27 December 2021, Monday

2 years ago

The arbitrator’s interim order interfering with the commercial wisdom of a party to not renew a contractual arrangement is erroneous: Delhi High Court

06 December 2021 | Honda Cars India Ltd. v. Pothen Vehicles and Service Pvt. Ltd. | Arb. A (Comm) 73/2021 | Sanjeev Narula J | Delhi High Court | 2021 SCC OnLine Del 5341

The High Court of Delhi has ruled that once the arbitrator rejected the prayer to direct continuation of the dealership in an application for interim relief, it could not have required Honda to continue to supply spare parts and software to service the customers’ cars even for a limited time.

It found the direction contrary to contract an order compelling Honda to adopt an arrangement contrary to their business model. The court further reasoned that the clause in the contract under which Honda could allow a dealer to extend the service facilities to customers could not be the basis of such a direction. Moreover, apart from being discretionary, that clause was limited to 6 months, which had already lapsed.

What further weighed with the court is that the petitioner was no longer the authorized dealer, and any car servicing done by it would be unfair to the customers and violate the warranty terms.

Read the decision here.


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