@JUDGMENTTAG-ORDER
D.Y. Chandrachud, J.@mdashAdmit. Counsel for the respondent waives services. By consent, taken up for hearing and final disposal.
2. On 20 May, 1995, an agreement was entered into between the parties by which'' the petitioner appointed the respondent as a sole selling agent for the sale of span parts of textile machinery. Disputes arose between the parties and, on 3 April, 1998, the petitioner terminated the agreement. The agreement between the parties contained an arbitration clause in the following terms:
"10. Arbitration.--In the event of any doubt, dispute, difference or question arising howsoever between the parties from or under this agreement or any operation activity or accounting thereunder (including any question of interpretations enforceability of this agreement), the same shall, if not amicably resolved, be referred to the arbitration of a mutually agreed arbitrator and in the event of any disagreement as to the appointment of such sole arbitrator, the sole arbitrator shall be a professional practising in Bombay appointed by the Bombay Chamber of Commerce and Industry, Bombay. The arbitration proceeding shall take place at Bombay. The award of the sole arbitrator shall be final and binding between the parties. Each party shall bear its own cost of arbitration within the meaning of the Indian Arbitration Act, 1940, including any statutory modification or reenactment thereof."
2.1 On 18 January, 1999, a letter was addressed by the respondent to the petitioner setting out certain proposals and recording that if the petitioner did not agree, the the only course open to the parties would be to refer the matter to the arbitration a provided in the agreement, and let the Bombay Chamber of Commerce resolve the matter for us''. On 12 May, 1999, the respondent''s advocates addressed a letter to the petitioner stating that, in view of the provisions of Clause 10 of the agreement the arbitration shall be conducted under the auspices of the Bombay Chamber of Commerce and Industry. A letter of the same date was addressed to the Bombay Chamber of Commerce for the appointment of an arbitrator and for the holding of arbitration proceeding. On 19 May, 1999, the petitioner responded by an advocate''s letter and contended that the arbitration agreement was not in existence in view of the termination of the agency agreement. By its letter of the same date addressed to the Bombay Chamber of Commerce, the petitioner reiterated the contention that the agreement had come to an end upon termination, and hence Clause 10 which contained an arbitration agreement would not apply.
3. In pursuance of the arbitral request, the Bombay Chamber of Commerce nominated Mr. Justice D.R. Dhanuka, a former Judge of this court, to adjudicate upon the dispute between the parties. Parties led evidence before the arbitrator. The award the sole arbitrator has been rendered on 16 May, 2002, by which the petitioner has been ordered and directed to pay an amount of Rs. 11,59,081.16 to the respondent together with interest @ 18% per annum from the date of the reference. The arbitral award records that at the fourth arbitral meeting held on 4 April, 2000, the arbitral tribunal was specifically informed by and on behalf of the petitioner herein that in respect of the claim of the respondent of Rs. 14,83,963.13 -- the petitioner conceded that the respondent was entitled to a credit of Rs. 11,78,894.87. The arbitrator allowed the claim of the respondent to the extent of Rs. 11,59,081.16. The arbitrator, however, rejected the contention of the respondent that it was entitled to commission even in respect of direct sales that were made by the petitioner during the term of the agreement. On the latter aspect, the arbitrator held that the respondent had not led evidence to prove that it was instrumental in causing orders to be placed for the purchase of the goods though these orders were directly received by the petitioner from customers. Consequently, the aforesaid claim could not be and was not allowed.
4. Three submissions have been urged in support of the arbitration petition. The first submission is that there was no jurisdiction in the learned arbitrator to adjudicate upon the disputes since the arbitration agreement between the parties contemplated that in the first instance, disputes between the parties, if they were not amicably resolved, must be referred to the arbitration of mutually agreed arbitrator. The submission was that in the present case, without exploring the possibility of a mutual agreement, the respondent invoked the latter part of the arbitration clause requiring nomination of an arbitrator by the Bombay Chamber of Commerce and Industry. The next limb of the submission was that in any event, the arbitration could not have taken place under the auspices of the Bombay Chamber of Commerce and Industry, but the arbitration clause only stipulated that the sole arbitrator shall be appointed by the aforesaid institution.
