Madras High Court
M/S.Ananyakrishnaa Constructions ... vs Mr.E.G.Krishnamoorthy on 10 August, 2022
Author: M.Sundar
Bench: M.Sundar
Arb.O.P(Com.Div) No.325 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 10.08.2022
CORAM
THE HON'BLE Mr.JUSTICE M.SUNDAR
Arb.O.P(Com.Div) No.325 of 2022
M/s.AnanyaKrishnaa Constructions Private Limited,
Rep. by its Managing director Mr.Y.Gangadhar,
No.110, Ground & First Floors,
Lakshmana Swamy Salai,
K.K.Nagar, Chennai-600 078.
... Petitioner
Vs.
1. Mr.E.G.Krishnamoorthy
2. Mrs.S.Lakshmi Swaminathan
3. Mr.V.Dilip,
4. Mrs.V.JayanthiHariharan,
5. Mr.V.Ganesh
... Respondents
Prayer:- Arbitration Original Petition filed under Section 11(6) of The
Arbitration and Conciliation Act, 1996 praying to (a) appoint an Arbitrator to
adjudicate the disputes between the petitioner and the respondents 1 to 5 in
terms of the Joint Development Agreement dated 11.07.2019 (b) direct the
respondents 1 to 5 to pay costs.
For Petitioner : Mr.T.Thiageswaran
of M/s.Waraon & Sai Rams
For Respondents : Mr.P.B.Balaji
****
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https://www.mhc.tn.gov.in/judis
Arb.O.P(Com.Div) No.325 of 2022
ORDER
This order will now dispose of captioned matter.
2. This order has to be read in conjunction with and in continuation of earlier proceedings made in the previous listing on 20.07.2022, which reads as follows:
'Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the sake of convenience and clarity] has` been presented in this Court on 24.06.2022 under Section 11 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)' [hereinafter referred to as 'A and C Act' for the sake of convenience, clarity and brevity] with a prayer for appointment of an Arbitrator.
2. Mr.T.Thiageswaran, learned counsel of M/s.Waraon and Sai Rams (Law firm) on behalf of sole petitioner-Company who is before this Court submits that the captioned Arb OP is predicated on clause 29 of a 'Joint Development Agreement' [hereinafter 'JDA' for the sake of convenience and clarity] between the petitioner-
Company and five respondents being JDA dated 11.07.2019. This JDA is the primary contract and clause 29 thereat is the 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 is learned counsel's say.
3. Aforementioned clause 29 of primary contract reads as follows:
'29. DISPUTES RESOLUTION 2/10 https://www.mhc.tn.gov.in/judis Arb.O.P(Com.Div) No.325 of 2022 The parties agree to use reasonable efforts to resolve all disputes equitably and in good faith. If any dispute arises between the parties herein on account of breach of the terms of this agreement, the parties shall in the first instance endeavour to settle the same amicably in a spirit of co-operation and in failure the same shall be referred to a sole arbitrator appointed by the Developer and the jurisdiction shall be only at Chennai. Under any circumstances the Owners shall not take any step to stop the construction work of the proposed Building Complex over the Schedule A Land, since it involves huge investment and also interest of third parties. In case the Developer violates or deviates the construction from the approved building plan, then the owner shall request the Developer in writing to rectify the mistake and in failure thereto have right to stop the work.'
4. Learned counsel submitted that when efforts were taken to operate the primary contract, lack of patta became an impediment and according to the petitioner-Company there is delay on the part of the respondents in this regard causing cascading delay in the projects and this broadly stated is the arbitrable dispute that has arisen between the parties.
5. Learned counsel submits that the petitioner-Company issued a notice dated 15.04.2022 invoking the arbitration agreement. This trigger notice met with a reply dated 26.04.2022 from the respondents wherein certain issues have been raised on the merits of the disputes but there is no mention about the request of the 3/10 https://www.mhc.tn.gov.in/judis Arb.O.P(Com.Div) No.325 of 2022 petitioner qua arbitration agreement. This has necessitated the presentation of the captioned Arb OP in this Court is learned counsel's further say.
6. Prima facie case for issue of notice has been made out.
7. Issue notice to respondents returnable in three weeks i.e., returnable by 10.08.2022. Private notice permitted.
8. List on 10.08.2022.'
3. Aforementioned earlier proceedings shall now be read as an integral part and parcel of this order. This means that the abbreviations, short forms and short references used in the aforementioned proceedings will continue to be used in the instant order for the sake of convenience and clarity.
