Delhi High Court Facilitates Arbitration over Unpaid Invoices


Case No.: ARB.P. 481/2024

Order on: MAY 17, 2024


In this case, Delhivery Limited herein, the petitioner filed a petition under Section 11(5) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator. The petitioner entered into a Service Agreement with Far-Left Retail Private Limited herein, the respondent on 17th June 2022. However, disputes arose when the respondent failed to make payments for invoices raised by the petitioner as per the terms of the agreement, amounting to Rs. 8,69,743.78/- along with accrued interest. Despite various attempts by the petitioner to settle the dispute amicably through emails and legal notices, the respondent did not respond adequately. The petitioner invoked arbitration under the Service Agreement on 27th October 2023. Although the respondent admitted the arrears in several communications, they failed to make payments or respond effectively to resolve the matter. Thereafter, the respondent raised objections regarding the procedure followed for amicable settlement and the sufficiency of service, which the court found to be without merit. The court concluded that there was a valid arbitration agreement between the parties and allowed the petition. The Delhi International Arbitration Centre was requested to appoint an arbitrator, and both parties were given the opportunity to present their objections before the arbitrator. The fees of the arbitrator would be determined according to the rules of the Delhi International Arbitration Centre.
Whether there is a valid arbitration agreement between the petitioner and the respondent.
Whether the respondent failed to fulfill its payment obligations under the Service Agreement dated 17th June 2022.
Whether the petitioner made sufficient attempts to settle the dispute amicably before invoking arbitration.
Whether the objections raised by the respondent regarding the procedure for amicable settlement and the sufficiency of service are valid.
Legal Provisions
Section 21 of the Arbitration and Conciliation Act, 1996: Deals with the commencement of arbitral proceedings and requests to refer a dispute to arbitration.

Section 12(1) of the Arbitration and Conciliation Act, 1996: Grounds for Challenge.
Contentions of the Appellant
The petitioner, Delhivery Limited, had a deal with Far Left Retail Private Limited. Delhivery provided services, but Far Left Retail didn’t pay up. The petitioner tried to sort things out through emails and notices, but got no proper response. So, they decided to go for arbitration to resolve the dispute. However, Far Left Retail argued that Delhivery didn’t follow the right steps before going to arbitration and also questioned if Delhivery served them properly with legal notices. But the court didn’t consider Far Left Retail’s arguments and ruled in favor of Delhivery, allowing them to proceed with arbitration.

Contentions of the Respondent
The respondent, Far Left Retail Private Limited, raised objections regarding two main points.

Firstly, they argued that the petitioner, Delhivery Limited, didn’t follow the correct procedure for trying to resolve the issue before going to arbitration. They claimed that there was a step in the process meant for trying to settle things amicably, which the petitioner skipped. Secondly, the respondent questioned whether the legal documents were properly delivered to them. They argued that the service of these documents on their behalf was not satisfactory, meaning they might not have received them in the right way. Moreover, the respondent disputed the way the petitioner handled the situation before going to arbitration and raised concerns about how they were officially informed about the legal proceedings.
Court’s Analysis and Judgement
In this case, Delhivery Limited, a logistics company, filed a petition asking the court to appoint an arbitrator because Far Left Retail Private Limited, a company they had a contract with, didn’t pay them as agreed. Delhivery tried to settle the matter by sending emails and notices, but Far Left didn’t respond properly. The court looked at whether there was a valid agreement between the companies and if Delhivery tried hard enough to sort things out before going to court. They found that Delhivery did try, and there was a valid agreement. So, the court allowed Delhivery’s petition, meaning they could appoint someone to solve the problem outside of court. Both companies would have a chance to explain their sides to this person.

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Judgement Reviewed By- Shramana Sengupta

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