BEFORE BETWEEN: HAVING ITS OFFICE...
Transcript of BEFORE BETWEEN: HAVING ITS OFFICE...
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF AUGUST, 2018
BEFORE
THE HON' BLE MR. JUSTICE B. VEERAPPA
CIVIL MISCELLANEOUS PETITION No.57/2018
BETWEEN:
M/S TOWNSHIP PROMOTERS
A REGISTERED PARTNERSHIP FIRM
HAVING ITS OFFICE AT:
NO.10/1, LAKSHMINARAYAN COMPLEX,
PALACE ROAD, BENGALURU-560052.
REPRESENTED BY ITS MANAGING PARTNER,
MR. ASHWIN PAI,
... PETITIONER
(BY SRI SRINIVASA RAGHAVAN, ADVOCATE A/W
SRI NIKHILESH RAO M., ADVOCATE)
AND:
M/S MANTRI PROMOTERS,
A REGISTERED PARTNERSHIP FIRM,
HAVING ITS OFFICE AT: MANTRI HOUSE,
NO.41, VITTAL MALLYA ROAD,
BENGALURU-560 001.
REPRESENTED BY ITS MANAGING PARTNER,
... RESPONDENT
(BY SRI SURAJ GOVINDARAJ, ADVOCATE)
R
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THIS CMP IS FILED UNDER SECTION 11(6) OF THE
ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO
APPOINT FORMER JUDGE OF THIS COURT AS THE SOLE
ARBITRATOR TO ADJUDICATE THE DISPUTES BETWEEN
THE PARTIES, IN TERMS OF CLAUSE 25 OF THE JOINT
DEVELOPMENT AGREEMENT DATED: 30.03.2009 OR IN THE
ALTERNATIVE APPONT ANY OTHER RETIRED JUDGE OF
THE HON’BLE SUPREME COURT OF INDIA AS THE SOLE
ARBITRATOR TO ADJUDICATE THE DISPUTES BETWEEN
THE PARTIES, IN TERMS OF CLAUSE 25 OF THE JOINT
DEVELOPMENT AGREEMENT DATED 30.3.2009.
THIS CMP HAVING BEEN HEARD AND RESERVED FOR
ORDERS, COMING ON FOR PRONOUNCEMENT OF ORDER
THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R
The petitioner filed the present Civil Miscellaneous
Petition under the provisions of Section 11(6) of the
Arbitration and Conciliation Act, 1996 (‘the Act’ for short)
for appointment of the sole Arbitrator to adjudicate the
disputes between the parties, in terms of Clause-25 of the
Joint Development Agreement (‘JDA’ for short) dated
30.3.2009 entered into between the parties as per
Annexure-H.
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I. FACTS OF THE CASE
2. It is the case of the petitioner that in the year
2004, Mantri Developers Private Limited entered into
Memorandum of Understanding (‘MoU’) with the petitioner
for development of the schedule property excluding Sy. No.
1B at Jakkur Plantation Village, Yelahanka Hobli, Bangalore
North Taluk, Bangalore. However, Mantri Developers
Private Limited was unable to implement the terms of the
MoU and failed to commence the development of the
property. On 9.1.2006 M/s Abhishek Developers, a
partnership firm and a sister concern of Mantri Developers
Private Limited entered into a Joint Development
Agreement (‘JDA’ for short) dated 09.01.2006 and General
Power of Attorney dated 09.01.2006 for the development of
the schedule property excluding Sy. No.1B at Jakkur
Plantation Village, Yelahanka Hobli, Bangalore North Taluk,
Bangalore. The said partnership firm and the petitioner
entered into a registered Supplemental JDA dated
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14.12.2006 and power of Attorney dated 14.12.2006,
wherein Survey No.1B, Block 41 situated at Jakkur
Plantation Village, Yelahanka Hobli, Bangalore North Taluk,
ad measuring 1 Acre was included for development.
