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2012 DIGILAW 2004 (BOM)

Ashok Parmanand v. Radha Nandlal Kalro

2012-10-16

A.P.LAVANDE

body2012
ORDER A.P. Lavande, J.- Heard Mr. Bhobe, learned Counsel for the applicants in both the applications and Mr. Mascarenhas, learned Counsel for respondents No. 1 to 6 in both the applications. Respondent No. 7. though served in both the applications, has chosen not to put in appearance. 2. Both these applications filed under Section 11 (6) of the Arbitration and Conciliation Act. 1996 ('the Act' for short) are disposed of by common order since the issues involved in both the matters are interconnected. 3. Briefly, the facts leading to filing of these two applications are as under : On 13/04/2007, the applicant in application No. 9/2012 entered into an agreement dated 13/04/2007 for extraction of ore in respect of the mining concession THATATEM SODO' in respect of which the lease was granted to late Raghuvir Paingankar, the husband of Shakuntala Paingankar. Simultaneously, the applicants in application No. 8/12 entered into an agreement for sale of iron ore with respondents No.1 to 6 herein and one Shakuntala R. Paingankar who expired later on. Respondent No.7 was joined in both the agreements as consultant. 4. On 27/01/2010, respondents No.1 to 6 herein issued notice d to both the applicants in the present applications informing them that both the above referred agreements stood terminated, cancelled and rescinded and respondents No. 1 to 6 undertook to refund the sum of Rs. 1 Crore 20 Lakhs received by them together with late Shakuntala Paingankar. 5. By communication dated 2/2/2010 addressed by both the applicants to respondents No. 1 to 6, the applicants called upon respondents No.1 to 6 to withdraw the letter dated 27/01/2010. Thereafter, by communication dated 11/02/2010. respondents No.1 to 6 informed the applicants that in case they were to persist in refusing to agree to amicable settlement, they would be compelled to claim loss and damages suffered on account of failure of the applicants to fulfill their obligations under the agreements. Thereafter, by communication dated 14/03/2010, the applicants requested respondents No. 1 to 6 not to enter into any transactions in respect of the said mine in favour of any third party and further requested to settle the issue a with their brothers namely Rohit and Rajendra Paingankar at the earliest so as to facilitate the applicants to obtain necessary permissions and to commence mining operation in the said mine. Thereafter, one Mr. Thereafter, one Mr. Bhalchandra Bakhle claiming himself to be the constituted attorney of the applicants suggested the name of Mr. D.R. Kenkare, retired Additional District and Sessions Judge as arbitrator for the purpose of adjudicating the dispute and further called upon respondents No.1 to 6 to inform their acceptance and further stated that in case of disagreement, the applicants would be compelled to approach this Court under Section 11 of the Act. On 24/12/2010. Advocate Caetano Mascarenhas on behalf of respondents No. 1 to 6 informed Mr. Bakhle that his clients did not have acquaintance with him and that they had no reason to believe that he was attorney of the applicants. Thereafter. Mr Bakhle sent a copy of power of attorney executed in his favour by both the applicants authorising him to act. By communication dated 3/01/2011 addressed by Advocate C. Mascarenhas on behalf of respondents No.1 to G. the authority of Mr. Bakhle to act as constituted attorney was challenged. Since respondents No. 1 to 6 did not agree to the appointment of Mr. D. R. Kenkare as arbitrator, the applicants have filed the present applications for appointment of arbitrator in each of the applications. There is no c serious dispute that both these agreements contain arbitration clause. 6. The respondents No. 1 to 6 have filed identical replies in both the applications. Both the applications are opposed primarily on the following grounds : (i) Mr. Rohit R. Paingankar and Rajendra R. Paingankar along with their spouses are the legal heirs of late Shakuntala Paingankar along with respondents No. 1 to 6 since late Shakuntala Paingankar was party to the agreements. In the absence of Mr. Rohit and Rajendra Paingankar, the present applications are not maintainable. (ii) Rohit and Rajendra Paingankar along with their spouses are necessary parties being co-lessees of the mine in question and as such, in their absence the present applications are not maintainable. (iii) Respondents No.1 to 6 have entered into agreements dated 28/01/2010 with two Companies i.e. Prime Minerals Ex-ports Pvt. Ltd. and Hardesh Ores Pvt. Ltd., for extraction and sale of ore from the said mine and as such. reliefs granted in the present applications would be rendered infructuous since any order that may be passed in these applications would not be binding on the said two Companies. (iv) Notice purportedly issued under Section 11 (5) of the Act by Mr. reliefs granted in the present applications would be rendered infructuous since any order that may be passed in these applications would not be binding on the said two Companies. (iv) Notice purportedly issued under Section 11 (5) of the Act by Mr. Bhalchandra Bakhle on behalf of the applicants is bad in law. (v) The applicants are also