Bombay High Court
Noble Organisation Zest Yielding vs Maharashtra State Rural Livelihood ... on 25 July, 2024
2024:BHC-OS:11027
Diksha Rane 10. CARAPL 34833-23.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION APPLICATION (L) NO.34833/2023
NOBLE ORGANISATION ZEST
YIELDING ..APPLICANT
VS.
MAHARASHTRA STATE RURAL
LIVELIHOOD MISSION ..RESPONDENT
------------
Adv. Chetan Shah a/w. Adv. Nikita Lad i/b. Ashok Purohit & Co. for
applicant.
Adv. Raj L. Kamble for respondent.
Mr. Sachin Salunkhe, Officer of the respondent.
------------
CORAM : Rajesh S. Patil, J.
DATE : July 25, 2024.
P.C. :
1. Between the parties there is a Memorandum of Understanding dated 7/8/2019. It contains an arbitration agreement in clause 8.
There were disputes and differences between the parties, hence, the applicant herein filed Commercial Arbitration Application No.214 of 2022 for appointment of arbitrator. The said Arbitration Application was disposed of by an order dated 12/4/2023. The said order reads as under:-
"1. Heard Mr. Mody, learned Advocate for Applicant.
2. This application has been filed under Section 11 of the Arbitration and 1 Diksha Rane 10. CARAPL 34833-23.doc Conciliation Act, 1996 (for short "the said Act").
3. None appears for the Respondent though Respondent is represented by an Advocate.
4. On 06.03.2023 learned Advocate for Respondent had appeared before this Court on which date it was informed that the Advocate on record for Respondent had filed his leave note. Thereafter matter was listed on board on 13.03.2023 and on that date it did not reach. Thereafter on 05.04.2023 the matter reached but once again none was present for Respondent. Hence matter was stood over to today.
5. Today also none appears for the Respondent. The matter cannot be protracted further. Mr. Mody would submit that the parties entered into MOU dated 07.08.2019 pursuant to following the due process of law for appointment of the Applicant under the Maharashtra State Rule Livelihood Mission (MSRLM) and for implementing the placement linked Skill Development Scheme Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) project in the State of Maharashtra.
6. Applicant evinced expression of interest by making application under the said project on 20.11.2018, followed by initial screening, followed by recommendation for Qualitative Approval, followed by conducting the pre-Project Approval Committee ('PAC') scheduled, followed by a conditional sanction order dated 29.05.2019 and finalisation of appointment of the Applicant as per the final PAC meeting dated 25.04.2019. Respondent finalised and sanctioned the project on 06.08.2019, made a representation thereto and only thereafter executed the MOU dated 07.08.2019 with the Applicant.
7. Under the MOU Applicant was to receive an amount of 25% of the total project cost. Applicant deposited the Bank Guarantee of approximately Rs.19 lakhs with the Respondent and thereafter started the project. Applicant received an amount of Rs. 37,73,682/- along with 2% TDS which according to the Applicant was approximately 12.5% of the advance in respect of the subject project. Pursuant thereto there was subsequent revision of target and Due Diligence Report ('DDR') was also filed.
8. It is the contention of the Applicant that he has incurred expenses whereas by a communication dated 22.12.2021 Respondent informed the Applicant that the Applicant had not commenced or trained any candidates. Hence the dispute. Invocation Notice dated 19.04.2022 was issued which is at Exh.N (page No.77). The Arbitration Clause is Clause No. 8.1 at page No. 39 of the MOU. The Arbitration Clause and the Invocation Notice are in consonance with the provisions of the said Act.
9. An arguable case has been made by Mr. Mody. There is one issue which Mr. Mody has argued and needs consideration. Clause 8.1 of MOU reads thus:
"8.1. The parties hereby agree that any controversy, claim or dispute arising in connection with this MoU, and which cannot be resolved amicably, shall be referred to the Principal Secretary, Rural Development Department, Government of Maharashtra (Chairman of the Executive Council of Maharashtra State Rural Livelihoods Mission in the State), whose decision shall be final and binding on all parties."
10. According to Mr. Mody though it was agreed by the parties that the dispute arising with in connection with the MOU, if not resolved amicably, shall be referred to the Principal Secretary, Rural Development, Government of 2 Diksha Rane 10. CARAPL 34833-23.doc Maharashtra, he would submit that in view of the provisions of Section 12(5) read with the VIIth Schedule, the arbitration dispute cannot be referred to the Principal Secretary and in that view of the matter he has urged the Court to appoint the Arbitrator of its choice to decide the disputes between the parties.
11. Section 12(5) of the said Act reads thus:
"12(5) : Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator. Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing."
11.1. Serial No.1 of the 7th Schedule reads thus:
"1. The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party."
11.2. Both the provisions were read together would clearly show that there is a direct nexus and relationship of the learned proposed Arbitrator stated in Clause 8.1 of the MOU with the Respondent. In that view of the matter, Mr. Mody would be right in his contention. He has fairly left the appointment of the Arbitrator to be done by this Court. He has urged the Court to appoint the sole Arbitrator to resolve all disputes between the parties in accordance with law.
