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2022 DIGILAW 1062 (MAD)

Daimler Financial Services India Private Limited v. Sant Kumar Sharma

2022-04-29

M.SUNDAR

body2022
ORDER : Captioned 'Arbitration Original Petition' [hereinafter 'Arb. OP' for the sake of brevity and convenience] has been presented in this Court on 10.12.2021 with a prayer for appointment of a sole Arbitrator. 2. Captioned Arb. OP has been presented in this Court under Section 11 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)' [hereinafter 'A and C Act' for the sake of convenience and clarity]. 3. On 21.01.2022, Hon'ble predecessor Judge issued notice to the two respondents, both respondents have since been duly served and they have entered appearance through one set of counsel. 4. Mr. D. Pradeep Kumar, learned counsel on record for sole petitioner and Mr. N. Krishna Kumar, learned counsel on record for both respondents are before this Court. 5. Captioned Arb. OP is predicated on a 'loan agreement dated 22.12.2017 bearing contract Nos. 20136579 & 20136580' [hereinafter 'primary contract' for the sake of convenience and clarity]. 6. This Court is informed that two vehicles were financed by the petitioner under primary contract. The petitioner submits that there is default in repayment but this is disputed by the respondents. To be noted, this is the crux and gravamen of arbitrable disputes. 7. Be that as it may, the petitioner triggered the arbitration clause in the primary contract earlier. To be noted, the arbitration clause in the primary contract is clause 85 and the same reads as follows : '85. Dispute Resolution : All claims and disputes arising under or relating to this Loan Agreement are to be settled by binding arbitration in the state of Tamil Nadu, specifically Chennai or another location desired by the Lender. The arbitration shall be conducted on a confidential basis and shall be subject to the Arbitration and Conciliation Act, 1996 of India. Any decision or award as a result of any such arbitration proceeding shall be in writing and shall provide an explanation for all conclusions of law and fact and shall include the assessment of costs, expenses, and reasonable attorneys' fees. Any such arbitration shall be conducted by single Arbitrator appointed by the Lender. The arbitration proceeds shall include a written record of the arbitration hearing. The parties reserve the right to object to any individual who shall be employed by or affiliated with a competing organization or entity. An award of arbitration may be confirmed in a Court of competent jurisdiction.' 8. The arbitration proceeds shall include a written record of the arbitration hearing. The parties reserve the right to object to any individual who shall be employed by or affiliated with a competing organization or entity. An award of arbitration may be confirmed in a Court of competent jurisdiction.' 8. Aforementioned clause 85 of primary contract serves as an Arbitration Agreement between the petitioner and respondents i.e., 'Arbitration Agreement' within the meaning of Section 2(1)(b) read with Section 7 of A and C Act. 9. However, the first respondent took out an application under Section 16 of A and C Act before Arbitrator who was nominated by the petitioner vide a petition dated 25.12.2020 and the learned sole Arbitrator in and by proceedings dated 23.04.2021 recused himself owing to a Section 16 plea made by the first respondent. This necessitated presentation of captioned Arb. OP in this Court on 10.12.2021 is learned petitioner counsel's say. 10. Learned counsel for both respondents submits that there are serious disputations and contestations regarding the claim that has been made by the petitioner. This Court does not express any view or opinion on the merits of the matter as the same will have to be decided by the Arbitrator. This is more so as the captioned Arb. OP is a Section 11 legal drill. 11. The scope of a legal drill under Section 11 of A and C Act is circumscribed by sub-section (6A) thereat which 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.' 12. The aforementioned sub-section (6A) of Section 11 of A and C Act came up for consideration before Hon'ble Supreme Court in oft-quoted Mayavati Trading case law i.e., Mayavati Trading Pvt. Ltd vs. Pradyuat Deb Burman reported in (2019) 8 SCC 714 , relevant paragraph 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 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) 13. Aforementioned paragraph No.10 of Mayavati Trading case law takes this Court to Duro Felguera principle i.e., M/s.Duro Felguera S.A. Vs. M/s. Gangavaram Port Limited reported in 2017 (9) SCC 729 , relevant paragraphs in Duro Felguera case law are paragraph Nos.47, 59 and the same read as follows : '47. What is the effect 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. and Boghara Polyfab. 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 Courts intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected.' 14. This Court on examination of this question i.e., question about existence of arbitration agreement, owing to the aforementioned clause 85 of primary contract noticing that there is no disputation or contestation about the existence of Arbitration Agreement comes to the conclusion that it would be appropriate to accede to the prayer for appointment of a sole Arbitrator making it clear that all the questions and merits are left open to be canvassed by both sides before the sole Arbitrator. 15. Therefore, Ms. 15. Therefore, Ms. V. Usha Rani, learned Advocate, No.21, Lakshmi Nagar 2nd Main Road, Chembakkam, Chennai-600 073, Mobile No.9840096812, Email Id : ushy22573@yahoo.com is appointed as sole Arbitrator. Learned sole Arbitrator is requested to enter upon reference qua primary contract being loan agreement dated 22.12.2017 bearing contract Nos.20136579 & 20136580, adjudicate upon arbitrable disputes that have arisen between the petitioner/respondents, render an award by holding sittings in 'Madras High Court Arbitration and Conciliation Centre under the aegis of this Court' (MHCAC) as per 'Madras High Court Arbitration Proceedings Rules 2017' and fee of learned sole Arbitrator shall be in accordance with the 'Madras High Court Arbitration Centre (MHCAC) (Administrative Cost and Arbitrator's Fees) Rules 2017'. 16. Captioned Arb. OP is disposed of in the aforesaid manner. There shall be no order as to costs.