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2022 DIGILAW 2913 (MAD)

Green Malabar Finance Ventures Limited, Rep by its Authorised Signatory, R. Ramesh, Chennai v. K. Prajesh

2022-08-25

M.SUNDAR

body2022
JUDGMENT (Prayer: Arbitration Original Petition filed under Section 11(5) of Arbitration and Conciliation Act 1996, as amended by the Arbitration and Conciliation (Amendment) Act, 2015 praying to (a) allow this petition and appoint a sole Arbitrator under clause 16 xv of the Loan Agreement dated 09.04.2021 of the Loan Agreement to adjudicate the dispute between the parties; (b) award the cost of present proceedings; and (c) pass such further or other orders as this Court may deem fit and proper in the circumstances of the case.) 1. This order will now dispose of the captioned Arb.OP. 2. This order has to be read in conjunction with and in continuation of earlier proceedings made in the previous listing on 02.08.2022, which reads as follows : 'Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the sake of convenience and clarity] has been presented in this Court on 13.07.2022 under Section 11 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] with a prayer for appointment of sole Arbitrator. 2. Mr.A.G.Sathyanarayana, learned counsel for sole petitioner company who is before this Court submits that the captioned Arb OP is predicated on sub-clause (xv) captioned 'Arbitration' of clause 16 captioned 'MISCELANEOUS' in an agreement dated 09.04.2021 captioned 'LOAN AGREEMENT'. To be noted, this Loan Agreement shall hereinafter be referred to as 'primary contract' for the sake of convenience and clarity. 3. Aforementioned sub-clause (xv) of clause 16 of primary contract reads as follows: '(xv) Arbitration: In the event of any dispute or differences arising under this Agreement including any dispute as to any amount outstanding, the real meaning or purport hereof ("Dispute"), such Dispute shall be finally resolved by arbitration. Such arbitration shall be conducted in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996 or any amendment or reenactment thereof by a single arbitrator to be appointed by the Lender. The venue of arbitration shall be at as decided by the Lender and the arbitration shall be conducted in English language.' 4. Such arbitration shall be conducted in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996 or any amendment or reenactment thereof by a single arbitrator to be appointed by the Lender. The venue of arbitration shall be at as decided by the Lender and the arbitration shall be conducted in English language.' 4. It is necessary to read the above along with sub-clause (xvi) of clause 16 and the same reads as follows: '(xvi) Governing Law & Jurisdiction : That this Agreement shall be governed by the laws of Tamilnadu and the Courts as mentioned in Schedule alone shall have exclusive jurisdiction in respect of any matter, claim or dispute arising out of or in any way relating to these presents or to anything to be done pursuant to these presents or in regard to interpretation of these presents or of any clause or provision thereof. This shall not, however, limit the rights of GMFVL to take proceedings in any other Court of competent jurisdiction including, but not limited to, the Courts as mentioned in Schedule hereunder.' 5. Aforementioned clauses in primary contract serve as arbitration agreement between the parties i.e., 'arbitration agreement' within the meaning of Section 2(1)(b) read with Section 7 of A and C Act is learned counsel's say. 6. A careful perusal of primary contract brings to light that it is between the petitioner company and first respondent which is a natural person. The first respondent is carrying on business in the name and style of 'KPR Fuels' as sole proprietor. Therefore, the first respondent will be 'party' qua primary contract i.e., 'party' within the meaning of Section 2(1)(h) of A and C Act. There could be an entity which is either juristic person or a natural person. However, the first respondent has been clearly described as proprietor of 'KPR Fuels'. 7. Faced with the above situation, learned counsel for petitioner submitted that he would delete the second respondent from the array of parties qua captioned Arb OP. Learned counsel has made an endorsement in the case file and a scanned reproduction of the same is as follows: 8. Aforementioned endorsement is reiterated in the hearing. 9. Therefore, the first respondent Mr.Prajesh K, a natural person has now become sole respondent in the captioned Arb OP. 10. This Court now reverts to the aforementioned arbitration agreement. Learned counsel has made an endorsement in the case file and a scanned reproduction of the same is as follows: 8. Aforementioned endorsement is reiterated in the hearing. 