{"id":61759,"date":"2011-04-20T00:00:00","date_gmt":"2011-04-19T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/in-the-high-court-of-judicature-at-vs-aci-worldwide-corp-decided-on-on-20-april-2011"},"modified":"2017-11-01T06:00:48","modified_gmt":"2017-11-01T00:30:48","slug":"in-the-high-court-of-judicature-at-vs-aci-worldwide-corp-decided-on-on-20-april-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/in-the-high-court-of-judicature-at-vs-aci-worldwide-corp-decided-on-on-20-april-2011","title":{"rendered":"In The High Court Of Judicature At … vs Aci Worldwide Corp.) Decided On … on 20 April, 2011"},"content":{"rendered":"
Madras High Court<\/div>\n
In The High Court Of Judicature At … vs Aci Worldwide Corp.) Decided On … on 20 April, 2011<\/div>\n
       \n\n  \n\n  \n\n \n \n IN THE HIGH COURT OF JUDICATURE AT MADRAS\n\nDATED: 20\/04\/2011\n\nCORAM\n\nTHE HON'BLE MR.JUSTICE VINOD K.SHARMA\n\nO.A.No.153 of 2010 \nand \nA.Nos.758 to 760 of 2010\n\n\nORDER :\n<\/pre>\n
VINOD K.SHARMA.J.,<\/p>\n
  \tThis order shall dispose off O.A.No.153 of 2010, A. Nos. 758 to 760 of 2010, moved by M\/s. Trivitron Health Care Pvt. Ltd.\n<\/p>\n
\t2.\tIn O.A.No.153 of 2010, the prayer made is to pass an order of injunction, restraining the respondent to do any business by themselves or by appointing any new distributor during the period and pass such further or other orders as this Hon’ble Court may deem fit and proper in the circumstances of the case.\n<\/p>\n
\t3.\tIn A.No.758 of 2010, the prayer made is to direct the respondent to pay to the applicant the undisputed amount of US$1,50,378.96\/- (US Dollar One Lakh Fifty Thousand Three Hundred Seventy Eight and Ninety Six Paise only), the commission amount under the agreement or in the alternative deposit the same till final disposal of the application.\n<\/p>\n
\t4.\tIn A.No.759 of 2010, the prayer made is to pass an order directing the respondent to furnish security to the tune of US$4,18,503.96\/- (US Dollar Four Lakhs Eighteen Thousand Five Hundred Three and Ninety Six paise only) to the satisfaction of the applicant within a time to be fixed by this Court.\n<\/p>\n
\t5.\tWhereas, in A.No.760 of 2010, the prayer made is to direct the respondent to furnish the account statements from the period January 2009 till date within a time to be fixed by this Court.\n<\/p>\n
\t6.\tThe applicant commenced his business in the year 1997 with a view to provide solutions to specialists in healthcare with world-class MT products and services. The applicant is the largest medical technology brand of Indian origin and the only company providing 3600 healthcare solutions in all the five segments of medical technology i.e. Medical Equipment, Medical Devices, Diagnostics, Consumables and Healthcare IT. The applicant has 20 offices across the country at Chennai, New Delhi, Coimbatore, Pondicherry, Hyderabad, Chandigarh, Nagpur, Ahmedabad, Cochin, Lucknow, Jaipur, Bangalore, Kolkata, Pune and Mumbai.\n<\/p>\n
\t7.\tThere are 200 distributors \/ dealers in India and 400 professional employees providing 24 hours helpline for technical support and best office logistics and customer support infrastructure in all office locations. The applicant also has office at Sri Lanka, Nepal and UAE and are taking steps to enter market in Africa and South East Asian markets. The applicant company was marketing their products to various consumers throughout India initially by themselves and later on by appointing distributors.\n<\/p>\n
\t8.\tThe respondent company M\/s.Fresenius Medical Care Deutschland Gmbh, approached the applicant in the year 1999, with an offer for exclusive distribution in respect of respondent company’s Haemodialysis products, which includes HD machines, dialysers, blood tubings and acute therapy CRRT machines and consumables. An agreement was executed in December, 1999, initially for a period of three years, which was periodically renewed. Last renewal was on 22.03.2006.\n<\/p>\n
\t9.\tThe agreement provided as under:\n<\/p>\n
“a.\tThe agreement was entered into with exclusive right \tto distribute the products only mentioned in the agree\tment as contractual product.\n<\/p>\n
