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Karnataka High Court · body

2020 DIGILAW 211 (KAR)

Managing Director, M/s. P3 Consulting Engineering Pvt Ltd. v. Managing Director, Belmar Aviation Pvt. Ltd.

2020-01-23

B.VEERAPPA

body2020
ORDER : 1. The petitioner filed the present Civil Miscellaneous Petition under the provisions of Section 11(5) of the Arbitration and Conciliation Act, 1996 for appointment of sole Arbitrator to adjudicate the dispute in terms of clause 11.8 of the Memorandum of Understanding dated 30.05.2017 entered into between the parties. 2. It is the case of the petitioner that the petitioner M/s. P3 Consulting Engineering Pvt. Ltd., India (P31) is 100% subsidiary of P3 Engineering GmbH is an established product design and Engineering Services company, focused into Aerospace & Defence Industry. P31 is providing its design and engineering services using engineering and software knowledge to its clients worldwide in the above industry segments. It is further contended that the P3 Academy is the training center has aim and agenda in its goal to provide training in innovative technologies and such modules to the engineering graduates and in that aspect has joined the hands with Belmer Aviation Pvt. Ltd., for inviting the students for the training programme. After several discussions with the respondent, the petitioner entered into the memorandum of Understanding on 30.05.2017 with the respondent, especially with Mr. Ashwin Belmer to work along with P3A to ensure enrollment of students, delivery of training and to make payment of the agreed Transfer price to the petitioner. The respondent has agreed to pay “transfer Price” to P31, the parent organization of the P3 Academy Institute, out of the total fee collected from the candidates who are graduates and also from the college tiedup institutions. 3. It is further contended that as per the Memorandum of Understanding, the training fees the respondent has liberty to charge any fees as the “enduser price” from such candidates – provided that the total fees charged shall be clearly mentioned in the documentation to the information of the candidates and to the petitioner. However, Belmar Aviation shall be liable to pay to P31 only the predetermined fees “transfer price” alone. Further, as per the terms of the MOU, during the financial year 201718, the respondent has collected the total fees from the candidates to hold the training and has agreed to transfer the transfer price to the petitioner and agreed to remit/credit the transfer price to the petitioner’s Account. The statement of Ledger account confers the liability of Rs.4,05,350/outstanding payable to the petitioner. The statement of Ledger account confers the liability of Rs.4,05,350/outstanding payable to the petitioner. The respondent has collected a sum of Rs.8,05,350/as on 31.08.2017 towards academic fees from the candidates as per the financial period ending 31.03.2018 and out of which has remitted to the petitioner’s account a sum of Rs.4,00,000/only and remaining amount of a sum of Rs.4,05,350/has not been remitted to the petitioner company from the date of such collection of fees. Therefore, the petitioner issued legal notice to the respondent on 17.08.2018 calling upon him to pay a sum of Rs.4,05,350/with interest within 15 days. The petitioner also sent the Notice on 5.10.2018 as required under Section 11 of the Arbitration and Conciliation Act, 1996 invoking the provision to appear before the sole arbitrator and to participate in the Arbitration Proceedings. The respondent replied on 22.10.2018 denying to participate in the arbitration and to appoint the Arbitrator. Hence, the petitioner is before this Court for the appointment of sole Arbitrator in terms of Clause 11.8 of Memorandum of Understanding dated 4. The respondent has filed statement of objections and contended that the present Civil Miscellaneous Petition filed by the petitioner for appointment of sole Arbitrator is not maintainable and the same is liable to be dismissed. Though the respondent denied the entire petition averments, but has not denied the Memorandum of Understanding entered into between the parties and existence of Clause 30.05.2017 entered into between the parties. 11.8. It is further contended that the Memorandum of Understanding was fraudulently obtained and no valid agreement was entered into between the petitioner and respondent in respect of the business transactions, the petitioner cannot invoke arbitration proceedings under Clause 11.8 of the MOU and petitioner has no right to enforce his alleged rights under MOU. The petition is not maintainable and therefore, sought to dismiss the Civil Miscellaneous Petition. 5. Having heard the learned counsel for the parties, though several contentions are raised by learned counsel for both the parties, the fact remains that the Memorandum of Understanding entered into between the parties dated 30.05.2017 and the existence of arbitration clause 11.8 is not in dispute. Though the learned counsel for the respondent contended that the Memorandum of Understanding is obtained by fraud, it is a matter to be adjudicated before the learned Arbitrator and this Court cannot decide the disputed facts between the parties. 6. Though the learned counsel for the respondent contended that the Memorandum of Understanding is obtained by fraud, it is a matter to be adjudicated before the learned Arbitrator and this Court cannot decide the disputed facts between the parties. 6. A careful perusal of AnnexureA/ Memorandum of Understanding depicts that the said document has been duly signed by the parties, as contemplated under the provisions of Section 7 of the Arbitration and Conciliation Act. Once the Memorandum of Understanding is admitted and the existence of arbitration clause is admitted and when the petitioner has complied the provisions of Section 11(5) of the Arbitration and Conciliation Act by issuing legal notice, there is no impediment for this Court to appoint an arbitrator to dissolve the dispute between the parties. Once the signatures on the Memorandum of Understanding are admitted, mere denial of existence of Memorandum of Understanding is not a ground to deny the petitioner to approach an arbitrator as contemplated in clause 11.8 of the Memorandum of Understanding which reads as under: “11.8 In the event of any dispute, differences or controversies arises between the parties hereto, out of or in relation to or in connection with the provisions of this MoU, or any action taken hereunder, the parties shall thoroughly explore all possibilities for the amicable settlement..” 7. In view of the admitted facts regarding existence of the Memorandum of Understanding and arbitration clause and in view of compliance of provisions of Section 11(5) of the Arbitration and Conciliation Act, there is no impediment for this Court for appointing sole arbitrator to adjudicate the dispute between the parties in terms of clause 11.8 of the Memorandum of Understanding. My view is fortified by the dictum of the Hon’ble Supreme Court in the case of M/s Mayavati Trading Pvt. Ltd. Vs. Pradyuat Deb Burman reported in AIR 2019 SC 4284 , overruling the earlier judgment in the case of Duro Felguera S.A. vs. Gangavaram Port Limited reported in (2017)9 SCC 729 . 8. For the reasons stated above, the Civil Miscellaneous Petition is allowed. Sri S. Siddalingesh, former District Judge is appointed as sole arbitrator to adjudicate the dispute in terms of clause 11.8 of the Memorandum of Understanding dated 30.05.2017 entered into between the parties. 9. Registry is directed to send a copy of this order to Sri S. Siddalingesh, former District Judge and Arbitration Centre for reference, forthwith.