Gujarat High Court
Poggenamp Nagarsheth Powertronics ... vs Posco India Pune Processing Centre Pvt. ... on 1 July, 2022
Author: Aravind Kumar
Bench: Aravind Kumar
C/IAAP/62/2022 ORDER DATED: 01/07/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/PETN. UNDER ARBITRATION ACT NO. 62 of 2022
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POGGENAMP NAGARSHETH POWERTRONICS PVT. LTD.
Versus
POSCO INDIA PUNE PROCESSING CENTRE PVT. LTD.
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Appearance:
MR. DEVEN PARIKH, SENIOR ADVOCATE ASSISTED BY MR. KUNAL
VYAS, ADVOCATE FOR GANDHI LAW ASSOCIATES(12275) for the
Petitioner(s) No. 1,2,3
MR. SANJIB SEN, SENIOR ADVOCATE WITH MR. ABHAY ITAGI WITH MR.
VATSAL TRIVEDI, ADVOCATES FOR M. V. KINI(12681) for the
Respondent(s) No. 1
MR YOGESH G DEV(5700) for the Respondent(s) No. 1
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CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE
ARAVIND KUMAR
Date : 01/07/2022
ORAL ORDER
1. Petitioners are seeking for appointment of a former Judge of Hon'ble Supreme Court of India as Presiding Arbitrator to preside over the Arbitral Tribunal and to adjudicate disputes between the parties in connection with the Joint Venture Agreement dated 30.10.2010.
2. I have heard the arguments of learned Senior Counsel Mr. Deven Parikh appearing for petitioners Page 1 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 and learned Senior Advocate Mr. Sanjib Sen appearing for respondent.
3. On account of disputes having arisen between the parties pursuant to the agreement dated 30.10.2010, it resulted in petitioners getting issued a notice suggesting appointment of Hon'ble Mr. Justice G.T. Nanavati, Former Judge, Supreme Court of India as the sole Arbitrator, which notice came to be replied on 12.04.2019 and 20.04.2019 by the respondent nominating Hon'ble Justice (Retd.) Ms. Sujata Manohar, Former Judge, Supreme Court of India and as its nominee. The nominee Arbitrators of both the parties appointed Hon'ble Mr. Justice R.C. Lahoti, Former Chief Justice of India as presiding Arbitrator.
4. In light of the pleadings laid before the Arbitral Tribunal, the matter was taken up and both the parties tendered their oral and documentary evidence, and matter was finally heard in the month of September, 2021 and reserved the matter for pronouncement of Page 2 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 award. Unfortunately before the pronouncement of arbitral award, one of the members of the Arbitral Tribunal namely Hon'ble Mr. Justice G.T. Nanavati passed away on 18.12.2021. On the demise of nominee arbitrator of the petitioners, a communication was forwarded on 20.12.2021 to the Arbitral Tribunal suggesting and appointing Hon'ble Mr. Justice C.K. Thakkar to act as their nominee Arbitrator. The freshly constituted Arbitral Tribunal held its sittings wherein fresh arguments came to be advanced between 11.01.2022 to 05.03.2022. However, to the misfortune, the Presiding Arbitrator Hon'ble Justice Mr. R.C. Lahoti, Former Chief Justice of India passed away on 23.03.2022. The nominee Arbitrators of both the parties mutually agreed and appointed Hon'ble Mr. Justice Anil R. Dave, Former Judge, Supreme Court of India as the Presiding Arbitrator and infact, consent was also given by the said Hon'ble Presiding Arbitrator vide communication dated 05.04.2022 forwarded to the parties. Intriguingly and surprisingly, a mail came to be forwarded on 11.04.2022 by the Company Secretary Page 3 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 (Legal Department) of respondent Company to the counsel representing respondent before Arbitral Tribunal objecting to appointment of Hon'ble Justice Anil R. Dave, a copy of which was forwarded to the members of the Hon'ble Tribunal namely Hon'ble Mr. Justice Anil R. Dave and Hon'ble Ms. Justice Sujata Manohar. On receiving this mail, Hon'ble Mr. Justice Anil R. Dave, forwarded a mail on 11.04.2022 to the Arbitral Tribunal Members namely Hon'ble Ms. Justice Sujata Manohar and Hon'ble Mr. Justice C.K. Thakkar resigning as Prisiding Arbitrator since one of the parties (respondent) had objected to his nomination. This resulted in a communication being forwarded to the parties namely the petitioner and the respondent through their Advocates on 19.04.2022 narrating the afore-stated facts and informing them about Arbitral Tribunal's inability or disinclination to appoint a Presiding Arbitrator and left open the issue to the parties namely permitted the parties to approach appropriate Court for appointment of the Presiding Arbitrator under Section 11 of the Arbitration and Page 4 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short). Hence, this has given birth to the present application filed by one of the parties namely the claimants. On 17.06.2022, Mr. M.V. Kini undertook to appear on behalf of respondent and as such this Court directed to print the name of Mr. M.V. Kini as counsel appearing for respondent. Vakalatnama has been filed on behalf of respondent by Mr. M.V. Kini and respondent is led by Shri Sanjib Sen, learned Senior Counsel along with Mr. Abhay Itagi and Mr. Vatsal Trivedi, learned advocates.