b.\tThe agreement was exclusively for distribution in \tcontractual territory i.e. India south (Tamilnadu, \tPondicherry, Kerala, Andhra Pradesh and Karnataka, \tIndia West (Mumbai, Maharastra, Goa and Gujarat and \tSrilanka).\n<\/p>\n
c.\tThe agreement provides for exclusive prohibition in \tclause 5 with regard to competitive products.\n<\/p>\n
d.\tThe agreement also provides a clause for commission.\n<\/p>\n
e.\tThe agreement provides for arbitration clause under \tclause 9(4) in case of any dispute.”\n<\/p>\n
\t10.\tThe agreement executed between the parties provided that the agreement was to be exclusively construed and governed by the laws of the Federal Republic of Germany. Clause 9(2) and 9(4) of the agreement reads as under:\n<\/p>\n
9 (2) Applicable law<\/p>\n
a)\tThe agreement is exclusively construed and governed \tby the laws of the Federal Republic of Germany. The \tversion in English language is the original text and \tgenerally authoritative in case of disputes arising from \tthe Agreement or its interpretation.\n<\/p>\n
b)\tAs far as there is no other arragement and it does not \tinflict with binding law, business between \tManufacturer and Distributor is done exclusively \taccording to the standard business conditions of \tManufacturer which apply in the current version and \twhich Manufacturer uses as a basis for his business \twith other customers; the current standard business \tconditions of Manufacturer are attached to this \tAgreement as enclosure-7.\n<\/p>\n
\tIt is understood between the contractual parties that  \teven if Manufacturer expressively refers to his \tstandard business conditions  those are insignificant \tfor the contractual relationship with Distributor and \tthat exclusively the standard business conditions of \tDistributor are authoritative.\n<\/p>\n
9(4) Arbitration Clause<\/p>\n
a)\tThe parties agree concurrently that the arbitration \tagreement is a commercial business for both parts and \tthat none of the parties is engaged in trades according \tto Article 4 HGB (German Commercial Code).\n<\/p>\n
b)\tAll legal actions from this agreement shall be finally \tdecided by the following arbitration court under \texclusion of a court of law. The arbitration is also \tliable for the decision whether this Agreement is \tvalid.\n<\/p>\n
c)\tThe arbitration court consists of two arbitrators and \tone umpire. All three persons must be qualified to \texercise the functions of a judge. They must not be \tpartners and\/or in a top position at one of the \tcontractual parties.\n<\/p>\n
d)\tEach party names an arbitrator. The party petitioning \tarbitration notifies the counterpart by registered mail \tof the appointment of an arbitrator stating his case \tand requests the other party to appoint his arbitrator \twithin two weeks. The term commences with the day \tof the mailing of the registered mail at the post \toffice.\n<\/p>\n
e)\tIf the adverse party does not meet the request in due \ttime the President of the Handelskammer Frankfurt \tam Main (Chamber of Commerce Frankfurt am Main) \tappoints on the request of the petitioning party an \tarbitrator for the defaulting party.\n<\/p>\n
f) \tSeveral persons on the one or the other side must \tagree upon one arbitrator.\n<\/p>\n
g)\tThe arbitrators appoint an umpire. If this is not \teffected within two weeks from the appointment of \tthe last of the two arbitrators, the President of the \tHandelskammer Frankfurt \tam Main (Chamber of \tCommerce Frankfurt am Main) appoints an umpire on \tthe request of one of the parties the umpire.\n<\/p>\n
h)\tIf one arbitrator is no longer available, the party \twhich appointed him shall appoint another arbitrator \tand inform the adverse party by registered mail with \tadvice of delivery.\n<\/p>\n
\tIf the party fails to honour this obligation d) applies \taccordingly. If the umpire is no longer available, f) \tapplies accordingly.\n<\/p>\n
i) \tThe arbitration court is seated at the location of \tManufacturer. The responsible Landgericht (German \tregional court) is also responsible in the sense of \tArticle 1050 ZPO (German Code of Civil Procedure).\n<\/p>\n
