Madras High Court
Mr.Mohana Rao Dandamudi vs The Government Of Tamil Nadu on 21 July, 2022
Author: M.Sundar
Bench: M.Sundar
Arb.O.P (Com.Div) No.119 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 21.07.2022
Coram
THE HONOURABLE MR. JUSTICE M.SUNDAR
Arb.O.P (Com.Div) No.119 of 2022
Mr.Mohana Rao Dandamudi
No.51, Cambridge Avenue
Oak Brook, Illinois 60523, USA
Represented by his Power Agent
Mr.Bhagwan Singh
No.133, 10th Cross Street, Rangareddy Garden
Neelankarai, Chennai – 600 115 ... Petitioner
vs.
The Government of Tamil Nadu
Represented by the Secretary to the Government
Information & Tourism (T3) Department
Fort St. George
Chennai – 600 009 ... Respondent
Petition filed under Section 11(5) of the Arbitration and Conciliation
Act, 1996 to appoint a sole Arbitrator to constitute the arbitral tribunal to
resolve the disputes that have arisen between the petitioner and the
respondent.
For Petitioner : Ms.Preeti Mohan
For Respondent : Mr.R.Neelakandan
Additional Advocate General
assisted by Mr.P.Harish
Government Advocate
https://www.mhc.tn.gov.in/judis
1/20
Arb.O.P (Com.Div) No.119 of 2022
ORDER
This order will now dispose of captioned 'Arbitration Original Petition' ['Arb.OP' for the sake of brevity].
2. This order has to be read in conjunction with and in continuation of proceedings made in the first listing (on 21.03.2022) of captioned Arb.OP before this Court. This 21.03.2022 proceedings reads as follows:
'Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the sake of convenience and clarity] has been presented in this Court on 21.12.2021 inter alia under Section 11(5) of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)' [hereinafter 'A and C Act' for the sake of convenience and clarity] with a prayer for appointment of a sole arbitrator.
2. Ms.Preeti Mohan, learned counsel on record for petitioner who is before this Court submits that the captioned Arb OP is predicated on clauses 39 and 40 (under covenant No.VIII captioned 'Arbitration') in 'an agreement dated 24.06.1985' [hereinafter 'primary contract' for the sake of convenience and clarity]. Aforementioned clauses 39 and 40 (under main clause No.VIII) of primary contract read as follows:
'VIII. Arbitration:
39. If any dispute and/or difference shall at any time arise between the parties to this agreement or any clause or their respective rights, claims or liabilities hereunder or otherwise however, in relation to or arising out of or https://www.mhc.tn.gov.in/judis 2/20 Arb.O.P (Com.Div) No.119 of 2022 concerning this agreement, such dispute and/or differences shall be referred to arbitration by two arbitrators, one to be appointed by each party and in the event of the arbitrators differing, to an umpire to be appointed by the said two arbitrators before entering upon the reference. The Arbitration Act 1940 as amended from time to time shall apply.
40. The venue of arbitration shall be at Madras only unless otherwise agreed to between the parties.'
3. It is submitted that the aforementioned clauses serve as arbitration agreement between the petitioner and respondents i.e., arbitration agreement within the meaning of Section 2(1)(b) read with Section 7 of A and C Act.
4 It is submitted that primary contract is essentially one for investments in what is known as 'INTEGRATED TOURISM PROJECTS' and primary contract was preceded by two other agreements but it may not be necessary to dilate on those aspects of the matter owing to the narrow and limited scope of the captioned Arb OP which is under Section 11 of A and C Act. Suffice to say that primary contract ran into rough weather resulting in writ petitions in this Court which were disposed of by orders dated 20.07.2009 (W.P.Nos.7162 of 1999 and 5212 of 2000) inter alia relegating the parties to arbitration, pursuant to which an arbitration award dated 15.06.2016 came to be made by a sole arbitrator. This arbitral award dated 15.06.2016 was assailed under Section 34 of A and C Act vide O.P.No.549 of 2016 and after full contest, this Section 34 petition was allowed (setting aside the arbitral award) by a Hon'ble single Judge of this Court in and by an https://www.mhc.tn.gov.in/judis 3/20 Arb.O.P (Com.Div) No.119 of 2022 order dated 22.04.2021 inter alia preserving the rights of parties under Section 43(4) of A and C Act qua re-arbitration.