5. It is contention of learned Senior Counsel Mr. Deven Parikh appearing for petitioners that in view of the unforeseen circumstances having unfolded in the instant case namely at the first instance, Hon'ble Mr. Justice G.T. Nanavati, one of the Arbitrator having expired on 18.12.2021 resulting in Hon'ble Mr. Justice C.K. Thakkar being appointed and thereafter when the arguments were heard on several dates, Hon'ble Mr. Justice R.C. Lahoti, the Presiding Officer having Page 5 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 expired on 23.03.2022, petitioner has been perforced to approach this Court for appointment since the learned nominee Arbitrators of both parties have refused to appoint a Presiding Arbitrator in view of communication dated 11.04.2022 received from the Presiding Arbitrator whom had been appointed by them jointly and on account of the respondent having expressed reservation for such appointment, and the said Presiding Arbitrator appointed by the Arbitral Tribunal having since resigned, he prays for appointment of a Presiding Arbitrator.
6. Per contra, Shri Sanjib Sen, learned Senior Counsel appearing on behalf of respondent submits that present petition would not be maintainable, inasmuch as it has been the consistent stand of the petitioners before Arbitral Tribunal throughout that the respondent is an alter ego of a Foreign Company and he has drawn attention of the Court to the affidavit filed by the petitioners before the Arbitral Tribunal to the several paragraphs of the said affidavit dated Page 6 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 21.07.2020 to drive home the point that petitioner itself is admitting or contending that respondent is 100% subsidiary of POSCO, Korea and further contention of petitioners that respondent is an extended arm of a foreign company, and as such the only remedy available to petitioners is to approach Hon'ble Apex Court inasmuch as when one of the parties to the Arbitral agreement being a Foreign National or a Foreign Company, section 2(f) of the Act, 1996 would be attracted and as such present petition is not maintainable. He would also submit that even otherwise the respondent having approached the Hon'ble Bombay High Court by filing a petition under section 11, this petition need not be entertained and same be dismissed.
7. In reply, learned Senior Counsel appearing for the petitioners has contended that issue regarding the respondent company being a foreign company, requires to be examined, adjudicated and decided by the Arbitral Tribunal and this Court should desist from Page 7 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 examining or entering into said arena as it would prejudice the rights of the parties, hence, he seeks for rejecting of said contention.
8. Having heard learned advocates appearing for parties and after bestowing my careful and anxious consideration to the rival contentions raised at the Bar, it requires to be noticed that at the outset the unfortunate incident of one of the member of the Arbitral Tribunal as well as Presiding Arbitrator having passed away during pendency of the Arbitral Tribunal and this has given rise to the present application as well as application before Bombay High Court (filed by respondent for appointment of Presiding Arbitrator) and thereby the fast track process for adjudication of dispute to which the parties had agreed seems to have got derailed.
9. Be that as it may. The fact remains that trial before the Arbitral Tribunal has been completed or in other words has already got concluded. The only other Page 8 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 exercise which the Arbitral Tribunal may have to undertake would only be hearing the arguments of parties through their learned advocates on the main matter and after evaluating the pleadings and evidence, Tribunal has to pass the arbitral award.