12. Hence the following order:
(i) Justice Mr. Suresh C. Gupte, (Retired Judge of this Court) is appointed as sole Arbitrator to decide upon the disputes and differences between the parties which is the subject matter of the present Petition;
(ii) Parties are directed to intimate to Justice Mr. Suresh C. Gupte (Retd.) of his appointment as a sole Arbitrator to resolve the dispute between them;
(iii) 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) 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 proceeding, with a copy to be forwarded to both the parties;
(iv) Parties are directed to appear before the learned sole Arbitrator within a period of two weeks from today and the learned Arbitrator shall fix a schedule as per his convenience;
(v) Learned arbitral Tribunal shall give all such further directions with reference to the arbitration and also as to how it is to be proceeded further considering that the arbitration had proceeded before the earlier arbitral Tribunal upto a particular stage;
(vi) Contact and communication particulars shall be provided by both the sides to the learned sole Arbitrator within a period of one week from today. This information shall include a valid and functional email as well as mobile numbers of the parties participating in the process as well as all Advocates / Counsel;
(vii) All contentions of the parties are expressly kept open;
(viii)Costs and fees of the learned sole Arbitrator and Arbitration proceedings shall be borne by both parties in equal proportion as per his directions and shall 3 Diksha Rane 10. CARAPL 34833-23.doc be subject to the final award that may be passed by the Tribunal.
13. In view of the above, Commercial Arbitration Application is disposed."
2. Accordingly, retired Judge of this High Court Shri Suresh C. Gupte was appointed as sole arbitrator to decide the disputes and differences between the parties. However, by Minutes of the Meeting held on 3/7/2023 before the sole arbitrator the arbitration proceedings were terminated, and the parties were directed to approach this Court for appointment of substitutes arbitrator. For ease of reference, the Minutes of the Meeting dated 3/7/2023 held before sole arbitrator, is reproduced herein below :-
"MINUTES OF THE MEETING HELD ON 3 rd JULY 2023 AT 4:30 P.M. AT 43, 4 th FLOOR, FREE PRESS HOUSE, NARIMAN POINT, MUMBAI - 400 021:-
1. As noted in the Minutes of Meeting dated 20th June 2023, the Tribunal had indicated in that meeting the broad procedure to be followed at the hearing of the reference and its fees structure, concerning which the parties were to indicate their consent on the next date. Learned Counsel for both parties, after taking instructions from their respective clients, inform the Tribunal that both are not agreeable to the fee structure indicated by the Tribunal. Learned Counsel inform the Tribunal that they shall go back to the Hon'ble Court in Commercial Arbitration Application No. 214 of 2022 and seek its directions for appointment of a substitute arbitrator and that the proceedings before this Tribunal may accordingly be terminated.
2. It is ordered accordingly. The parties are at liberty to approach the Hon'ble High Court and seek appropriate directions for appointment of a substitute arbitrator."
3. The parties have now agreed to appoint Mr. Vishal Kanade, advocate practicing in this Court as Arbitrator to decide their disputes and differences.
4. Accordingly, Mr. Vishal Kanade is appointed as sole arbitrator 4 Diksha Rane 10. CARAPL 34833-23.doc to decide the disputes and differences between the parties. Hence, the following order:
(a) Appointment of Arbitrator: Mr. Vishal Kanade, is hereby nominated to act as a Sole Arbitrator to decide the disputes and differences between the parties under the Memorandum of Understanding dated 7/8/2019.
(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 within one week from the date of this order is uploaded.
(ii) In addition, within one week of this order being uploaded, the Registry will forward an ordinary copy of this order to the learned Sole Arbitrator at the following postal and email addresses:
Arbitrator/s Mr. Vishal Kanade Address Office No.103, 1st floor, Gundecha Chambers, N. M. Road, Fort, Mumbai - 400 001.
Mobile 9819668711 E-mail : [email protected]
(c) Disclosure: The learned Sole Arbitrator is requested to forward the necessary statement of disclosure under Section 11(8) read with Section 12(1) of the Arbitration Act to the Prothonotary and Senior Master of this Court, referencing this arbitration application, as soon 5 Diksha Rane 10. CARAPL 34833-23.doc as possible, and in any case sufficiently before entering upon the reference to arbitration. That statement will be retained by the Prothonotary and Senior Master on the file of this application. Copies will be given to both sides.
(d) Appearance before the Arbitrator: Parties will appear before the learned Sole Arbitrator on such date and at such place as the learned Sole Arbitrator nominates to obtain appropriate directions in regard to fixing a schedule for completing pleadings, etc.
(e) Contact/communication information of the parties: Contact and communication particulars are to be provided by both sides to the learned Sole Arbitrator within one week of this order being uploaded.
The information is to include a valid and functional email address.
(f) Interim Application/s:
(i) Liberty to the parties to make an interim application or interim applications including (but not limited to) interim application under Section 17 of the Arbitration & Conciliation Act, 1996 before the learned Sole Arbitrator.
(ii) Any such application if preferred will be decided in such manner and within such time as the learned Sole Arbitrator deems fit.
(g) Fees: The arbitral tribunal's fees shall be governed by the Bombay High Court (Fee Payable to Arbitrators) Rule, 2018.
(h) Sharing of costs and fees: Parties agree that all arbitral costs and the fees of the arbitrator will be borne by the two sides in equal share in the first instance.6
Diksha Rane 10. CARAPL 34833-23.doc
(i) Consent to an extension if thought necessary: Parties immediately consent to a further extension of up to six months to complete the arbitration, should the learned Sole Arbitrator find it necessary.
(j) Venue and seat of arbitration: Parties agree that the venue and seat of the arbitration will be in Mumbai.
5. The Commercial Arbitration Application is disposed of.
(Rajesh S. Patil, J.) 7 Signed by: Diksha Rane Designation: PS To Honourable Judge Date: 26/07/2024 18:33:23