5. After the aforementioned trajectory, the petitioner issued a trigger notice dated 10.06.2021 and this was duly received by respondents 1 and 2 on 11.06.2021 and 12.06.2021 respectively is learned counsel's say. It is further submitted that both respondents have neither responded nor replied to the trigger notice necessitating the presentation of captioned Arb OP in this Court.
6. Prima facie case for issue of notice made out.
7. Issue notice.
8. Ms.P.Vijaya Devi, learned Government Advocate who is present in this Court on behalf of Mr.Edwin Prabhakar, learned Special Government Pleader submits that State counsel accepts notice for both respondents.
9. Registry to show the names of learned Special Government Pleader and learned Government Advocate in the cause list in the next listing.
10. Learned counsel for petitioner to favour learned State counsel with one set of papers.
11. List one week hence in the Admission Board i.e., MOTION LIST. List on 28.03.2022.'
3. The aforementioned 21.03.2022 proceedings shall be read as integral part and parcel of this order. This also means that the abbreviations, short forms and short references used in the proceedings dated 21.03.2022 will continue to be used in the instant order obviously for the sake of https://www.mhc.tn.gov.in/judis 4/20 Arb.O.P (Com.Div) No.119 of 2022 convenience and clarity.
4. After the first listing, there have been multiple listings of the captioned Arb.OP. To be precise there were listings on 28.03.2022, 04.04.2022, 12.04.2022, 15.06.2022, 28.06.2022, 12.07.2022 and 14.07.2022. It may not be necessary to extract and reproduce the proceedings made on all the earlier listings as they capture the trajectory the matter has taken before this Section 11 Court. It will suffice to reproduce the proceedings made in the last listing on 14.07.2022, which reads as follows:
'Read this in conjunction with and in continuation of earlier proceedings made in the previous listing on 12.07.2022.
2. Notwithstanding the aforementioned earlier proceedings, Mr.Edwin Prabhakar, learned Special Government Pleader along with Mr.P.Harish, learned Government Advocate submit that there was some difficulty in bringing up the intra-court appeal before Hon'ble Division Bench and that if one last opportunity is provided it would be brought up within one week from today. Ms.Preeti Mohan, learned counsel for petitioner submits that she is on caveat before the Hon'ble Division Bench.
3. Adverting to recent order of Hon'ble Supreme Court dated 19th May 2022 made in Shree Vishnu Constructions case law [Shree Vishnu Constructions Vs. The Engineer in Chief Military Engineering Service & Ors.] besides sub-section (13) of Section 11, https://www.mhc.tn.gov.in/judis 5/20 Arb.O.P (Com.Div) No.119 of 2022 this Section 11 Court highlighted the importance of expeditious disposal of captioned matter.
4. Learned State counsel requested for one week time to do the needful regarding the intra-court appeal. Request acceded to.
List on 21.07.2022.'
5. In the light of the proceedings made in the previous listing on 14.07.2022, captioned Arb.OP was heard out today.
6. Ms.Preeti Mohan, learned counsel for sole petitioner and Mr.R.Neelakandan, learned Additional Advocate General assisted by Mr.P.Harish, learned Government Advocate for the respondents (hereinafter collectively 'State' for the sake of convenience and clarity) are before this Court.
