Tmeic Industrial Systems INDIA Private Limited vs. Kansal Pumps Private Limited

Facts

The applicant, TMEIC Industrial Systems India Private Limited, filed an application under Section 11(4) & (6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator. The dispute arose from two tax invoices dated January 19, 2021, and March 20, 2021, for equipment supplied to the respondent, Kansal Pumps Private Limited, under purchase orders dated January 31, 2020, and February 05, 2021. The applicant claimed a total outstanding amount of Rs. 47,17,357/-. The respondent contended that the equipment was not in good condition, installation and commissioning were incomplete, and there was no valid arbitration agreement. The respondent also raised an issue regarding the incorrect filing of a purchase order signed by a sister concern instead of the respondent.

Held

The Court held that its jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996, is limited to examining the existence of an arbitration agreement and the presence of disputes. The Court noted that there was no dispute about a contract existing between the parties and that equipment had been supplied. The applicant's assertion that the respondent retained the original project terms and conditions, and only a signed soft copy was forwarded, was accepted for the purpose of this application. The Court found that Clause 17(b) of the project terms and conditions clearly stipulated for arbitration. The genuineness of the document and the respondent's claims regarding the quality of goods and incomplete services were matters to be decided by the arbitrator, not by the High Court at this stage. Therefore, the Court allowed the application and appointed an arbitrator.

Key Issues

1. Whether a valid arbitration agreement exists between the applicant and the respondent, as contemplated under Section 11(6) of the Arbitration and Conciliation Act, 1996, considering the respondent's contention that the filed document was not signed by them and was an agreement with a sister concern? 2. Whether the disputes arising from the non-payment of dues for the supplied equipment are arbitrable, given the respondent's claims regarding the quality of goods and incomplete services? Petitioner's Arguments: The petitioner argued that a contract existed, equipment was supplied, and an arbitration notice was issued. They asserted that the respondent retained the original project terms and conditions, and a signed soft copy was forwarded. The genuineness of the document, they contended, was for the arbitrator to decide. They relied on Clause 17(b) of the project terms and conditions, which provides for arbitration. Respondent's Arguments: The respondent argued that the equipment was not in good condition, installation and commissioning were incomplete, and their clients demanded refunds. They further contended that there was no arbitration agreement between the parties, as the document filed by the applicant was not signed by the respondent and was an agreement with M/s Kansal Power Private Limited, a sister concern. They acknowledged inadvertently filing a document signed by the sister concern instead of the respondent.