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2023 DIGILAW 634 (CHH)

Advait Buildtech Pvt Ltd. v. Venu Gopal Sharma S/o. Sheshnarayan Sharma

2023-11-24

RAMESH SINHA

body2023
ORDER : 1. Since the issues for consideration involve in all these Arbitration Applications filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act of 1996’) for appointment of Arbitrator are similar, they are clubbed and heard together and are being disposed of by this common order. Parties, pleadings and proceedings are referred to as given in ARBR No. 25 of 2023, except where it is separately adverted to. 2. Heard Mr. Pankaj Singh, learned counsel for the applicant as well as Mr. Tarendra Kumar Jha, learned counsel, appearing for respondents in all these cases. 3. The present applications have been filed by the applicant under Section 11 (6) of the Act of 1996 seeking an order from this Court for the appointment of an Arbitrator. 4. Mr. Pankaj Singh, learned counsel for the applicant submitted that the applicant previously happens to be a Coaching Institute/Academy known by the name of Gate Academy Learning Pvt. Ltd. The applicant and respondent entered into an Agreement (Contractual Agreement for Tutor) dated 22.11.2020, wherein respondent agreed to render his service as a tutor of the applicant under the Agreement for the continuous period of 3 years from the date of execution of the Agreement. The said Agreement between the applicant and respondent under Clause 15.7 had an arbitration clause, wherein both the parties categorically agreed that “in case of any dispute arising in respect of this Agreement, the matter shall re referred to arbitration of sole Arbitrator duly appointed by Party No.1 (Applicant in the present matter). The Arbitration proceeding shall be conducted at Bhilai (C.G) in consonance with the provision of Arbitration and Conciliation Act, 1996.” He further submitted that contrary to express provisions of the Agreement, the respondent resigned from his post of tutor on 09.07.2021 before completion of three years thereby violated the terms of Clause 15.7 of the Agreement. Upon receipt of said resignation by the respondent, the applicant sent a legal notice through its Advocate vide Notice bearing Ref. No. LN/AD756/1039, dated 04.08.2021 to the respondent. The applicant in compliance with the Agreement invoked the Arbitration proceeding by sending a letter of request to Shri Ashok Kumar Panda (former Judicial member, C.G. Arbitration Tribunal Raipur; former Registrar General of High Court of Chhattisgarh and Retd. District and Sessions Judge), which was accepted by the Arbitrator. No. LN/AD756/1039, dated 04.08.2021 to the respondent. The applicant in compliance with the Agreement invoked the Arbitration proceeding by sending a letter of request to Shri Ashok Kumar Panda (former Judicial member, C.G. Arbitration Tribunal Raipur; former Registrar General of High Court of Chhattisgarh and Retd. District and Sessions Judge), which was accepted by the Arbitrator. The applicant sent a letter of intimation dated 01.04.2022 to the respondent to invoke Arbitration proceedings informing the name of Arbitrator and its designation. 5. Mr. Singh further submitted that Arbitration proceedings duly began wherein the respondent appeared and raised objection on the appointment of the Arbitrator. The learned sole Arbitrator Shri Ashok Kumar Panda dropped the proceedings on 10.09.2022 on the ground that one party cannot unilaterally appoint a sole Arbitrator in view of the judgment of Hon’ble Supreme Court rendered in case of Perkins Eastman Architect DPC (India) Ltd. V/s HSCC (India) Ltd., reported in (2020) 20 SCC 760 . After receiving the said order dated 10.09.2022 of the Hon’ble Arbitrator, the applicant duly complied with the order and again set a proposal letter dated 10.12.2022 to mutually appoint the Arbitrator with consent of the respondent, however, till date the applicant did not receive any response from the other party. Based on the aforesaid premise it is apparent that the respondent is not agreeable to appointment of Arbitrator by mutual consent, meaning thereby parties are not able to appoint an arbitrator mutually with their consent and thus applicant has filed this application under section 11(6) of the Act of 1996 seeking appointment of an Arbitrator. 