Kerala High Court
A.V. Manoharan vs M/S.Niit Ltd on 27 February, 1995
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN
MONDAY, THE 20TH DAY OF JANUARY 2014/30TH POUSHA, 1935
OP(C).No. 4421 of 2012 ()
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PETITIONER :
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A.V. MANOHARAN, S/O.LATE M.V.MADHAVAN NAIR,AGED 60 YEARS,
PRESENTLY RESIDING AT 'KARTHIKA', PODIKKUNDU,
PALLIKKUNNU P.O., KANNUR -670 004, KERALA,
MANAGING DIRECTOR, MANDOT COMPUTERS PVT.LTD.
BY SRI.A.V.MANOHARAN (PARTY-IN-PERSON)
RESPONDENT(S):
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1. M/S.NIIT LTD., THROUGH ITS MANAGING DIRECTOR AND CHAIRMAN,
8, BALAJI ESTATE, SUDARSHAN MUNJAL MARG, KAKAJI,
NEW DELHI - 110 019.
2. RAJENDRA S PAWAR, CHAIRMAN, M/S.NIIT LTD., PLOT NO.85, SECTOR,
32, INSTITUTIONAL AREA, GURGAON, HARYANA.
BY SRI.GEORGE THOMAS,SENIOR ADVOCATE,(AMICUS CURIAE)
SRI. G. SREEKUMAR (AMICUS CURIAE)
BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR
SRI.P.GOPINATH
SRI.P.BENNY THOMAS
SRI.K.JOHN MATHAI
THIS OP (CIVIL) HAVING BEEN FINALLY HEARD
ON 20-01-2014, THE COURT ON THE SAME DAY DELIVERED
THE FOLLOWING:
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OP(C).NO.4421/2012
APPENDIX
PETITIONER(S) EXHIBITS
EXT.P-1 TRUE COPY OF THE AGREEMENT BETWEEN THE RESPONDENT
COMPANY AND THE PETITIONER, DATED 27.02.1995.
EXT.P-2 TRUE COPY OF THE ESCROW AGREEMENT BETWEEN THE
RESPONDENTS COMPANY AND THE PETITIONER DATED 27.02.1995
EXT.P-3 TRUE COPY OF THE II TERM AGREEMENT BETWEEN THE
RESPONDENT COMPANY AND THE PETITIONER DATED 21.02.1998.
EXT.P-4 TRUE COPY OF THE LETTER DATED 22.02.1999 BY THE
RESPONDENTS STATING THE PURCHASE OF THE PETITIONER'S
CENTRE WITH APPROPRIATE PURCHASE PRICE BY ANEW BUSINESS
PARNTER WHOM THE RESPONDENTS WILL FIND OUT AND THE
PETITIONER HAS TO CONTINUE TRAINING THE STUDENTS TILL
THAT TIME.
EXT.P-5 TRUE COPY OF THE INTEREST ACCRUED ON THE FIXED DEPOSIT
CREATED IN IOB, KANNUR WITH THE PETITIONER'S SHARE OF FEES.
EXT.P-6 TRUE COPY OF THE FIXED DEPOSIT WITH THEIR INTEREST
BROUGHT AGAIN TO THE ESCROW ACCOUNT BY IOB, KANNUR.
EXT.P-7 TRUE COPY OF THE DD NO.845033 DATED 15.09.1999 FOR ASUM
OF RS.3,30,000 DRAWN BY THE RESPONDENT.
EXT.P-8 TRUE COPY OF THE POLICY LETTER ISSUED BY THE RESPONDENTS
FOR RELEASING THE INTEREST 14% ON THE TRANSFERRED FIXED
DEPOSIT BY THE RESPONDENTS.
EXT.P-9 TRUE COPY OF THE LETTER STATING THE RELEASE OF INTEREST
UPTO SEPTEMBER 1998 BY THE RESPONDENTS.
EXT.P-10 TRUE COPY OF THE INTERNAL NOTE ISSUED BY THE RESPONDENTS
REGARDING THE FIXED DEPOSIT TRANSFERRED FROM 22 CENTRES.