guilty of gross laches in approaching this Court. (vi) The applicants do not have subsisting or live claim against respondents No. 1 to 6 arising out of two agreements entered into between them. 7. Mr. Bhobe, learned Counsel for the applicants submitted that none of the grounds urged by the respondents No. 1 to 6 are tenable in law. According to Mr. Bhobe, Rohit and Rajendra Paingankar and their spouses and/or the Companies with whom respondents No.1 to 6 claim to have entered into agreements, are not necessary parties to the present applications. Learned Counsel further submitted that in an application filed under Section 11 (6) of, the Act, the necessary parties would be only the parties to agreement and in the present case, respondents No. 1 to 6 and late Shakuntala Paingankar were the parties to agreements and Shakuntala Paingankar having expired after entering into both the agreements, there is no question of joining her heirs as parties to the present applications. Mr. Shobe further submitted that only the respondents No. 1 to 6 have terminated both c the agreements by communication dated 27/01/2010 addressed to the applicants and as such, the present applications filed under Section 11(6) of the Act are maintainable in law. Learned Counsel further submitted that the applicants have no dispute with the other heirs of late Shalmntala Paingankar or with the Companies with whom respondents No. 1 to 6 claim to have entered into an agreement on 28/01/2010 and as such, the question of joining them as parties in the present applications, does not arise. Mr. Bhobe placed reliance upon Sections 2(h), 2(g), 11, 21 and 40 of the Act and submitted that having regard to the scheme of the Act, the applications filed under d Section 11 (6) of the Act are maintainable. Mr. Bhobe further submitted that the notice given by Mr. Mr. Bhobe placed reliance upon Sections 2(h), 2(g), 11, 21 and 40 of the Act and submitted that having regard to the scheme of the Act, the applications filed under d Section 11 (6) of the Act are maintainable. Mr. Bhobe further submitted that the notice given by Mr. Bakhle calling upon respondents No. 1 to 6 to appoint arbitrator in respect of both the agreements cannot be faulted inasmuch as the power of attorney, a copy of which is placed on record, clearly entitles him to act on behalf of the applicants in relation to the mine in question. In support of his submissions. Mr. Bhobe placed reliance upon the following judgments : (i) Bharat Rasiklal Ashra v. Gautam Rasikclal Ashra and another; (2012) 2 SCC 144 . (ii) Deutsche Post Bank Home Finance Limited v. Taduri Sridhar and another. (2011) 11 SCC 375 . (iii) Supreme Court Bar Association and Ors. v. B.D. Kaushik, 2012 (6) SCC 152 . 8. Per contra. Mr. Mascarenhas, learned Counsel for respondents No. 1 to 6 submitted that all the parties to agreements dated 13/04/2007 are not before this Court and as such, the applications are not maintainable. Mr. Mascarenhas further submitted that Rohit and Rajendra Paingankar along with their spouses being the heirs of late Shakuntala Paingankar and also in their own right as co-lessees in respect of the said mine, are necessary parties and in their absence, the applications seeking appointment of arbitrator, are not maintainable. According to learned Counsel, their non-joinder is fatal to the present applications. Learned Counsel further submitted that the notice issued by Mr. Bakhle to respondents No.1 to 6 to agree to appoint Mr. D.R. Kenkare as arbitrator. was issued on behalf of the applicants as partners of M/s. Purshooram Exports, a registered Partnership Firm and as such, the notice is patently illegal. Learned Counsel further submitted that the exact dispute which the applicants have with respondents No.1 to 6, has not been stated by the applicants in any of the communications to respondents No. 1 to 6 and as such, both the applications are not maintainable. Learned Counsel further submitted that the exact dispute which the applicants have with respondents No.1 to 6, has not been stated by the applicants in any of the communications to respondents No. 1 to 6 and as such, both the applications are not maintainable. Learned Counsel further submitted that in view of the agreements dated 28/01/2010 entered into by the respondents No.1 to 6 with Prime Minerals Exports Pvt. Ltd, and Hardesh Ores Pvt. Ltd., the main dispute between the parties does not survive and the purpose of arbitration being to adjudicate the disputes between the parties, no purpose would be served by appointing an arbitrator in respect of the disputes between the parties arising out the two agreements. Mr. Mascarenhas placed reliance upon the judgment of the Delhi High Court in the case of D.C.M. Ltd. v. RK. Towers (India) Pvt. Ltd., 2008(3) Arb LR 507 (Delhi) in support of his submission that unless dispute is arbitrable, there is no question of making an order under Section 11 (6) of the Act. Mr. Mascarenhas also placed reliance upon the scheme framed by this Court for appointment of an arbitrator known as Appointment of Arbitrator by the Chief Justice of Bombay High Court Scheme, 1996 ('the Scheme' for short) and submitted that in terms of clause 2 of the Scheme, the applicant who files an application either under subsections 4, 5 or 6 of Section 11 has to furnish the names