7. State has filed a counter affidavit dated 12.07.2022. Adverting to the counter affidavit, learned Additional Advocate General submitted that there is one point that requires consideration and that is whether the petitioner would be entitled to the benefit of Section 14 of the Limitation Act, 1963. In support of his contention, learned Additional Advocate General pointed out that the primary contract is dated 24.06.1985 and termination of the same was on 31.03.1989 but the petitioner chose to file writ petitions for the first time in this Court a decade later i.e., in 1999. To https://www.mhc.tn.gov.in/judis 6/20 Arb.O.P (Com.Div) No.119 of 2022 be noted, writ petitions are W.P.Nos.7162 of 1999 and 5212 of 2000 as captured in paragraph 4 of the aforementioned 21.03.2022 proceedings and these writ petitions came to be disposed of on 20.07.2009. Therefore, the first step taken by the petitioner qua this Court itself is post termination and therefore, the claim is barred by limitation is learned State counsel's say.
8. In response to this argument, learned counsel for petitioner drew the attention of this Court to the earlier Section 11 order made by Hon'ble Mr. Justice Sanjay Kishan Kaul, former Hon'ble Chief Justice of this Court (as his Lordship then was) being order dated 09.01.2015 made in O.P.No.257 of 2012. The most relevant paragraphs in the earlier Section 11 order are paragraphs 6 and 7, which read as follows:
'6. As far as the defence to the arbitration clause is concerned, the said clause is not disputed, but it is stated that due to lapse of 25 years of time, the law of limitation would apply.
7. On hearing the learned counsel for parties, I am of the view that the defence to the petition is unsustainable. The petitioner has been raising the grievance through writ proceedings, the orders culminated in his favour, to the extent of the matter being re-examined by Government authorities and the respondents themselves took the stand that the remedy of the petitioner was by arbitration. All these aspects, in a sense, came to an end only when the amount was offered in May 2010 by the https://www.mhc.tn.gov.in/judis 7/20 Arb.O.P (Com.Div) No.119 of 2022 respondents, which was refused by the petitioner. The present petition has been filed in 2012, well within time. Thus, I am of the view that the arbitration clause comes into play, which reads as under:
''39.If any dispute and/or difference shall at any time arise between the parties to this agreement or any clause or their respective rights, claims or liabilities hereunder or otherwise, however, in relation to or arising out of or concerning this agreement, such dispute and/or differences shall be referred to arbitration by two arbitrators, one to be appointed by each party and in the event of the arbitrators differing, to an umpire to be appointed by the said two arbitrators before entering upon the reference. The Arbitration Act 1940 as amended from time to time shall apply.''
9. Learned counsel for petitioner points out that aforementioned earlier order is dated 09.01.2015, which is prior to 23.10.2015. This means that sub-section (6A) of Section 11 was not in the statute books when the earlier order was made and Patel Engineering case law [ seven Judge Bench] rendered by Hon'ble Supreme Court in SBP & Co. Vs. Patel Engineering Limited and another reported in (2005) 8 SCC 618 was holding the field. https://www.mhc.tn.gov.in/judis 8/20 Arb.O.P (Com.Div) No.119 of 2022 Therefore, the limitation point having been raised by the State, same having been shot down by this Court and the same having been given legal quietus (there is no disputation that the matter was not carried to Hon'ble Supreme Court) itself concludes the limitation issue is learned counsel's say.