EXT.P-11 TRUE COPY OF THE STATEMENT OF ACCOUNTS GOT FROM IOB,
KANNUR ON THE ESCROW ACCOUNT 2366, SHOWING THE WHOLE
TRANSACTIONS PERTAINING TO THE TRANSFERRED FIXED
DEPOSIT BY THE RESPONDENTS.
EXT.P-12 TRUE COPY OF THE HANDWRITTEN PURCHASE PRICE OF THE
PETITIONER'S CENTRE BY M/S.GANESH KRISHNAMURTHY AND
RAVI KIRAN, THE EXECUTIVES OF THE RESPONDENTS.
EXT.P-13 TRUE COPY OF THE NAMES OF STUDENTS AND THE PETITIONER'S
SHARE OF FEES FOR A FULL YEAR STARTING FROM JULY 1999.
EXT.P-14 TRUE COPIES OF THE LETTERS DATED 03.05.1999 AND 9.07.1999
ADDRESSED TO THE SECOND RESPONDENT NARRATING THE WHOLE
MATTER OF NOT DISBURSING THE DUE AMOUNT TO THE
PETITIONER AND TO INTERVENE IMMEDIATELY ON THE DISPUTES.
Sts 2/-
-2-
OP(C).NO.4421/2012
EXT.P-15 TRUE COPIES OF THE TELEGRAMS DATED 07.08.1999, 14.08.1999
AND 21.08.1999 SENT BY THE PETITIONER TO THE RESPONDENTS
INVOKING THE ARBIRATION TO RESOLVE THE DISPUTES BY THE
SECOND RESPONDENT AS THE ARBITRATOR IN THE AGREEMENT.
EXT.P-16 TRUE COPY OF THE LETTER DATED 21.12.1999 SENT BY THE
RESPONDENTS ACKNOWLEDING ALL THE TELEGRAMS AND THE
REPLY AS ATELEGRAM DATED 30.12.1999 SENT BY THE PETITIONER.
EXT.P-17 TRUE COPY OF THE LETTER RECEIVED BY THE PETITIONER FROM
SOME OTHER FRANCHISEES NARRATING THE SAD PLIGHT OF
MR.VINOD BHATNAGAR, THE FRANCHISEE OF 3 CENTRES IN AND
AROUND LUCKNOW, AT THE HANDS OF THE RESPONDENTS THE
DOWNLOADED NEW ARTICLE PUBLISHED BY THE HINDU METRO
PLUS MAKE THE LETTER AREAL INCIDENT HAPPENED TO MR.VINOD
BHATNAGAR AND SOME OTHER FRANCHISEES OF THE
RESPONDENTS.
EXT.P-18 TRUE COPIES OF THE INJUNCTION SUIT O.S.NO.648 OF 1999 BEFORE
THE MUNSIFF COURT, KANNUR, FILED BY THE PETITIONER TO
RESTRAIN THE RESPONDENTS OF APPOINTING ANEW FRANCHISEE
IN KANNUR WITHOUT RESOLVING THE DISPUTES BY ARBITRATION
WHICH WAS ALREADY INVOKED BY THE PETITIONER.
EXT.P-19 TRUE COPIES OF THE 13 RECEIPTS ISSUED BY THE RESPONDENTS
TO THE NEW FRANCHISEE AT KANNUR AS PART OF THE PURCHASE
PRICE OF THE PETITIONER'S CENTRE.
EXT.P-20 TRUE COPIES OF THE CEVEAT PETITIONS FILED BY THE
RESPONDENTS AND THE NEW FRANCHISEE OF KANNUR,
MR.U.AVINASH BABU.
EXT.P-21 TRUE COPIES OF THE CASES FILED BY THE PARENTS OF THE
STUDENTS AGAINST THE PETITIONER FOR REFUND OF FEES FOR
WHICH THE PETITIONER HAD GIVEN ADVANCE CHEQUES.
