Madras High Court
M/S.Tamil Nadu Water Investment ... vs M/S.Kasipalayam Common Effluent ... on 30 June, 2022
Author: M.Sundar
Bench: M.Sundar
Arb O.P(Com.Div.)No.22 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 30.06.2022
CORAM
THE HONOURABLE Mr.JUSTICE M.SUNDAR
Arb O.P(Com.Div.)No.22 of 2022
M/s.Tamil Nadu Water Investment Company Limited
Represented herein by its Authorised Signatory
'Polyhose Towers'
No.86, Mount Road
Guindy, Chennai-600 032. ... Petitioner
vs.
M/s.Kasipalayam Common Effluent Treatment Plant Pvt. Ltd.,
CETP Gardens
S.F.No.250/1
S.Periyapalayem (PO)
Tirupur - 641 607. ... Respondent
Arbitration Original Petition filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996 to
(a) Appoint the Presiding Arbitrator in terms of Clause 19 of the PMA
Agreement dated 10th April 2012 for the purpose of adjudicating the disputes
between the petitioner and the respondent;
(b) Direct the respondent to pay the costs of this proceeding to the
petitioner;
For Petitioner : Mr.S.Raghunathan
For Respondent : Ms.K.Subhashini
*****
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https://www.mhc.tn.gov.in/judis
Arb O.P(Com.Div.)No.22 of 2022
ORDER
Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the sake of convenience and clarity] has been presented in this Court on 08.09.2021 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] with a prayer for appointment of the Presiding Arbitrator.
2. Mr.S.Raghunathan, learned counsel for the petitioner assisted by Ms.R.Sahana and Ms.K.Subhashini, learned counsel of Chennai Law Associates (Law Firm) on behalf of the lone respondent are before this Court.
3. Both aforementioned learned counsel were heard.
4. There is no disputation that the captioned Arb OP is predicated on clause 19 of an agreement which is referred to as 'PMA Agreement' (to be noted, this Court is informed that 'PMA' stands for 'Project Management Agency') dated 10.04.2012.
5. Aforementioned 'PMA agreement' dated 10.04.2012 shall hereinafter 2/10 https://www.mhc.tn.gov.in/judis Arb O.P(Com.Div.)No.22 of 2022 be referred to as 'primary contract' and 'clause 19' thereat shall be referred to as 'arbitration agreement' / 'arbitration clause' for the sake of convenience and clarity.
6. Aforementioned clause 19 i.e., arbitration clause reads as follows:
'19. Arbitration
(a) It is hereby agreed between the parties that the project shall be executed in the manner and form outlined in this Agreement. If any difference or dispute of any kind whatsoever arises between the parties in connection with or arising out or or relating to or under this Agreement, the parties shall promptly and in good faith negotiate with a view to its amicable resolution and settlement. In the event no amicable resolution or settlement is reached within a period of thirty (30) days from the date on which the above mentioned dispute or difference arose, such dispute or difference shall be referred to a panel of arbitrators.
The panel of arbitrators shall consist of three persons. Each party hereto shall appoint one arbitrator and the two arbitrators so appointed shall together appoint the third arbitrator, who shall function as the presiding arbitrator. The seat of arbitration shall be Chennai and the arbitration shall be conducted in the English language. The Arbitration and Conciliation Act 1996, shall govern Arbitral proceedings.
(b) The existence of any dispute or difference or the 3/10 https://www.mhc.tn.gov.in/judis Arb O.P(Com.Div.)No.22 of 2022 initiation or continuance of the Arbitral proceedings shall not postpone or delay the performance by the parties of their respective obligations under or pursuant to this Agreement. Further, this Agreement shall remain subsisting and operative furing the Arbitral proceedings and no payment due and payable to either party shall be withheld except the payment in dispute, if any.
(c) The Courts of Chennai alone shall have jurisdiction with respect to arbitration or any other dispute.'
