chief Justice) as the sole Arbitrator to adjudicate the dispute. The cost and fee of the arbitration proceedings are to be borne as per the 4th Schedule of the Act.

Key Issues

1. Whether the Court should exercise its power under Section 11(6) of the Arbitration and Conciliation Act, 1996, to appoint an arbitrator, given the dispute between the parties regarding financial dues and the respondent's denial of agreements. Petitioner's Argument: The petitioners argued that a dispute has arisen concerning GST payments and security deposits, and despite attempts at reconciliation, no settlement was reached. They sent a notice for arbitration as per Clause 28 of the agreement, but the respondent denied the agreements and transactions, necessitating the Court's intervention to appoint an arbitrator. Respondent's Argument: The respondent contended that the petitioners failed to comply with the agreement terms, specifically regarding minimum guarantee payments. They asserted that they had responded to the petitioners' requests and denied the claim of no response. The respondent also highlighted their own arbitration applications against the petitioners' sister concerns for substantial dues.