3. It is further case of the petitioner that the said
Abhishek Developers failed to commence development work
within six months of execution of the 2006 JDA and the
2006 Supplemental JDA as stipulated in the said
agreements. Therefore the petitioner issued a letter on
2.6.2008 to Abhishek Partnership firm rejecting the
untenable reasons assigned by the said firm for the delay in
commencement of development work and brought to the
notice of the said firm that delay has resulted in adverse
financial implications upon the petitioner. Considering the
failure in commencing the development of the Schedule
property, the petitioner was constrained to revoke the
Powers of Attorney dated 09.01.2006 and 14.12.2006 as
per Deed of Revocation dated 20.06.2008.
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4. It is further contended that considering the
subsequent representations of M/s Abhishek Developers
that they were capable of executing the development of the
Schedule Property as envisaged, the petitioner entered into
a Supplemental JDA dated 26.12.2008 and power of
Attorney dated 26.12.2008 with the said firm for
development of the Schedule Property. Inspite of the
same, the said firm failed to commence development of
the Schedule Property in accordance with the terms of the
Supplemental JDA dated 26.12.2008. Thereafter, M/s
Abhishek Developers requested that it be permitted to
nominate its affiliate, the respondent herein, to develop the
Schedule Property, to which the Petitioner acceded.
Accordingly, the petitioner and respondent entered into a
JDA dated 30.03.2009 for development of the schedule
property. As per the terms of the JDA dated 30.3.2009, the
Respondent has to complete development of the schedule
property and obtain completion certificate within 3 years
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from 26.12.2008 i.e., by 26.12.2011. The Respondent
failed to commence the development of the Schedule
Property within the stipulated time stated supra and from
6.1.2012 to 21.12.2012 the respondent illegally created an
equitable mortgage by way of deposit of title deeds of the
Schedule Property with Indian Overseas Bank for
Rs.100,00,00,000/- (Rupees One Hundred Crores) as per
Memorandum of Deposit of Title Deeds dated 21.01.2012
(’Mortgage Deed’). The Credit Sanction letter dated
06.01.2012 issued by the bank for the said mortgage
evidences that the monies from the mortgage were diverted
to the Respondent’s sister concern i.e., M/s Mantri
Developers Private Limited and utilized for development of
alternate projects. The petitioner issued number of letters
to the respondent in the year 2004 bringing to its attention
the delay in completing the development of the schedule
property. On 19.5.2017 the petitioner addressed a
detailed letter to the Respondent bringing to its attention
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the history of the transaction and its failure to develop the
Schedule Property as envisaged in terms of JDA dated
30.3.2009 and calling upon them to complete the project
within 12 months from the date of the letter. On the same
day, the respondent gave its reply giving untenable reasons
for its failure to develop the Schedule Property till date and
did not mention whether it would execute the development
within the time stipulated in the petitioner’s letter.
5. It is further case of the petitioner that on 7.6.2017
it issued one more letter bringing to the notice of the
respondent illegal mortgage of the Schedule Property and
sought an explanation for the same. On the same day, the
respondent gave reply providing untenable explanations for
its illegal activities. Therefore the petitioner was
constrained to file A.A.No.368/2017 on 12.10.2017 before
the City Civil Court, Bengaluru seeking an ad interim order
of injunction against the respondent. The trial Court
granted an ad interim order of injunction on the same day
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and the same continued to be in force. Thereafter on
29.12.2017 the Petitioner issued arbitral legal notice for
appointment of Arbitrator under Clause 25 of the JDA dated
30.3.2009 entered into between the parties. On 11.1.2018,
the respondent issued untenable reply denying the
petitioner’s claims. Hence the petitioner is before this
Court for the reliefs sought for.
II. OBJECTIONS FILED BY THE RESPONDENT
6. The respondent filed the statement of objections
mainly contending that the petition is not maintainable and
the petitioner has wantonly mis-described the respondent -
Mantri Promoters, which is now a company registered under
the Indian Companies Act and operates under the name
and style of Jakkur Promoters Private Limited (‘JPPL’ for
short) and the array of parties being wrong, the petition is
liable to be dismissed for mis-joinder of parties. It is further
contended that there are criminal proceedings pending
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between the parties. Further, the clause relied upon by the
petitioner provides for a panel of arbitrators contrary to the
claim of the petitioner for a sole Arbitrator. The respondent
further contended that the agreement between the parties
continued to be in force and the petitioner is abusing the
process of law and Courts to pressurize JPPL. The petitioner
has suppressed the material facts. It is further contended
that M/s Mantri Promoters does no longer exist as a
partnership firm as described in the cause title of the
petition and knowing fully well that Mantri Promoters now
being Jakkur Promoters Private Limited, in terms of the
letter dated 12.10.2017, still the petitioner impleaded the
Mantri Promoters. It is further contended that the Mantri
Promoters has been registered under the Companies Act,
now known as Jakkur Promoters Private Limited. Therefore
the petition against Mantri Promoters is not maintainable.
