ARBITRATION AWARD

BEFORE THE DISPUTE RESOLUTION PANEL

AS UNDER CLAUSE 21 OF THE DEALERSHIP AGREEMENT

IN THE MATTER OF
M/S. AQUAFEEDS LTD
No.15, Lotus Street, Shivaji Nagar,
Bangalore – 560100 CLAIMANT
VERSUS
M/S, DURAI PRIVATE LTD
14-A, William Street, Shrimp Complex,
Bern – 380050 RESPONDENT

CLAIMANT AND COUNSEL:

M/S. AquaFeeds Ltd, represented by Mr. Ashoka (Managing Director)

Advocate Ms. Swesthiga (B. Com LLB (Hons.))

RESPONDENT AND COUNSEL:

M/S. Durai Private Ltd, represented by Mr. Durai (Sole Proprietor)

Advocate Ms. Divya Bharathi (B. Com LLB (Hons.))

DISPUTE RESOLUTION PANEL:

Mr. Roshan Mandhana (Retired High Court Judge)

Mr. Vijay Kumar (Senior Advocate – Supreme Court)

Ms. Kareena Chopra (Retired High Court Judge)

1. THE PARTIES:
The Claimant is M/S. AquaFeeds Ltd, a company established under the Companies
Act, 1956, whose address is No.15, Lotus Street, Shivaji Nagar, Bangalore – 560100, India.
The Claimant is represented by Advocate Ms. Swesthiga and a copy of the same is annexed
in the Plaint.
The Respondent is M/S Durai Private Ltd, managed by Mr. Durai, a sole proprietor
who entered into a Dealership Agreement with the Claimant on 12-11-2008, whose address
is 14-A, William Street, Shrimp Complex, Bern – 380050, Switzerland. The Respondent is
represented by Advocate Ms. Divya Bharathi and a copy of the same is annexed in the
Written Statement.

2. PROCEDURAL HISTORY:
DATE ACTIVITIES
01/10/2020  Special Reminder Letter sent by Claimant indicating legal
or contractual consequences following the non-fulfilment of
payment obligation, including invocation of Clause 21.
31/12/2020  Demand Letter sent by Claimant seeking for the fulfilment
of payment obligation on the part of the Respondent.
 In case of failure of the same in 24 hours, the Demand
Letter specifies invocation of Clause 21 by Claimant.
15/02/2021  Claimant invokes Clause 21 of the Dealership Agreement.
 Claimant sends letter regarding the same to the Dispute
Resolution Panel members and the Respondent
30/03/2021  Date of Arbitration proceedings

3. FACTUAL BACKGROUND:
The essential facts of this dispute fall into a very small compass. The Claimant, M/S.
AquaFeeds Ltd deals in the business of harvesting, packaging and distributing Prawns
around the globe by entering into Dealership Agreements with many other entities. One
such dealer, M/S. Durai (P) Ltd has been in cordial relationship with the Claimant since
2008, until February 2020 when M/S. Durai (P) Ltd commenced default of payment till
October 15th, 2020. The Government of Switzerland imposed complete Covid-19 lockdown
for months of March and April and continued to impose severe restrictions after the same,
which inflicted severe hardship on the Respondent. The Claimant regularly sent Reminder
Letters for fulfilment of payment obligation, for which the Respondent replied and the same
are annexed in the Plaint and Written Statement respectively.
The Respondent, till September 14th of 2020 agreed to fulfil the payment obligation
but after 1st October, invoked Clause 27 (Force Majeure Clause) and refused to fulfil the
prior and upcoming payment obligation. The Claimant sent a Special Reminder Letter and
Demand Letter indicating legal or contractual consequences. After the series of events, the
Claimant invoked Clause 21 of the Dealership Agreement in 15/02/2021 and hence this
Dispute Resolution Proceedings.
4. DISPUTE:
The dispute arose between the Claimant and Respondent, when the latter failed to
fulfil the payment obligation for the supply of prawns made by the former entity from 1 st
February till 15th October, 2020. In these circumstances, the Claimant referred to the
Dispute Resolution Panel as enshrined in Clause 21 of the Dealership Agreement.

