Bombay High Court
Bhupesh Sevantilal Shah vs Lyka Bdr International Limited on 27 February, 2023
Author: Bharati Dangre
Bench: Bharati Dangre
1/4 20 CARAPL-30623-22.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM. ARBITRATION APPLICATION (L) NO.30623 OF 2022
Bhupesh Sevantilal Shah .. Applicant
Versus
Lyka BDR International Limited .. Respondent
...
Mr.Sahil Mahajan for the Applicant.
Mr.Chetan Kapadia, Senior Advocate with Ms.Vidisha Rohira
and Mr.Pankaj Uttaradhi i/b Ms.Sabeena Mahadik for the
Respondent.
...
CORAM: BHARATI DANGRE, J.
DATED : 27th FEBRUARY, 2023 P.C:-
1. A Memorandum of Understanding (MoU) entered between the applicant, referred to as the 'frst part' and the respondent, referred to as the 'company' dated 02/11/2018, gave rise to certain disputes.
The MoU contained a specifc clause of settling the dispute by mutual discussion and in absence of such settlement, a reference to be made to the Arbitrator under the Arbitration and Conciliation Act, 1996. The Court in Bombay is conferred with the jurisdiction to entertain any claim. The place of arbitration is also agreed to be Mumbai.
M.M.Salgaonkar
::: Uploaded on - 28/02/2023 ::: Downloaded on - 28/02/2023 19:03:22 :::
2/4 20 CARAPL-30623-22.odt
2. Since the dispute arose between the parties, the applicant invoked arbitration, by addressing a communication dated 05/08/2022, wherein a reference is made to clause 20 in the MoU and an offer was made for a mutual discussion, in absence of which, the name of the sole Arbitrator was also suggested.
In response, on 25/08/2022, the respondent denied the binding effect of the MoU and rather questioned the execution of the MoU itself. Apart from this, appointment of the Arbitrator was also contested, as an unilateral appointment.
Since the dispute could not be made over to the Arbitrator, the applicant has invoked Section 11 of the Arbitration and Conciliation Act, seeking appointment of the sole Arbitrator.
3. The application fled before this Court is contested by the respondent, by taking a stand that the MoU is non-est factum and void ab initio as its consideration and object is unlawful and the transactions forming subject matter thereof are forbidden by law. It is also specifcally averred that the MoU is a fraudulent device adopted by the applicant in furtherance of 'business of money-lending' against usurious rate of interest and the same is in violation of the provisions of the Maharashtra Money-Lending (Regulation) Act, 2014.
With this background, the arbitrability of the dispute is called in question in the wake of the alleged fraud that is committed by the applicant.
M.M.Salgaonkar
::: Uploaded on - 28/02/2023 ::: Downloaded on - 28/02/2023 19:03:22 :::
3/4 20 CARAPL-30623-22.odt
In my considered opinion, this aspect of the matter can very well be examined by the Arbitrator, since the arbitration has been invoked by the applicant and the MoU specifcally contains a clause for appointment of the sole Arbitrator.
In the wake of the above, by exercising the power available under Section 11(6) of the Arbitration and Conciliation Act, 1996, I deem it appropriate to pass the following order.
TERMS OF APPOINTMENT
(a) Appointment of Arbitrator :
Mr.Shyam Kapadia, an Advocate of this Court, is hereby appointed as a Sole Arbitrator to decide the disputes and differences between the parties under the document referred to above.
(b) Communication to Arbitrator of this order :-
(i) A copy of this order will be communicated to the learned Sole Arbitrator by the Advocates for the applicant/ petitioner within one week from the date this order is uploaded.
(c) Disclosure : The learned Arbitrator, within a period of 15 days before entering the arbitration reference, shall forward a statement of disclosure as per the requirement of Section 11(8) read with Section 12(1) of the Arbitration and Conciliation Act, 1996, to the Prothonotary & Senior Master of this Court, to be placed on record of this application, with a copy to be forwarded to both the parties.
(d) Appearance before the Arbitrator :The parties shall appear before the Sole Arbitrator within a period of two weeks from today and the learned Arbitrator shall fx up a frst date of hearing in the week commencing from M.M.Salgaonkar ::: Uploaded on - 28/02/2023 ::: Downloaded on - 28/02/2023 19:03:22 ::: 4/4 20 CARAPL-30623-22.odt 13/03/2023. The Arbitral Tribunal shall give all further directions with reference to the arbitration and also as to how it is to proceed.
(e) Contact and communication information of the parties : Contact and communication particulars are to be provided by both sides to the learned Sole Arbitrator. This information shall include a valid and functional E-mail address as well as mobile numbers of the parties, participating in the process as well as of the Advocates.
(f) Section 16 application : The respondents are at liberty to raise all questions of jurisdiction within the meaning of section 16 of the Arbitration Act. All contentions are left open.
(g) Fees : The sole Arbitrator shall be entitled to the fees prescribed under the Bombay High Court (Fee Payable to Arbitrators) Rules, 2018 and the arbitral costs and fees of the Arbitrator shall be borne by the parties in equal portion and shall be subject to the fnal Award that may be passed by the Tribunal.
(h) Venue and seat of Arbitration : Parties agree that the venue and seat of the arbitration will be in Mumbai.
(i) Procedure : These directions are not in derogation of the powers of the learned Sole Arbitrator to decide and frame all matters of procedure in arbitration.
4. All the rights and contentions of the parties are kept open, including the right to the respondent to institute a counter-claim before the arbitral tribunal.
5. Comm. Arbitration Application (L) No.30623 of 2022 stands disposed off in the aforestated terms.
( SMT. BHARATI DANGRE, J.) M.M.Salgaonkar ::: Uploaded on - 28/02/2023 ::: Downloaded on - 28/02/2023 19:03:22 :::