Rajasthan High Court - Jaipur
M/S Bla Packaging Industries Pvt. Ltd vs Spectrum Foods Limited on 17 September, 2021
Author: Indrajit Mahanty
Bench: Chief Justice
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Arbitration Application No. 17/2021
M/s Bla Packaging Industries Pvt. Ltd., Through Its Director Shri
Narendra Kumar Agarwal, R/o 1B 1303, Green Acres Chs,
Lokhanwala, Andheri West Mumbai-56.
----Petitioner
Versus
Spectrum Foods Limited, Through Its Director/concerned Officer,
Office Address At Surya House, L-5M B-Ii, Krishna Marg, C-
Scheme, Jaipur-302001.
----Respondent
Connected With S.B. Arbitration Application No. 60/2020 M/s Bla Packaging Industries Pvt. Ltd., Through Its Director Shri Narendra Kumar Agarwal, R/o 1B 1303, Green Acres Chs, Lokhanwala, Andheri West, Mumbai-56
----Petitioner Versus M/s Saboo Sodium Chloro Limited, Through Its Director/concerned Officer, Office Address At Surya House, L-5, B-2, Krishna Marg, C Scheme, Jaipur-302001
----Respondent For Petitioner(s) : Mr. Naman Maheshwari For Respondent(s) : Mr. Amol Vyas HON'BLE THE CHIEF JUSTICE Order 17/09/2021
1. Heard learned counsel for the respective parties.
2. Both the applications have been filed by the applicant namely M/s BLA Packaging Industries Pvt. Limited, therefore, they are being decided by a common order.
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3. The present applications under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter to be referred as 'Act of 1996') have come to be filed by the applicant- M/s BLA Packaging Industries Pvt. Limited pursuant to certain disputes that have arisen between the respondents i.e. M/s Saboo Sodium Chloro Limited pursuant to agreement entered into by the parties. The relevant clause of the agreement reads as under:-
"It is agreed upon by the both parties that in case of dispute, if any, arising under this purchase order the same shall be referred to an arbitrator to be nominated by "Saboo Sodium Chloro Limited", Jaipur and the award of the arbitrator shall be acceptable and binding on both the parties. The venue of such arbitration shall be in Jaipur (Rajasthan)."
4. It is relevant to take note herein that the respondent- company has raised a claim against the present petitioner and petitioner has also raised a counter claim against the respondent and the respondent pursuant to the arbitration clause narrated herein that by virtue of arbitration agreement by communication dated 11.01.2020 appointed Mr. Arif Mohammad Madani, Retired Additional District Judge to act as an arbitrator.
5. Learned counsel for the petitioner submitted that the appointment of arbitrator by the respondent, though is in terms of the agreement entered into between the parties, yet it is not in consonance with the amendment incorporating Section 12 (5) of the Act read with VIIth schedule. In support of his submissions, he placed reliance on the Hon'ble Supreme Court judgment in the case of Perkins Eastman Architects DPC & Anr. Vs. HSCC (India) Ltd. reported in 2019 SCC Online 1517 = AIR 2020 SC 59. While relying on the said judgment, learned counsel for the applicant drew my attention to the conclusion arrived by the (Downloaded on 20/09/2021 at 10:19:29 PM) (3 of 5) [ARBAP-17/2021] Hon'ble Supreme Court in para 23 wherein, it has been held as under:
"23. In TRF Limited, the Managing Director of the respondent had nominated a former judge of this Court as sole arbitrator in terms of aforesaid Clause 33(d), after which the appellant had preferred an application under Section 11(5) read with Section 11(6) of the Act. The plea was rejected by the High Court and the appeal therefrom on the issue whether the Managing Director could nominate an arbitrator was decided in favour of the appellant as stated hereinabove. As regards the issue about fresh appointment, this Court remanded the matter to the High Court for fresh consideration as is discernible from para 55 of the judgment. In the light of these authorities there is no hindrance in entertaining the instant application preferred by the Applicants."
The Hon'ble Supreme Court in its judgment referred hereinabove dealt in detail with the earlier judgment of the Hon'ble Supreme Court in the case of TRF Ltd vs Energo Engineering Projects Ltd. - 2017 SC 3099 and Hon'ble Supreme Court came to the conclusion that there were two categories of cases. The first, similar to the one dealt with in TRF Limited where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself but is empowered or authorized to appoint any other person of his choice or discretion as an arbitrator. If in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he would be said to be having in the outcome or result of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such outcome or decision. If that be the test, similar invalidity would always arise and spring even in the second category of cases. If the interest that he has in the outcome of the dispute, is taken to be (Downloaded on 20/09/2021 at 10:19:29 PM) (4 of 5) [ARBAP-17/2021] the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases.
6. The lordships further concluded as follows:-
"We are conscious that if such deduction is drawn from the decision of this Court in TRF Limited, all cases having clauses similar to that with which we are presently concerned, a party to the agreement would be disentitled to make any appointment of an Arbitrator on its own and it would always be available to argue that a party or an official or an authority having interest in the dispute would be disentitled to make appointment of an Arbitrator. In paragraph 16, the lordships have come to hold that the logical deduction from TRF Limited. Paragraph 50 of the decision shows that this Court was concerned with the issue, whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an Arbitrator? The ineligibility referred to therein, was as a result of operation of law, in that a person having an interest in the dispute or in the outcome or decision thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator and that such person cannot and should not have any role in charting out any course to the dispute resolution by having the power to appoint an arbitrator."
7. In view of the aforesaid findings of the Hon'ble Supreme Court in the case as recorded hereinabove, the contentions raised by the counsel for the respondent to the contrary has no ground to stand on. In other words, both categories of the cases are covered in the said judgment. Interested parties the possibility of (Downloaded on 20/09/2021 at 10:19:29 PM) (5 of 5) [ARBAP-17/2021] bias cannot be ruled out. Hence, the necessity to appoint any arbitrator who does not suffer from any bias is required.
8. Accordingly, this Court directs appointment of Dr. Chandrika Prasad Sharma, District Judge (Retd.) R/o 152/41, Shipra Path, Mansarovar, Jaipur, 302020 to act as an Arbitrator and to decide all issues without prejudice to the rights and contentions raised in the present application and in the reply. The arbitration fees shall be in accordance with fourth schedule of the Act of 1996.
9. The parties are at liberty to raise all such objections before the Arbitrator.
10. Registry is directed to intimate Dr. Chandrika Prasad Sharma, District Judge (Retd.) of his appointment as Arbitrator and parties are at liberty to call upon appropriate date for necessary directions.
11. The applications are accordingly disposed of.
(INDRAJIT MAHANTY),CJ NAVAL KISHOR /Harshit/18-19 (Downloaded on 20/09/2021 at 10:19:29 PM) Powered by TCPDF (www.tcpdf.org)