No Need For Notice To Invoke Fresh Arbitration Where Analogous Arbitral Proceedings Going: Delhi High Court Allows Section 11(6) Petition

Brief Facts:

The matter pertained to disputes arising from the Franchise Agreements between Petitioner and Respondent. The Petitioner asserted that an initial Master Franchise Agreement designated the Petitioner as the 'Master Franchisee' for the franchise business in the territories of Punjab (including Chandigarh Tri-city), Gujarat, and Maharashtra. Subsequently, 14 additional Franchise Agreements were executed between the parties to govern the operation of outlets. Thereafter, disputes arose between the parties. The Petitioner approached the Delhi High Court (High Court) and filed a petition under Section 11(6) of the Arbitration & Conciliation Act (“Arbitration Act”), seeking the appointment of a Sole Arbitrator.

However, the Respondent contested the petition, raising an objection to its maintainability. The objection was based on the argument that the petition lacked a prerequisite notice under Section 21 of the Arbitration Act, which is required to invoke arbitration.

Importantly, disputes arising from the Master Franchise Agreement were previously referred to the Arbitral Tribunal, resulting in the issuance of an award. Additionally, disputes related to 12 out of the 14 Franchise Agreements were also referred to the arbitral tribunal, and the proceedings were pending.

Observations by the High Court:

The central issue before the High Court was whether, before filing the petition under Section 11(6), the Petitioner was required to separately invoke arbitration afresh by issuing a notice under Section 21 of the Arbitration Act. It referred to the decision in Zion Promoters and Developers Pvt. Ltd. v. Ferrous Infrastructure Pvt. Ltd. [ARB. P. 391/2015], highlighting the distinction between Sections 11(5) and 11(6) of the Arbitration Act. It emphasized that Section 11(6) empowers a "party" to approach the court for the appointment of an arbitrator without the requirement of a notice, provided certain circumstances have been fulfilled. It held that that once an arbitration agreement has been invoked by a party, it cannot be invoked for the second time by another party.

The High Court held that present case fell under Section 11(6)(c) and not under Section 11(5). Given that arbitration had already been invoked, the High Court held it appropriate to refer the matters to the same Arbitrator who was already handling disputes related to other agreements between the parties.

Case Title: Prime Interglobe Private Limited vs Super Milk Products Private Limited

Citation: 2024 LiveLaw (Del) 212

Case Number: ARB. P. 337/2023.

Advocate for the Petitioner: Mr. Gaurav Gupta, Mr. Nikhil Kohli, Mr. Tushar Mudgil and Mr. Kushank Garg.

Advocate for the Respondent: Mr. Aseem Chaturvedi, Mr. Shivank Diddi and Mr. Milind Jain.

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