M/S COMED CHEMICALS LTD. versus C.N. RAMCHAND

Citation: [2008] 15 S.C.R. 567 · Decided: 06-11-2008 · Supreme Court of India · Bench: C.K. THAKKER · Disposal: Appeal(s) allowed

Judgment (excerpt)

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[2008) 15 S.C.R. 567 
M/S COM ED CHEMICALS LTD. 
v. 
C.N. RAMCHAND 
(Arbitration Petition No. 17 of 2007) 
NOVEMBER 6, 2008 
[C.K. THAKKER, J.] 
The Arbitration and Conciliation Act, 1996: 
A 
B 
s.2(1)(f) and 11 (6) and (9) - 'International commercial C 
arbitration - A British National appointed as Director 
(Technic;al) of an Indian subsidiary company formed under the 
Memo of Understanding - Dispute with regard to functioning 
of Director (Technical) - Application for appointment of 
arbitrator- Opposed on the ground that Director (Technical) 
0 
being an employee and providing technical know-how and 
expertise for payment of fees, matter was not covered under 
·the term 'commercial' so as to _attract provisions of the Act -
HELD: The relevant clause in the agreement expressly 
declared that any dispute pertaining to MoU would be decided 
through arbitration - The Director (Technical) was required to 
E 
undertake certain responsibilities under the agreement - He 
was allotted 40% equity share in subsidiary company, besides 
salary. and other benefits in lieu of services to be rendered 
by him - Any dispute between the parties would be covered 
under the arbitration clause in the agreement - Case is 
F 
covered by clause (f) of s.2(1) of the Act - Arbitrator 
appointed. 
· 
INTERNATIONAL CONVENTIONS/TREATIES 
UNCITRAL Model Law on International Commercial G 
Arbitration as adopted by United .Nations Commission on 
International Trade Law - Expression 'commercial' - HELD: 
Should be given a wide interpretation so as to cover matters 
567 
H 
568 
SUPREME COURT REPORTS 
[2008] 15 S.C.R. 
A arising from all relationships of a commercial nature, whether 
contractual or not. 
The petitioner company, in order to expand its 
business in chemicals in the field of bio-technology, 
entered into a Memorandum of Understanding and 
8 appointed the respondent as Director (Technical). The 
MoU stipulated that the respondent would work full time 
with the company at least for next eight years. The case 
of the petitioner was that the respondent did not take 
interest in the work and failed to attend Board Meetings, 
C and sent a letter of resignation. The petitioner did not 
accept t_~e resignation and sent a notice to the 
respondent for arbitration, nominating an arbitrator. The 
respondent did not agree to the arbitrator nominated by 
the petitioner and suggested three names. In view of non-
0 agreement between the parties, the petitioner filed an 
application under s.11 of the Arbitration and 
Reconciliation Act, 1996 and requested the Chief Justice 
of the High Court to appoint an arbitrator. The respondent 
raised an objection that he being a British National, Chief 
E Justice of the High Court had no jurisdiction to entertain 
the application. Consequently, the company filed the 
instant petition. 
The respondent opposed the petition as not-
F maintainable on the grounds that the agreement 
provided for supply of technical knowmhow and expertise 
l--
for payment of 'fees' and there was no dispute arising out 
of legal relationship that could be considered as 
'commercial' covered under clause (f) of s.2(1) of the Act; 
and that the respondent was appointed by the company 
G as an employee and the relationship between them was 
of master and serv~nt, and as such the Act had no 
application. · 
· Allowing the petition, the Court 
H 
COMED CHEMICALS LTD. v. C.N. RAMCHAND 
569 
HELD: 1. A bare reading of Clause 12 of the 
A 
Agreement leaves no room for doubt that it is an 
'arbitration clause' and expressly declares that any 
dispute pertaining to MoU would be solved and decided 
by an arbitrator. [Para 13] [576-H; 577-A] 
B 
2.1. It would not be correct to say that there was no 
'commercial' element in the agreement so as to be 
covered within the term 'International commercial 
arbitration'. This Court has held that the agreement to 
render consultancy service was 'commercial' in nature G 
and there was commercial relationship between the 
parties. [Para 14 and 17] [577-B; 578-C] 
Kamani Engineering Corporation Ltd. & Ors. v. Societe 
De Traction Et D'Electricite Societe Anonyme, & Ors., AIR 
(1965) Born 114; Josef Meisaner GMBR & Co. v. Kanoria 
D 
Chemicals & Industries Ltd. & Anr., AIR (1986) Cal 45 and 
Mukesh H.Mehta & Ors. v. Harendra Mehta, (1998) 92 Comp 
Cases 402, cited. 
R. M. Investment & Trading Co. Pvt. Ltd. v. Boeing Co. & E 
Anr., [1994] 4 sec 541, relied on. 
2.2. The UNCITRAL Model Law on I

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