10. Insofar as contention of learned Senior Advocate Mr. Sanjib Sen appearing for respondent about this petition being not maintainable on the ground of there being a specific plea by the petitioners itself that respondent is a foreign company requires to be considered with a pinch of salt. I say so, for the simple reason that by consent of parties, the jurisdiction cannot be conferred. That apart, the nomenclature of the both the companies namely the petitioners and respondent as per the pleadings laid before the Arbitral Tribunal. Perusal of the same would clearly indicate that registered offices of parties is within the Indian Territory. Section 2(1)(f) of the Act, 1996 describes 'international commercial arbitration' as under : -
Page 9 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022
C/IAAP/62/2022 ORDER DATED: 01/07/2022 "Section 2(1)(f) : "international commercial arbitration" means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is--
(i) an individual who is a national of, or habitually resident in, any country other than India; or
(ii) a body corporate which is incorporated in any country other than India; or
(iii) a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or
(iv) the Government of a foreign country;"
11. A plain reading of the above clause of the definition would indicate that if arbitration relates to disputes arising out of legal relationships, whether contractual or not and considered as commercial under the law in force in India, where if at least one of the parties is an individual who is a national of or habitually resident in any country other than India, or a body corporate which is incorporated in any country other than India, or an association or a body of individuals whose central management and control is exercised in any country other than India, or the Government of a foreign country, then such contract Page 10 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 would partake the character of "international commercial arbitration" as defined under section 2(1)
(f) of the Act, 1996.
12. In the aforesaid circumstances, if the disputes were to arise necessarily such disputes will have to be termed as falling under the definition of Section 2(1)(f) viz. as "international commercial arbitration" and the jurisdiction would vest with the Hon'ble Apex Court. As noticed hereinabove and at the cost of repetition, it is noticed that parties who have approached this Court as well as Arbitral Tribunal and laid their pleadings in support of their claims would disclose the respective registered companies are registered in India and prima facie the jurisdiction vest in India. However, this Court would not embark upon conducting a roving inquiry in this regard, particularly in the background of a plea having been raised by the petitioners in its pleading before the Arbitral Tribunal contending that respondent - company is an alter ego of foreign entity or respondent - company is 100% subsidiary of POSCO Page 11 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 Korea and has called upon the Arbitral Tribunal to pierce the Corporate Veil and examine the said issue. In other words, the said issue is at large before the Arbitral Tribunal. Any examination or scrutiny of such contention, would definitely prejudice the rights of either of the parties. Hence, this Court desists from embarking upon such an inquiry being conducted. It is needless to state that both the parties would be liberty to work out their rights or urge their contentions before the Arbitral Tribunal in support of their respective claims in that regard.
13. Now turning my attention back to the core issue namely as to whether the Presiding Arbitrator requires to be appointed ? The answer will have to be necessarily in the affirmative and for the simple reason that learned members of the Hon'ble Arbitral Tribunal, have with pain and agony as is found from the tenor of the communication dated 19.04.2022 have felt that wisdom has to dawn on the parties, to enable them to approach appropriate Court for appointment of a Page 12 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 Presiding Arbitrator. As such petitioners are before this Court as already noticed hereinabove. At this juncture, I may also add that it was unfortunate that the respondent could have taken such a stand of doubting the impartiality of the Presiding Arbitrator appointed by Arbitral Tribunal, namely the impartiality of Hon'ble Mr. Justice Anil R. Dave while forwarding its e-mail on 11.04.2022 to its counsel and marking the copy to other two (2) members of the Arbitral Tribunal. However, this Court need not delve upon said issue further, inasmuch as, the said Hon'ble Judge also having being pained by such e-mail forwarded by the respondent has at the first available opportunity resigned from the Arbitral Tribunal or in other words has in unequivocal terms expressed his intention not to continue to be the Presiding Arbitrator.
