The Division Bench of Karnataka HC while disposing off the Civil Miscellaneous Petition filed by the petitioner to appoint an Arbitrator, has held that only a statement is sufficient for the purpose of invocation of Arbitral Clause in an Agreement and what a party is required to do is only to refer the matter to the said institution and for the institution to appoint an arbitrator.
Facts
The petitioner and respondent had entered into a 'Interior Architectural Services' agreement that was governed by an arbitration clause. After some time, a disagreement between the parties emerged, and the petitioner approached the Council of Architecture for the appointment of an Arbitrator. However, Council denied the petitioner's request for an arbitrator because the petitioner is a Limited Liability Partnership and one of the partners is not an architect.
Aggrieved by this, the Petitioner files a Civil Miscellaneous Petition before the Karnataka High Court under Section 11(5) of the Arbitration and Conciliation Act, 1966, praying that; Any retired District Judge / Architects be appointed as the sole Arbitrator to adjudicate the petitioner's claim.
Contention Made
Petitioner: That though the petitioner had approached the Council of Architecture, the said Council had rejected the claim of the petitioner to appoint an arbitrator on account of the petitioner being a Limited Liability Partnership and that one of the partners is not an architect. That the other partner is an architect registered on the rolls of Council of Architecture. If that be so, it was for the petitioner to appraise the Counsel of Architecture on the said matter.
Respondent’s: Relying on the Petitioner Contention, Counsel for Respondent’s submit that if that is the case then the arbitration clause itself is non-est and void and cannot be relied upon.
Apart there from, a letter issued under Section 21 of the Arbitration and Conciliation Act, 1996, Whereby, the petitioner has not specifically invoked the arbitration clause but has only stated that the matter would be referred to the Council of Architecture. Therefore, he submits that the arbitration clause is void ab initio.
Court Observation
The Division Bench of the HC observed that; As regards the contention of the respondent a party to arbitration is entitled to take the contentions which are legally permissible but not malafide arguments. The parties having agreed to refer the dispute to arbitration and the agreement itself being one for ‘Interior Architectural Services and Constructing/Execution’, the respondent was always aware that the petitioner is an architectural firm of which one of the partners was an architect. Now after dispute having arisen, the respondent has indulged itself in such a malafide contentions which is already deprecated above.
As regards the further contention that in the notice was issued, what a party is required to do is only to refer the matter to the said institution and for the institution to appoint an arbitrator. There is no specific requirement for a party to name an arbitrator.
Judgment
The division bench of Karnataka HC held that; with regard to first issue, even if one of the partners is an architect registered with the Council of Architecture, the said Council would have jurisdiction to appoint an arbitrator. Thereby, HC direct the Council for Architecture to consider the request of the petitioner in the light of the above observations. However in the case notice was issued whereby the Petitioner has just stated the Arbitral Clause, that the same is sufficient for the purpose of invocation, since the Council of Architecture is an arbitral institution within the meaning of Section 11 of the Arbitration and Conciliation Act, 1996.
Hence, the petition is disposed with liberty to the petitioner to approach the Council of Architecture to appoint an arbitrator, which shall be considered by the said Council in terms of the observations made by the court.
Case: M/s Geosmin Studio Sustainable Solutions LLP vs M/s Ethnus Consultancy Services Pvt. Ltd.
Citation: C.M.P. No. 52 of 2021.
Bench: Mr. Justice Suraj GovindaRaj.
Decided on: 30th June, 2022.
Read Judgment @Latestlaws.com
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