J. Vivek v. Big Laundry Services Private Ltd. , Represented by Kumaraguru Seshadri, Director, Kanchipuram
2022-09-02
M.SUNDAR
body2022
DigiLaw.ai
JUDGMENT (Prayer; Arbitration Original Petition filed under Section 11(5) of the Arbitration and Conciliation Act, 1996 praying to appoint Mrs.R.J.Radhika, Advocate, High Court, Madras as sole arbitrator on behalf of the parties to resolve the dispute in terms of the Franchise Agreement dated 25.02.2019 between the petitioner and the respondents.) 1. This order will now dispose of the captioned matter. 2. This order has to be read in conjunction with and in continuation of earlier proceedings made in the previous listing on 24.08.2022, 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 10.08.2022 under Section 11(5) 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.Vigneshwar Elango, learned counsel on record for two petitioners submits that the captioned Arb OP is predicated on clause 14.2 in an 'agreement captioned 'FRANCHISE AGREEMENT' and dated 25.02.2019' [hereinafter 'primary contract' for the sake of convenience and clarity]. Clause 14.2 of primary contract may have to be read along with clause 14.1. Both sub-clauses are slotted under clause 14 captioned 'JURISDICTION AND DISPUTE RESOLUTION' which reads as follows: 14. JURISDICTION & DISPUTE RESOLTUION' 14.1. The Agreement shall be governed and construed in accordance with the laws of Indian and subject to Clause 14.2 below, the Parties shall submit to the exclusive jurisdiction of Courts in Chennai. 14.2. In the event of any dispute or difference between the Parties hereto, whether arising out of or in relation to this Agreement, then either Party shall give to the other Party a notice in writing of such dispute or difference and the same shall be settled at the first instance, by arbitration in Chennai, by a sole arbitrator appointed by mutual consent of the both the Parties herein within a period of 30 (thirty) days from notice of dispute. If the Parties fail to appoint a sole arbitrator within the given time, the arbitrator shall be appointed in accordance with the Arbitration and Conciliation Act, 1996, or any statutory modification or substitution thereof ("Arbitration Act").
If the Parties fail to appoint a sole arbitrator within the given time, the arbitrator shall be appointed in accordance with the Arbitration and Conciliation Act, 1996, or any statutory modification or substitution thereof ("Arbitration Act"). The Parties agree that the rights and obligations of the Parties under this Agreement shall subsist and continue till the final determination of the dispute by the arbitrator or by a Curt of law as specified under Clause 14.1 hereinabove.' 3. Aforementioned clauses 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. 4. It is submitted by the learned counsel that when the primary contract was operated, arbitrable disputes erupted between the parties inter alia touching upon alleged non-refund of about Rs.20 Lakhs money paid upfront for franchise arrangement which never took off. This Court considers it appropriate to not to express any opinion or dilate any further as this is a Section 11 legal drill. 5. Suffice to say that owing to eruption of arbitrable disputes, petitioners issued a 'notice dated 08.10.2021' [hereinafter 'trigger' notice for the sake of brevity, convenience and clarity] invoking arbitration agreement and suggesting the name of sole Arbitrator. Adverting to postal acknowledgment card which forms part of the case file, learned counsel submits that this trigger notice has been duly served on the respondent on 16.10.2021 but the respondent company has not chosen to send a reply. Though the respondent had not sent a reply, it promised to settle the matter and petitioners were waiting in the fond hope that the matter will get settled but that turned out to be a mirage necessitating the presentation of the captioned Arb OP in this Court is further say of learned counsel for petitioners. 6. Prima facie case has been made out for issue of notice. 7. Issue notice to respondent returnable by 02.09.2022. Private notice permitted. 8. List on 02.09.2022.' 3. The aforementioned 24.08.2022 proceedings shall now be read as an integral part and parcel of this order. This means that the abbreviations, short forms and short references used in the earlier proceedings will continue to be used in the instant order also for the sake of convenience and clarity. 4.
Private notice permitted. 8. List on 02.09.2022.' 3. The aforementioned 24.08.2022 proceedings shall now be read as an integral part and parcel of this order. This means that the abbreviations, short forms and short references used in the earlier proceedings will continue to be used in the instant order also for the sake of convenience and clarity. 4. Mr.Vigneshwar Elango, learned counsel who is before this Court adverting to aforementioned earlier proceedings submits that the sole respondent has since been duly served and 'Affidavit of Service' [AOS] has been filed vide Diary No.24135 of 2022. Name of the sole respondentcompany together with full/complete address as in the short and long cause titles is shown in the cause list but there is no representation. Name of the sole respondent-company called out aloud thrice in the Court and in the adjoining corridors but there is no response. This Court is informed by the Registry that no counsel has entered appearance on behalf of the sole respondent. 5. The narrative thus far means that the lone respondent has not chosen to come before this Court and dispute the existence of the arbitration agreement. Therefore, this Court will now proceed to appoint a sole Arbitrator i.e., accede to the prayer in the captioned Arb.OP. 6. Before doing that, this Court deems it appropriate to set out that a legal drill under Section 11 of A and C Act should perambulate within the statutory perimeter sketched 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.' 7. Aforementioned sub-section (6A) came up for consideration before Hon'ble Supreme Court in 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 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) 8. 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. ' 9. Besides aforementioned statutory facet of a Section 11 legal drill, two other facets have been put in place by way of judicial pronouncements vide N.N.Global being ratio laid down by Hon'ble Supreme Court in N.N.Global Mercantile Pvt. Ltd., Vs. Indo Unique Flame Ltd., and others reported in 2021 SCC Online SC 13 and Nortel principle being ratio laid down by Hon'ble Supreme Court in Bharat Sanchar Nigam Limited and another Vs. Nortel Networks India Private Limited reported in (2021) 5 SCC 738 .
Indo Unique Flame Ltd., and others reported in 2021 SCC Online SC 13 and Nortel principle being ratio laid down by Hon'ble Supreme Court in Bharat Sanchar Nigam Limited and another Vs. Nortel Networks India Private Limited reported in (2021) 5 SCC 738 . To be noted, N.N.Global principle is a case of arbitration agreement contained in a contract which is insufficiently stamped/unstamped/not registered when it is compulsorily registrable. Nortel principle turns on a plea of lis being ex facie barred by limitation. None of these issues have been raised in the case on hand as the respondent has not chosen to come before this Court in spite of being duly served. 10. As there is no disputation about the existence of the arbitration agreement, Mr.P.M.N.Bhagavath Krishnan, Advocate, residing at Flat No.1, Marvel Vasudev, No.11, Venkatesa Agraharam Street, Mylapore, Chennai- 600 004, Mob: 9566277892 [E-mail: [email protected]] is appointed as the sole Arbitrator. Learned Arbitrator is requested to enter upon reference qua primary contract i.e., Agreement captioned 'FRANCHISE AGREEMENT' dated 25.02.2019, adjudicate upon the arbitrable disputes that have arisen between the parties by holding sittings in the 'Madras High Court Arbitration Centre under the aegis of this Court' (MHCAC) in accordance with the Madras High Court Arbitration Proceedings Rules 2017 and fee of the learned Arbitrator shall be as per Madras High Court Arbitration Centre (MHCAC) (Administrative Cost and Arbitrator's Fees) Rules 2017. 11. Captioned Arb.OP disposed of in the aforesaid manner. There shall be no order as to costs.