4. Today, Mr.T.Thiageswaran of M/s.Waraon & Sai Rams (Law Firm) for the sole petitioner is before this Court.
5. Mr.P.B.Balaji, learned counsel who is before this Court submits that he has instructions to enter appearance on behalf of five respondents and that vakalatnama would be filed in the Registry before close of working hours on Friday i.e., on 12.08.2022.
6. Be that as it may, there is no disputation or disagreement about the existence of arbitration agreement which is in the form of a Clause in JDA i.e., Clause 29 in the JDA dated 11.07.2019. 4/10 https://www.mhc.tn.gov.in/judis Arb.O.P(Com.Div) No.325 of 2022
7. Be that as it may, learned counsel on both sides, on instructions submit that the parties are exploring the possibility of a settlement. It is well open to the parties to do so by resorting to Section 30 of A and C Act before the Hon'ble Arbitrator, who is to be appointed [infra in this order].
8. A legal drill under Section 11 of A and C Act will normally perambulate within the statutory perimeter sketched by sub-section (6A) of Section 11 of A and C Act, 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.'
9. Aforementioned sub-section (6A) of Section 11 of A and C Act came up for consideration before Hon'ble Supreme Court in oft quoted Mayavati case law i.e., Mayavati Trading Pvt. Ltd vs Pradyuat Deb Burman reported in (2019) 8 SCC 714. Relevant paragraph is paragraph 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 5/10 https://www.mhc.tn.gov.in/judis Arb.O.P(Com.Div) No.325 of 2022 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)
10. Mayavati case law (particularly, paragraph 10 extracted and reproduced supra) takes this Court to Duro Felguera case law i.e., Duro Felguera S.A. Vs Gangavaram Port Limited reported in 2017 (9) SCC 729, relevant paragraphs are paragraphs Nos.47, 59, which 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 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 6/10 https://www.mhc.tn.gov.in/judis Arb.O.P(Com.Div) No.325 of 2022 Courts intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected.'
11. While aforementioned sub-section (6A) is a statutory facet, other facets of a Section 11 legal drill put in place by judicial pronouncements are N.N.Global principle being ratio laid down by Hon'ble Suprme Court in N.N.Global Mercantile Pvt. Ltd., Vs. Indo Unique Flame Ltd., and others reported in 2021 SCC Online SC 13 and Nortel principle being ratio qua Bharat Sanchar Nigam Limited and another Vs. Nortel Networks India Private Limited reported in (2021) 5 SCC 738. To be noted, N.N.Global principle pertains to arbitration clause in an agreement which is insufficiently stamped/unstamped or not registered when it is compulsorily registrable and Nortel principle pertains to a plea of the lis being ex facie barred by limitation. Such issues have not been raised in the case on hand. Therefore, as there is no disputation or disagreement about the existence of arbitration agreement, this Court proceeds to appoint a sole Arbitrator making it clear that all questions are left open and it is open to the parties to continue to explore the possibility of settlement by resorting to Section 30 of A and C Act, (if need be) before Hon'ble Arbitrator.
12. Hon'ble Mr.Justice K.Ravichandrabaabu (Retd.), Former Judge of 7/10 https://www.mhc.tn.gov.in/judis Arb.O.P(Com.Div) No.325 of 2022 this Court residing at No.1D, Cresent Castle, 13/6, II Cresent, Park Road, Gandhi Nagar, Adyar, Chennai-600 020, Mobile:94980 33336, 94440 11433, email: [email protected] is appointed as sole Arbitrator. Hon'ble sole Arbitrator is requested to enter upon reference qua primary contract i.e., JDA dated 11.07.2019, adjudicate qua arbitrable disputes that have erupted between the parties and render an award by holding sittings in the 'Madras High Court Arbitration Centre under the aegis of this Court' (MHCAC) in accordance with the Madras High Court Arbitration Proceedings Rules 2017 and fee of the Hon'ble Arbitrator shall be as per Madras High Court Arbitration Centre (MHCAC) (Administrative Cost and Arbitrator's Fees) Rules 2017.
13. Captioned Arb.OP is disposed of in the aforesaid manner. There shall be no order as to costs.
10.08.2022 kmi Index : Yes/No Speaking/Non-speaking order 8/10 https://www.mhc.tn.gov.in/judis Arb.O.P(Com.Div) No.325 of 2022 Note: The Registry is directed to communicate this order forthwith To
1. Hon'ble Mr.Justice K.Ravichandrabaabu (Retd.), Former Judge of Madras High Court No.1D, Cresent Castle, 13/6, II Cresent, Park Road, Gandhi Nagar, Adyar, Chennai-600 020, Mobile:94980 33336, 94440 11433, email: [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.
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