EXT.P-22 TRUE COPIES OF THE LETTER/APPLICATION SENT TO THE
HONOURABLE CHIEF JUSTICE OF INDIA TOGETHER WITH THE LIST
OF DOCUMENTS, SYNOPSIS OF ARGUMENTS AGAINST THE VALIDITY
OF THE RESPONDENTS ONE SIDED AGREEMENTS INCLUDING A COPY
OF THE AMENDED AGREEMENT DATED 22.08.1998 WHICH THE
RESPONDENTS GOT SIGNED BY THE PETITIONER UNDER DURESS.
EXT.P-23 TRUE COPIES OF THE FAMILY PETITION SUBMITTED BY THE
PETITIONER TO THE THEN HONOURABLE MINISTER OF STATE FOR
LAW AND COMPANY AFFAIRS, SHRI.RAJAGOPAL AND THE LETTERS
SENT BY THE SECRETARY OF THE HUMAN RESOURCES TO THE
SECOND RESPONDENT.
EXT.P-24 TRUE COPIES OF THE COMPLAINT AND THE PROCEDURE SHEET
OBTAINED BY THE PETITIONER ON THE CASE C.C.NO.57/2000
FILED BY THE PETITIONER BEFORE THE 1ST CLASS
MAGISTRATE,KANNUR.
3/-
-3-
OP(C).NO.4421/2012
EXT.P-25 TRUE COPIES OF THE COMPLAINT AND THE PROCEEDINGS BEFORE
THE CONSUMER DISPUTES REDRESSAL FORUM, KANNUR FOR
SUPPLYING PIRATED SOFTWARE BY THE RESPONDENTS TO THE
PETITIONER.
EXT.P-26 TRUE COPY OF THE PLAINT PRESENTED BEFORE THE SUB COURT,
THALASSERY, OS NO.171/2003.
EXT.P-27 TRUE COPY OF THE IA 585/2004 INVOKING SECTION 8 OF THE
ARBITRATION AND CONCILIATION ACT 1996 FILED BY THE
RESPONDENTS.
EXT.P-28 TRUE COPY OF THE ORDER DISMISSING THE IA 585/2004 BY THE
SUB COURT, THALASSERY.
EXT.P-29 TRUE COPY OF THE REVIEW PETITION 1134/2004 FILED BY THE
RESPONDENTS BEFORE THIS HONOURABLE HIGH COURT OF
KERALA ON THE IMPUGNED ORDER OF THE SUB COURT,
THALASSERY ON THE IA 585/2004.
EXT.P-30 TRUE COPY OF THE ORDER OF THIS HONOURABLE HIGH COURT OF
KERALA ALLOWING THE ABOVE REVIEW PETITION AND REMANDING
TO THE SUB COURT THALASSERY.
EXT.P-31 TRUE COPY OF THE ORDER OF THE SUB COURT THALASSERY
REFERRING THE CASE TO THE NAMED ARBITRATOR IN THE
AGREEMENT DATED 27.02.1995 AS PER THE PRAYER IN THE
SECTION 8 APPLICATION OF THE RESPONDENTS.
EXT.P-32 TRUE COPIES OF THE TWO NOTICES SEND TO THE NAMED
ARBITRATOR TO CONSTITUTE THE ARBITRAL TRIBUNAL AS PER
THE ODER OF THE SUB COURT THALASSERY DATED 27.07.2007.
EXT.P-33 TRUE COPY OF THE ARBITRATION PETITION SUBMITTED BY THE
COUNSEL OF THE PETITIONER BEFORE THE HONOURABLE HIGH
COURT OF DELHI, AND THE ORDER OF THE HONOURABLE HIGH
COURT OF DELHI DISMISSING THE ARB PETITION.
EXT.P-34 TRUE COPY OF THE SLP FILED BEFORE THE HONOURABLE SUPREME
COURT OF INDIA ON THE IMPUGNED ORDER OF THE HONOURABLE
DELHI HIGH COURT.
EXT.P-35 TRUE COPY OF THE NOTICE AGAIN SENT BY THE COUNSEL OF THE
PETITIONER TO THE SECOND RESPONDENT TO CONSTITUTE THE
ARBITRAL TRIBUNAL.