and addresses of the parties to arbitration agreement and since in the present case, all the parties have not been joined, both the applications are not maintainable. Learned Counsel further submitted that in terms of clause 7 of the Scheme, notice has to be given to all the parties to arbitration agreement and. also to such a person or persons as may be likely to be affected by the appointment of an arbitrator. Learned Counsel, therefore, submitted that in view of clause 7 of the Scheme, both the applications in the absence of necessary parties, are not maintainable. Mr. Mascarenhas, also placed reliance upon the judgment in the case of Indian Oil Corporation Ltd. v. M/s. SPS Engineering Ltd., 2011 AIR SCW 3715. Learned Counsel further submitted that the applications are liable to be dismissed on account of gross laches on the part of the applicants in approaching this Court. 9. Mr. Mascarenhas, also placed reliance upon the judgment in the case of Indian Oil Corporation Ltd. v. M/s. SPS Engineering Ltd., 2011 AIR SCW 3715. Learned Counsel further submitted that the applications are liable to be dismissed on account of gross laches on the part of the applicants in approaching this Court. 9. I have carefully considered the rival submissions, perused the record and the judgments relied upon by both the sides. 10. In the case of Indian Oil Corporation Ltd. (supra), the Apex Court has held that an application under Section 11 of the Act is expected to contain the pleading about the existence of dispute and existence of an arbitration agreement to decide such dispute and is not expected to justify the claim nor plead exhaustively in regard to limitation to demonstrate that the claim is within time in a proceeding under Section 11 of the Act. That issue should normally be left to Arbitral Tribunal. However, the Chief Justice or his designate should consider whether the claim is dead one (long time barred) or whether there has been satisfaction of mutual rights and obligation under the contract and this should be done after giving an opportunity to both the parties to place materials on such issues. In the ease of Deutsche Post Hank Home Finance Ltd. (supra), the Apex Court held that existence of arbitration agreement between the parties to the petition under Section 11 of the Act and existence of dispute to be referred to arbitration are conditions precedent for appointing arbitrator under Section 11 of the Act. Such a dispute can be said to arise only when one party to arbitration agreement makes c or asserts a claim/demand against the other party to arbitration agreement and the other party refuses or denies such claim or demand. If a party to an arbitration agreement files petition under Section 11 of the Act impleading the other party to the arbitration agreement as also a non-party to the arbitration agreement as the respondents, and the Court merely appoints arbitrator without deleting or excluding non-party, the effect would be that all the parties to the petition under Section 11 of the Act, including non-party to arbitration agreement will be the parties to arbitration and that will be contrary to law. If a person who is not party to arbitration agreement is impleaded as party to the petition under Section 11 of the Act, the Court should either delete such party from the array of parties or when appointing an arbitrator make it clear that the arbitrator is appointed only to decide the disputes between the parties to the arbitration agreement. 11. In the case of D.C.M. Ltd. (supra), Delhi High Court has held that in case disputes are not arbitrable, the question of appointing arbitrator does not arise. 12. Insofar as the objection taken by Mr. Mascarenhas that in the absence of Rohit and Rajendra Paingankar and their respective spouses as heirs of late Shakuntala Paingankar and also in their own right the present applications are not maintainable is concerned, I do not find any merit inasmuch as in view of the judgment in the case of Deutsche Post Bank Home Finance Ltd. (supra), only those parties who are parties to the arbitration agreement, can be parties in an application under Section 11 (6) of the Act. Rohit and Rajendra and their respective spouses were not the parties to arbitration agreement. Therefore, in my view, the applications are not liable to be dismissed on account of non-joinder of Rohit and Rajendra Paingankar and their respective spouses. Similarly, the applications are not liable to be dismissed on the ground that respondents No. 1 to 6 have entered into agreements dated 28/01/2010 with Prime Minerals exports Private Ltd. and Hardesh Ores Private Ltd. Both these companies are not the parties to the arbitration agreement. Mr. Bhobe is justified in placing reliance upon the judgment of the Apex Court in the case of Supreme Court Bar Association and others (supra) in support of his submission that the judgment of the Apex Court is binding on all b Courts and Tribunals. In view of the ratio laid down by the Apex Court in the case of Deutsche Post Bank Home Finance Ltd. (supra), clause 7 of the Scheme would not come in the way of the applicants from getting relief under Section 11 (6) of the Act. 13. Section 2(h) of the Act defines the party as party to an arbitration agreement. Therefore, it is evident that in an application under Section 11 (6) of the Act, only the parties to an arbitration agreement are necessary parties. 