5. PARTIES CONTENTIONS:
A. CLAIMANT’S CONTENTIONS:
The Claimant contends for the fulfilment of the entire payment obligation on the part
of the Respondent with 10% interest on the defaulted amount as enumerated in Clause 45 of
the Dealership Agreement as attached in Annexure – 1 of the Plaint. The Claimant reiterates
that the pandemic does not constitute as a Force Majeure event and refutes the Respondent’s
contentions on the validity of the Dispute Resolution Clause (Clause 21) and the
appointment of Mr. Roshan as one of the Dispute Resolution Panel members.

B. RESPONDENT’S CONTENTIONS:
The Respondent’s contention is focused on the challenge of Clause 21 of the
Dealership Agreement by stating that it is vague and cannot be construed as an Arbitration
Clause. Furthermore, the Respondent’s challenge the presence of Mr. Roshan in the Dispute
Resolution Panel by stating that the same is against Section 12(5) and 7th Schedule of the
Arbitration and Conciliation Act, 1996. The Respondent’s also contends that the Dispute
Resolution Proceedings is barred by the Limitation Clause as enumerated under the
Dealership Agreement. Arguendo, the Respondent’s cite the Pandemic as a Force Majeure
event which renders the fulfilment of contractual duties impossible

6. ISSUES:
After a careful perusal of the facts and the contentions of the respective parties, the
Dispute Resolution Panel summarizes the following issues, namely:
1. Whether Clause 21 of the Dealership Agreement constitutes as an Arbitration Clause?
2. Whether the presence of Mr. Roshan in the Panel is against Schedule 7 of the
Arbitration and Conciliation Act, 1996?
3. Whether the Dispute Resolution Proceedings is barred by the Limitation Clause?
4. Whether the default of payment is permissible under the Dealership Agreement?
7. DISCUSSION AND FINDINGS:

A. WHETHER CLAUSE 21 OF THE DEALERSHIP AGREEMENT CONSTITUTES

AS AN ARBITRATION CLAUSE?
1. The Respondent’s, firstly challenge the validity of Clause 21 (Dispute Resolution Clause) of
the Dealership Agreement stating that Clause 21 is not an Arbitration Clause. It is pertinent
to read Clause 21, before venturing into the arguments of Claimant and Respondent. Clause
21 of the Dealership Agreement is as follows: “The parties to the Dealership Agreement
should resort to the consented Dispute Resolution Mechanism Panel consisting of Mr.
Roshan (Retired High Court Judge), Mr. Vijay Kumar (Senior Advocate – Supreme Court)
and Mrs. Kareena Chopra (Retired High Court Judge), in case of any dispute arising out.
Reference to the Dispute Resolution Panel can be made by either of the parties in case of a
dispute, whose decision shall be final.”
2. The Respondent’s challenge Clause 21 of the Dealership Agreement on two grounds: First,
the provision does not address the Panel members as “Arbitrators”. Second, the provision
does not mention that the proceedings must be “Arbitration”. The Respondent’s put forth
two precedents, Teamco Private Ltd vs TMS Mani1 and ITC Classic Finance Ltd vs Grapco
Mining and Co2 to further their stand by stating that the elements elucidated in the
precedents are not adhered to in the current case.
3. The Claimant’s rebuts Respondent’s arguments stating that the M/S. Durai (P) Ltd did not
rise any objection or seek clarification on Clause 21 of the Dealership Agreement at the
time of entering into the Agreement. The Claimant’s reiterates that this is sufficient to prove
that the Respondent was aware of the fact that Clause 21 is an Arbitration Clause.
4. After considering the facts, arguments along with the reading of Clause 21, the Panel is of the
opinion that Clause 21 of the Dealership Agreement should be construed as an Arbitration
Clause. The Panel cannot strike down Clause 21 for the mere absence of the words
“Arbitrators” and “Arbitration”. We look into the word’s “reference” and “final” present
in the provision to conclude that Clause 21 is an Arbitration Clause and the elements
propounded in the precedents provided by Respondent is present in Clause 21.
B. WHETHER THE PRESENCE OF MR. ROSHAN IN THE PANEL IS AGAINST
SCHEDULE 7 OF THE ARBITRATION AND CONCILIATION ACT, 1996?
5. The Respondent’s argue that the presence of Mr. Roshan Mandhana is in contrary to Section
12(5) and 7th Schedule, Entry 17 of the Arbitration and Conciliation Act, 1996. The
Respondent’s refer to Annexure Number– 15,16 and 17 of the Written Statement, to state
that Mrs. Rashmika Mandhana, the wife of Mr. Roshan, was a shareholder in M/S.
AquaFeeds.
6. The Claimant’s state that Mrs. Rashmika Mandhana held shares in M/S. AquaFeeds Ltd
between the year 2010 and 2020, and did not hold shares at the time of the current
proceedings.
7. The Panel after the perusal of the facts and arguments, is of the opinion that Mr. Roshan’s
presence in the Dispute Resolution Panel is not in contrary to Section 12(5) and the 7 th
Schedule of the Arbitration and Conciliation Act, 1996 since we find merit in the
Claimant’s argument.
1
AIR 1967 Cal 168
2
AIR 1997 Cal 397
C. WHETHER THE DISPUTE RESOLUTION PROCEEDINGS IS BARRED BY THE
LIMITATION CLAUSE?
8. The Respondent further argues that the Dispute Resolution Proceedings is barred by Clause
32 of the Dealership Agreement. To reiterate the same, the Respondent’s state that the
Special Reminder Letter sent by the Claimant on 1 st October gave rise to the cause of action
and 1st October must be considered as commencement of Dispute Resolution Proceedings.
The Respondent interprets the term “intimation” using Oxford Dictionary, wherein it means
hint or indication, and using the same, the Respondent states that the Special Reminder
Letter hints or indicates invocation of Clause 21.
9. The Claimant disagrees with the Respondent’s arguments and states that the Demand Letter
which was sent by the Claimant on 31st December, 2020 gives rise to cause of action and the
Demand Letter must be taken into account as the initiating date, by which the proceedings is
not barred by limitation under the Dealership Agreement.
10. The Panel seeks to refer Black’s Law Dictionary, wherein the term “intimation” is defined
as “A notification to a party that some step in a legal proceeding is asked or will be taken”.
The Special Reminder Letter states that the Respondent shall face legal/contractual
consequences including invocation of Clause 21, whereas in Demand Letter, the Claimant
exclusively specifies invocation of Clause 21. It is pertinent to note that the Dealership
Agreement includes Clause 45 titled ‘Payment Default’ and accordingly the stoppage of the
supply of prawns is done with the exercise with this provision.
11. After a careful perusal of the facts, arguments and interpretation, the Panel declares that the
Dispute Resolution Proceedings is not barred by the Limitation Clause. The Panel is of the
opinion to consider the date of Demand Letter as commencement of cause of action as the
Demand Letter exclusively deals with legal consequence as otherwise in the Special
Reminder Letter.
D. WHETHER THE DEFAULT OF PAYMENT IS PERMISSIBLE UNDER THE
DEALERSHIP AGREEMENT?
12. The Respondent, invokes Clause 27 (Force Majeure Clause) for the default in payment and
refers to the case of Rural Fairprice Wholesale Ltd. & Anr. vs IDBI Trusteeship Services
Ltd. & Ors3 to state that the Pandemic is a Force Majeure event.
13. The Claimant contends that the Respondent defaulted before the Covid-19 lockdowns and
refers to the case of M/s Halliburton Offshore Services Inc vs Vedanta Limited 4 and stated
that since the Respondent defaulted before the lockdown period, the invocation of Clause 27
is not permissible as per law.
14. The Panel is well-aware of the precedent put forth by the Claimant, wherein the Delhi High
Court stated that non-performance or breach of a contract has to be examined on the facts
and circumstances of each case and only in genuine cases where the party was prevented or
could justify its non-performance because of the epidemic/pandemic. The Panel is of the
opinion that the Respondent can be exempted for 4 months, namely: March, April, May and
June due to Lockdown and Post-Lockdown effect, but must repay the defaulted amount for
the moths February, July, August, September and October (till 15th) with 10% interest.

8. DECISION:
3
AIR 2020 Bom 96
4
AIR 2020 Del 667
 It is hereby directed by the Dispute Resolution Panel that the Respondent must pay the
defaulted amount for the months February, July, August, September and October (till 15th)
in the year 2020 with 10% interest as mentioned in Clause 45 (Payment Default) of the
Dealership Agreement and the default of payment for the months March, April, May and
June are exempted by way of Clause 27 (Force Majeure Clause) of the Dealership
Agreement

SIGNED BY
1. Mr. Roshan
2. Mr. Vijay Kumar
3. Mrs. Kareena Chopra