In fact in the reply to the notice nominating an arbitrator,
JPPL by its letter dated 11.1.2018 had categorically stated
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about registration of Mantri Promoters as Jakkur Promoters
Private Limited and inspite of which, the present petition
has been filed against the Mantri Promoters and the same is
not maintainable. Therefore respondent sought for
dismissal of the petition.
III. ARGUMENTS ADVANCED BY THE
LEARNED COUNSEL FOR THE PARTIES
7. I have heard the learned counsel for the parties to
the lis.
8. Sri Srinivasa Raghavan, learned counsel for the
petitioner reiterating the averments made in the petition
contended that the existence of the JDA dated 30.3.2009
and existence of the Arbitration Clause i.e, Clause-25 in the
JDA is not in dispute. The petitioner issued legal notice as
contemplated under the provisions of Section 11(5) of the
Act. He would further contend that even the respondent
filed Criminal Petition No.8203/2017 under Section 482 of
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the Code of Criminal Procedure in the name of ‘M/s Mantri
Promoters’ against the petitioner in the month of October-
2017. He also contended that in the reply dated 11.1.2018
given by the respondent to the notice issued by the
petitioner, the respondent has not taken any contention
with regard to fraud and also not arbitrable. Therefore the
petitioner is entitled to the relief sought for in the petition.
9. In support of his contentions, the learned counsel
for the petitioner has relied upon the following judgments:
1. (2017)9 SCC 729 {DURO FELGUERA S.A. v.
GANGAVARAM PORT LTD., … Paragraphs 14, 17, 18,
19, 48 and 59}.
2. (2009)7 SCC 545 {SIME DARBY ENGINEERING SDN.
BHD vs. ENGINEERS INDIA LIMITED … paragraphs 23,
24, 26 and 27.
3. Judgment of the High Court of Delhi in Arbitration
Petition No.22/2016 decided on 19.10.2016
{PICASSO DIGITAL MEDIA PVT. LTD., vs. PICK-A-
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CENT CONSULTANCY SERVICE PVT. LTD…. paragraphs
4 and 5 }
4. Judgment of the High Court of Bombay in Arbitration
Petition No.9/2015 decided on 10.1.2018 {PADMINI
CHANDRAN MENON vs. VIJAY CHANDRAN MENON
AND OTHERS … paragraphs 24, 29, 46 and 48}
10. Per contra, Sri Suraj Govindraraj, learned counsel
for the respondent reiterating the averments made in the
statement of objections contended that the petitioner has
not followed the procedure as contemplated under the
provisions of Section 11(5) of the Act by issuing arbitral
legal notice to the JPPL. He would further contend that
under Clause-25 of the JDA dated 30.3.2009, the dispute
has to be referred to the Arbitral Tribunal and therefore the
sole Arbitrator cannot be appointed. Further, there are
serious allegations of fraud. Therefore the petitioner is not
entitled to any relief before this Court under the provisions
of Section 11(6) of the Act.
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11. In support of his contentions, the learned counsel
for the respondent has relied upon the following
Judgments:
1. (2010)1 SCC 72 {N. RADHAKRISHNAN vs. MAESTRO
ENGINEERS AND OTHERS}
2. (2016)10 SCC 386 {A. AYYASAMY vs. A.
PARAMASIVAM AND OTHERS}
3. (2017)10 SCC 706 { HIMANGNI ENTERPRISES vs.