7. Aforementioned arbitration clause in primary contract serves as an arbitration agreement between the petitioner and respondent i.e., arbitration agreement within the meaning of Section 2(1)(b) read with Section 7 of A and C Act.
8. Primary contract is inter alia for design, consultancy and project management for a 'Common Effluent Treatment Plant' ['CETP' for the sake of convenience and clarity] at a place known as Kasipalayam. This Court is informed that CETP is 4.4 MLD capacity and estimated costs is Rs.12.08 Crores. This Court is informed that MLD is a unit of measurement/unit. It is not necessary to dilate any further on these aspects of the matter as there is 4/10 https://www.mhc.tn.gov.in/judis Arb O.P(Com.Div.)No.22 of 2022 no disputation or disagreement between the parties about the existence of arbitration agreement i.e., clause 19 of primary contract. To be noted, the scope of a legal drill under Section 11 of A and C Act is largely limited and it has to 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.'
9. 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 [Mayavati Trading Pvt. Ltd vs Pradyuat Deb Burman reported in (2019) 8 SCC 714]. To be noted 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 difficult to agree with the reasoning contained in the aforesaid judgments, as Section 11(6- 5/10 https://www.mhc.tn.gov.in/judis Arb O.P(Com.Div.)No.22 of 2022 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)
10. Aforementioned paragraph No.10 of Mayavati Trading case law takes this Court to Duro Felguera principle i.e., Duro Felguera S.A. Vs 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 6/10 https://www.mhc.tn.gov.in/judis Arb O.P(Com.Div.)No.22 of 2022 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.'
11. In the light of the narrative thus far, without further discussion the following points are recorded.
(a) Learned counsel on both sides agreed for downsizing the Arbitral Tribunal from a three member Arbitral Tribunal to a sole Arbitrator;
(b) Learned counsel for petitioner therefore, requests the prayer for appointment of a Presiding Arbitrator to be treated as a prayer for appointment of a sole Arbitrator;
(c) Both the learned counsel request that a former Hon'ble member of Bench of this Court may please be appointed as an Arbitrator.
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12. In the light of the narrative thus far, Hon'ble Mr.Justice K.Venkatraman (Retd.), a former Judge of this Court, residing at L-Block, 125, 17th Street, East Anna Nagar, Chennai-600 102, Mobile No.7708895435, Email ID : [email protected] is appointed as sole Arbitrator. Hon'ble sole Arbitrator is requested to enter upon reference, adjudicate arbitrable disputes that have arisen between the petitioner and respondent qua primary contract i.e., PMA Agreement dated 10.04.2012 in the light of arbitration clause thereat namely, clause 19 and render an award by holding sittings in the 'Madras High Court Arbitration Centre under the aegis of this Court' (MHCAC) as per Madras High Court Arbitration Proceedings Rules 2017 and fee of Hon'ble sole Arbitrator shall be in accordance with the Madras High Court Arbitration Centre (MHCAC) (Administrative Cost and Arbitrator's Fees) Rules 2017.
13. Though obvious, it is made clear that all questions including arbitrability are left open, rights and contentions of both parties in this regard are preserved for being raised before Hon'ble Arbitrator if so desired and if so advised.
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14. Captioned Arb OP is disposed of in the aforesaid manner. There shall be no order as to costs.
30.06.2022 Speaking/Non-speaking order Index : Yes / No mk Note: Registry is directed to communicate a copy of this order forthwith to
1. Hon'ble Mr.Justice K.Venkatraman (Retd.), High Court, Madras, L-Block, 125, 17th Street, East Anna Nagar, Chennai-600 102, Mobile No.7708895435, Email ID : [email protected]
2. The Director Tamil Nadu Mediation and Conciliation Centre-cum-Ex-Officio Member Madras High Court Arbitration Centre Chennai - 104.
9/10 https://www.mhc.tn.gov.in/judis Arb O.P(Com.Div.)No.22 of 2022 M.SUNDAR. J., mk Arb O.P(Com.Div.)No.22 of 2022 30.06.2022 10/10 https://www.mhc.tn.gov.in/judis