Okaya Infocom Pvt. Ltd. , Rep. by its Authorised Representative, New Delhi v. Electronic Corporation of Tamil Nadu Ltd. , (ELCOT), Rep. by its Managing Director, Chennai
2022-04-26
M.SUNDAR
body2022
DigiLaw.ai
JUDGMENT (Prayer: Arbitration Original Petition filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 to appoint an sole arbitrator as per Clause No.17 of the Memorandum of Lease Agreement dated 05.11.2012 between the petitioner and the respondent for resoling the disputes between the petitioner and respondent.) 1. This order will dispose of captioned 'Arbitration Original Petition' ['Arb.OP' for the sake of brevity]. 2. This order has to be read in conjunction with and in continuation of earlier proceedings made in the listing before this Court on 11.04.2022, which reads as follows: 'In the captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the sake of convenience and clarity], Mr.R.Gokul, learned counsel representing Mr.S.L.Sudarsanam counsel on record for petitioner is before this Court. 2. Learned counsel submits that the prayer in the captioned Arb OP is for appointment of a sole Arbitrator. 3. Learned counsel draws the attention of this Court to a Lease Deed between the petitioner and respondent being 'Lease Deed dated 05.11.2012' [hereinafter 'primary contract' for the sake of convenience and clarity] and submits that clauses 17 and 18 thereat constitute Arbitration Agreement between the parties i.e., Arbitration Agreement within the meaning of Section 2(1)(b) read with Section 7 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)' [hereinafter referred to as 'A and C Act' for the sake of convenience, clarity and brevity]. 4. To be noted, aforementioned clauses 17 and 18 of primary contract read as follows: 17. Any dispute arising out of or connected with this lease shall be referred to arbitration of a sole arbitrator as consented to by the LESSEE and LESSOR under the provisions of the Arbitration and Conciliation Act, 1996. In the event of non-agreement between the parties for a sole arbitrator, each party shall be entitled to appoint one arbitrator and such nominated arbitrators shall appoint the third arbitrator to form an arbitral tribunal for conducting the arbitration proceedings. The place of Arbitration shall be at Chennai in English proceedings. The place of Arbitration shall be at Chennai in English language and cost of such arbitration shall be such arbitration shall be borne equally by both parties. 18. Only the Courts situated in the City of Chennai shall have jurisdiction to decide upon any dispute or obligation between the parties to this lease deed subject to the arbitration clauses.' 5.
The place of Arbitration shall be at Chennai in English language and cost of such arbitration shall be such arbitration shall be borne equally by both parties. 18. Only the Courts situated in the City of Chennai shall have jurisdiction to decide upon any dispute or obligation between the parties to this lease deed subject to the arbitration clauses.' 5. A perusal of clause 17 of primary contract makes it clear that the place of arbitration is Chennai 6. Learned counsel submits that arbitrable disputes erupted qua primary contract, a notice dated 27.10.2020 was issued invoking the arbitration clause, respondent sent a reply notice dated 13.11.2020 inter alia stating that there are no arbitrable disputes, this was followed by a communication dated 29.07.2021 from the petitioner to respondent reiterating the claim but there has been no response. 7. In the light of the response given by respondent for the trigger notice issued by petitioner (notice dated 27.10.2020 invoking arbitration agreement) it has become necessary to present the captioned Arb OP in this Court on 21.03.2022 is learned counsel's say. 8. Adverting to Vidya Drolia principle i.e., ratio laid down by Hon'ble Suprme Court in Vidya Drolia & Ors. Vs. Durga Trading Corporation reported in 2019 SCC OnLine SC 358, learned counsel submits that the disputes are arbitrable as they are in the nature of money claims qua primary contract i.e., Lease Deed. 9. Prima facie case for issue of notice made out. 10. Issue notice to respondent returnable in a fortnight i.e., returnable by 25.04.2022. Private notice permitted. 11. List on 25.04.2022.' 3. Aforementioned 11.04.2022 proceedings/orders shall now be read as an integral part and parcel of this order. The short forms, abbreviations and short references made in the aforementioned 11.04.2022 proceedings / orders shall continue to be used in the instant order also for the sake of convenience and clarity. 4. Pursuant to aforementioned 11.04.2022 proceedings, notice has been duly served on the lone respondent by two modes i.e., private notice and Court notice. The Affidavit of Service dated 21.04.2022 placed before this Court as part of the case file to demonstrate that services has been effected by way of private notice is as follows: 5. As regards Court notice, the service proceedings placed before this Court by the Registry is as follows: 6.
The Affidavit of Service dated 21.04.2022 placed before this Court as part of the case file to demonstrate that services has been effected by way of private notice is as follows: 5. As regards Court notice, the service proceedings placed before this Court by the Registry is as follows: 6. The above demonstrate that lone respondent has been duly served by way of private notice on 19.04.2022 and Court notice has also been duly served on 21.04.2022. Therefore, the name of the lone respondent together with full/complete address as in the cause title has been shown in the cause list. To be noted, this was the position yesterday also. This Court is informed that the respondent has not chosen to enter appearance through any counsel. There is no representation yesterday and therefore the matter was re-notified and directed to be listed today with the intention of giving opportunity to the respondent. It is to be further noted that yesterday there was no representation for the lone respondent in three calls, one in the forenoon and two in the afternoon. 7. Today also there is no representation for the respondent. 8. The narrative thus far makes it clear that lone respondent has not chosen to come before this Court and disputed or contested the existence of arbitration agreement i.e., Clauses 17 and 18 of the primary contract (Lease Deed dated 05.11.2012), inspite of being duly served vide private notice and court notice. 9. A legal drill under Section 11 should be conducted within legal landscape bounded by statutory perimeter sketched by sub-section (6A) thereat. To be noted, sub-section (6A) of Section 11 of A and C Act reads as follows: '(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.' 10. The scope of a legal drill under Section 11 has been succinctly and elucidatively set out by Hon'ble Supreme Court in the oft-quoted Mayavati Trading case law i.e., Mayavati Trading Private Limited Vs. Pradyuat Deb Burman reported in (2019) 8 SCC 714 ], relevant paragraph in Mayavati Trading case law is paragraph No.10 and the same reads as follows: 10.
