M/S. REVA ELECTRIC CAR CO. P. LTD. versus M/S. GREEN MOBIL

Citation: [2011] 13 S.C.R. 359 · Decided: 25-11-2011 · Supreme Court of India · Bench: S.S. NIJJAR · Disposal: Disposed off

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Judgment (excerpt)

(2011) 13 (ADDL.) S.C.R. 359 
M/S. REVA ELECTRIC CAR CO. P. LTD. 
v. 
M/S. GREEN MOBIL 
(Arbitration Petition No.18 of 2010) 
NOVEMBER 25, 2011. 
[SURINDER SINGH NIJJAR, J] 
ARBITRATION AND CONCILIATION ACT, 1996: 
A 
B 
s.11 (4), (5), (6) and 9 - Decision as to existence of a valid c 
arbitration - HELD: It is for Chief Justice of India/his designate 
to decide about the existence of a valid arbitration agreement 
- In the instant case, the MOU contained an arbitration clause, 
and there existed a valid arbitration agreement - The contract 
existed till the date of its termination - Therefore, it cannot 0 
be said that the disputes arising between the parties cannot 
be referred to Arbitral Tribunal - The disputes have arisen in 
relation to the termination of the MOU and the consequences 
thereof - Such disputes would be clearly covered under the 
arbitration clause - Clearly, therefore, the disputes raised bx 
E 
the petitioner needs to be referred to arbitration - Under the 
arbitration clause, a reference was to be made· that the 
disputes were to be referred to a single arbitrator - Since the 
parties have failed to appoint an arbitrator under the agreed 
procedure, it is necessary to appoint an arbitrator- In exercise 
F 
of powers u/s 11 (4) and (6) of the Act, read with Paragraph 2 
of the Scheme of 1996, arbitrator is appointed to adjudicate 
the disputes that have arisen between the parties -
Appointment of the Arbitrators by the Chief Justice of India 
Scheme, 1996 - Para 2. 
s.16(1)(a) - Arbitration agreement - Scope of - HELD: 
Section 16(1)(a) provides that an arbitration clause which 
forms part of the contract shall be treated as an agreement 
independent of the other terms of the contract - Even on the 
G 
359 
H 
360 
SUPREME COURT REPORTS [2011] 13 (ADDL.) S.C.R. 
A termination of the contract, the arbitration agreement would 
still survive - By virtue of s.16(1)(b), it continues to be 
enforceable notwithstanding a declaration of the contract 
being null and void - In view of the provisions contained in s. 
16(1) of the Act, it cannot be said that with the termination of 
B the MOU, the arbitration clause would also cease to exist. 
The petitioner filed the instant application for 
appointment of arbitrators stating that memos of 
understanding (MOU) were entered· into between the 
parties on 25.9.2007, 22.4.2008, 24.8.2008 and 1.4.2009 for 
C supply of cars to the respondent to be sold in Belgium 
· Region. However, as the respondent did not have the 
necessary resources to build up the brand of the 
petitioner, the latter through e-mail dated 25.9.2009 
terminated the contract and asked the respondent to 
D immediately cease the sales and marketing activities on 
its behalf. The petitioner stated to have received a Writ 
of Summons dated 14.1.2010 of legal proceedings 
initiated by the respondent in the Commercial Court at 
Brussels in Belgium claiming damages on ac:count of 
E termination of fhe MOU dated 25.9.2007. The petitioner 
thereafter issued' a notice dated 24.3.2010 to the 
respondent invoking the arbitration clause of the MOU. 
The respondent in its reply dated 7 .4.2010 denied 
existence of any contractual relationship between the 
·· F parties on the date of termination of MOU on 25.9.2009. 
The petitioner filed an arbitration application uls 9 of the 
Arbitration and Conciliation Act 1996 before_the Court of 
Principal· City Civil and Sessions Judge, Bangalore 
praying for an order of injunction restraining the 
G respondent from proceeding with the legal proceedings 
in the Commercial Court at Brussels, Belgium. The 
petitioner was granted a of temporary injunction. 
Thereafter the petitioner filed the instant application. 
The stand of the respondent was that the MOU dated 
H 25.9.2007 expired on 31.12.2007, as it related to the "Test 
REVA ELECTRIC CAR CO. P. LTD. v. GREEN MOBIL 361 
and Trial period" which came to end on 31.12.2007 after 
A 
which the parties decided to enter into a distribution 
agreement which was sent by the petitioner to the 
respondent on 15.11.2007 i.e. after 15 days prior to the 
expiry of MOU. Therefore, the arbitration clause relied 
ijpon by the petitioner did not cover any disputes/claims 
B 
that relate to any period beyond 31.12.2007. 
Disposing of the petition, the Court 
Held: 1.1 In a petition u/s 11 (4),(5),(6) and (9) of the 
Arbitration and Conciliation Act, 1996, it is for the Chief C 
Justice of India/his designate to decide about the 
exi

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