10. The scope of a legal drill under Section 11 is now confined to statutory perimeter sketched by sub-section (6A) thereat which kicked in on 23.10.2015 and this is Mayavati Trading principle i.e., ratio laid down by Hon'ble Supreme Court Mayavati Trading Private Limited Vs. Pradyuat Deb Burman reported in (2019) 8 SCC 714, relevant paragraph in Mayavati Trading case law is paragraph No.10 and the same reads as follows:
'10. This being the position, it is clear that the law prior to the 2015 Amendment that has been laid down by this Court, which would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgments, as Section 11(6-A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment in Duro Felguera SA.' (underlining made by this Court to supply emphasis and highlight)
11. Aforementioned paragraph 10 of Mayavati Trading case law takes https://www.mhc.tn.gov.in/judis 9/20 Arb.O.P (Com.Div) No.119 of 2022 this Court to Duro Felguera, S.A case law i.e., Duro Felguera, S.A. Vs. Gangavaram Port Limited reported in (2017) 9 SCC 729, relevant paragraphs in Duro Felguera case law are paragraphs 47, 59 and the same read as follows:
'47. What is the effects of the change introduced by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as 'the 2015 Amendment' ) with particular reference to Section 11(6) and the newly added Section 11(6-A) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as “the 1996 Act”) is the crucial question arising for consideration in this case.' '59. The scope of the power under Section 11 (6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. (supra) and Boghara Polyfab (supra). This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an arbitration agreement exists -
nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected. '
12. Be that as it may, as rightly pointed out by learned counsel for petitioner, the limitation plea has been conclusively decided by this Court vide order dated 09.01.2015 made in O.P.No.257 of 2012. Therefore, the arbitrable disputes now have to be adjudicated upon. https://www.mhc.tn.gov.in/judis 10/20 Arb.O.P (Com.Div) No.119 of 2022
13. There is no disputation or disagreement about the existence of the arbitration agreement. There are only two other facets in a Section 11 legal drill. They are Nortel principle [Bharat Sanchar Nigam Limited and another Vs. Nortel Networks India Private Limited reported in (2021) 5 SCC 738] and N.N.Global principle i.e., ratio laid down by Hon'ble Supreme Court in N.N.Global Mercantile Pvt. Ltd., Vs. Indo Unique Flame Ltd., and others reported in 2021 SCC Online SC 13. Nortel principle talks about lis being ex facie barred by limitation plea, which can be described as deadwood issue by borrowing the language of Hon'ble Supreme Court in Nortel. Limitation has been raised and concluded in the matter on hand. N.N.Global principle turns on issues of arbitration agreement being in the form of a clause/covenant in a agreement and that primary agreement being unstamped/ insufficiently stamped and/or not registered though compulsorily registrable. There is no N.N Global issue in the matter on hand. This Section 11 Court has also respectfully noticed an order rendered by Hon'ble Supreme Court yesterday (20.07.2022) in NCC Limited case being Indian Oil Corporation Limited Vs.NCC Limited in Civil Appeal No.341 of 2022 (originally S.L.P (C) No.13161 of 2019). There is nothing glaring or clear https://www.mhc.tn.gov.in/judis 11/20 Arb.O.P (Com.Div) No.119 of 2022 qua lis and narrative thus far makes it clear that case on hand falls in the category of debatable and disputable facts, which can be best left to Arbitral Tribunal as held by Hon'ble Supreme Court in NCC case law. That leaves us with examination of existence of arbitration agreement which is not subjected to disputation. Therefore, this Court proceeds to appoint a sole Arbitrator.
14. Before writing the operative portion, this Court deems it appropriate to set out that it is to be noted that learned State counsel on instructions submitted that the order dated 22.04.2021 made by Hon'ble single Judge of this Court in O.P.No.549 of 2016 regarding setting aside the arbitral award and re-arbitration preserving the rights of the parties under Section 43(4) has been challenged by the State by way of 'Original Side Appeals' ['O.S Appeals']. However, on instructions, it is submitted that O.S Appeals are lying under objections. Post first listing of captioned Arb.OP before this Court on 21.03.2022, there have been as many as seven listings on 28.03.2022, 04.04.2022, 12.04.2022, 15.06.2022, 28.06.2022, 12.07.2022 and 14.07.2022 as already alluded to elsewhere supra in this order. Over a period of four months there has been no progress on the part of State in https://www.mhc.tn.gov.in/judis 12/20 Arb.O.P (Com.Div) No.119 of 2022 processing, numbering and bringing on Board the intra-court appeal that too against an order which itself was made on 22.04.2021 more than one year and two months ago. In this regard, this Court reminds itself of sub-section (13) of Section 11 which reads as follows:
'13. An application made under this Section for appointment of an Arbitrator or Arbitrators shall be disposed of by the Supreme Court or the High Court or the person or institution designated by such Court, as the case may be, as expeditiously as possible and an endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party.'
