Case Law Details
Derivados Consulting Pvt. Ltd. Vs Pramara Promotions Pvt. Ltd. (Bombay High Court)
1. An interesting issue on the existence of an arbitration agreement arises in this application filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act’). By this application the Applicant has prayed for appointment of an arbitral tribunal to adjudicate the disputes and differences which have arisen between the parties under the engagement letter/mandate dated 7 November 2019 issued by the Respondent in favour of the Applicant.
2. Applicant’s case:- The Applicant is inter alia engaged in the business of financial advisory services, including providing debt-syndication services, enabling companies to raise funds from banks and financial institutions. The Respondent approached the Applicant for availing its services. Accordingly, on 7 November 2019, a mandate was executed between the parties under which the Respondent appointed the Applicant and the Applicant agreed to be appointed as the Respondent’s executive financial adviser for securing financial facilities for a period of twelve months.
3. On 28 January 2020, ICICI Bank sanctioned a working capital facility of Rs.23.24 crores to the Respondent which is stated to be a consequence of the Applicant providing its services to the Respondent. On March 3, 2020, the Applicant issued an invoice on the Respondent calling upon the Respondent to pay an amount of Rs.22,56,750/- towards the professional services rendered by it in terms of the engagement letter/mandate. The Respondent, however, by its letter dated 9 March 2020, denied its liability towards the outstanding dues, as also raised certain disputes refusing to discharge the said liability towards the applicant. Such issues generated correspondence between the parties, ultimately, the Applicant through its Advocates’ notice dated 28 October 2020, as addressed to the Respondent invoked the arbitration agreement as contained in the mandate/engagement letter, calling upon the Respondent to appoint an arbitral tribunal to adjudicate disputes and differences which had arisen between the parties on such non payment of the applicant’s dues. In the invocation letter, the Applicant also suggested the names of the proposed arbitrators who could be appointed. The invocation letter was replied by respondents advocate’s letter dated 17 November 2020 denying the respondent’s liability, as also denying the disputes which the applicant had stated to have arisen between the parties, so as to be referred to arbitration. The Respondent also recorded that a reference to arbitration was optional to the parties which according to the respondent was clear from a reading of the alleged arbitration agreement.
4. As the Respondent did not agree for the reference of the disputes to arbitration, the present application was filed invoking the Court’s jurisdiction under Section 11(6) of the Act praying for appointment of an arbitral tribunal.
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