M/S Beri Udyog PVT LTD vs. Jiangsu World Agriculture Machinery Co. LTD. And Ors

Facts

M/s Beri Udyog Private Limited (Petitioner) filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim reliefs against Jiangsu World Agriculture Machinery Co. Limited (Respondent No. 1) and others. The Petitioner, an Indian company, was appointed as the exclusive distributor of Respondent No. 1's Combine Harvesters and agricultural equipment in India for five years through an agreement dated December 15, 2016. The Petitioner alleged that Respondent No. 1 breached Clauses 2.3 and 2.4 of the agreement by supplying machinery to other entities in India, including Respondent No. 2, Ward Agricultural Machinery India Private Limited. A termination notice was issued, followed by a Memorandum of Understanding (MOU) on November 2, 2019, which included settlement terms and compensation. The Petitioner sought to restrain further supplies, prevent imports and distribution, and requested Respondent No. 1 to deposit Rs. 36,15,00,000/-.

Held

The Court held that the Petitioner was not entitled to the injunctive relief claimed. The primary reason was the inordinate delay on the part of the Petitioner in seeking relief, as they had not taken any steps from March 2020 until the filing of the petition in September 2021. The agreement's tenure ended on December 15, 2019. While Clause 2.4 of the agreement, regarding not appointing new dealers, might subsist for two years post-termination, the Petitioner's prayer was for restraining supplies, not appointment of new dealers. The Court noted that compensation of Rs. 2.5 Crores was deposited with the Petitioner on May 19, 2020, and that the Petitioner had not initiated arbitration proceedings. The Court also observed that the period of two years after the agreement's expiry would end on December 15, 2021. Regarding the maintainability against non-parties to the arbitration agreement, the Court held it was maintainable. However, due to the delay and the nature of the prayers, the petition was dismissed. The Court clarified that its observations were confined to the decision of the Section 9 petition and did not express an opinion on the parties' claims or counter-claims.

Key Issues

1. Whether the Petitioner is entitled to an ad-interim ex-parte order restraining Respondent No. 1 from supplying Combine Harvesters and other agricultural machinery to any other person, dealer, or distributor in India, in light of Clause 2.3 of the agreement dated December 15, 2016, and the subsequent MOU dated November 2, 2019? 2. Whether the Petitioner is entitled to an ad-interim ex-parte order restraining Respondent No. 1 from appointing any new dealer, distributor, or stockiest in India, and from importing/distributing/selling such machinery, considering Clause 2.4 of the agreement and the MOU? 3. Whether the Petitioner is entitled to an ad-interim ex-parte order directing Respondent No. 1 to furnish import, export, purchase, sales, and stock/inventory/accounting reports? 4. Whether the Petitioner is entitled to an ad-interim ex-parte order directing Respondent No. 1 to deposit Rs. 36,15,00,000/- with the Court as damages? Petitioner's arguments: The Petitioner contended that Respondent No. 1 breached the exclusive distributorship agreement by supplying machinery to other entities in India. They relied on Clauses 2.3 and 2.4 of the agreement and the terms of the MOU. Respondents' arguments: The Respondents argued that the Petitioner had unduly delayed in filing the petition, that the tenure of the agreement had ended, and that the relief sought under Clause 2.3 was not applicable post-termination. They also raised preliminary objections regarding the maintainability of the petition against certain respondents due to lack of privity of contract.