j)\tThe arbitration court proceeds according to Article \t1042 ZPO (German Code of Civil Procedure), in other \trespects the procedure is formed at the court’s \tcomplete discretion.\n<\/p>\n
k)\tThe umpire has the position of president of the \tarbitration court. He shall give written notice to the \tparties about the constitution of the arbitration court \tand shall require the petitioning party to lodge a \tcomplaint including possible exhibits within two weeks \tin two office copies for the adverse party and\/or his \tattorney to represent the party in action and one copy \tfor each the arbitrator and the umpire, by registered \tmail\/advice of delivery. The umpire is responsible for \tthe preparation of the proceeding. He arranges the \tdates after consulting with the parties and\/or their \tlitigation agent, invites them for the oral hearing by \tregistered mail, provides for a recording clerk, leads \tthe oral hearings by voting and shall render a written \taward seting forth reasons.\n<\/p>\n
l)\tThe arbitration court ought to, if possible, produce a \tsettlement by arbitration between the parties.\n<\/p>\n
m)\tThe arbitral award must be signed by the arbitrators \tand the umpire personally under indication to the \tplace and the time. Five original copies have to be \tissued at least.\n<\/p>\n
n)\tThe arbitration court decides about the costs of the \tarbitration proceeding according to Article 91 ZPO \t(German Code of Civil Procedure).\n<\/p>\n
o)\tThe arbitration court fixes the value of the matter in \tdispute on its complete discretion.\n<\/p>\n
p)\tThe arbitration court fixes in confirmity with the \tarbitration decision the costs of the unsuccessful to \tthe successful party.\n<\/p>\n
q)\tThe fees of the attorney are according to the \tapplicable German laws.\n<\/p>\n
r)\tWhen constituting the arbitration court the arbitrators \tgive full power to the umpire to serve the arbitration \ton the parties and\/or their representatives and after \tthis service to lay it down at the registry of the \tLandgericht (German regional court) responsible for \tthe seat of Manufacturer. The umpire proceeds \taccordingly.”\n<\/p>\n
\t11.\tThe case of the applicant is that the revenues and business during the pendency of the agreement increased from 3 crores in 2000 to Rs.36.50crores in 2008-2009, due to hardwork of the applicant. The applicant, under the agreement, is entitled to the commission on the sale effected. The amount due to the applicant towards commission is US$1,50,378.96\/- (US Dollar One Lakh Fifty Thousand Three Hundred Seventy Eight and Ninety Six paise only), which is admitted by the respondent in the account statement summary dated 12.03.2009.\n<\/p>\n
\t12.\tThe applicant, after supply, was necessarily to maintain the machine during the warranty period and extended warranty period and in order to fulfill this obligation entered into Annual Maintenance Contract with the consumer, so as to maintain the machinery in workable condition. The maintenance contract is exclusive between the applicant and the customers. It is admitted that the respondent is not a party to this agreement.\n<\/p>\n
\t13.\tIt is the case of the applicant that under Clause-12 of the agreement executed between the parties, that repairs and services fell exclusively on the applicant, as it was not for the manufacturer to maintain the equipment.\n<\/p>\n
\t14.\tThe amount due under maintenance contract is US$76,000\/- (US Dollar Seventy Six Thousand only), which is apart from the  outstanding receivable for the supplies amounting to US$ 1,92,125\/-( US Dollar One Lakh Ninety Two Thousand One Hundred Twenty Five only).\n<\/p>\n
\t15.\tThe agreement was terminated on 31.12.2008. The case of the applicant is that though the respondent agreed to be fair in settlements of the account, it has deliberately refused to pay the commission amount, and illegally took over the maintenance contract, without being assigned by the applicant, that too, in absence of distributor agreement between the applicant, its customer and the respondent, empowering the respondent to carry out the maintenance for the balance period. The respondent is deducting the amount towards maintenance charges from the commission payable to the applicant, thereby depriving the applicant the payment due to it.\n<\/p>\n
