Dell International Services INDIA PVT. LTD. vs. Analogics Tech INDIA LTD.

Facts

Dell International Services India Pvt. Ltd. (applicant) filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator. The dispute arose from a purchase order dated March 15, 2019, and subsequent tax invoices raised by the applicant for the supply of IT products worth Rs. 86,03,132.60, inclusive of GST. The respondent, Analogics Tech India Ltd., received the goods but failed to clear the outstanding payments despite repeated reminders and assurances. The purchase order contained a clause for dispute resolution through arbitration. The applicant issued a notice invoking arbitration, to which the respondent did not reply, nor did they agree on a mutually appointed arbitrator.

Held

The Court held that the respondent's admission of the claim was not bonafide and was merely a tactic to avoid payment. The Court reasoned that even if a claim is admitted, if payment is not made, the applicant is left with no remedy unless a legal recourse is taken. The Court distinguished the cited judgments, noting that in some cases, the applications were dismissed due to admitted liability, but here, the admission was not followed by payment, thus constituting a dispute. The Court found that the applicant cannot be left without a remedy, and an admitted claim without bonafides constitutes a dispute requiring adjudication by an arbitrator as per the agreement. Accordingly, the Court allowed the arbitration application and appointed Sri Mangari Rajender, Retired District Judge, as the sole arbitrator to adjudicate the claims and disputes.

Key Issues

1. Whether an admitted liability, without actual payment, constitutes a dispute for the purpose of invoking arbitration under Section 11 of the Arbitration and Conciliation Act, 1996? Petitioner's Arguments: The petitioner argued that despite the respondent admitting the claim, the non-payment amounts to a dispute. They contended that an admission of liability without discharging it does not negate the existence of a dispute, and legal remedies are necessary to recover the dues. The petitioner relied on the principle that a dispute continues until payment is made. Respondent's Arguments: The respondent argued that there is no dispute as the claim under the invoices is admitted. They contended that an arbitrator is appointed only when there is a dispute requiring adjudication, and in this case, the absence of a dispute makes referring the matter to arbitration unwarranted. The respondent relied on judgments such as UNION OF INDIA v. BIRLA COTTON SPINNING & WEAVING MILLS LTD., M/s. PEARL HOSIERY MILLS v. UNION OF INDIA, M/s. CHEMIPACK (INDIA) PVT. LTD. v. M/s. ARCH PHARMA LABS LTD., M/s. SANKAR SEALING SYSTEMS P. LTD. v. M/s. JAIN MOTOR TRADING CO., and MARUTI UDYOG LTD. v. MAHALAXMI MOTORS LTD.