EXT.P-36 TRUE COPY OF THE NOTICE ISSUED BY THE SECOND RESPONDENT
AS THE ARBITRATOR OF CONSTITUTING THE ARBITRAL TRIBUNAL
AND ENTERING INTO REFERENCE.
EXT.P-37 TRUE COPY OF THE APPLICATION UNDER SECTION 12 & 13 OF THE
ARBITRATION AND CONCILIATION ACT 1996 FILED BY THE
PETITIONER BEFORE THE SOLE ARBITRAL TRIBUNAL CONSTITUTED
BY THE SECOND RESPONDENT.
4/-
-4-
OP(C).NO.4421/2012
EXT.P-38 TRUE COPY OF THE STATEMENT OF CLAIM GOT FILED BY THE
COUNSEL OF THE PETITIONER AT DELHI.
EXT.P-39 TRUE COPY OF THE LETTER DATED 19.01.2011 STATING THE
BITTER EXPERIENCE METED OUT BY THE COUNSEL BY THE
PETITIONER AT THE HANDS OF THE RESPONDENTS ON 14.01.2011
EXT.P-40 TRUE COPY OF THE LETTER DATED 19.01.2011 NARRATING THE
BITTER EXPERIENCE METED OUT BY THE COUNSEL OF THE
PETITIONER ON THE DATE OF THE FIRST ARBITRATION MEETING.
EXT.P-41 TRUE COPY OF THE LAWYER NOTICE ISSUED BY THE RESPONDENT
COMPANY AND ITS PARA WISE REPLY SENT BY THE COUNSEL
OF THE PETITIONER.
EXT.P-42 TRUE COPIES OF THE LETTER AND THE ENCLOSED LETTER
REFERRED BY THE SECOND RESPONDENT PURPORTEDLY SENT BY
THE RESPONDENT COMPANY REQUESTING HIN NOT TO TAKE ANY
ACTION ON THE APPLICATION FILED BY THE PETITIONER UNDER
SECTION 12 & 13 AND TO CLOSE THE ARBITRAL TRIBUNAL AS THE
PETITIONER HAS INVOKED THE WRONG CLAUSE OF AWRONG
AGREEMENT.
EXT.P-43 TRUE COPIES OF THE LETTERS DATED 01.05.2011 AND 30.05.2011
SENT BY THE COUNSEL OF THE PETITIONER AT DELHI REQUESTING
THE ARBITRATOR FOR AN ORDER ON THE APPLICATION OF THE
PETITIONER UNDER SECTION 12 & 13 OF THE ARB ACT.
EXT.P-44 TRUE COPY OF THE LETTER/ORDER OF THE SECOND RESPONDENT
AS THE ARBITRATOR INTIMATING THE CLOSURE OF THE
PROCEEDINGS OF THE SOLE ARBITRAL TRIBUNAL CONSTITUTED
BY HIM.
EXT.P-45 TRUE COPY OF THE PETITION UNDER SECTION 14 & 15 READ
WITH 11/6 FILED BY THE COUNSEL OF THE PETITIONER BEFORE
THE HONOURABLE HIGH COURT OF DELHI.
EXT.P-46 TRUE COPY OF THE LETTER DATED 28.4.2012 SENT BY THE
COUNSEL OF THE PETITIONER AT DELHI TO THE SECOND
RESPONDENT TO PASS AN AWARD OF THE SOLE ARBITRAL
TRIBUNAL CONSTITUTED BY HIM.
EXT.P-47 TRUE COPY OF THE APPLICATION FOR REFUND OF REQUEST
PROCESS FEE WITH THE AFFIDAVIT BY THE COUNSEL OF THE
PETITIONER BEFORE THE HONOURABLE HIGH COURT OF DELHI.
RESPONDENTS' EXHIBITS : NIL
/TRUE COPY/
P.S.TO.JUDGE
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P.N.RAVINDRAN, J.