9. Therefore, the first respondent Mr.Prajesh K, a natural person has now become sole respondent in the captioned Arb OP. 10. This Court now reverts to the aforementioned arbitration agreement. Adverting to sub-clause (xvi) of clause 16 of primary contract, learned counsel submits that though there is a reference to schedule therein, there is no schedule to the primary contract. This submission is recorded. 11. Be that as it may, learned counsel submits that when the primary contract was operated, loan to the tune of Rs.9 Lakhs was advanced to the respondent but the respondent committed default in repayment. Learned counsel further submits that certain cheques were given by respondent towards repayment wherein it was dishonoured, broadly stated, this is the arbitrable dispute that has arisen between the parties. Therefore, the petitioner company issued a notice dated 23.11.2021 followed by a trigger notice dated 13.01.2022 invoking arbitration clause. Adverting to trigger notice, more particularly paragraph No.5 thereat, learned counsel submits that Venue / Seat has been chosen as Chennai. This submission is also recorded. It is submitted that though the trigger notice has been duly received by sole respondent on 20.01.2022, there has been no response necessitating the presentation of captioned Arb OP in this Court. 12. Prima facie case for issue of notice made out. 13. Issue notice to sole respondent returnable by 18.08.2022. Private notice permitted. 14. List on 18.08.2022.' 3. Pursuant to aforementioned proceedings, the lone respondent has been served. To be noted, in the captioned Arb.OP. there were two respondents and the second respondent has been given up. The name of lone respondent together with full/complete address as in the short and long cause titles of the petition is shown in the cause list but there is no representation. Name of the lone respondent called out aloud thrice in the Court and in the adjoining corridors. No response. This Court is informed that lone respondent has not chosen to enter appearance through any counsel. 4. The narrative thus far means that the respondent has not come before this Court and entered upon disputation qua existence of arbitration agreement i.e., clause 16 of primary contract. 5. No response. This Court is informed that lone respondent has not chosen to enter appearance through any counsel. 4. The narrative thus far means that the respondent has not come before this Court and entered upon disputation qua existence of arbitration agreement i.e., clause 16 of primary contract. 5. As existence of arbitration agreement is not in dispute, this Court now proceeds to appoint an Arbitrator. Before doing that, this Court reminds itself sub-section (6A) of Section 11 of A and C Act, 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.' 6. Aforementioned sub-section (6A) of Section 11 of A and C Act came up for consideration in oft quoted judgment of Hon'ble Supreme Court in 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 acord 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 judgement, 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 judgement in Duro Felguera' 7. Aforementioned paragraph No.10 of Mayavati Trading case law takes us to Duro Felguera principle being ratio laid down by Hon'ble Supreme Court in Duro Felguera S.A. Vs Gangavaram Port Limited reported in 2017 (9) SCC 729 , relevant paragraphs in Duro Felguera case are paragraph Nos.47 and 59 and the same reads 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. 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.' 8. As a legal drill under Section 11 of A and C Act would perambulate within the statutory perimeter sketched by sub-section (6A) thereat, in the case on hand there is no disputation or disagreement regarding existence of arbitration agreement. 9. In the light of narrative thus far, Mr.M.Muthusamy, learned Senior Advocate, having residence at No.5 (Old No.H-34/A), Parvathi Street, Kalakshetra Colony, Besant Nagar, Chennai-600090; [Ph.No.24917077/ Mobile No.94440-42965; E-mail:yogamuthu@dataone.in; mmarappa.gounder@yahoo.in] is appointed as sole Arbitrator. Learned sole Arbitrator is requested to enter upon reference qua 'primary contract' i.e., 'Loan Agreement' dated 09.04.2021 entered between the petitioner and the respondent, adjudicate upon the arbitrable disputes that have erupted between the petitioner and respondent-by holding sittings in 'Madras High Court Arbitration Centre under the aegis of this Court' ['MHCAC'] and render an award by adopting the Madras High Court Arbitration Proceedings Rules, 2017 and fee of the learned Arbitrator shall be in accordance with Madras High Court Arbitration Centre (MHCAC) (Administrative Cost and Arbitrator's Fees), Rules 2017. 10. Captioned Arb.OP is disposed of in aforesaid manner. There shall be no order as to costs.