14. The objection taken by Mr. 13. Section 2(h) of the Act defines the party as party to an arbitration agreement. Therefore, it is evident that in an application under Section 11 (6) of the Act, only the parties to an arbitration agreement are necessary parties. 14. The objection taken by Mr. Mascarenhas that the applications are liable to be dismissed on account of gross laches in approaching the Court, is liable to be rejected inasmuch as both the applications have been filed on 07/03/2012 and as such, it cannot be said that the applicants are guilty of gross laches. 15. Similarly, the objection taken by respondents No.1 to 6 that the applicants have no subsisting or live claim against them, has also no merit. Once the applicants have challenged the action of respondents No.1 to 6 in terminating both the agreements and having raised the dispute and called upon respondents No. 1 to 6 to appoint an arbitrator, the applicants are entitled to approach this Court under d Section 11 (6) of the Act. 16. In the present case. admittedly, respondents No. 1 to 6 by communication dated 27/01/2010 have terminated both the agreements which termination has not been accepted by the applicants herein and by communication dated 14/03/2010, the applicants have raised dispute regarding the termination/rescission of both the agreements and as such, it cannot be said that there is no dispute between the parties. No doubt, existence of, dispute is sine qua non for filing application under Section 11 (6) of the Act, but in the present case, the applicants have contended that the termination of both the agreements by respondents No. 1 to 6 is illegal. This by itself would constitute the dispute for the purpose of the Act. 17. Section 21 of the Act provides that arbitral proceedings in respect of a particular dispute commences on the date on which request for referring the dispute to the arbitration received by the respondent. 18. In the present case. there is no dispute that by communication dated 14/12/2010 addressed by Mr. Bakhle, respondents No. 1 to 6 were called upon to agree to the appointment of Mr. D.R. Kenkare as arbitrator in respect of the dispute between the parties. 19. 18. In the present case. there is no dispute that by communication dated 14/12/2010 addressed by Mr. Bakhle, respondents No. 1 to 6 were called upon to agree to the appointment of Mr. D.R. Kenkare as arbitrator in respect of the dispute between the parties. 19. Another objection taken on behalf of respondents No.1 to 6 is that a valid notice under Section 11 (5) of the Act which is a precondition for invoking Section 11(6) of the Act, was not properly given inasmuch as Mr. Bakhle had no authority to act on behalf of the applicants since Mr. Bakhle was appointed as attorney by the applicants as partners of the firm and not in individual capacity. In my view, the objection taken is highly technical. Perusal of power of attorney discloses that both the applicants who are partners of the firm M/s. Purshooram Exports have authorised Mr. Bakhle to act on their behalf in respect of the said mine as partners of the registered firm M/s. Purshooram Exports. It is well settled that a registered partnership firm is not a legal entity like a Company registered under the Companies Act, 1956. Therefore, in my view, the objection taken on behalf of respondents No. 1 to 6 does not go to the root of the matter and as such, has no merit. 20. In view of the above discussion, I am of the considered c opinion that, there are arbitrable disputes between the applicants and respondents No.1 to 6 in respect of two agreements dated 13/04/2007 which are required to be adjudicated by an arbitrator and. Therefore, the applications filed under Section 11 (6) of the Act are liable to be allowed. 21. Mr. Bhobe, learned Counsel for the applicants suggested the name of Mr. M.S. Keny, former City Civil Judge, Mumbai, at Margao, Goa for appointment as an arbitrator in respect of the disputes arisen in respect of above two agreements. Mr. Mascarenhas submitted that he would have no objection if Mr. M.S. Keny is appointed an arbitrator. 22. In view of the above, Mr. M.S. Keny, former City Civil Judge, Mumbai at Margao. Goa is appointed arbitrator to adjudicate the disputes that have arisen between the applicants and respondents No. 1 to 6 in respect of the two agreements dated 13/04/2007. Learned arbitrator shall pass separate awards since the parties to both the agreements are not the same. In view of the above, Mr. M.S. Keny, former City Civil Judge, Mumbai at Margao. Goa is appointed arbitrator to adjudicate the disputes that have arisen between the applicants and respondents No. 1 to 6 in respect of the two agreements dated 13/04/2007. Learned arbitrator shall pass separate awards since the parties to both the agreements are not the same. 23. Both the parties shall pay the fees of the arbitrator in equal shares. Learned arbitrator is requested to dispose of the arbitration proceedings expeditiously. 24. Needless to mention that the disputes between the parties on merits would be decided by the arbitrator and as such, all the contentions of the rival parties are kept open. 25. Both the applications stand disposed of with no order as to costs.