Punjab-Haryana High Court
Punjab State Industrial Development ... vs Jasbir Singh Dhillon on 22 February, 2010
Author: Mukul Mudgal
Bench: Mukul Mudgal
Arbitration Case No.49 of 2006
-1-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
Arbitration Case No.49 of 2006
Date of decision: 22nd February, 2010
Punjab State Industrial Development Corporation Ltd.
.......Petitioner
Versus
Jasbir Singh Dhillon
........Respondent
Before: Hon'ble Mr. Justice Mukul Mudgal, Chief Justice
Present: Mr. Vikas Mohan Gupta, Advocate,
for the petitioner.
Mr. R.L.Batta, Senior Advocate with
Ms. Geeta Sharma, Advocate,
for respondent no.1.
1. Whether Reporters of local papers may be allowed to see
the judgment?
2. To be referred to the Reporters or not?
3. Whether the judgment should be reported in the Digest?
Mukul Mudgal, the Chief Justice, J.(Oral)
This petition has been filed by the petitioner under Section 11(6) of the Arbitration & Conciliation Act, 1996 (for short 'the Act), for appointment of third arbitrator as per the agreement. The relevant part of the agreement reads as follows:-
"34. All differences and disputes between the parties hereto on any issue or matter herein contained or their respective ---- liabilities hereunder or otherwise, however, in relation to or arising out of this Agreement, shall be referred to arbitration by two arbitrators (one to be appointed by each party) who shall, before proceeding with the reference, appoint an Umpire Arbitration Case No.49 of 2006 -2- and such arbitration shall be governed by the Indian Arbitration Act, 1940 or any modification or re-enactment thereof for the time being in force.
35. The venue of the arbitration shall be CHANDIGARH or NEW DELHI as may be agreed to in writing between the parties hereto.
36. Subject to the provisions of Clause 34 hereinabove, all legal proceedings arising out of or under this Agreement shall be subject to the jurisdiction of the High Court of Punjab only."
A dispute arose between the parties with regard to the payment of certain amounts. Pursuant to the above clause of the agreement, the petitioner while appointing its Arbitrator Shri B.B.Mahajan requested the respondents to nominate the Arbitrator vide letter dated 3.11.1999(Annexure A-5). The respondent vide letter 23.11.1999(Annexure A-6), appointed Dr. D.Dhillon, as his Arbitrator but both the Arbitrator failed to appoint the presiding Arbitrator. Hence this petition.
Mr. R.L.Batta, learned Sr. Counsel appearing for the respondent, raised an objection that the agreement was with the company but that company is not party to the proceedings and being in winding up these proceedings cannot continue without leave of the Company Court. Therefore, the present petition is not maintainable.
This plea of Mr. R.L.Batta, is not sustainable in view of the fact that the Agreement was entered into between the petitioner and Sardar Jasbir Singh Dhillon, as Collaborator and Arbitration Case No.49 of 2006 -3- not with the Company. The relevant part of the agreement depicting that it was executed between the petitioner and the Collaborator reads as follows:-
"THIS AGREEMENT MADE THIS 11th day of July, One Thousand Nine Hundred & Seventy-
nine between PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION Ltd., a Company limited by shares, registered under the Companies Act, 1956, having its Registered Office at SCO 54-56, Section 17-A, Chandigarh (hereinafter called "the CORPORATION" which expression shall unless repugnant tot he context or meaning thereof include the said CORPORATION, its successors and agreed assigns) of the ONE PART AND Sardar Jasbir Singh Dhillon s/o late S.B.Ganda Singh residing at 65-B, Model Town, Patiala, Managing Partner of General Tools, Patiala (hereinafter called "the COLLABORATOR" which expression shall unless repugnant to the context of meaning thereof, include the said COLLABORATOR, his heirs, administrators, executors, representatives and agreed assigns) of the OTHER PART."
Mr. R.L.Batta, learned Sr. counsel for the respondent then contended that the Company has gone into liquidation. Therefore, in view of the provisions of Section 446 of the Arbitration Case No.49 of 2006 -4- Companies Act, 1956, no proceedings could be initiated in any Court of law against such a Company, without the leave of the Company Court and without joining the Liquidator as a party.
This objection is not tenable because it has already been held that the agreement was not with the Company but with the Sardar Jasbir Singh Dhillon, Collaborator, who happened to be the managing partner of the company under liquidation. In this view of the matter, Section 446 of the Companies Act, 1956, will also not come in the way of appointment of third Arbitrator for the following reasons:-
(a) that at the initial stage, Dr. D.Dhillon was appointed as an Arbitrator under the Arbitration clause even by the Collaborator, Sardar Jasbir Singh Dhillon himself when the provisions for winding up were already initiated.
(b) that as has already been held the agreement is not with the company but with the named collaborator, respondent no. 1, herein.
Therefore, this court has the jurisdiction to appoint the third Arbitrator as per Section 11 of the Act. At this stage Mr. R.L.Batta, submitted that original Arbitrator appointed by Sardar Jasbir Singh Dhillon has failed to act that is why the Arbitration proceedings could not go on. He further submitted that in this view of the matter and subject to any challenge to this order the respondent is prepared to appoint his Arbitrator within four weeks from today.
Arbitration Case No.49 of 2006 -5- As a consequence of the above discussion, this petition is allowed with a direction to the respondent to appoint his Arbitrator within four weeks from today. Both the Arbitrators then shall appoint the third Arbitrator within four weeks. In case the Arbitrators so appointed failed to appoint the third Arbitrator, the aggrieved party may approach this Court for appointment of third Arbitrator. Taking into account the passage of time consumed by these proceedings, this Court may in that eventuality appoint a sole Arbitrator to adjudicate upon the disputes between the parties.
In the meanwhile, the parties will exchange the statement of claims and response thereof. The statement of claim be supplied to counsel for the respondents within four weeks and response to the statement of claim shall be supplied to the counsel for the petitioner within four weeks thereafter. The parties shall appear before the Arbitral Tribunal on 21.05.2010 or on an agreed date convenient to the parties but not later than 15 days from the aforesaid date fixed by this Court, after exchange of pleadings as directed aforesaid. The Arbitral tribunal shall render the award not later than six months from the date of first appearance of the parties before it.
With these directions , the petition stands disposed of.
[MUKUL MUDGAL] Chief Justice 22nd Febraury, 2010 Shivani Kaushik