Aeris Communications INDIA Private Limited vs. M/S. Kshiv Ventures Private Limited

Facts

The petitioner, Aeris Communications India Private Limited, filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the constitution of an Arbitral Tribunal. The dispute arose from an IoT Services Agreement and a subsequent agreement for the supply of goods on a Bill to Ship mode. The petitioner asserted that it supplied LED lights and other electrical goods worth Rs. 36,18,62,808/- to the respondent, M/s. Kshiv Ventures Private Limited. While Rs. 14,85,29,585/- was received, an amount of Rs. 21,33,33,223/- remained outstanding. The petitioner issued a notice under Section 21 of the Act on April 25, 2022, due to the respondent's alleged failure to fulfill its obligations. The respondent, in its reply, denied that any supplies were effected and primarily referred to an ongoing GST intelligence investigation concerning the petitioner.

Held

The Court held that disputes evidently exist between the parties concerning the supply of goods and outstanding payments. The Court found that the respondent's assertion of no supplies being effected and the reference to the GST intelligence investigation, while noted, did not provide sufficient material to establish that the investigation would materially impact the question of the asserted liability owed by the respondent. The Court concluded that these disputes, including the denial of supply and the GST inquiry, warranted being addressed before an Arbitral Tribunal. Therefore, the petition was allowed, and an Arbitral Tribunal was constituted. The Court appointed Mr. Justice A. P. Shah as the sole arbitrator. The parties were directed to appear before the arbitrator, subject to the arbitrator's disclosures and eligibility under the Act. The arbitrator's fees were to be determined as per the Fourth Schedule of the Act.

Key Issues

1. Whether the Court has the power to constitute an Arbitral Tribunal under Section 11 of the Arbitration and Conciliation Act, 1996, when disputes exist between the parties regarding the supply of goods and outstanding payments? (Question of law) The petitioner argued that disputes have evidently arisen from the agreements and the respondent's failure to meet its contractual obligations, necessitating the appointment of an arbitrator. The respondent contended that no supplies were made by the petitioner and pointed to an ongoing investigation by the Directorate General of GST Intelligence regarding the petitioner's GST liabilities, implying this might affect the asserted liability. However, the respondent did not present any material to establish a direct link between the GST investigation and the debt owed to the petitioner.