Mr. Hemant Chauhan, Adv v. SONARTARI MULTISTATE AGRO COOPERATIVE SOCIETY

Through: Mr. Vinay Prakash Singh, Advs. for R-1 to 7 Mr. Deepak Thukral and Mr. Nikhil Goyal, Advs. for R-8 PURUSHAINDRA KUMAR KAURAV, J. (ORAL)

1. The present petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (the Act), seeking appointment of an Arbitrator to adjudicate disputes between the parties arising from a General Agreement/Memorandum of Understanding (Agreement/MoU).

2. Learned counsel for the petitioner submits that the petitioner is a private limited company, incorporated under the Companies Act, 2013, with its registered office at C-54, Anupam Apartments, Vasundhra Enclave, Delhi-110096, and corporate office at B-107, 2nd Floor, Sector-6, Noida, Uttar Pradesh. The petitioner is engaged in providing advisory, ancillary, and auxiliary services across various sectors, including agriculture, forestry, Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:07.05.2025 17:54:59 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV animal husbandry, rural development, and social and tribal welfare.

3. Learned counsel further submits that respondents No.1 to 7 entered into a duly notarized MoU dated 17.01.2023 with the petitioner, the original of which remains with respondents, and a copy retained by the petitioner. It is highlighted that respondent No.1 was selected by the Small Farmers Agribusiness Consortium Haryana (Respondent No.8 – “SFACH”) for forming and promoting 100 Farmer Producer Organizations (FPOs) in Haryana, pursuant to the selection letter dated 23.12.2022. To execute the said project, respondents Nos.1 to 7 engaged the petitioner under the aforesaid MoU.

4. Learned counsel for the petitioner submits that pursuant to the agreement and a subsequent work order dated 31.01.2023, respondents No.1 to 7 allocated clusters in various districts of Haryana to the petitioner. The petitioner diligently carried out Stage-1 activities as specified, deploying significant manpower and resources, and upon completion, submitted requisite documentation and proofs for verification by respondents No.1 to

7. Thereafter, the petitioner advanced to Stage-2 activities, given the sequential nature of work.

5. Learned counsel states that despite raising valid invoices and duly submitting supporting documentation, respondents No.1 to 7 failed to clear the outstanding payments. Although repeated assurances of payment were given by the respondents, particularly respondents No.2 to 5 and other officials acting on behalf of respondent No.1, no payments were released. The petitioner, despite the delay, continued Stage-2 activities upon specific assurances from respondents No.1 to 7.

6. Due to continued non-payment, it is submitted the petitioner issued a Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:07.05.2025 17:54:59 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV demand letter dated 08.06.2023 (Ref. No. EUP/06/23/127) requesting release of the outstanding amounts. However, respondents No.1 to 7 responded on 02.11.2023 (Ref. No. SONACO/SFACH/Epr/2023), attempting to evade liability by shifting responsibility to respondent No.8 (SFACH). Counsel submits that the petitioner clarified its position by reply dated 07.11.2023 (Ref. No. EUP/11/23/146), asserting that respondents No.1 to 7 were contractually bound to pay the petitioner irrespective of disputes, if any, with the tendering agency. Despite further correspondence, the respondents have failed to make the requisite payments.

7. Learned counsel submits that, due to non-payment and clear breach of contractual obligations, disputes have arisen which could not be resolved through conciliation. Consequently, the petitioner invoked arbitration as per Clause 11 of the Agreement, resulting in the filing of this petition.

8. On notice, learned counsel for respondent No.8 submits that it is a non-signatory to the Agreement and bears no liability thereunder. Learned counsel for respondents No.1 to 7 contends that the petitioner is not entitled to the claimed amount on grounds including force majeure, asserting therefore that no arbitrable dispute exists between the parties.

