Madras High Court
M/S.Intense Impex International Pvt. ... vs M/S.Arif & Sons India Ltd on 27 July, 2022
Author: M.Sundar
Bench: M.Sundar
Arb O.P.(Com. Div.) No.303 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 27.07.2022
CORAM
THE HONOURABLE Mr.JUSTICE M.SUNDAR
Arb O.P.(Com. Div.) No.303 of 2022
M/s.Intense Impex International Pvt. Ltd.
Rep by its Managing Director
Mr.Sushil Kumar
No.10/14, Police Manickam Street
Ayanavaram, Chennai – 600 023. ... Petitioner
Vs
1.M/s.Arif & Sons India Ltd.,
Rep by its Managing Director
Mr.Arif Abdul Latif
2.Mr.Arif Abdul Latif
S/o. Abdul Latif
Managing Director
M/s.Arif & Sons India Ltd.,
3.Mr.Adil Arif
S/o.Arif Abdul Latif
Director
M/s.Arif & Sons India Ltd.,
[Respondents 1 to 3 having addres at
No.490/1, Inner Ring Road
Madhavaram, Chennai
Tamil Nadu – 600 060. ... Respondents
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https://www.mhc.tn.gov.in/judis
Arb O.P.(Com. Div.) No.303 of 2022
Arbitration Original Petition filed under Section 11(6) (c ) of the
Arbitration and Conciliation Act, 1996 praying to appoint an Arbitrator to go
into the dispute between the petitioner and the respondent in respect of sale
contract agreement dated 18/01/2019 and pass such other or further orders as
this Court may deem fit and proper in the circumstances of the case.
For Petitioner : Mr.K.Prasath
ORDER
This order will now dispose of the captioned Arb.O.P.
2. This order has to be read in conjunction with and in continuation of earlier proceedings made in the previous listing on 13.07.2022, which reads as follows :
'Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the sake of convenience and clarity] is listed in the Admission Board. Mr.P.Sidharthan, learned counsel on record for petitioner, made an endorsement giving up respondents 2 and 3 and a scanned reproduction of the endorsement made by learned counsel for the petitioner in the case file is as follows:2/12
https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.303 of 2022
2. In the light of the above, captioned Arb OP stands closed as against respondents 2 and 3.
3. Be that as it may, captioned Arb OP has been presented on 07.06.2022 under Section 11 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 an Arbitrator. Captioned Arb OP is predicated on clause 8 of an 'Agreement dated 18.01.2019 captioned Sales Contract' [hereinafter 'primary contract' for the sake of convenience and clarity].
4. Aforementioned clause 8 of primary contract is as as follows:3/12
https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.303 of 2022
5. Adverting to the aforementioned clause 8 of primary contract, learned counsel submits that the aforementioned clause 8 serves as an Arbitration Agreement between the parties i.e., 'Arbitration Agreement' within the meaning of Section 2(1)(b) read with Section 7 of A and C Act. It is submitted that there was supply of materials and it is alleged that there was default on the part of the first respondent (now sole respondent) and there are also some issues touching upon returning of money for which materials were never supplied. It is not necessary to dilate further on this as this is 4/12 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.303 of 2022 a Section 11 legal drill and that too at the Admission stage. Suffice to say that these issues broadly constitute arbitrable disputes that have arisen between the parties. Learned counsel draws the attention of this Court to a notice dated 09.04.2022 which according to the learned counsel for petitioner is the trigger notice i.e., notice invoking arbitration clause. This trigger notice was served on the first respondent (now sole respondent) on 12.04.2022 but there is neither reply nor response from the first respondent until this day necessitating presentation of the captioned Arb OP in this Court is learned counsel's say.
6. Prima facie case has been made out for issue of notice.
Issue notice to first respondent (now sole respondent) returnable in a fortnight i.e., returnable by 27.07.2022. Private notice permitted.
List on 27.07.2022.'
3. Aforementioned proceedings/order dated 13.07.2022 shall be read as an integral part and parcel of this order. This means that the abbreviations, short forms and short references used in the previous proceedings will continue to be used in the instant order also for the sake of convenience and clarity.
4. Adverting to earlier proceedings dated 13.07.2022, Mr.K.Prasath, learned counsel on record for sole petitioner who is before this Court submits that the sole respondent has been duly served. To be noted, the name of the lone respondent together with full/complete address as in the short and long 5/12 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.303 of 2022 cause titles of captioned Arb.O.P. has been duly shown in the cause list but there is no representation. Name of the sole respondent called out aloud thrice in the Court but there is no response. This Court is informed by the Registry that no counsel has entered appearance on behalf of the lone respondent. The narrative thus far demonstrates that the lone respondent has not chosen to come before this Court and dispute the existence of arbitration agreement between the parties i.e., Clause 8 of primary contract.