KAMALJEET SINGH AHLUWALIA}
4. (2011)5 SCC 532 {BOOZ ALLEN AND HAMILTON INC.
vs. SBI HOME FINANCE LIMITED AND OTHERS}
5. 2018 SCC OnLine SC 487 {AMEET LALCHAND SHAH
AND OTHERS vs. RISHABH ENTERPRISES AND
ANOTHER}
6. Judgment of the High Court of Delhi in 2017 SCC
OnLine Del. 11036 {M/s KR IMPEX vs. M/s PUNJ
LIOYD LIMITED}
IV. POINT FOR CONSIDERATION
12. In view of the aforesaid rival contentions urged
by the learned counsel for the parties, the only point that
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arises for consideration in the present Civil Miscellaneous
Petition is:
Whether the petitioner has made out a
case to refer the matter for arbitration under the
provisions of Section 11(6) of the Arbitration and
Conciliation Act, 1996?
V. CLAUSE-25 OF THE JDA DATED 30.3.2009
13. It is the specific case of the petitioner that the
petitioner and the respondent have entered into JDA dated
30.3.2009. Clause 25 of the said JDA reads as under:
25. ARBITRATION: The parties hereto agree that in the event of
there being any disputes with regards to this
Agreement or interpretation of any of the terms
Agreement, the same shall be referred to the
Arbitration in terms hereof:
Arbitration shall be conducted as follows:
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a) All proceedings in any arbitration shall be
conducted in English;
b) The arbitration award shall be final and
binding on the parties, and the Parties agree
to be bound thereby and to act accordingly;
c) The arbitral tribunal may by unanimous
agreement, award to a party that
substantially prevails on the merits its costs
and reasonable expenses (including
reasonable fees of its counsel;
d) Seat of such arbitration tribunal shall be at
Bangalore;
e) The Arbitration Proceedings shall be
governed by the Arbitration and Conciliation
Act, 1996.
VI. REGARDING COMPLIANCE OF SECTION
11(5) OF THE ACT
14. It is not in dispute that the parties to the JDA i.e.,
the petitioner, respondent and M/s Abhishek Developers,
the authorized signatory of the respondent have duly
signed the said registered document as contemplated under
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the provisions of Section-7 of the Act. The respondent filed
objections and seriously contended that the petitioner has
not followed the procedure by issuing the legal notice to the
JPPL knowing fully well that the respondent – M/s Mantri
Promoters operates under the name and style of JPPL. The
same cannot be accepted on going through the reply dated
11.1.2018 issued by the respondent himself to the
petitioner’s notice. At the top of the reply dated 11.1.2018,
it is mentioned as “mantri” and at the bottom of the reply
notice it is mentioned as “Jakkur Promoters Pvt. Ltd., CIN:
U70100KA2017PTC1058212; Mantri House, 41, Vittal
Mallya Road, Bangalore-560 001”. Further in the reply, it
is stated that “Even the present notice has been addressed
to the said non-existent “Mantri Promoters”. However,
since it has been received at our address and we are
concerned with the subject matter of the notice we are
addressing this reply lest it be contended that no reply has
been issued”. In the reply, it is also stated that “a perusal
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of clause 25(c) which requires an award to be passed by
unanimous agreement, which essentially means, indicates
and establishes that the tribunal shall comprise of more
than one arbitrator. The interpretation now sought to be
given by your client that the arbitration is by sole arbitrator
is one more example of the long line of wrong interpretation
given by your client and contentions raised by your client”.
It is also stated in the reply that at the most, the petitioner
can nominate one person as its nominee arbitrator and not
as a sole Arbitrator. Therefore it clearly indicates that the
petitioner has complied the provisions of Section 11(5) of
the Act.
15. It is also relevant to state at this stage that the
very respondent – M/s Mantri Promoters now known as M/s
‘Jakkur Promoters Private Limited’ filed Criminal Petition
NO.8203/2017 in the month of October-2017 against the
present petitioner and the State under Section 482 of Code
of Criminal Procedure and has given its address as “ Mantri
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House, No.41, Vittal Mallya Road, Bangalore-560001,
represented by its Authorized Signatory Mr. Ravishankar
B.S. That is the address given in the present Petition.
Therefore the contention of the learned counsel for the
respondent that the petitioner has not complied the
provisions of Section 11(5) of the Act against the JPPL,
cannot be accepted.
