Telangana High Court
Nag Interiors Private Limited vs Aurobindo Realty And Infrastructure ... on 15 December, 2023
THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE
ARBITRATION APPLICATION No.40 of 2023
ORDER:
Heard Mr. Sai Sanjay Suraneni, learned counsel for the applicant and Mr. Pramod Maligi, learned counsel for the respondent.
2. By means of this application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (briefly 'the Act' hereinafter), the applicant seeks appointment of an arbitrator to resolve the dispute, which has arisen between them.
3. Facts giving rise to filing of this application briefly stated are that the parties had entered into an agreement titled as 'Conditions of Subcontract' on 11.09.2020. Clause 37 of the aforesaid agreement contains an arbitration clause, which is extracted below for the facility of reference:
37. Governing Law, Dispute Resolution & Jurisdiction:
This Agreement shall be governed by the laws of India.
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It is the intention of the Parties that the subcontract between the Parties should be implemented in a smooth manner and in order to give effect to this intention, Parties agree that any difference of opinion or dispute as to the construction of this Subcontract or as to any matter of whatsoever nature arising there under or in connection therewith, including any question regarding its existence, validity or termination such dispute or difference that may arise at any time during the period of transaction and thereafter, the Parties would endeavor to resolve such disputes amicably within 7 days from the date of notice and it shall be referred to Owner's Authorized representative for settlement of such referred disputes which shall be binding on the Party/ies thereto. However, in case the Parties are unable to resolve the same amicably at the first instance, such difference(s)/dispute(s) shall be referred to and finally settled by arbitration (arbitration tribunal) in accordance with the Arbitration and Conciliation Act, 1996 or any modifications or re-enactment thereof. Arbitration Tribunal shall consist of three (3) arbitrators. The Owner shall nominate one arbitrator (the "first" arbitrator) and the Subcontractor shall nominate one arbitrator (the "second" arbitrator). The two arbitrators thus appointed shall nominate the third arbitrator, who shall act as Chairman. The ::3::
language of the proceedings, documentation and the award shall be English. The award shall be made in writing and shall be final and binding on the Parties. Each Party waives any right to refer any question of law and any right of appeal on the law and/or merits to any court, except that the Parties agree that either Party may apply to any court or other judicial authority of competent jurisdiction for conservatory or similar interim relief.
The Seat of arbitration shall take place at Hyderabad. The Parties shall undertake to carry out the award without delay. The award may be made public only with the consent of both Parties.
It is distinctly agreed and understood that, pending the resolution of any difference of opinion or dispute as to the construction of this Subcontract or as to any matter of whatsoever nature arising there under or in connection therewith, including any question regarding its existence, validity or termination such dispute or difference that may arise at any time during the period of transaction and thereafter, by means of amicable settlement/arbitration, will not entitle the Subcontractor to stop or delay the work and the Subcontractor shall continue to perform the Work/all their obligations in accordance with the provisions of the Subcontract and in accordance with the Owner's ::4::
instructions with all due diligence and dispatch and perform all its obligations under the Subcontract. Subject to above, the Courts situated at Hyderabad shall have exclusive territorial jurisdiction in respect of the matters arising out of or pertaining to this Agreement and no other courts shall have jurisdiction to entertain any petition, application or suit to resolve such disputes.
4. The dispute between the parties has arisen. Therefore, the applicant sent a notice of dispute on 22.11.2022 to the respondent. The respondent submitted a reply to the aforesaid notice and denied its liability to pay any amount to the applicant. Thereupon, the applicant has filed this petition seeking resolution of dispute in the manner agreed to by the parties.
5. Learned counsel for the applicant submitted that the existence of arbitration clause has not been disputed by the respondent. The attention of this Court has also been invited to an order dated 13.12.2023 passed by a seven Judge Bench of the Supreme Court in N N Global Mercantile Private Limited v.
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Indo Unique Flame Limited 1. It has been submitted that the objection with regard to deficit stamp duty cannot be examined in a proceeding under Section 11(6) of the Act. It is submitted that the applicant had sent a notice of dispute to the respondent. However, the respondent did not make any endeavour for resolution of the dispute amicably and in any case, the resolution of dispute through mediation is not a mandatory provision. In support of the aforesaid submission, reliance has been placed on a decision of the Supreme Court in Demerara Distilleries Private Limited and another v. Demerara Distillers Limited 2.