9. The Court takes note of the Arbitration Clause 11 of General Agreement/MoU dated 17.01.2023, which reads as under:- “11. Arbitration: i. In the event of breach of any of the terms of this MoU by any of the party thereto or in the event of any differences/disputes/questions arising between the parties which may at any time herein after arise between the parties hereto or their respective representatives touching the present Mo U or the subject matter hereof or arising out of or in relation thereto respectively and whether as to breach or construction or with rights in respect of any of the transaction involved whether before or after its termination, pertaining to agreement or otherwise the same shall be referred to the arbitration of the sole arbitrator who Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:07.05.2025 17:54:59 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV shall be appointed by Sonartari Multi-State Agro Cooperative Society Limited (SONACO) as per the provisions of Indian Arbitration & Conciliation Act, 1996 or any statute thereon for the time being. ii. The Arbitrator shall pass his award as per the terms of reference in writing under their hand within 6 months from the date of reference made and within such extended time not exceeding one month and the arbitrator should enlarge the time for making the award. iii. language of the arbitration proceedings shall be English language” The jurisdiction for this purpose shall be State of Delhi only. The

10. The law with respect to the scope and standard of judicial scrutiny under Section 11(6) of the 1996 Act has been fairly well settled. This Court as well in the order dated 24.04.2025 in case of ARB.P. 145/2025 titled as Pradhaan Air Express Pvt Ltd v. Air Works India Engineering Pvt Ltd has extensively dealt with the scope of interference at the stage of Section 11. The Court held as under:-

9. The law with respect to the scope and standard of judicial scrutiny under Section 11(6) of the 1996 Act has been fairly well settled. The Supreme Court in the case of SBI General Insurance Co. Ltd. v. Krish Spinning,1 while considering all earlier pronouncements including the Constitutional Bench decision of seven judges in the case of Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re 2 has held that scope of inquiry at the stage of appointment of an Arbitrator is limited to the extent of prima facie existence of the arbitration agreement and nothing else. It has unequivocally been held in paragraph no.114 in the case of SBI 10. General Insurance Co. Ltd that observations made in Vidya Drolia v. Durga Trading Corpn.,3 and adopted in NTPC Ltd. v. SPML Infra Ltd.,4 that the jurisdiction of the referral court when dealing with the issue of “accord and satisfaction” under Section 11 extends to weeding out ex-facie non-arbitrable and frivolous disputes would not apply after the decision of Re: Interplay. The abovenoted paragraph no.114 in the case of SBI General Insurance Co. Ltd reads as under:- “114. In view of the observations made by this Court in In Re: Interplay (supra), it is clear that the scope of enquiry at the stage of appointment

Through: Mr. Vinay Prakash Singh, Advs. for R-1 to 7 Mr. Deepak Thukral and Mr. Nikhil Goyal, Advs. for R-8 PURUSHAINDRA KUMAR KAURAV, J. (ORAL)

1. The present petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (the Act), seeking appointment of an Arbitrator to adjudicate disputes between the parties arising from a General Agreement/Memorandum of Understanding (Agreement/MoU).

2. Learned counsel for the petitioner submits that the petitioner is a private limited company, incorporated under the Companies Act, 2013, with its registered office at C-54, Anupam Apartments, Vasundhra Enclave, Delhi-110096, and corporate office at B-107, 2nd Floor, Sector-6, Noida, Uttar Pradesh. The petitioner is engaged in providing advisory, ancillary, and auxiliary services across various sectors, including agriculture, forestry, Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:07.05.2025 17:54:59 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV animal husbandry, rural development, and social and tribal welfare.

3. Learned counsel further submits that respondents No.1 to 7 entered into a duly notarized MoU dated 17.01.2023 with the petitioner, the original of which remains with respondents, and a copy retained by the petitioner. It is highlighted that respondent No.1 was selected by the Small Farmers Agribusiness Consortium Haryana (Respondent No.8 – “SFACH”) for forming and promoting 100 Farmer Producer Organizations (FPOs) in Haryana, pursuant to the selection letter dated 23.12.2022. To execute the said project, respondents Nos.1 to 7 engaged the petitioner under the aforesaid MoU.

4. Learned counsel for the petitioner submits that pursuant to the agreement and a subsequent work order dated 31.01.2023, respondents No.1 to 7 allocated clusters in various districts of Haryana to the petitioner. The petitioner diligently carried out Stage-1 activities as specified, deploying significant manpower and resources, and upon completion, submitted requisite documentation and proofs for verification by respondents No.1 to

7. Thereafter, the petitioner advanced to Stage-2 activities, given the sequential nature of work.

5. Learned counsel states that despite raising valid invoices and duly submitting supporting documentation, respondents No.1 to 7 failed to clear the outstanding payments. Although repeated assurances of payment were given by the respondents, particularly respondents No.2 to 5 and other officials acting on behalf of respondent No.1, no payments were released. The petitioner, despite the delay, continued Stage-2 activities upon specific assurances from respondents No.1 to 7.