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O.P.(C).No.4421 of 2012
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Dated this the 20th day of January, 2014
JUDGMENT
This original petition arises out of a dispute which has been pending for the past several years. The petitioner, an ex- serviceman, had, as the proprietor of an establishment, entered into a licence agreement with the first respondent on 27.2.1995. Later, the proprietoryship concern became an establishment run by a private limited company, of which the petitioner was the Managing Director. Thereupon supplementary agreements were also entered into between the parties. When disputes arose between the parties, the petitioner filed O.S.No.171 of 2003 in the Court of the Subordinate Judge of Thalassery joining the Managing Director of the first respondent company as the defendant. In that suit he prayed for a decree allowing him to realize the sum of Rs.46,03,684/- with interest and costs from the defendant.
2. Upon receipt of summons, the defendant entered appearance and filed I.A.No.585 of 2004 under section 8(1) of the Arbitration and Conciliation Act, 1996 wherein the defendant prayed for referring the dispute to arbitration. In the affidavit filed in support of the said application it was contended that in view of O.P.(C)No.4421 of 2012 -: 2 :- Article 16 of the licence agreement dated 27.2.1995, the dispute between the parties has to be resolved by arbitration. It was contended that the civil court has no jurisdiction to entertain the suit in view of the arbitration clause. That contention did not find acceptance in the trial court, which dismissed the application by Ext.P28 order passed on 22.6.2004. The defendant in the suit thereupon filed C.R.P.No.1134 of 2004 in this Court. A learned single Judge of this Court allowed the Civil Revision Petition by Ext.P30 order passed on 2.3.2005 and held that the grounds stated by the trial court to dismiss the application cannot be sustained. The impugned order was set aside and I.A.No.585 of 2004 in O.S.No.171 of 2003 was remanded to the trial court for fresh disposal. The trial court thereafter allowed the application by Ext.P31 order passed on 20.7.2007 and referred the dispute between the parties to the Chairman of the Board of Directors of the defendant company. The operative portion of Ext.P31 order reads as follows:-
"In the result, the petition is allowed and the dispute between the parties in O.S.No.171/03 is referred to Chairman Board of Directors, M/s.NIIT Ltd., New Delhi 110 020."
3. Ext.P31 order refers to the arbitration clause in the agreement dated 27.2.1995 which reads as follows:-
"16.1. All disputes and differences of whatsoever O.P.(C)No.4421 of 2012 -: 3 :- nature arising out of this Agreement, whether during its term or after expiry thereof or prior termination shall be referred to the sole arbitration of the Chairman of the Board of Directors of the Licensor, whose decision shall be final on every matter arising hereunder. It is further agreed that the fact that the Chairman of the Board of Directors of the Licensor may have had occasion to deal with any matter related to this license either before or after its execution shall not disqualify him from acting as Arbitrator. The venue of the Arbitration shall only be Delhi."
4. Alleging that notwithstanding the order passed by the civil court and letters dated 7.1.2009 and 12.1.2009 caused to be sent by him, the Chairman of the Board of Directors of the first respondent company has not constituted the arbitral tribunal, the petitioner filed Arbitration Petition No.111 of 2009 under section 11 (6) of the Arbitration and Conciliation Act, 1996 in the High Court of Delhi and prayed for the appointment of an independent sole arbitrator to decide the dispute between the parties. The respondent opposed the said application by filing written objections. Inter alia it was contended that the parties are governed by the terms and stipulations in the licence agreement dated 22.8.1998 and that as per the said agreement, the arbitration clause in the agreement dated 27.2.1995 was modified. The respondent also contended that the petitioner has suppressed the said agreement and therefore, the petition is liable to be dismissed on that short O.P.(C)No.4421 of 2012 -: 4 :- ground. The High Court of Delhi considered the rival contentions and dismissed Arbitration Petition No.111 of 2009 by Ext.P33 order passed on 3.11.2009. It was held that the delay, if any, in proceeding with the application till 20th July, 2007 when I.A.No.585 of 2004 in O.S.No.171 of 2003 was allowed by the Court of the Subordinate Judge of Thalassery was entirely on account of the petitioner's conduct and that it is not clear from the averments in the petition as to how the respondent or the Arbitrator has failed to act or the Arbitrator's mandate has terminated. The High Court of Delhi had, while dismissing Arbitration Petition 111 of 2009 referred to clause 16 of the agreement between the parties, which incidentally is the one occurring in the agreement dated 27.2.1995 and not the one occurring in the supplementary agreement dated 22.8.1998, which was pressed into service by the respondent in its reply to the Arbitration Petition. Though the petitioner moved the Apex Court by filing S.L.P.(Civil) No.2614 of 2010 it was dismissed.