6. On the other hand, learned counsel for the respondent has submitted that since the applicant has not resorted to the amicable settlement of dispute through mediation, the petition under Section 11(6) of the Act cannot be entertained. In support of the aforesaid submission, reliance has been placed on a decision of 1 Curative Petition (C) No.44 of 2023, Dt. 13.12.2023 2 (2015) 13 SCC 610 ::6::
Supreme Court in Standard Corrosion Controls Private Limited v. Sarku Engineering Services SDN BHD 3.
7. I have considered the submissions made on both sides and have perused the record.
8. The issue with regard to payment of deficit stamp duty is no longer res integra and the same has been answered by a Seven Judge Bench of the Supreme Court in N N Global Mercantile Private Limited (supra). The aforesaid issue has to be examined by the arbitrator. The applicant had sent a notice of dispute to the respondent on 22.11.2022. The respondent denied its liability and disputed the claim of the petitioner by a response dated 16.12.2022. Any steps for resolution of the dispute could have been taken only if the parties had so chosen. The respondent has not indicated its willingness for settlement of dispute amicably within a period of seven days. Therefore, the respondent cannot be permitted to raise such a contention in this proceeding. The decision relied upon by learned counsel for the respondent in Standard Corrosion 3 (2009) 1 SCC 303 ::7::
Controls Private Limited (supra) does not apply to the fact situation of the case as the arbitration clause in the said case is differently worded, which is extracted below for the facility of reference.
14. As already stated above, the parties had agreed that any dispute between them shall be settled as far as possible by mutual consultation and consent, failing which by arbitration to be held at Mumbai applying the Arbitration Rules of the ICC. In my opinion, the applicant has to apply to the Secretariat of the ICC, as mentioned in the Arbitration Rules of the ICC, and it cannot approach this Court for appointment of an arbitrator. No doubt, the arbitration will have to be held at Mumbai, but the entire procedure of appointment of the arbitrator has to be in accordance with the Arbitration Rules of the ICC, which requires that first a request has to be made to the Secretariat of the ICC. Admittedly, the applicant has not approached the ICC Secretariat.
Hence, in my opinion, the application filed by the applicant herein, is not maintainable at all. This Court in a series of decisions has held that such an application/petition without approaching the authority nominated and agreed upon by the parties is not maintainable vide Iron & Steel Co. Ltd. v. Tiwari ::8::
Road Lines [(2007) 5 SCC 703], Rite Approach Group Ltd. v. Rosoboronexport [(2006) 1 SCC 206], etc.
9. The aforesaid clause contains a negative mandate. Therefore, while interpreting the same in the fact situation of the case, Supreme Court held that it was imperative for the parties to approach the ICC seeking resolution of dispute through mediation. In the instant case, Clause 37 of the agreement is not in pari materia with the clause in the aforesaid decision. Therefore, the decision in Standard Corrosion Controls Private Limited (supra) does not apply to the fact situation of the case.
10. At this stage, learned counsel for the parties jointly submitted that a sole arbitrator be appointed to adjudicate the dispute between the parties.
11. Therefore, a former Judge of the Supreme Court, Mr. Justice L. Nageswara Rao, (resident of A-402, Jayabheri Orange County, Gachibowli Financial District, Ranga Reddy District, ::9::
Mobile No.9560003598, 9810035984) is appointed as sole arbitrator to adjudicate the dispute between the parties.
12. The parties undertake to appear before the sole arbitrator on 30.12.2023 at 11:00 a.m., along with a copy of this order.
13. Thereupon, the sole arbitrator shall proceed with the arbitral proceedings in accordance with law.
14. Accordingly, the Arbitration Application is disposed of. No costs.
Registry is directed to handover the original agreement dated 11.09.2020 on substitution thereof by a photocopy.
__________________ ALOK ARADHE, CJ Date: 15.12.2023 LUR/myk