14. It is no doubt true that respondent has filed an application under Section 11 before the Bombay High Court seeking for appointment of a Presiding Arbitrator. This itself is an additional ground on which Page 13 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 contention raised by the learned Senior Counsel Mr. Sanjib Sen requires to be rejected. Inasmuch as when it is the specific stand of respondent in this proceedings that on account of plea that has been put forward by the petitioners to the effect that respondent is an alter ego of a foreign company or a subsidiary of a foreign company and as such contract entered into between parties would part-take the character of an 'international arbitration agreement' then necessarily the respondent ought to have approached the Hon'ble Apex Court for appropriate relief. Being fully conscious of this fact, respondent cannot be permitted to raise an argument now put forward that too in an application filed for similar relief namely for appointment of a Presiding Arbitrator, for which respondent has also rightly knocked the doors of Bombay High Court for appointment of a Presiding Arbitrator. The question that would incidentally arise is : whether the petitioners should be permitted to prosecute this petition or the respondent should be permitted to seek for appointment of the Arbitrator before the Bombay Page 14 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 High Court in view of similar petition filed by it. It is submitted by learned Senior Counsel appearing for respondent on instruction from the instructing counsel that said arbitration application has been filed by the respondent before the Bombay High Court on 25.04.2022, whereas this petition by the petitioners (claimants) which is dated 21.04.2022 has been filed on 27.04.2022. Obviously, notice has not been issued by Bombay High Court on the petition filed by the respondent and as such respondent cannot be heard to contend that petitioners knowing fully well about the filing of the petition before Bombay High Court had filed this petition. Even otherwise, the prayer sought for by the respondent herein before the Bombay High Court in the petition filed under section 11(6), is also identical and similar to the prayer sought for by the petitioners in this petition, no fruitful purpose would be served in directing the parties to prosecute the claim before Bombay High Court. For the purposes of convenience and immediate reference, the prayer sought for in the petition filed by respondent before the Page 15 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 High Court of Judicature at Bombay, is extracted herein below :-
"13. The applicant therefore most humbly prays that :
(a) This Hon'ble Court be pleased to appoint any former Chief Justice of India as the Presiding Arbitrator to resolve the disputes arisen between the respondents and applicant in accordance with Clause No. 11 of the JV agreement."
(emphasis supplied by me)
15. When the respondent is also seeking for appointment of a Presiding Arbitrator which is also the prayer of the present petitioners in this petition namely for appointment of a Presiding Arbitrator and keeping in mind that arbitration proceedings is one of the alternate dispute resolution mechanism where the parties have agreed for fast tracking their disputes, it would be needless to state that such disputes have to be taken to its logical end expeditiously. To put it differently, instead of allowing the parties to play in the outer field, it would be better to direct them to go and play near the goal post.
16. Hence, this Court is of the considered view that second contention raised by the learned Senior Counsel Page 16 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022 C/IAAP/62/2022 ORDER DATED: 01/07/2022 appearing for respondent also cannot be accepted.
17. This leads me to the issue as to who is to be appointed as Presiding Arbitrator. As could be seen from tenor of communication exchanged between the parties, both are agreeable for a Former Chief Justice of India to be appointed as Presiding Arbitrator. At the first instance, they had appointed Hon'ble Mr. Justice R.C. Lahoti who unfortunately expired on 23.03.2022. Hence, this Court is of the considered view that ends of justice would be met if one of the Former Chief Justice of India is appointed as the Presiding Arbitrator, since this issue has been left for being resolved by this Court by the two learned Hon'ble Presiding Arbitrators of the Arbitral Tribunal who are adjudicating the disputes between the parties and both parties not being ad-idem on the name of the Presiding Arbitrator.
Hence, I proceed to pass following :
ORDER
(i) Petition filed under section 11(6) is ALLOWED.Page 17 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022
C/IAAP/62/2022 ORDER DATED: 01/07/2022
(ii) Hon'ble Shri Justice Jagdish Singh Khehar, Former Chief Justice, Supreme Court of India, residing at - C-1/35, Ground Floor, Safdarjung Development Area, Delhi - 110016, Chandigarh Address : House No. 1126, Sector 8-C, Chandigarh - 160009, is hereby nominated as the Presiding Arbitrator for adjudicating the disputes between the parties.
(iii) The Arbitral Tribunal would regulate its proceedings with regards to the venue as may be mutually agreed upon between the parties.
(iv) No order as to costs.
(ARAVIND KUMAR) CHIEF JUSTICE AMAR SINGH Page 18 of 18 Downloaded on : Sat Dec 24 20:12:45 IST 2022