Mother Boon Foods Pvt Ltd v. Mindscape One Marketing Pvt Ltd O.M.P. (COMM) 136 2017

Introduction 

• In this case the judgement was passed by the Delhi High Court setting aside the award passed by the arbitral tribunal. 

Facts 

• The petitioner and respondent came to an agreement on 25 July 2012 related to manufacturing and packaging of bread by the petitioner for respondent’s company.  
• The dispute arose between them which led to termination of the agreement. 
• The petitioner requested to amicably resolve the dispute and conduct a meeting which eventually failed, and no conclusion was drawn. 
• The petitioner pleaded some final claims from the respondents which the respondent denied, subject to which the respondent filed for arbitration proceedings and invoked the arbitration clause of the agreement. 
• An arbitration tribunal consisting of 3 arbitrators was set up and notices were sent to the parties. 
• In consequence of which respondent submitted its claims while petitioner challenge the constitution of arbitral tribunal. 
• After several notices the petitioner did not turn up for the proceedings which led to an ex-parte award by the tribunal in favor of the respondent.  
• In pursuance of which petitioner filed an application under Section 34(2) of Arbitration and Conciliation Act (ArC), 1996 before the Delhi High Court. 

Issue Involved  

• Whether the agreement between the parties can be overturned by an oral request for the constitution of arbitral tribunal? 

Observations 

• The Delhi High Court observed that the arbitration clause specifically states appointment of sole arbitrator for arbitration proceedings. 
• It was further added that an agreement must be in writing as per the ArC Act, 1996.  
• It was also observed by the court that despite petitioner’s objection on the constitution of the arbitral tribunal the tribunal went on with the proceedings and passed an award. 

Conclusion 

• The Delhi High Court held that the constitution of arbitral tribunal was not in accordance with the agreement and therefore the award passed by the tribunal shall be set aside as per Section 34 of Arc Act, 1996 and petitioner’s plea was allowed.