BALASORE ALLOYS LIMITED versus MEDIMA LLC

Citation: [2020] 6 S.C.R. 1036 · Decided: 16-09-2020 · Supreme Court of India · Bench: S.A. BOBDE, A.S. BOPANNA, V. RAMASUBRAMANIAN · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2020] 6 S.C.R.
BALASORE ALLOYS LIMITED
v.
MEDIMA LLC
(Arbitration Petition (Civil) No. 15/2020)
SEPTEMBER 16, 2020
[S. A. BOBDE, CJI, A. S. BOPANNA AND
V. RAMASUBRAMANIAN, JJ.]
Arbitration and Conciliation Act, 1996:
s.11 – Application under – Seeking appointment of sole
arbitrator – Sustainability of – 37 Purchase Orders placed by
respondent in favour of applicant – Parties also entered into
agreement dated 31.03.2018 relating to same transaction –
Application for appointment of arbitrator by applicant relying on
Clause 7 of the 37 Purchase Orders – Plea of respondent that entire
transaction was governed by agreement dated 31.03.2018 which
was an ‘Umbrella Agreement’ and as per Clause 23 thereof, Arbitral
Tribunal had already been constituted by International Chamber
of Commerce (ICC) – Held: In view of the nature of dispute that has
been raised by the applicant with regard to the price and terms of
payment including recovery etc., the parties would be governed by
Clause 23 of the agreement dated 31.03.2018 and not by Clause 7
of Purchase Orders – Therefore, Special leave Petition as regards
the applicant’s grievance against Constitution of Arbitral Tribunal
by ICC is also not liable to be entertained.
Dismissing the Arbitration Application and the Special
Leave Petition, the Court
HELD:
Arbitration Petition (Civil) No. 15 of 2020:
1. Since the transaction entered into between the parties
and the dispute having arisen not being in dispute; further
arbitration Clause 7 of the 37 separate purchase orders being
explicit; in a normal circumstance no other consideration would
have been necessary in the limited scope for consideration in an
application under Section 11 of the Act, 1996. However, in the
[2020] 6 S.C.R. 1036
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present case the fact remains that undisputedly an Agreement
dated 31.03.2018 is also entered into between the parties relating
to the very same transaction which is referred to as the “Umbrella
Agreement” by the respondent and as “Pricing Agreement” by
the applicant.  The said agreement also makes provision for
resolution of disputes through arbitration in the manner as
indicated therein. [Para 7][1042-G-H; 1043-A]
2. A perusal of the documents reveals that in the present
case the applicant had not initiated the process of invoking the
arbitration clause. On the other hand a notice dated 13.03.2020
(Annexure A-41) was issued on behalf of the respondent by its
attorney to the applicant referring to the breach of the agreement
dated 31.03.2018 (Umbrella agreement/Pricing agreement) and
as per the procedure provided under Clause-23 of the said
agreement an opportunity was provided to amicably resolve the
matter; failing which it was indicated that the respondent would
approach the International Chamber of Commerce (ICC) in 30
days.   It is in reply to the said notice dated 13.03.2020 issued by
the Respondent on 13.04.2020, the applicant herein disputed the
claim put forth by the respondent under the Agreement dated
31.03.2018 referring to it as the Pricing Agreement. Further, the
applicant thereafter referred to the nature of their claim and
thereon proceeded to indicate that the constitution of the Arbitral
Tribunal and conduct of arbitration proceeding shall be in
accordance with Clause-7 of the contract terms forming part of
and governing all individual contracts. [Para 9][1045-C-F]
3. In the above backdrop, when both, the purchase order
as also the Pricing Agreement subsists and both the said
documents contain the arbitration clauses which are not similar
to one another, in order to determine the nature of the arbitral
proceedings the said two documents will have to be read in
harmony or reconciled so as to take note of the nature of the
dispute that had arisen between the parties which would require
resolution through arbitration and thereafter arrive at the
conclusion as to whether the instant application filed under Section
11 of the Act, 1996 would be sustainable so as to appoint an
arbitrator by invoking Clause-7 of the purchase order; more
BALASORE ALLOYS LIMITED v. MEDIMA LLC
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SUPREME COURT REPORTS
[2020] 6 S.C.R.
particularly in a situation where the Arbitral Tribunal has already
been constituted in terms of Clause-23 of the agreement dated
31.03.2018. [Para 10][1045-G-H; 1046-A]
4. A close perusal of Paras 6, 7, 8 and 9 of the reply by the
applicants dated 13.4.2020 would indicate that the reference made

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