6. Due to continued non-payment, it is submitted the petitioner issued a Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:07.05.2025 17:54:59 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV demand letter dated 08.06.2023 (Ref. No. EUP/06/23/127) requesting release of the outstanding amounts. However, respondents No.1 to 7 responded on 02.11.2023 (Ref. No. SONACO/SFACH/Epr/2023), attempting to evade liability by shifting responsibility to respondent No.8 (SFACH). Counsel submits that the petitioner clarified its position by reply dated 07.11.2023 (Ref. No. EUP/11/23/146), asserting that respondents No.1 to 7 were contractually bound to pay the petitioner irrespective of disputes, if any, with the tendering agency. Despite further correspondence, the respondents have failed to make the requisite payments.

7. Learned counsel submits that, due to non-payment and clear breach of contractual obligations, disputes have arisen which could not be resolved through conciliation. Consequently, the petitioner invoked arbitration as per Clause 11 of the Agreement, resulting in the filing of this petition.

8. On notice, learned counsel for respondent No.8 submits that it is a non-signatory to the Agreement and bears no liability thereunder. Learned counsel for respondents No.1 to 7 contends that the petitioner is not entitled to the claimed amount on grounds including force majeure, asserting therefore that no arbitrable dispute exists between the parties.

9. The Court takes note of the Arbitration Clause 11 of General Agreement/MoU dated 17.01.2023, which reads as under:- “11. Arbitration: i. In the event of breach of any of the terms of this MoU by any of the party thereto or in the event of any differences/disputes/questions arising between the parties which may at any time herein after arise between the parties hereto or their respective representatives touching the present Mo U or the subject matter hereof or arising out of or in relation thereto respectively and whether as to breach or construction or with rights in respect of any of the transaction involved whether before or after its termination, pertaining to agreement or otherwise the same shall be referred to the arbitration of the sole arbitrator who Signature Not Verified Signed By:DEEPAK BISSYAN Signing Date:07.05.2025 17:54:59 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV shall be appointed by Sonartari Multi-State Agro Cooperative Society Limited (SONACO) as per the provisions of Indian Arbitration & Conciliation Act, 1996 or any statute thereon for the time being. ii. The Arbitrator shall pass his award as per the terms of reference in writing under their hand within 6 months from the date of reference made and within such extended time not exceeding one month and the arbitrator should enlarge the time for making the award. iii. language of the arbitration proceedings shall be English language” The jurisdiction for this purpose shall be State of Delhi only. The

10. The law with respect to the scope and standard of judicial scrutiny under Section 11(6) of the 1996 Act has been fairly well settled. This Court as well in the order dated 24.04.2025 in case of ARB.P. 145/2025 titled as Pradhaan Air Express Pvt Ltd v. Air Works India Engineering Pvt Ltd has extensively dealt with the scope of interference at the stage of Section 11. The Court held as under:-

9. The law with respect to the scope and standard of judicial scrutiny under Section 11(6) of the 1996 Act has been fairly well settled. The Supreme Court in the case of SBI General Insurance Co. Ltd. v. Krish Spinning,1 while considering all earlier pronouncements including the Constitutional Bench decision of seven judges in the case of Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re 2 has held that scope of inquiry at the stage of appointment of an Arbitrator is limited to the extent of prima facie existence of the arbitration agreement and nothing else. It has unequivocally been held in paragraph no.114 in the case of SBI 10. General Insurance Co. Ltd that observations made in Vidya Drolia v. Durga Trading Corpn.,3 and adopted in NTPC Ltd. v. SPML Infra Ltd.,4 that the jurisdiction of the referral court when dealing with the issue of “accord and satisfaction” under Section 11 extends to weeding out ex-facie non-arbitrable and frivolous disputes would not apply after the decision of Re: Interplay. The abovenoted paragraph no.114 in the case of SBI General Insurance Co. Ltd reads as under:- “114. In view of the observations made by this Court in In Re: Interplay (supra), it is clear that the scope of enquiry at the stage of appointment