5. There is no merit in the first submission. In the present case, after disputes between the parties arose and the agency was terminated on 3 April, 1998, the respondent had on 18 January, 1999, made a clear suggestion to the petitioner that if there was no agreement between the parties along the lines of the proposal which was made by the respondent, it would be appropriate to have the mater resolved by arbitration, through the Bombay Chamber of Commerce. On 12 May, 1999, the respondent invoked the latter part of Clause 10 by requesting the Bombay Chamber of Commerce to appoint an arbitrator. The response of the petitioner was significant, because it was not the case of the petitioner at that stage that the request to the Bombay Chamber of Commerce could not be made without an attempt by the parties to find a mutually acceptable name of an arbitrator. The contention of the petitioner was that there was no arbitration clause in existence following the termination of the agency agreement and that, therefore, there could be no arbitration at all. Now the contention that the arbitration clause would not survive following the termination of the agreement was without any basis or substance, since Clause (a) of Section 16 of the Arbitration and Conciliation Act, 1996, provides that an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. The termination of the contract of agency did, not therefore, disentitle the respondent to claim a reference of the disputes between the parties in arbitration. Be that as it may, the case of the petitioner was that there was no arbitration agreement in existence following the termination of the agreement. That being the position, the petitioner cannot now be heard to complain of the fact that the respondent moved the Bombay Chamber of Commerce and Industry for the appointment of an arbitrator and that the petitioner should have, in the meantime, before the respondent did so, been given an opportunity of finding a mutually acceptable name of an arbitrator. The arbitrator has dealt with the objection and has negatived it for cogent reasons relying upon the correspondence between the parties. Besides, the arbitrator has recorded that the petitioner had fairly stated before him that the petitioner had no objection to the selection of the particular arbitrator in the present case, namely, Mr. Justice D.R. Dhanuka as sole arbitrator by the Bombay Chamber of Commerce and Industry. The first submission must, therefore, fail.
6. The next limb of the first submission that was urged was that the arbitration clause provided for the appointment "of an arbitrator by the Bombay Chamber of Commerce and there was no provision under which the arbitration would be under the auspices of that institution. Again, there is no merit in that contention. The arbitrator has noted that insofar as the substantive provisions of law applicable to the arbitration are concerned, the rules of the Bombay Chamber of Commerce which are purely contractual in nature cannot override the provision of the Arbitration and Conciliation Act, 1996, and that the arbitrator would have to follow the provisions of the Act. In practical terms, therefore, all that resulted in the arbitration being conducted under the auspices of the Bombay Chamber of Commerce was that the arbitrator could avail of incidental administrative and secretarial assistance from the Chamber such as the venue and the stenographer. The arbitrator has noted that in any event, even if the arbitration were to be conducted by him without the association of the Bombay Chamber of Commerce'', it would have been necessary for the arbitral tribunal to incur the required expenses for meeting the cost of arbitration and secretarial assistance including the venue and transcription services. Absolutely no material has been produced by the petitioner to establish that any prejudice was caused to it either in terms of incurring increased costs or otherwise. Having therefore, regard to these facts and circumstances, I am of the view that there is no merit in the first contention.
7. The second submission which has been urged before the court relates to the rejection of the counter claim by the arbitrator insofar as the petitioner claimed a refunds of commission paid to the respondent on account of sales directly made by the petitioner. According to the petitioner, the commission had been erroneously paid and should have been refunded to the petitioner in view of the arbitrator''s finding that the respondent was not entitled to commission on direct sales. The arbitrator has dealt with this aspect in paragraph 4.5 of the award and has recorded that the evidence in the matter of Shri Amrut Mistry showed that, on various occasions, the petitioner herein used to pay commission to the respondent even in respect of direct sales and sale of goods not covered under the agency agreement. The arbitrator has held that the payment of such commission was not under a mistake as claimed by the petitioner and it was paid, taking a conscious decision, in view of the excellent business relations between the parties and in order to promote business. This was hence a conscious business decision of the petitioner taken after due application of mind. The arbitrator has held that in the business world, mutual adjustments are common and past transactions cannot be reopened except on a valid ground. The question as to whether certain payments of commission that were made by the petitioner to the respondent on direct sales was under a mistake or otherwise--was a question of fact. Evidence was led on this issue before the arbitrator. The award of the arbitrator is based on evidence. Having regard to the limited parameters of the jurisdiction u/s 34 of the Act, I am of the view that no case for interference is made out. The award cannot be construed, in any manner, as amounting to a breach of public policy.
8. Finally, it has been urged that the arbitrator has awarded a disproportionately high rate of interest of 18% from the date of the reference, e.g. 12 May, 1999. Having regard to all the facts and circumstances of the present case, I am of the view that it would be appropriate to reduce the rate of interest which has been awarded by the arbitrator from 18% to 15%. Subject to the aforesaid modification in the rate of interest, I am of the view that no interference of the court is called for. The award cannot be regarded as being outside the jurisdiction of the arbitrator, and in any manner contrary to public policy. The arbitration petition is, in the circumstances, subject to the modification in the rate of interest, rejected.