\t16.\tIt is under these conditions, that the applicant filed the applications referred to above, under Section 9 of the Arbitration and Conciliation Act.\n<\/p>\n
\t17.\tThe applications are opposed by the respondent on the ground that this Court has no jurisdiction to entertain and try these applications, as by implication, the parties agreed to exclude part-1 of the Arbitration and Conciliation Act, as substantive as well as procedural law is governed by the Republic of Germany.\n<\/p>\n
\t18.\tIn view of the law laid down by this Court in O.A.Nos.155 to 157 of 2011 (Financial Software & Systems Pvt.Ltd. vs. ACI Worldwide Corp.) decided on 12.04.2011, this Court will have no jurisdiction to entertain and try these applications, as parties to agreement have made substantive law of Republic of Germany to be applicable to agreement and also accepted the procedural law and seat of arbitration to be at Germany, which means that impliedly, parties had agreed to exclude the operation of part-1 of the Arbitration and Conciliation Act.\n<\/p>\n
\t19.\tMr.M.Kabir, learned Senior Counsel, appearing on behalf of the applicant, vehemently contended that reading of arbitration clause reproduced herein above, does not exclude part-1 of the arbitration and conciliation act, therefore, keeping in view the fact that sales of equipment took place in India, and the annual maintenance contracts were also entered into in India, therefore, in view of the law laid down by the Hon’ble Supreme Court in Bhatia International vs. Bulk Trading S.A. and<\/a> another, [2002 (4) SCC 105], Venture Global Engineering vs. Satyam Computer Services Ltd and<\/a> another, [2008 (4) SCC 190], and the judgment of the Hon’ble Delhi High Court in the case Shin Satellite Public Company Limited vs. Jain Studios Limited,<\/a> [2008 (Suppl.2) Arb.LR242 (Delhi)], the judgment of the Hon’ble Bombay High Court in the case of Perma Container (UK) Line Ltd vs. Perma Container Line (India) Pvt. Ltd. and Ors. [2010 (2) Arb. LR 133 (Bombay)]  of (supra), Indtel Technical, the provisions of Section 9 of the Arbitration and Conciliation Act would be applicable, and this Court has the jurisdiction to entertain and try present applications.\n<\/p>\n
\t20.\tThis contention of the learned Senior Counsel cannot be accepted. This Court, in the case of Financial Software & Systems Pvt.Ltd. vs. ACI Worldwide Corp.) (supra) has considered the judgment of the Hon’ble Supreme Court in the case of Bhatia International vs. Bulk Trading S.A. and<\/a> another, (supra) and Venture Global Engineering vs. Satyam Computer Services Ltd and<\/a> another,while holding that when substantive and procedural law is of foreign countries, then part-1 of the Arbitration and Conciliation Act would impliedly stand excluded.\n<\/p>\n
\t21.\tIn the case of Shin Satellite Public Company Limited vs. Jain Studios Limited,<\/a> (supra), the Hon’ble High Court of Delhi, did not consider the issue involved in this case. The reading of judgment of the Hon’ble Delhi High Court shows that application, under Section 9 was entertained, as there was no express or implied exclusion of part-1 of the Act or any other provisions, therefore, the judgment of the Hon’ble Delhi High Court would have no application to the facts of the present case.\n<\/p>\n
\t22.\tSimilarly, the Hon’ble High Court of Bombay, in the case of Perma Container (UK) Line Ltd vs. Perma Container Line (India) Pvt. Ltd. and Ors. (supra), has not taken note of the judgment of the Hon’ble Supreme Court in the case of Dozco India P.Ltd. vs. Doosan Infracore Co. Ltd, the<\/a>refore, is to be treated as per incuriam. In any case, the judgment would not be binding on this Court, in view of the law laid down by this Court in the case of Financial Software & Systems Pvt.Ltd. vs. ACI Worldwide Corp. (supra).\n<\/p>\n