The scope of a legal drill under Section 11 has been succinctly and elucidatively set out by Hon'ble Supreme Court in the oft-quoted Mayavati Trading case law i.e., Mayavati Trading Private Limited Vs. Pradyuat Deb Burman reported in (2019) 8 SCC 714 ], relevant paragraph in Mayavati Trading case law is paragraph No.10 and the same reads as follows: 10. This being the position, it is clear that the law prior to the 2015 Amendment that has been laid down by this Court, which would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgments, as Section 11(6-A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment in Duro Felguera SA.' (underlining made by this Court to supply emphasis and highlight) 11. Aforementioned paragraph 10 of Mayavati Trading case law takes this Court to Duro Felguera, S.A case law i.e., Duro Felguera, S.A. Vs. Gangavaram Port Limited reported in (2017) 9 SCC 729 ], relevant paragraphs in Duro Felguera case law are paragraphs 47, 59 and the same read as follows: 47. What is the effects of the change introduced by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as 'the 2015 Amendment' ) with particular reference to Section 11(6) and the newly added Section 11(6-A) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as “the 1996 Act”) is the crucial question arising for consideration in this case.' 59. The scope of the power under Section 11 (6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. (supra) and Boghara Polyfab (supra). This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an arbitration agreement exists - nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected. ' 12.
After the amendment, all that the Courts need to see is whether an arbitration agreement exists - nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected. ' 12. Besides the limited scope of a legal drill under Section 11, this Court has also taken note of sub-section (13) of Section 11 which reads as follows: '(13) An application made under this section for appointment of an arbitrator or arbitrators shall be disposed by the Supreme Court or the High Court or the person or institution designated by such Court, as the case may be, as expeditiously as possible and an endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party. ' (underlining made by this Court for ease of reference and for highlighting/supplying emphasis) 13. To be noted, there is an amendment to the aforementioned subsection (13) vide Section 3 of 'The Arbitration and Conciliation (Amendment) Act, 2019 [Act No.33 of 2019]', which shall hereinafter be referred to as 2019 Amendment Act' or 'Act No.33 of 2019'. There are 16 provisions in all in Act 33 of 2019, but only 11 provisions kicked in on and from 30.08.2019 vide Notification by Government of India dated 30.08.2019 bearing No. S.O 3154 (E) and those 11 provisions are Sections 1, 4 to 9, 11 to 13 and 15. In and by the proposed amendment the sixty days time frame in sub section (13) is proposed to be reduced to thirty days. 14. The above is mentioned for the limited purpose of highlighting that expeditious and quick disposal, more particularly quick disposal of petitions under Section 11 of A and C Act is a sanctus sublime philosophy underlying A and C Act. This Court has also carefully examined the respondent's reply dated 13.11.2020 i.e., reply to the arbitration trigger notice. That portion of such reply which is relevant for the case on hand is, the respondent has taken the plea that there are no arbitrable disputes whereas the petitioner emphatically contends that it has a claim of over Rupees 6 Crores under various heads.
That portion of such reply which is relevant for the case on hand is, the respondent has taken the plea that there are no arbitrable disputes whereas the petitioner emphatically contends that it has a claim of over Rupees 6 Crores under various heads. To be noted, according to the petitioner, arbitrable disputes include refund of deposit amount, return of part of the lease amount, as according to the petitioner, a sum of little over Rs.4.14 Crores alone was returned whereas petitioner claims that it has paid a little over Rs.6.37 Crores, all of which pertains to cancellation of codeveloper status. To be further noted, this is not an exhaustive list of arbitrable disputes but this is only an illustrative list to record that these are the arbitrable disputes which are being raised by the petitioner. For the sake of completion of facts, it is also recorded that the petitioner earlier filed W.P.No.1504 of 2017 and this Court directed the respondent to consider the petitioner's representation. Whether arbitrable disputes erupted and/or whether arbitrable disputes subsist have to necessarily be decided by a Hon'ble Arbitrator. 15. In the light of the narrative thus far Hon'ble Mr.Justice V.Parthiban (Retd.,),, a former Judge of this Court, residing at No.5069, Z Block, 12th Street, Anna Nagar (West), Chennai – 600 040 [Ph: 26280804, 26214850, Mob: 9444094401], is appointed as sole Arbitrator. Hon'ble sole Arbitrator is requested to enter upon reference, adjudicate upon what according to the petitioner are arbitrable disputes and render an award by holding sittings in the 'Madras High Court Arbitration and Conciliation Centre under the aegis of this Court' (MHCAC) in accordance with the Madras High Court Arbitration Proceedings Rules 2017 and fee of the Hon'ble Arbitrator shall be as per Madras High Court Arbitration Centre (MHCAC) (Administrative Cost and Arbitrator's Fees) Rules 2017. 16. Captioned Arb.OP disposed of in the aforesaid manner. There shall be no order as to costs.