5. Thereupon, invoking clause 16 of the agreement dated 27.2.1995, the petitioner caused Ext.P35 notice dated 10.10.2010 to be issued through his lawyer to the Chairman and Managing Director of the respondent company and called upon him to constitute an arbitral tribunal consisting of the Chairman of the Board of Directors of the first respondent. The Managing Director responded by sending Ext.P36 letter dated 1.11.2010 wherein he O.P.(C)No.4421 of 2012 -: 5 :- constituted himself as the arbitral tribunal and called upon both sides to file their statement of claims and also fixed the date of hearing as 19.1.2011. The petitioner however challenged the authority of the Chairman of the Board of Directors of the respondent company to act as the arbitrator by filing Ext.P37 statement. He also filed a statement of claims evidenced by Ext.P38, a copy of which was served on the respondent on 10.12.2010. At that stage, the respondent caused Ext.P41 notice dated 16.12.2010 to be issued to the petitioner referring to clause 17.1 of the agreement dated 22.8.1998 and called upon the petitioner to opt for any one of the Directors of the Board of Directors of the first respondent company to arbitrate the dispute between the parties, within 30 days of receipt of the notice. He was cautioned that in the event of failure, the respondent company shall be entitled to nominate the arbitrator. Clause 17.1 of the agreement dated 22.8.1998, which is referred to in Ext.P41 notice is extracted below in full:-
"Section 17.1: Arbitration.
All claims disputes and differences of whatsoever nature arising out of this Agreement, raised by the Licensee or the Indemnifier whether during its term or after expiry thereof or prior termination shall be referred to the sole arbitration of one of the Directors of the Board of Directors of the Licensor, whose decision shall be final on every matter arising hereunder. The request for arbitration may specify the particular Director of the O.P.(C)No.4421 of 2012 -: 6 :- Board failing which the Licensor shall be entitled to nominate the arbitrator. It is further agreed that the fact that the Director of the Board of Directors of the Licensor may have had occasion to deal with any matter related to this License either before or after its execution, shall not disqualify him from acting as Arbitrator. The venue of the Arbitration shall only be Delhi. Where the Licensor has claims, disputes or differences, it shall be open to the Licensor, though not obligatory, to opt to be covered under this clause."
6. The petitioner thereupon caused a reply dated 14.1.2011 to be issued wherein he inter alia stated that the Chairman of the Board of Directors of the first respondent company is also one of the Directors of the Board. Thereafter there was repeated correspondence between the parties and ultimately the Chairman of the first respondent company sent Ext.P44 letter dated 31.5.2011 to the petitioner wherein, after referring to clause 17.1 of the agreement dated 22.8.1998, he concluded as follows:-
"CONCLUSION
1. The applicable Arbitration clause is clause 17.1 of the amended Agreement dated 22.08.1998 (Annexure C to NIIT's letter dated 08.12.2010).
2. Mr.A.V.Manoharan is at liberty to seek Arbitration under said clause 17.1, which entitles the choice of any particular member of the Board of Directors of NIIT.
3. NIIT will furnish to Mr.A.V.Manoharan and his Advocate Mr.D'Souza Philip within 3 days, a list of names of its Board members to enable a choice to be O.P.(C)No.4421 of 2012 -: 7 :- made.
4. In case Mr.A.V.Manoharan opts to have the undersigned as the Arbitral Tribunal under clause 17.1, he may do so in writing with 4 days of receipt of the list of Board Members, clearly stating that his choice is exercised under cause 17.1. In the event of such an option being exercised, then the question of reconstituting the Arbitral Tribunal and continuation can be considered.
5. The communication dated 01.11.2010 of the undersigned to both parties is hereby revoked.
6. In view of this conclusion, the application dated 20.11.2010 of Mr.A.V.Manoharan under Sections 12 & 13 of the Arbitration & Conciliation Act 1996 becomes redundant.