6. The Respondent has filed reply and is not agreed for Arbitration proceeding and contented that it is quite vivid from the application filed before this Hon’ble Court that the applicant has not enclosed any authenticated evidence in pursuant with the aforesaid provisions of Company Act 2013 regarding change of name of the applicant Company to support the legal entity of the applicant viz. M/s ADVIT BUILTECH PVT LTD. M/s ADVIT BUILTECH PVT LTD. as the previously known company with name and title M/s Gate Academy Learning Pvt. Ltd. Further, the affidavit made in support of the application by one Sri Umesh Dhande S/o Hari Ram Dhande is not capable in law to support this stand of the applicant that it was previously known as M/s Gate Academy Learning Pvt. Ltd. inasmuch as that the averment of the deponent in the affidavit is not supported with certificate of authorization by its company authorizing him to depose and authenticate the documents annexed with the application under Section 11(6) of the Act 1996. Further, no certificate of incorporation pursuant to change of name issued by the Registrar of the Companies under Companies (Incorporation) Rules 2014 has been enclosed that may reveal the objective/nature and workings of the company pre and post change in name duly incorporated under this Rule. 7. In view of the foregoing, the applicant has no legal entity of a “Party” as defined under Section 2 (h) read with Section 7 of the Arbitration and Conciliation Act 1996 which reads as under: “Sec.2 (h) “party” means a party to an arbitration agreement.” “Sec.7. Arbitration agreement.—(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.” 8. The Respondent also submitted that from the facts stated in the application that the applicant does not fall in the category as “party” under Section 2(h) and therefore, no arbitration agreement exist in terms with provisions under Section 7(1) between the applicant and the respondent herein. The applicant is not entitled to make any claim to appoint arbitrator under the provisions of Section 11(6) of the Act of 1996 since it has no privity as party in the agreement dated 22.11.2020 marked as Annexure-A/1 of the application. 9. Non-applicant/respondent herein places reliance on Vidya Drolia and Ors. Versus Durga Trading Corporation, (2021) 2 SCC 1 wherein the Hon’ble Supreme Court observed: "153. Accordingly, we hold that the expression "existence of an arbitration agreement" in Sec. 11 of the Arbitration Act, would include aspect of validity of an arbitration agreement, albeit the court at the referral stage would apply the prima facie test on the basis of principles set out in this judgment……” 10. Accordingly, we hold that the expression "existence of an arbitration agreement" in Sec. 11 of the Arbitration Act, would include aspect of validity of an arbitration agreement, albeit the court at the referral stage would apply the prima facie test on the basis of principles set out in this judgment……” 10. The Respondent relied upon the recent Judgment of Hon'ble Supreme Court in case of NTPC Vs. M/s SPML Infra Ltd. [AIR (SC)-2023-0-1974, LAWS (SC)-2023-4-10, ALD (SC)-2023-3-13] decided on 10.04.2023 the Hon’ble Supreme Court has observed: “(25.) Eye of the Needle: The above-referred precedents crystallise the position of law that the pre referral jurisdiction of the courts under Sec. 11(6) of the Act is very narrow and inheres two inquiries. The primary inquiry is about the existence and the validity of an arbitration agreement, which also includes an inquiry as to the parties to the agreement and the applicants privity to the said agreement. These are matters which require a thorough examination by the referral court. The secondary inquiry that may arise at the reference stage itself is with respect to the non arbitrability of the dispute.” 11. The Respondent also submitted that it is the duty cast upon the referral court to consider the dispute/issue with respect to the existence of an arbitration agreement, in view of the recent judgment pronounced by the Hon’ble Supreme Court in Magic Eye Developers Pvt. Ltd. Vs. Green Edge Infrastructure Pvt. Ltd. decided on 12.05.2023 [AIR(SC)-2023- 0-2339. 