Facts of the Case

M/s Inceptra Retail India Pvt. Ltd. and M/s Inceptra Lifestyle Pvt. Ltd. filed an application (S.B. Arbitration Application No. 3/2023) before the Rajasthan High Court, Jaipur Bench, seeking appointment of an arbitrator to resolve disputes with M/s Iconic Fashion Retailing Pvt. Ltd.

This application was heard together with two connected applications — S.B. Arbitration Application Nos. 5/2022 and 6/2022 — filed by Samarth Lifestyle Retailing Pvt. Ltd. against the Inceptra entities, arising from related retail/franchise agreements.

The disputes concerned alleged failure to pay minimum guarantee amounts due under retail agreements. According to the respondent side, a substantial sum (over Rs.7.41 crore with interest) remained unpaid by the Inceptra companies and their sister concerns, while the applicants contended the fault for non-payment lay with the respondent.

The agreements contained an arbitration clause (Clause 28) providing for reference of disputes to arbitration under the Arbitration and Conciliation Act, 1996. The matter was decided by a Single Judge on 12.05.2023.

Issues Involved

  1. Whether the applicants were entitled to appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, to adjudicate the payment disputes arising from the retail agreements.

Petitioner's Arguments

  • The applicants sought appointment of an arbitrator under Section 11(6) of the Act of 1996, relying on the arbitration clause (Clause 28) in the agreement, and contended that the fault for non-payment of minimum guarantee lay with the respondent.

Respondent's Arguments

  • The respondent opposed the application on certain grounds while itself having filed connected applications (Nos. 5/2022 and 6/2022) against the applicants' sister concerns for appointment of an arbitrator over the unpaid minimum guarantee amount of over Rs.7.41 crore, which the Court noted was inconsistent with opposing the applicants' own request for arbitration.

Court Order / Findings

  • The Court found that the parties had entered into different agreements, that disputes had genuinely arisen between them, and that in S.B. Arbitration Application No. 3/2023 the executed agreement placed on record contained Clause 28, providing for reference of disputes to arbitration under the Act of 1996.
  • Since the respondent itself had filed similar applications against the applicants' sister concerns, the Court held that the respondent's objection to appointment of an arbitrator in the present application deserved to be rejected, and that the application was liable to be allowed.
  • The Court accordingly appointed Hon'ble Mr. Justice Mohammad Rafiq (Retired Chief Justice) as the sole arbitrator to adjudicate the disputes, with arbitration costs and fees to be governed by the Fourth Schedule to the Act of 1996.

Important Clarification

This order does not decide who owes what to whom — it only appoints an arbitrator to hear and decide the payment dispute. It is a purely commercial retail-franchise dispute governed by the Arbitration and Conciliation Act, and has no connection to GST law.

Sections Involved

  • Arbitration and Conciliation Act, 1996 – Section 11 (appointment of arbitrator) and the Fourth Schedule (arbitrator fees)

Decision – In Favour of

The application for appointment of an arbitrator was allowed in favour of the applicants (Inceptra Retail India Pvt. Ltd. and Inceptra Lifestyle Pvt. Ltd.) to the extent that an arbitrator was appointed; the underlying dispute over minimum guarantee payments remains to be decided by the arbitrator, not by this order.

Case Details

  • Court: High Court of Judicature for Rajasthan, Bench at Jaipur
  • Case No.: S.B. Arbitration Application No.3/2023, connected with S.B. Arbitration Application Nos. 5/2022 and 6/2022
  • Coram: Justice Ashok Kumar Gaur
  • Date: 12.05.2023

Link to Download the Order

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