VII. REGARDING ALLEGATIONS OF FRAUD AND
EXISTENCE OF ARBITRATION CLAUSE
16. Insofar as the contention raised by the learned
counsel for the respondent that there are serious
allegations of fraud and the dispute cannot be referred to
arbitration, the same cannot be accepted in view of the fact
that very respondent in the affidavit filed in support of the
application under Section 9 r/w Section 151 of the Code of
Civil Procedure to vacate the interim order passed by the
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trial Court in Arbitration Application No.368/2017, has
specifically stated at paragraphs 13 and 14 as under:
13. I say and submit and during the subsistence
of the JDA and the PoA, none of the actions
authorized under the JDA and PoA can be
curtailed by the Petitioner. Admittedly, all the
allegations made by the petitioner are required
to be adjudicated by the arbitral tribunal to be
appointed. This Hon’ble Court is only concerned
as regards protecting the subject matter of the
agreement which contains the arbitral clause.
With respect, it is submitted that the subject
matter of the JDA is development of the
schedule property and sale/lease of the
development which would include alienating,
disposing, dealing with, encumbering or parting
with or creating any third party rights including
but not limited to an agreement of sale, sale
deed, mortgage, deed, charge, encumbrance
etc., There cannot be an injunction sought for by
one of the parties to the JDA which goes against
the subject matter of the JDA. Hence, the ex
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parte injunction order obtained by the Petitioner
being contrary to the terms of the JDA/PoA is
required to be vacated.
14. In view of the injunction order being
contrary to the JDA it is required to be vacated
to enable the Respondent to act in terms of the
JDA. The vacating of the ex parte order of
injunction will not cause any loss, harm, injury
or injustice to the Petitioner. All the disputes and
matters which have been raised by the Petitioner
are disputed by the Respondent and can only be
adjudicated during the trial by the Arbitral
Tribunal yet to be appointed and cannot be done
so in a summary proceedings of the present
nature.
17. On careful perusal of the above averments made
by the respondent in the affidavit filed in support of the
application for vacating the interim order passed in AA
No.368/2017, it clearly depicts that the respondent has
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admitted in categorical terms that all the allegations made
by the petitioner are required to be adjudicated by the
arbitral tribunal to be appointed and all the disputes and
matters which have been raised by the petitioner are
disputed by the respondent and can only be adjudicated
during the trial by the Arbitral Tribunal yet to be appointed
and cannot be done so in a summary proceedings of the
present nature. Therefore primafacie the respondent has
admitted the existence of arbitration clause i.e, Clause 25 in
the JDA dated 30.3.2009 entered into between the parties.
Further, it is also relevant to state that in the reply notice
dated 11.1.2018, the respondent has not taken any
contention with regard to the fraud and that the dispute
cannot be referred to arbitrator. In view of the above, the
contention of the respondent that there are serious
allegations of fraud and the dispute cannot be referred to
arbitration, cannot be accepted.
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VIII. JUDGEMENTS RELIED UPON AND
PROVISIONS OF THE ACT
18. In the judgment relied upon by the learned
counsel for the respondent in the case of Radhakrishna
cited supra, the Hon’ble Supreme Court considered the
provisions of Sections 5,8 and 27 of the Act and the facts of
the said case and the facts of the present case are entirely
different and the said judgment is not applicable to the
present case. The judgment relied upon by the learned
counsel for the respondent in the case of N. Radhakrishnan
has been considered by the Hon’ble Supreme Court in the
case of A. AYYASAMY vs. A. PARAMASIVAM AND OTHERS
{(2016)10 SCC 386), wherein at paragraph-18, it is held as
under:
18. When the case involves serious allegations of
fraud, the dicta contained in the aforesaid
judgments would be understandable. However,
at the same time, mere allegation of fraud in the
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pleadings by one party against the other cannot
be a ground to hold that the matter is incapable
of settlement by arbitration and should be
decided by the civil court. The allegations of
fraud should be such that not only these
allegations are serious that in normal course
these may even constitute criminal offence, they
are also complex in nature and the decision on
these issues demand extensive evidence for
which civil court should appear to be more
appropriate forum than the Arbitral Tribunal.
Otherwise, it may become a convenient mode of
avoiding the process of arbitration by simply
using the device of making allegations of fraud
and pleading that issue of fraud needs to be
decided by the civil court. The judgment in N.
