HON'BLE SRI JUSTICE K. LAKSHMAN
ARBITRATION APPLICATION No.90 OF 2022
ORDER:
Heard Mr. Avinash Desai, learned senior counsel representing Mr. Mallu Nethan Reddy, learned counsel for the petitioner and Mr. Prathap Narayan Sanghi, learned senior counsel representing Mr. Avadesh Narayan Sanghi, learned counsel for the respondent.
2. The present Arbitration Application is filed under Section - 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter 'the Act, 1996') for appointment of an arbitrator to resolve the disputes between the parties.
3. FACTS OF THE CASE:
i) The petitioner herein and the respondent have entered into a Memorandum of Understanding (MOU) dated 01.02.2019 on the specific terms and conditions agreed thereon for the purpose of purchase and development of land admeasuring Acs.12-40 cents at Plot No.A-4 in Survey Nos.581/1, 581/2, 582 and 583, situated at Industrial 2 KL,J Arb.Appl.No.90 of 2022 Development Area, TSIIC, Uppal, Hyderabad, from Hyderabad Distilleries and Wineries Private Limited. In the said MOU, there is no arbitration clause.
ii) Thereafter, they have entered into a Development Agreement - cum - General Power of Attorney (DAGPA) on 24.10.2019 on the specific terms and conditions agreed thereon for the purpose of development of the aforesaid property. Clause - XV of the said DAGPA deals with 'resolution of disputes', and Clause - XV(c) deals with appointment of arbitrator and the same is extracted as under:
"The dispute/s shall be referred to a sole Arbitrator who shall be mutually agreed by both the parties and the decision(s) of the Arbitrator shall be final and binding on the parties. All proceedings of such arbitration shall be in the English language. The seat and venue of such arbitration shall be Hyderabad, Telangana, India and the Courts at Hyderabad shall have jurisdiction over this Agreement to the exclusion of all the other courts."
iii) According to the petitioner, after execution of the aforesaid DAGPA, the petitioner called upon the respondent to come forward for 3 KL,J Arb.Appl.No.90 of 2022 registration of DAGPA on multiple occasions. The respondent postponed the same on one pretext or other. An e-mail dated 24.04.2021 was sent to the respondent with similar request. There was no response from the respondent. Thus, the respondent did not come forward for registration and, thereafter, started making unreasonable demands as to the terms of the aforesaid DAGPA.
iv) Therefore, according to the petitioner, there are disputes between the petitioner and the respondent which have to be adjudicated by an Arbitrator to be appointed in terms of the aforesaid DAGPA. Thus, they have invoked the aforesaid Clause - XV (c) of the DAGPA, dated 24.10.2019 and proposed the name of Justice Vilas Afzalpurkar, Former Judge, High Court of Judicature at Hyderabad for the States of Telangana and Andhra Pradesh, to act as sole arbitrator. Accordingly, a notice dated 29.03.2022 was issued. The respondent having received the said notice, vide reply dated 20.04.2022 denied the allegations made by the petitioner, however, it is stated that it agrees to refer the dispute to an Arbitrator and firstly to identify the respective land required to be 4 KL,J Arb.Appl.No.90 of 2022 retained by both the parties as per their respective shares, secondly, to take the mediation of arbitral Tribunal to fix the market value of the land in proportionate to the shares owned by the respondent and the petitioner, and on mutually agreed terms, the respondent is prepared to purchase the land of the petitioner as amount fixed by the Arbitral Tribunal or dispose of the extent of land owned by the respondent and the petitioner to any prospective purchasers to get rid of from the nuisance created by the petitioner in coming up with different versions at different point of time. Therefore, the petitioner filed the present application seeking to appoint an Arbitrator.
4. The respondent filed counter affidavit and additional counter affidavit on the very same lines.
5. CONTENTIONS OF THE PETITIONER:
Mr. Avinash Desai, learned senior counsel representing learned counsel for the petitioner, on instructions, would submit that the petitioner herein had filed a suit vide O.S. No.185 of 2022 against the respondent for perpetual injunction restraining the respondent including 5 KL,J Arb.Appl.No.90 of 2022 its representatives, officers, henchmen, agents etc., and the said suit is pending. The Court granted interim injunction in favour of the petitioner restraining the respondent, its representatives etc. from carrying out any act on 60 feet passage which interferes with the petitioner's easementary right of passage over the said 60 feet passage including applying for building permission, making of any construction over the suit schedule property therein. The said suit is pending and the said interim injunction is subsisting. In the said MOU, dated 01.02.2019, there is no arbitration clause. However, according to him, the respondent is not coming forward for registration of the aforesaid DAGPA, dated 24.10.2019 as agreed despite several requests including the e-mail dated 24.04.2021 and, thus, there are arbitral disputes between the petitioner and the respondent with regard to the said dispute, to which an Arbitrator has to be appointed in terms of Section - 11 (6) of the Act, 1996. Therefore, the petitioner has proposed the name of a retired Judge of High Court. Despite agreeing for appointment of Arbitrator and resolution of disputes by way of appointing an Arbitrator, the respondent is not coming forward 6 KL,J Arb.Appl.No.90 of 2022 to appoint an Arbitrator. Therefore, the petitioner herein has filed the present application.
