High Court of Delhi was dealing with the petition filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 seeking appointment of Arbitrator on behalf of respondent No.1 in terms of arbitration agreements.
Brief Facts:
Petitioner No.1 and petitioner No. 2 are the companies incorporated under the provisions of Companies Act, 1956. Respondent No.1, National Textiles Corporation is a public sector enterprise under the Ministry of Textiles incorporated in the year 1968. Respondent No.2 is a Joint Venture Company duly incorporated under the laws of India, in which petitioners and respondent No.1 collectively hold 51% and 49% shares respectively. The parties had entered into some documents to constitute a Joint Venture Company, so that the Textile Mill/Undertaking namely India United Mills No. 1 along with its entire land admeasuring 21.25 acres consisting of the "Mill Land/1 and also the "Surplus Land" along with the building/structures thereof can be transferred to respondent No.2 on lease for a period of 33 years (renewable for two more term of 33 years each) to revive and operate the same by respondent No.2. However, according to petitioner, Respondent No. 1 till date, has miserably failed to comply the crucial terms of transaction.
Petitioner’s Contention:
Learned counsel for the petitioner submitted that when all efforts of Petitioners for resolving the disputes with respondent No.1 failed, petitioner invoked arbitration in terms of Article 8.1, 8.2 and 9 of Memorandum of Understanding; Article 13.1, 13.2, 13.13 of Share Subscription and Shareholders Agreement; Article 13.1, 13.2, 13.3 and 13.4 of Lease Deed and Article 13.2, 13.3 and 13.4 of UTA Undertaking Transfer Agreement. It was next submitted that till date, respondent has neither consented to the appointment of Sole Arbitrator nor appointed its nominee Arbitrator.
Respondent’s Contention:
Learned ASG, appearing on behalf of respondent No.1 has disputed the claims raised in the present petition. However, he agreed that the disputes are arbitrable. Existence of ‘Dispute Resolution Clause’ in the afore-noted documents executed between the parties is also not disputed. It was submitted that the plea of petitioner that respondent has failed to appoint its arbitrator deserves to be rejected, as respondent has been regularly communicating with the petitioner with the object to resolve the disputes.
HC’s Observations:
After hearing both the sides Court observed that during the course of hearing, learned senior counsel for the petitioner and learned ASG reached at a consensus that in terms of arbitration clause, the disputes have to be adjudicated by the arbitral tribunal comprising of three members, out of which one arbitrator each has to be proposed by both the sides and the two Arbitrators so appointed, shall appoint the Presiding Arbitrator.
HC Held:
After evaluating submissions made by both the parties the Court held that “since both the sides have themselves proposed names of their nominee Arbitrators, which is acceptable to the other side, this Court hereby directs that the disputes, which are subject matter of this petition, shall be adjudicated by the Arbitral Tribunal. The learned Arbitrators shall ensure compliance of Section 12 of Arbitration and Conciliation Act, 1996 before commencing the arbitration.”
Bench: Hon'ble Mr. Justice Suresh Kumar Kait
Case Title: Bhaskar Industries Pvt. Ltd. & Anr. v. National Textile Corporation Ltd. & Anr.
Case Details: ARB.P. 1123/2021
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