15. This Court also reminds itself of the observations made by Hon'ble Supreme Court in the very recently rendered judgment dated 19th May 2022 in Shree Vishnu Constructions case law [Shree Vishnu Constructions Vs. The Engineer in Chief Military Engineering Service & Ors.], relevant portions of Shree Vishnu Constructions case law read as follows:
'..... Therefore, if the arbitrators are not appointed at the earliest and the applications under Sections 11(5) and 11(6) of the Arbitration Act are kept pending for a number of years, it will defeat the object and purpose of the enactment of the Arbitration Act and it may lose the significance of an effective Alternative Dispute Resolution Mechanism. If the Commercial disputes are not resolved at the earliest, not only it would affect the commercial https://www.mhc.tn.gov.in/judis 13/20 Arb.O.P (Com.Div) No.119 of 2022 relations between the parties but it would also affect economy of the country. It may affect the ease of doing business in the country.' '..... The litigant may lose the faith in the justice delivery system, which may ultimately affect not only rule of law but commerce and business in the country. Therefore, the applications under Sections 11(5) and 11(6) of the Arbitration Act and other applications, either for substitution and/or change of the Arbitrator have to be decided and disposed of at the earliest.'
16. This Court also deems it appropriate to extract and reproduce the entire Shree Vishnu Constructions case law and a scanned reproduction of the same is as follows:
https://www.mhc.tn.gov.in/judis 14/20 Arb.O.P (Com.Div) No.119 of 2022 https://www.mhc.tn.gov.in/judis 15/20 Arb.O.P (Com.Div) No.119 of 2022 https://www.mhc.tn.gov.in/judis 16/20 Arb.O.P (Com.Div) No.119 of 2022
17. Therefore, this Court proceeds to appoint a sole Arbitrator making it clear that if the State pursues the O.S appeals which are said to be lying in objection for considerable time beyond time lines for re-presentation, the https://www.mhc.tn.gov.in/judis 17/20 Arb.O.P (Com.Div) No.119 of 2022 hierarchy of Courts will operate and the orders to be made by Hon'ble Division Bench will obviously take its course and govern the arbitration qua case on hand.
18. This Court appoints Hon'ble Mrs.Justice R.Banumathi (Retd.), former Judge of Hon'ble Supreme Court of India at No.C20, Ground Floor, Defence Colony, New Delhi-110 024, (Mob: 7042955477 and 7397329476, e-mail:[email protected]) as sole Arbitrator. Hon'ble sole Arbitrator is requested to enter upon reference qua primary contract dated 24.06.1985 between the petitioner and respondent, adjudicate upon the arbitrable disputes that have arisen between the parties and render an award by holding sittings at 'Madras High Court Arbitration Centre under the aegis of this Court' (MHCAC) in accordance with Madras High Court Arbitration Proceedings Rules 2017 and fee of Hon'ble Arbitrator shall be in accordance with the Madras High Court Arbitration Centre (MHCAC) (Administrative Cost and Arbitrator's Fees) Rules 2017.
19. Captioned Arb OP disposed of in aforesaid manner. There shall be no order as to costs.
21.07.2022 gpa https://www.mhc.tn.gov.in/judis 18/20 Arb.O.P (Com.Div) No.119 of 2022 Note: The Registry is directed to communicate this order forthwith to
1. Hon'ble Mrs.Justice R.Banumathi (Retd.), Former Judge of Hon'ble Supreme Court of India No.C20, Ground Floor, Defence Colony, New Delhi-110 024, (Mob: 7042955477 and 7397329476, e-mail:[email protected])
2. The Director, Tamil Nadu Mediation and Conciliation Centre -cum- Ex-Officio Member, Madras High Court Arbitration Centre, Madras High Court, Chennai 600 104.
https://www.mhc.tn.gov.in/judis 19/20 Arb.O.P (Com.Div) No.119 of 2022 M.SUNDAR.J., gpa Arb.O.P (Com.Div) No.119 of 2022 21.07.2022 https://www.mhc.tn.gov.in/judis 20/20