Case Note & Summary
The applicant, Bafna Motors Private Limited, filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator to resolve disputes arising from a Leave and License Agreement dated 2nd July, 2012. The applicant is a company engaged in the business of commercial vehicle dealership and had taken on leave and license a workshop shed at Kurla from the respondent, Amanulla Khan, who held a leasehold interest in the property. The agreement was for a term of five years from 1st July, 2012 to 30th June, 2017, with a lock-in period of two years, and contained an arbitration clause for dispute resolution. As the license was about to expire, the applicant gave a notice on 19th May, 2017 indicating its intention to vacate. Disputes arose between the parties regarding the return of the security deposit of Rs. 12 lakhs and other claims. The applicant invoked the arbitration clause, but the respondent did not cooperate in appointing an arbitrator, leading to the present application. The respondent opposed the application on grounds that the agreement was not validly executed, that the disputes were not arbitrable, and that the claim was barred by limitation. The court examined the agreement and found that it bore the respondent's signature and contained a valid arbitration clause. The court held that the existence of an arbitration agreement and the disputes between the parties were sufficient to appoint an arbitrator under Section 11 of the Act. The court further held that issues of limitation and validity of the agreement are matters for the arbitrator to decide. Accordingly, the court allowed the application and appointed a sole arbitrator to adjudicate the disputes.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 of the Arbitration and Conciliation Act, 1996 - Existence of Arbitration Clause - The applicant sought appointment of an arbitrator to resolve disputes under a Leave and License Agreement. The respondent opposed, claiming the agreement was not validly executed. The court examined the agreement and found that it contained an arbitration clause and that disputes had arisen. Held that the existence of an arbitration agreement and disputes between the parties are sufficient to appoint an arbitrator under Section 11 of the Act. (Paras 1-10) B) Contract Law - Leave and License Agreement - Validity of Agreement - The respondent argued that the Leave and License Agreement was not validly executed as it was not signed by the respondent. The court noted that the agreement bore the signature of the respondent and that the respondent had not disputed his signature. Held that the agreement was validly executed and binding on the parties. (Paras 3-6) C) Arbitration Law - Limitation - Section 11 of the Arbitration and Conciliation Act, 1996 - The respondent raised a plea of limitation, arguing that the disputes were time-barred. The court held that the question of limitation is a matter for the arbitrator to decide and not for the court at the stage of appointment under Section 11. Held that the court's role is limited to examining the existence of an arbitration agreement and not the merits of the dispute. (Paras 7-9)
Issue of Consideration
Whether an arbitrator should be appointed under Section 11 of the Arbitration and Conciliation Act, 1996 to adjudicate disputes arising from a Leave and License Agreement dated 2nd July, 2012.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties arising from the Leave and License Agreement dated 2nd July, 2012.
Law Points
- Section 11 of the Arbitration and Conciliation Act
- 1996
- Appointment of Arbitrator
- Existence of Arbitration Agreement
- Dispute Resolution
