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Arbitration & conciliation act – vagueness in the arbitration clause incorporated in the sale contract dated 2nd May, 2011, there cannot be any arbitration and therefore, this petition made under the provision of Section 11(6) of the Arbitration and Conciliation Act, 1996 fails.

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

ARBITRATION PETITION NO.6 OF 2014
M/s. System for International Agencies … Petitioner
Versus

M/s. Rahul Coach Builders Pvt. Ltd. …Respondent
1
2 J U D G M E N T
ANIL R. DAVE, J.

1. Heard the learned counsel.

2. The arbitration clause incorporated in the agreement regarding sale
contract dated 2nd May, 2011 reads as under:
“Disputes: In case of any dispute arising out of this agreement between the
parties, the same shall be referred to the arbitration under the by-laws of
Indian Company’s Act 1956 and all amendments of this Act up to date or
shall be settled and decided by arbitration as per International Trade Laws
and all amendments of this Act up to date.”

3. Upon perusal of the said clause it is very clear that the parties to
the agreement had agreed to refer the dispute to arbitration under the
provisions of the ‘By-laws of Indian Companies Act, 1956’.
4. The learned counsel appearing for the parties had fairly conceded
that there are no by-laws framed under the provisions of the Indian
Companies Act, 1956.

5. Though an effort was made to show that in a reply to a winding up
petition, one of the parties had agreed to refer the matter to arbitration
but there also there was vagueness and even that willingness to refer the
dispute to an arbitrator cannot be said to be an arbitration agreement.

6. Upon perusal of the aforestated clause, it is clear that the clause
with regard to arbitration is quite vague and as there are no by-laws
framed under the provisions of the Companies Act, no arbitrator can be
appointed.

7. On account of the aforesaid vagueness in the arbitration clause
incorporated in the sale contract dated 2nd May, 2011, there cannot be any
arbitration and therefore, this petition made under the provision of
Section 11(6) of the Arbitration and Conciliation Act, 1996 fails.

8. Needless to say that it would be open to the parties to take
appropriate remedy in accordance with law.

9. The arbitration petition is disposed of as rejected.
……………………….J.
(ANIL R. DAVE)
New Delhi
February 16, 2015.

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