5. A legal drill under Section 11 of A and C Act usually perambulates within the statutory perimeter sketched by sub-section (6A) thereat, which reads as follows :
'(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub- section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.'
6. Aforementioned sub-section (6A) of Section 11 of A and C Act came up for consideration before Hon'ble Supreme Court in Mayavati Trading Pvt. Ltd vs Pradyuat Deb Burman reported in (2019) 8 SCC 714, relevant paragraph is paragraph No.10 and the same reads as follows: 6/12
https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.303 of 2022 '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 acord 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 judgement, 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 judgement in Duro Felguera'
7. Aforementioned paragraph No.10 of Mayavati Trading case law takes us to Duro Felguera principle being ratio laid down by Hon'ble Supreme Court in Duro Felguera S.A. Vs Gangavaram Port Limited reported in (2017) 9 SCC 729, relevant paragraphs in Duro Felguera case are paragraph Nos.47 and 59 and the same read as follows:
'47. What is the effect 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. and Boghara Polyfab. This position continued till the amendment brought 7/12 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.303 of 2022 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 Courts intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected.”
8. As the sole respondent in spite of being duly served has not chosen to come before this Court and dispute the existence of arbitration agreement between the parties, this facet of Section 11 legal drill stands concluded in favour of acceding to the prayer of appointment of an Arbitrator. This Court reminds itself that there are two other facets qua a Section 11 legal drill that have been put in place by judicial pronouncements i.e., N.N.Global and Nortel principles. N.N.Global principle i.e., ratio laid down by Hon'ble Supreme Court vide N.N.Global Mercantile Pvt. Ltd., Vs. Indo Unique Flame Ltd., and others reported in 2021 SCC Online SC 13, which turns on insufficiently stamped / unstamped or unregistered agreement containing arbitration clause. Nortel principle being ratio laid down by Hon'ble Supreme Court vide Bharat Sanchar Nigam Limited and another Vs. Nortel Networks India Private Limited reported in (2021) 5 SCC 738 turns on a plea of lis being ex facie barred by limitation. As the respondent has not 8/12 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.303 of 2022 chosen to come before this Court in spite of being duly served, none of these issues prop up in the case on hand.
9. Therefore, this Court is of the view that this is a fit case to proceed with appointment of an Arbitrator. Before writing the concluding paragraph i.e., operative portion of this order, this Court deems it appropriate to remind itself of sub-section (13) of Section 11 of A and C Act, 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.'
10. Besides sub-section (13) of Section 11 of the A and C Act, this Court also reminds itself of an order rendered recently by Hon'ble Supreme Court in Shree Vishnu Constructions [Shree Vishnu Constructions Vs. The Engineer in Chief, Military Engineering Service & Ors., ] on 19.05.2022 in Special Leave Petition (C) No.5306 of 2022. In this Shree Vishnu Constructions case, Hon'ble Supreme Court has emphasised the need for 9/12 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.303 of 2022 expeditious disposal of Section 11 petitions and the most relevant/significant observations in the order are 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 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.'
11. Sequitur is, this Court proceeds to appoint an Arbitrator. Hon'ble Mr.Justice K.Kalyanasundaram (Retd.,), a former Judge of this Court, residing at Plot No.406, 5th Cross Street, Kapaleaswarar Nagar, Neelankarai, Chennai – 600 115, [Ph.Nos.24491021, 24493690] is appointed as sole 10/12 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.303 of 2022 Arbitrator. Hon'ble sole Arbitrator is requested to enter upon reference qua primary contract being agreement dated 18.01.2019 qua Sales Contract between the petitioner and the respondent, adjudicate upon the arbitrable disputes that have arisen between the parties and render an award by holding sittings in 'Madras High Court Arbitration Centre under the aegis of this Court' ['MHCAC'], in accordance with the Madras High Court Arbitration Proceedings Rules, 2017 and Hon'ble Arbitrator's fee shall be as per Madras High Court Arbitration Centre (MHCAC) (Administrative Cost and Arbitrator's Fees), Rules 2017.
12. Captioned Arb.OP is disposed of in aforesaid manner. There shall be no order as to costs.
27.07.2022 ds Note: Registry is directed to communicate a copy of this order forthwith to
1.The Hon'ble Mr.Justice K.Kalyanasundaram (Retd.,), Former Judge of High Court of Madras Plot No.406, 5th Cross Street, Kapaleaswarar Nagar, Neelankarai, Chennai – 600 115.
[Ph.Nos.24491021, 24493690]
2.The Director Tamil Nadu Mediation and Conciliation Centre cum – Ex Officio Member Madras High Court Arbitration Centre Madras High Court, Chennai – 600 104.
11/12 https://www.mhc.tn.gov.in/judis Arb O.P.(Com. Div.) No.303 of 2022 M.SUNDAR. J., ds Arb O.P.(Com. Div.) No.303 of 2022 27.07.2022 12/12 https://www.mhc.tn.gov.in/judis