7. The present proceedings are closed."
7. The petitioner unsuccessfully challenged that decision in the High Court of Delhi by filing Arbitration Petition No.174 of 2012 which was dismissed as withdrawn. The instant original petition was thereafter filed on 5.12.2012 seeking the following reliefs:-
"(a) Issue an order or direction requiring the second respondent to send up to this Honourable High Court all the records of the sole arbitral tribunal constituted by him to adjudicate on the disputes and claims of the petitioner claimant as per the order of the Sub Court, Thalassery in a section B application of the Arbitration and Conciliation Act, 1996, which was allowed by this Honourable Court on its revision and as per the said act receiving the applications, statement of claims and other documents from the petitioner claimant, has closed O.P.(C)No.4421 of 2012 -: 8 :- the said arbitral tribunal disregarding the provisions of law and jurisdiction given to it, adversely affecting the rights of the petitioner and imposing on him financial liability.
(b) Issue an appropriate order or direction requiring the respondent company, NIIT Ltd., the other party to the arbitration, to deposit with this Honourable Court to secure an amount of Rs.5,79,14,479/- that was claimed through the Statement of Claims by the petitioner claimant before the sole arbitral tribunal constituted by the second respondent, for which there was no defence filed by the respondent company, the other party to the arbitration before the said sole arbitral tribunal during its months long proceedings.
(c) Due to the jurisdictional error committed by the said sole arbitral tribunal whereby its proceedings have concluded and is now incapable of being remedied the injustice caused to the petitioner, this Honourable Court with its supervisory jurisdiction may arrive to a speedy and summarized determination, which deems fit and proper in the circumstances of the case. If law permits, this writ petition may be converted to relief suit as there are sufficient documents annexed herewith, covering the whole period of the dispute."
8. Though the petitioner has raised various contentions and the first respondent has objected to the very maintainability of the instant original petition in this Court and disputed the entitlement of the petitioner to all or any of the reliefs prayed for, what I understand from the submissions made by the petitioner appearing O.P.(C)No.4421 of 2012 -: 9 :- in person is that his grievance is now limited to the reluctance of the Chairman of the Board of Directors of the first respondent to act as the arbitral tribunal notwithstanding clause 17.1 of the agreement dated 22.8.1998. The petitioner submitted that the Chairman of the Board of Directors is also a member of the Board of Directors and therefore, the excuse put forward by the Chairman in Ext.P41 letter that the petitioner will have to nominate a Director and until the procedure set out in Ext.P44 letter dated 31.5.2011 is followed, he cannot function as the arbitrator. The stand taken by the learned counsel appearing for the respondents is that this Court has no jurisdiction to entertain the original petition or to grant any of the reliefs prayed for. It is contended that the petitioner, who has unsuccessfully challenged the stand taken by the Chairman of the Board of Directors of the first respondent in Ext.P44 letter dated 31.5.2011 before the High Court of Delhi, cannot seek or be granted any relief in the instant original petition.
9. Having regard to the complexity of the dispute, this Court had appointed Sri.George Thomas Mevada, learned Senior Advocate of this Court as Amicus Curiae. When this original petition came up for hearing before me on 13.1.2014, after hearing learned counsel on both sides as also the learned Amicus Curiae, and taking note of the submission made by the petitioner that the dispute may be referred to mediation, this Court passed the following order:- O.P.(C)No.4421 of 2012 -: 10 :-
"When this original petition came up for hearing today Sri.A.V.Manoharan, the petitioner who is appearing in person submitted that he is willing to make an attempt to resolve the disputes and differences arising out of the agreement between the parties by mediation. Learned counsel appearing for the respondents sought time to get instructions as to whether the respondents are wiling to such a course of action and in the event of the respondents expressing their willingness to have the disputes resolved by mediation to ascertain the details of the officer who can participate in the mediation talks. In such circumstances, I am inclined to adjourn hearing of the original petition to 20.1.2014.
Post on 20.1.2014 in the admission list."