12. The Respondent also submitted that the applicant has filed the instant application under Section 11(6) of the Act of 1996 claimaning that an Arbitration Agreement exists at Para 15.7 of the principal agreement i.e. “Contractual Agreement for Tutor” enclosed with the application as Annexure-A/1. Para 13 of this Agreement deals with indemnification and compensation @ Rs. 50Lakhs (Rupees Fifty Lakhs Only) payable by the respondent in case of breach of this agreement. The agreement , thus fall under the category of BOND as defined under Sec 2(5) of the Indian Stamp Act 1899 therefore needs to be stamped with value as prescribed under the Schedule of the RATE STRUCTURE OF STAMP DUTY, CHHATTISGARH STATE "SCHEDULE 1-A" which provides at Para 15 as below: “15 Bond - (As defined by section 2(5) not being a Debenture and not being otherwise provided for by this Act or by the Court Fees Act,1870 (VII of 1870). On the amount or value secured: Provided that if the value or the amount is not a multiple of rupees ten it shall be rounded off to the nearest multiple of rupees ten, five rupees and over being counted as ten rupees and less than five rupees being disregarded. - Two percent of such amount or value.” Since the amount value of the Bond is Rs. 50 Lakh, the payable stamp duty @ 2% would be Rs.10, 000/- (Rupees Ten Thousand) plus other admissible charges as may be levied. Perusal of the photo copy of the document placed at page no.8 Annex. A/1 of the application would reveal that the stamp duty paid is Rs.500/- (Rupees Five Hundred only) which makes the agreement insufficiently/inadequately stamped and therefore not maintainable. Since the principal agreement is not maintainable on this score, it is undisputed in law that the container agreement of arbitration as one of the clause of the main agreement is also not maintainable. Non-applicant/respondent herein places reliance on the recent judgment pronounced by the Largest Bench of 05 Judges of the Hon’ble Supreme Court in N. N. Global Vs. Indo Unique Flame Limited 2023 SCC On Line SC 495. 13. The Respondent further relied upon the Judgment of Hon'ble Supreme Court in case of Vidya Drolia and Ors. Vs. Durga Trading Corporation mentioned supra wherein Hon’ble Court has observed: “24. D.Y. Chandrachud, J. in A. Ayyasamy vs. A. Paramasivam and Others, (2016) 10 SCC 386 referring to the dictum in Booz Allen and Hamilton Inc., has made two important comments: "35...This Court held that this class of actions operates in rem, which is a right exercisable against the world at large as contrasted with a right in personam which is an interest protected against specified individuals. All disputes relating to rights in personam are considered to be amenable to arbitration while rights in rem are required to be adjudicated by courts and public tribunals… xx xx xx 36. All disputes relating to rights in personam are considered to be amenable to arbitration while rights in rem are required to be adjudicated by courts and public tribunals… xx xx xx 36. The well-recognised examples of non-arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes. The Court came to the aforesaid conclusion, of ascertaining certain subject matters as non-arbitrable, on two main reasons, (1.) that certain matters are excluded for examination by a private forum; (2) that in rem rights cannot be arbitrated. 38. Hence, in addition to various classes of disputes which are generally considered by the courts as appropriate for decision by public fora, here are classes of disputes which fall within the exclusive domain of special fora under legislation which confers exclusive jurisdiction to the exclusion of an ordinarily civil court. That such disputes are not arbitrable dovetails with the general principle that a dispute which is capable of adjudication by an ordinary civil court is also capable of being resolved by arbitration. However, if the jurisdiction of an ordinary civil court is excluded by the conferment of exclusive jurisdiction on a specified court or tribunal as a matter of public policy such a dispute would not then be capable of resolution by arbitration." 14. No rejoinder has been filed by the applicant and on a pointed query being made to learned counsel for the applicant, whether he wants to file rejoinder, he submits that no rejoinder is required in the instant case. 15. After hearing learned counsel the parties and perusal of records, it is clear that the respondent has not executed any agreement with the present applicant and the respondent is also not agreeable to the arbitration proceedings and in view of the settled proposition of law as discussed above, this Court is not inclined to exercise the jurisdiction under Section 11 (6) of the Act of 1996. 16. 16. Accordingly, all the aforesaid applications are liable to be and hereby dismissed. However, the applicant is at liberty to avail other legal remedy available under the law.