\t23.\tAn attempt was made by the learned Senior Counsel to contend, that judgment of the Hon’ble Supreme Court in the case of Dozco India P.Ltd. vs. Doosan Infracore Co. Ltd,<\/a> was the case where the Court was dealing with the application under Section 11 of the Arbitration and Conciliation Act and did not consider the jurisdiction of the Court under Section 9 of the Act, therefore, would be incuriam.\n<\/p>\n
\t24.\tThis contention of the learned Senior Counsel deserves to be noticed to be rejected for the reason that the Hon’ble Supreme Court categorically laid down, that in case substantive law as well as procedural law is agreed to be of the foreign country, then it would amount to implied exclusion of part-1 of the Arbitration and Conciliation Act. Therefore, application under Section 9 of the Act would also not be maintainable.\n<\/p>\n
\t25.\tLearned Senior Counsel for the applicant also contended that there is no dispute with regard to US$1,50,378.96\/- (US Dollar One Lakh Fifty Thousand Three Hundred Seventy Eight and Ninety Six Paise only), as this amount is admitted by the respondent to be payable, therefore, there is no question of invoking arbitration under the agreement dated 22.03.2006, and the dispute in that case would fall under the annual maintenance contract, and the performance guarantee, therefore, this Court would have the jurisdiction, as the jurisdiction under maintenance contract is of this Court.\n<\/p>\n
\t26.\tThis contention again is totally misconceived. In absence of invoking of arbitration clause, under agreement dated 22.03.2006, no application under Section 9 of the Arbitration and Conciliation Act would be competent, as the orders for interim measure under Section 9 can be passed only, in the pending arbitration proceedings or intended arbitration proceedings.\n<\/p>\n
\t27.\tAs regard the annual maintenance contract is concerned, the respondent is not the party to said contract, therefore, in absence of arbitration agreement between the parties, there could be no arbitration, with regard to any dispute under annual maintenance contract between the parties. In absence of jurisdiction of arbitral tribunal to entertain the dispute under agreement, will also bar to filing of the application under Section 9, as pre-requisite for maintaining the petition under Arbitration and Conciliation Act, is the existence of arbitration agreement.\n<\/p>\n
\t28.\tEven if the sake of argument, the respondent has taken to be the third party qua the maintenance contract, still the dispute with respondent, if any, has to be governed by the agreement entered into between the parties, which is governed by substantive or procedural laws of Germany, thus ousting the jurisdiction of this Court.\n<\/p>\n
\t29.\tThe pleadings in the applications also show that the respondent is acting on the rights vested under agreement executed between the parties dated 22.03.2006, whether the respondent could act in the manner complained of, is to be determined by the arbitrations under the agreement, qua which this Court has no jurisdiction.\n<\/p>\n
VINOD K.SHARMA,J.,
\n\t\t\t\t          \t\t\t\t\tar<\/p>\n
\t30.\tConsequently, holding that this Court has no jurisdiction to entertain these applications, all the applications are ordered to be dismissed. No costs.\n<\/p>\n
20.04.2011
\nIndex: Yes
\nInternet: Yes
\nar<\/p>\n
O.A.No.153 of 2010 and
\nA.Nos.758 to 760 of 2010<\/p>\n","protected":false},"excerpt":{"rendered":"
Madras High Court In The High Court Of Judicature At … vs Aci Worldwide Corp.) Decided On … on 20 April, 2011 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 20\/04\/2011 CORAM THE HON’BLE MR.JUSTICE VINOD K.SHARMA O.A.No.153 of 2010 and A.Nos.758 to 760 of 2010 ORDER : VINOD K.SHARMA.J., This order shall dispose […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,13],"tags":[],"class_list":["post-61759","post","type-post","status-publish","format-standard","hentry","category-high-court","category-madras-high-court"],"yoast_head":"\nIn The High Court Of Judicature At ... vs Aci Worldwide Corp.) 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