6. CONTENTIONS OF THE RESPONDENT:
i) On the other hand, Mr. Prathap Narayan Sanghi, learned senior counsel representing the respondent would submit that the respondent has no objection for appointing an Arbitrator, provided that the Arbitrator has to cover all the issues including the dispute pursuant to the aforesaid MOU dated 01.02.2019 and DAGPA, dated 24.10.2019. The said fact was also mentioned in the reply sent by the respondent dated 20.04.2022. According to him, the petitioner herein is a chronic litigant, multiply the cases and keep harassing the land owners. The petitioner has filed 20 caveats which is an attempt provoking the respondent to enter into litigation and that the petitioner has also the aforesaid suit. Thus, the petitioner is having a fickle minded attitude and, therefore, the respondent fairly concedes that Justice Vilas Afzalpurkar was a close family friend of Managing Director of the respondent company for more than three (03) decades and that was the reason only, the respondent has 7 KL,J Arb.Appl.No.90 of 2022 disagreed for his appointment as an Arbitrator, mainly to avoid any future allegations of bias. Therefore, the respondent sought appointment of any retired Judge of Hon'ble Supreme Court as an Arbitrator based at Hyderabad for resolving disputes.
ii) Additional counter affidavit is also filed reiterating the said fact. However, learned senior counsel would submit that Arbitrator has to consider all the disputes including the disputes covered under MOU and DAGPA dated 24.10.2019. He has also placed reliance on the decision rendered by the Hon'ble Supreme Court in Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya1
7. ANALYSIS AND FINDING OF THE COURT:
i) The aforesaid rival submissions would reveal that the respondent is opposing the appointment of an Arbitrator on the following two (02) grounds:
(a) Justice Vilas Afzalpurkar is close relative of his father and, therefore, the petitioner may allege bias;1
. AIR 2003 SC 2252 8 KL,J Arb.Appl.No.90 of 2022
(b) Arbitrator has to consider all the disputes including the disputes in MOU dated 01.02.2019 and DAGPA dated 24.10.2019.
ii) In view of the above, it is relevant to note that there is no arbitration clause in MOU dated 01.02.2019. According to the petitioner, as per the terms of MOU, the petitioner was granted an easementary right of way over 60 feet passage and has been using the said 60 feet common passage/road which passes through and across the respondent's property since the date of execution of the sale deed. The respondent is creating problem. Therefore, the petitioner herein has filed the above suit and obtained ad interim injunction. Whereas, as per DAGPA, the respondent has to come forward for registration of the aforesaid DAGPA as agreed, and despite persuasions, it is not coming forward for registration of the same. Thus, there are arbitral disputes between the petitioner and the respondent which are to be adjudicated and resolved by an Arbitrator appointed by this Court under the provisions of the Act, 1996. However, the petitioner has proposed the name of the Arbitrator. 9
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iii) In view of the same, it is relevant to extract Article - XVIII of the DAGPA dated 24.10.2019 which deals with 'entire agreement' and the same is as under:
"a. This document along with its Schedules constitutes the entire Agreement between the Parties and supersedes all prior agreements, understandings and negotiations, both written and oral, between the Parties with respect of the subject matter of this Agreement.
b. No representation, inducement, promise, understanding, condition, warranty or indemnity not set forth herein has been made or relied upon by any Party hereto.
c. The Parties hereto acknowledge that each has had the opportunity to have this Agreement reviewed by legal counsel and that no presumption shall be applied in favour of or against any Party hereto by virtue of the fact that this document may have initially been prepared by one of the Parties hereto."
iv) As per the said Article, the said DAGPA dated 24.10.2019 along with its Schedules, constitutes the entire agreement between the parties and supersedes all prior agreements, understandings and 10 KL,J Arb.Appl.No.90 of 2022 negotiations, both written and oral, between the parties. Thus, the respondent has agreed for the said Article. Therefore, now it cannot say that the disputes under MOU and the DAGPA have to be resolved by an Arbitrator to be appointed by this Court.
v) It is also relevant to note that Section - 7 of the Act, 1996 deals with 'Arbitration Agreement', and sub-section 5 of Section - 7 refers to the reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract. Section - 8 envisages that a judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.
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vi) As stated above, there is no Clause in MOU dated 01.02.2019, but there is an arbitration clause in DAGPA dated 24.10.2019. Thus, the said contention of learned senior counsel for the respondent that all the disputes including MOU and DAGPA have to be considered by the Arbitrator cannot be accepted.
vii) The judgment in Sukanya Holdings Pvt. Ltd. (Supra) is with regard to interpretations of Clauses of the agreement and also Section - 8 of the Act, 1996. Thus, the facts of the judgment are altogether different to the facts in the present case.
viii) It is relevant to note that during the course of arguments, Mr. Prathap Narayan Sanghi, learned senior counsel appearing on behalf of the respondent submitted that the respondent has no objection for appointing Sri Justice R. Subhash Reddy, retired Judge, Hon'ble Supreme Court of India to resolve the disputes. Mr. Avinash Desai, learned senior counsel appearing for the petitioner, reported no objection for appointment of Sri Justice R. Subhash Reddy, as an Arbitrator. In 12 KL,J Arb.Appl.No.90 of 2022 view of the same, this Court is inclined to allow this application by appointing the said arbitrator to resolve the dispute.
8. CONCLUSION:
In light of the aforesaid discussion, the present arbitration application is allowed. Accordingly, Sri Justice R. Subhash Reddy, retired Judge, Hon'ble Supreme Court of India, R/o. Plot No.193, Road No.10 C, M.L.As & M.Ps Colony, Jubilee Hills, Hyderabad-500 033, is appointed as the Sole Arbitrator to resolve the disputes between the parties under DAGPA, dated 24.10.2019.
As a sequel, the miscellaneous applications, if any, pending in the Arbitration Application shall stand closed.
_________________ K. LAKSHMAN, J 4th April, 2023 Mgr