Radhakrishnan does not touch upon this aspect
and said decision is rendered after finding that
allegations of fraud were of serious nature.
19. It is also relevant to state at this stage that the
Hon’ble Supreme Court while considering the nature and
scope of Sections 11 and 8 of the Act in the case of BOOZ
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ALLEN AND HAMILTON INC. vs. SBI HOME FINANCE
LIMITED AND OTHERS reported in (2011)5 SCC 532 has
specifically held at paragraphs 32, 33 and 34 as under:
32. The nature and scope of issues arising for
consideration in an application under section 11
of the Act for appointment of arbitrators, are far
narrower than those arising in an application
under section 8 of the Act, seeking reference of
the parties to a suit to arbitration. While
considering an application under section 11 of
the Act, the Chief Justice or his designate would
not embark upon an examination of the issue of
`arbitrability' or appropriateness of adjudication
by a private forum, once he finds that there was
an arbitration agreement between or among the
parties, and would leave the issue of arbitrability
for the decision of the arbitral Tribunal. If the
arbitrator wrongly holds that the dispute is
arbitrable, the aggrieved party will have to
challenge the award by filing an application
under section 34 of the Act, relying upon sub-
section 2(b)(i) of that section.
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33. But where the issue of `arbitrability' arises
in the context of an application under section 8
of the Act in a pending suit, all aspects of
arbitrability have to be decided by the court
seized of the suit, and cannot be left to the
decision of the Arbitrator. Even if there is an
arbitration agreement between the parties, and
even if the dispute is covered by the arbitration
agreement, the court where the civil suit is
pending, will refuse an application under Section
8 of the Act, to refer the parties to arbitration, if
the subject matter of the suit is capable of
adjudication only by a public forum or the relief
claimed can only be granted by a special court or
Tribunal.
34. The term `arbitrability' has different
meanings in different contexts. The three facets
of arbitrability, relating to the jurisdiction of the
arbitral tribunal, are as under :
(i) whether the disputes are capable of
adjudication and settlement by arbitration?
That is, whether the disputes, having
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regard to their nature, could be resolved by
a private forum chosen by the parties (the
arbitral tribunal) or whether they would
exclusively fall within the domain of public
fora (courts).
(ii) Whether the disputes are covered by
the arbitration agreement? That is, whether
the disputes are enumerated or described
in the arbitration agreement as matters to
be decided by arbitration or whether the
disputes fall under the `excepted matters'
excluded from the purview of the
arbitration agreement.
(iii) Whether the parties have referred the
disputes to arbitration? That is, whether
the disputes fall under the scope of the
submission to the arbitral tribunal, or
whether they do not arise out of the
statement of claim and the counter claim
filed before the arbitral tribunal. A dispute,
even if it is capable of being decided by
arbitration and falling within the scope of
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arbitration agreement, will not be
`arbitrable' if it is not enumerated in the
joint list of disputes referred to arbitration,
or in the absence of such joint list of
disputes, does not form part of the
disputes raised in the pleadings before the
arbitral tribunal.
20. The provisions of sub-section 6A of Section 11 of
the Act after amendment w.e.f 23.10.2015 has brought
substantial changes in the Act. As per the amended
provisions of sub-section 6A of Section 11 of the Act, the
power of the Court is confined only to examine the
existence of an arbitration agreement. Further as per sub-
section (7) of Section 11 of the Act, the decision of
appointment of an arbitrator is made by Hon’ble Supreme
Court or the High Court instead of Chief Justice and no
appeal lies against such decision. The Hon’ble Supreme
Court while considering the provisions of sub-sections 6 and
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6A of Section 11 of the Act in the case of DURO FELGUERA
S.A. vs. GANGAVARAM PORT LIMITED reported in (2017)9
SCC 729 held at paragraphs 48 and 59 as under:
48. Section 11(6A) added by the 2015
Amendment, reads as follows:
“11(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.”
From a reading of Section 11(6A), the
intention of the legislature is crystal clear i.e.
the Court should and need only look into one
aspect- the existence of an arbitration
agreement. What are the factors for deciding
as to whether there is an arbitration
agreement is the next question. The
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resolution to that is simple - it needs to be
seen if the agreement contains a clause which
provides for arbitration pertaining to the
disputes which have arisen between the
parties to the agreement.
