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2010 DIGILAW 428 (PNJ)

P. S. I. D. C. Ltd v. Virsa Singh Sidhu

2010-01-18

MUKUL MUDGAL

body2010
Judgment MUKUL MUDGAL, J. 1. This petition has been filed by the petitioner under Sec.11 (6) of the arbitration and Conciliation Act, 1996 (for short the Act), for appointment of sole Arbitrator to adjudicate the disputes between the parties. 2. The agreement in question was executed between the following parties :- "this agreement is made at Chandigarh the 1st day of january in the year One Thousand Nine Hundred and Ninety three Between the punjab State Industrial Development Corporation Ltd. , a company limited by shares registered under the Companies Act, 1956, having its registered office at udyog Bhawan, 18, Himalaya Marg, Sector 17, chandigarh (hereinafter referred to as "the CORPORATION", which expression shall, unless repugnant to the context or meaning thereof, include the said corporation, its successors and agreed assigns) of the ONE PART and Shri Virsa singh Sidhu son of Shri Wazir Singh Sidhu, resident of 32-C, New Lal Bagh, patiala-147001 (hereinafter called the " the COLLABORATOR" , which expression shall, unless repugnant to the context or meaning thereof, include the said collaborator, his heirs, executors, representatives and agreed assigns of the other PART. " It has become necessary to reproduce the above clause because of the nature of the dispute raised in the present petition 3 Clause 31 of the agreement contains the Arbitration Clause which reads as under:- " 31. All differences and disputes between the parties hereto on any clause or matter herein contained or their respective rights, claims or liabilities hereunder or otherwise, howsoever, in relation to or arising out of this agreement, shall be referred to arbitration by two arbitrators (one to be appointed by each party), who shall, before proceeding with the reference, appoint an Umpire and such arbitration shall be governed by the Indian Arbitration Act, 1940 or any modification or re-enactment thereof for the time being in force. " 4. A dispute arose between the parties. The petitioner in view of the arbitration clause appointed its Arbitrator in March, 2002, and requested the respondent to appoint his nominee-Arbitrator. The respondent did not appoint his arbitrator as per clause. Hence this petition. 5. Mr. " 4. A dispute arose between the parties. The petitioner in view of the arbitration clause appointed its Arbitrator in March, 2002, and requested the respondent to appoint his nominee-Arbitrator. The respondent did not appoint his arbitrator as per clause. Hence this petition. 5. Mr. Suri, learned counsel for the respondent contended that the essence of the agreement was buy back of the shares of the company to be founded by the collaborator Virsa Singh Sidhu and PSIDC Ltd.-petitioner, consequently, because of the collaborator being the member, the company was the party to the agreement and the company had been declared as a sick company under the Sick industrial Companies (Special Provisions)Act, 1985 (for short sica Act ). He further contended that in view of the order of BIFR dated 4.12.2006 which was affirmed in appeal on 4.11.2008 by the appellate Authority for Industrial and Financial Reconstruction, New Delhi, a scheme had been sanctioned for reconstruction of the company, thus, the company being involved in proceedings under the SICA Act, the present arbitration application for referring the matter to the Arbitrator does not lie. 6. To controvert the above plea of the learned counsel for the respondent, learned counsel for the petitioner in rejoinder has submitted that the agreement was not with the company as witnessed by the preliminary clause. He further stated that the agreement was between the petitioner and collaborator virsa Singh Sidhu and, thus, Virsa Singh Sidhu was the party to the arbitration agreement and he could not resist the appointment of an Arbitrator merely on the ground that essence of the agreement postulates buy back shares of the company. 7. At this stage, learned counsel for the respondent has further submitted that even if an arbitral award is secured, it would not be enforceable. 8. In my view, this Court is not concerned with the merits of the dispute. Having perused the arbitration agreement, it is evident that the agreement was between Virsa Singh Sidhu and petitioner, though the agreement was for buy back shares of the Herman Milkfoods Limited which was to be found by the collaborator. 8. In my view, this Court is not concerned with the merits of the dispute. Having perused the arbitration agreement, it is evident that the agreement was between Virsa Singh Sidhu and petitioner, though the agreement was for buy back shares of the Herman Milkfoods Limited which was to be found by the collaborator. In the proceedings under Sec.11 (6) of the Act, this Court is concerned with the arbitration agreement only, therefore, taking into account that the dispute exists between the parties and the petitioner while invoking the arbitration clause had appointed his nominee Arbitrator in March, 2002, respondent Virsa Singh Sidhu cannot resist enforcement of arbitration clause and ought to have appointed his nominee Arbitrator as per arbitration clause. 9. Keeping in view the totality of the facts narrated above, this petition is allowed and it is directed that respondent shall appoint its Arbitrator not later than 28.02.2010. Parties shall appear before the Arbitrator on 15.03.2010 at 4.00 P. M. We leave it on the parties to take up their pleas sought to be taken on merits before the Arbitrator. In case the Arbitrator is not appointed by the respondent within the stipulated period,in that eventuality, this Court shall appoint the Arbitrator. Petition stands disposed of. A copy of the order shall be given dasti to learned counsel for the respondent under signature of the Bench Secretary.