10. When the original petition came up for further hearing today, Sri.Jose.N.Manavalan, learned counsel appearing for the respondents submitted that the respondents are not willing to have the dispute resolved by mediation and that it is for the petitioner to pursue the matter with the Chairman of the Board of Directors in terms of the stand taken by the Chairman in Ext.P44 letter dated 31.5.2011. Learned counsel for the respondents contended that the petitioner will have to nominate a Director of the company or if he so chooses, the Chairman himself as the arbitral tribunal and unless the petitioner exercises such an option, the dispute cannot be referred to arbitration.
11. It is evident from the facts emanating from the pleadings O.P.(C)No.4421 of 2012 -: 11 :- and the submissions made at the Bar that the dispute raised by the petitioner was referred to arbitration, relying on the arbitration clause in the agreement dated 27.2.1995, a copy of which is on record as Ext.P1. Initially there was no dispute between the parties as to the competence of the Chairman of the Board of Directors to act as the arbitral tribunal. Later, after the arbitral tribunal commenced the proceedings, when the petitioner challenged the competence of the Chairman of the first respondent company to act as the arbitral tribunal, the Chairman took the stand that only a Director of the company can be the arbitrator. It is evident from Ext.P44 letter that the Chairman is aware that he is also a Director of the company and that he can also function as the arbitrator. Clause 4 of the concluding portion of that letter clarifies that position. But for reasons best known to him, the Chairman of the first respondent company thought it fit that the proceedings already initiated should be dropped and the petitioner should decide as to who should act as the arbitrator.
12. From the pleadings and the submissions made before me, it appears that the stand taken by the first respondent is that unless the petitioner makes a request to the Chairman to act as the arbitrator, the Chairman is disabled from acting as the arbitrator in view of clause 17.1 of the agreement dated 22.8.1998. The said stand is, in my opinion, plainly untenable and deserves to be O.P.(C)No.4421 of 2012 -: 12 :- deprecated. The Chairman, who had in Ext.P44 letter dated 31.5.2011 taken the stand that he can also function as the Director, should have in my opinion proceeded with the arbitration proceedings initiated by him instead of driving the petitioner to another round of litigation. In such circumstances, notwithstanding the fact that this Court has no territorial jurisdiction to entertain the dispute, I deem it appropriate to direct that in the event of the petitioner opting to have the Chairman of the first respondent company as the arbitral tribunal in terms of clause 17.1 of the agreement dated 22.8.1998 by sending a registered letter in that regard to the Chairman of the first respondent company, the Chairman of the first respondent company shall enter upon the reference and decide the dispute between the parties within three months from the date of receipt of the letter, as otherwise it would defeat the very purpose for which the Arbitration Act, 1940 and the Arbitration and Conciliation Act, 1996 were enacted.
13. There is also yet another reason why I deem it appropriate to issue such a direction. By Ext.P31 order the Court of the Subordinate Judge of Thalassery had referred the dispute between the parties to the Chairman of the Board of Directors of the respondent company. That order has attained finality and it is binding between the parties. In the application which led to that order the respondent company had pressed into service the O.P.(C)No.4421 of 2012 -: 13 :- arbitration clause in the agreement dated 27.2.1995 and not the arbitration clause in the agreement dated 22.8.1998. In any case, as the Chairman of the Board of Directors of the respondent company is also one of the Directors and he had as a matter of fact commenced the arbitration proceedings and both sides had filed their claim statements, no prejudice whatsoever will be caused to the respondent by issuing such a direction. Further, the direction which I propose to issue will only advance the course of justice and enable speedy resolution of a dispute which has been pending for the past several years.
I accordingly dispose of the original petition with a direction that in the event of the petitioner opting to have the Chairman of the first respondent company as the arbitral tribunal in terms of clause 17.1 of the agreement dated 22.8.1998 by sending a registered letter in that regard to the Chairman of the first respondent company, the Chairman of the first respondent company shall enter upon the reference and decide the dispute between the parties within three months from the date of receipt of the letter.
P.N.RAVINDRAN, Judge.
ahg.
P.N.RAVINDRAN, J.
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O.P.(C).No.4421 of 2012
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JUDGMENT 20th January, 2014