59. The scope of the power under Section 11(6)
of the 1996 Act was considerably wide in view
of the decision in SBP and Co. v. Patel Engg. Ltd.
{(2005)8 SCC 618} and National Insurance Co.
Ltd., v. Baghara Polyfab (P) Ltd., {(2009)1 SCC
267}. 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(6-A) ought to be respected.
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IX. REGARDING DEFINITION OF ARBITRAL TRIBUNAL
21. The ‘Arbitral Tribunal’ as defined under Section
2(d) of the Act means “a sole arbitrator or a panel of
arbitrators”. Section 10 of the Act reads as under:
10. Number of arbitrators:- (1) The parties are
free to determine the number of arbitrators,
provided that such number shall not be an even
number. (2) Failing the determination referred
to in sub-section (1), the arbitral tribunal shall
consist of a sole arbitrator.
22. As per Clause 25(c) of the JDA dated 30.3.2009,
the Arbitral Tribunal may by unanimous agreement, award
to a party that substantially prevails on the merits, its
costs and reasonable expenses (including reasonable fees
of its counsel). Admittedly in the present case, there is no
unanimous decision in view of the controversy between the
parties and the arbitration clause 25 of the JDA dated
30.3.2009 is silent as to the number of arbitrators. The said
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clause read with sub-section 2 of Section 10 of the Act
makes it clear that the Arbitral Tribunal in the instant case
would consist of a sole Arbitrator. My view is fortified by
the Judgment of the Hon’ble Supreme Court in the case of
SIME DARBY ENGINEERING SDN. BHD. vs. ENGINEERS
INDIA LIMITED reported in (2009)7 SCC 545 wherein the
Hon’ble Supreme Court while considering the provisions of
Sections 2(1)(d) and 11 of the Act, held at paragraphs 21
and 23 as under:
21. The Arbitration Tribunal as defined under
Section 2(d) of the Act means "a sole arbitrator
or a panel of arbitrators". Section 10(2) of the
Act is very relevant in order to resolve the
controversy in this case in as much as Section
10(2) makes it very clear where the number of
arbitrator is not determined, the arbitral tribunal
shall consist of a sole arbitrator. In this
connection if UNCITRAL rules are referred the
position will remain the same. UNCITRAL model
law on International Commercial Arbitration also
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accepts the same definition of Arbitration
Tribunal in Article 2(b). Article 10 of those rules
is almost identical with Section 10 of the said
Act.
23. Section 10 deviates from Article 10 of the
UNCITRAL law only in the sense that Section
10(1) of the Act provides that despite the
freedom given to the parties to determine the
number of arbitrators such numbers shall not be
even number. But in default of determination of
the number, Section 10(2) provides the tribunal
is to consist of a sole arbitrator. Therefore,
scheme of Section 10(2) of the Act is virtually
similar to Article 10.2 of the UNCITRAL model
law.
X. CONCLUSION
23. The material on record clearly depicts that there
is no dispute with regard to existence of JDA dated
30.3.2009 as well as existence of the arbitration clause i.e.,
clause 25 in the said JDA entered into between the parties
33
and the petitioner has complied the provisions of Section
11(5) of the Act by issuing the legal notice.
24. For the reasons stated above, the point raised in
the petition has to be answered in the affirmative holding
that the petitioner has made out a case to refer the matter
for arbitration under the provisions of Section 11(6) of the
Arbitration and Conciliation Act, 1996.
25. In view of the above, the Civil Miscellaneous
Petition is allowed. Hon’ble Sri Justice Ashok B.
Hinchigeri, former Judge of this Court is appointed as the
sole Arbitrator to adjudicate the disputes, in terms of
Clause-25 of the Joint Development Agreement dated
30.3.2009 as per Annexure-H entered into between the
parties, in accordance with law.
Registry is directed to send copy of this order to
Hon’ble Sri Justice Ashok B. Hinchigeri, former Judge of this
34
Court as well as to the Arbitration Centre for intimation
forthwith.
Sd/-
JUDGE
Gss/-