M/S. Darshanlal Bhutani ... vs The General Manager (Mines), ...
2017 Latest Caselaw 6944 Bom

        J-mca 579.17.odt                                                                                                 1/9  


                   IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                          NAGPUR BENCH, NAGPUR


                   MISC. CIVIL APPLICATION (Arbn.) No. 579 OF 2017


                 M/s Darshanlal Bhutani (Contractor)
                 A registered partnership firm having its 
                 registered office at Darshan Complex,   
                 Motor Stand, Kamptee, Through its partner 
                 Shri Surinder s/o Darshanlal Bhutani, 
                 Aged about 45 years, Occ.: Business, 
                 R/o Bungalow No.94, Mall Road, 
                 Cantonment, Kamptee-441 002.              :      APPICANT

                           ...VERSUS...

        1.    The General Manager (Mines)
               Incharge-Group III,
               MOIL Limited, MOIL Bhavan,
               1-A, Katol Road, Chhaoni
               Nagpur-440 013. 
               
        2.    The Mine Manager
               Beldongri Mine
               MOIL Limited, Post Satak,
               Tah. Parseoni, Dist. Nagpur.                                         :      NON-APPLICANTS


        =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
        Shri H. I. Kothari, Advocate for the applicant.
        Shri Masood Shareef, Advocate for non-applicants. 
        =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-

                                                      CORAM  :   S.B. SHUKRE, J.

th DATE : 8 SEPTEMBER, 2017.

ORAL JUDGMENT :

Heard.

Rule made returnable. Heard finally by consent.

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This is an application filed under Section 11(6) of the

Arbitration and Conciliation Act, 1996 (for short "Arbitration Act"),

for appointment of an Arbitrator as the mechanism provided in the

arbitration clause has failed.

2] Learned counsel for the applicant submits that the

mechanism provided under the arbitration Clause-43 of the

agreement on the basis of which letter dated 28.4.2017 is issued,

provided that, first effort be made for settlement of the dispute

through mutual discussion and if such settlement is not possible

then, it be referred to the Chairman-cum-Managing Director of

Manganese Ore India Limited or his authorized representative, as

sole arbitrator. He submits that two notices were issued in this

regard; first on 10.4.2017 and second on 28.4.2017 and both

notices were received by the non-applicants, but unfortunately no

reply was given by the non-applicants. He submits that since there

has been a failure of mechanism, provided in the arbitration clause,

as held by the Hon'ble Apex Court in the case of Datar

Switchgears Ltd. Vs. Tata Finance Ltd. and another reported in

(2000) 8 Supreme Court Cases 151, this Court would have to

intervene and appoint an Arbitrator by invoking its power under

Section 11(6) of the Arbitration Act.

         J-mca 579.17.odt                                                                                                 3/9  


        3]                 Learned   counsel   Shri   Masood   Sharif   for   the   non-

applicants submits that no proper notices in consonance with the

agreement were sent by the applicant and, therefore, it cannot be

said that there has been a failure of mechanism for appointment of

Arbitrator in the arbitration clause. He submits that both the

notices in question, first being of the date of 10.4.2017 and second

dated 28.4.2017, though received by the non-applicants, were not

replied to the non-applicants, as they were issued to the General

Manager of the non-applicant company and not to the Chairman-

cum- Managing Director of the non-applicant company, who is the

authority to consider such matters. He, in support of his

contention, places his reliance on the view taken by the learned

single Judge of this Court in Misc. Civil Application (Arbitration)

No. 701 of 2013 (Naresh Kumar & Co.Pvt.Ltd. Vs. Manganese Ore

(India) Limited and another decided on 27.9.2013.

4] So far as concerned the existence of the arbitration

clause in the agreement in question, there is no dispute between

the parties. The dispute is about failure of the mechanism provided

for appointment of Arbitrator therein. Such dispute, I think can be

resolved by considering the agreement in question as well as the

notices issued by the applicant and which have been duly received

J-mca 579.17.odt 4/9

by the non-applicants.

In Datar Switchgears Ltd., Vs. Tata Finance Limited

(supra), the Hon'ble Apex Court has held that once there is a

failure of the mechanism provided under the arbitration clause for

appointment of an arbitrator, the application filed under Section

11(6) of the Arbitration Act is tenable and the Court would be

within its power to consider appointment of arbitrator, if the facts

and circumstances of the case justify the same.

5] The Arbitration clause is 43. It provides that whenever a

dispute arises between the parties in respect of the agreement or

matter arising out of work order, it shall be settled firstly, through

mutual discussion and if the settlement is not possible, secondly, by

reference of the dispute to the Chairman-cum-Managing Director of

the Company or his authorized representative, as sole arbitrator.

This clause clearly shows that the dispute between the parties

arising out of the agreement or work order has to be settled by

mutual discussion between the parties and if such settlement is not

possible, the parties to the agreement are required to refer the

dispute for settlement either to the Chairman-cum-Managing

Director or his authorized representative, acting as a sole

Arbitrator, whose decision has been given finality under the

J-mca 579.17.odt 5/9

Arbitration Clause 43. This clause, even on its deeper reading, does

not show that mutual discussion to be held firstly, must be held

between the applicant and the Chairman-cum-Managing Director,

rather, it only shows that such mutual discussion has to held

between the parties to the agreement. This clause further indicates

that it is only the parties to the agreement, who are supposed to

refer the dispute to the sole arbitration of the Chairman-cum-

Managing Director or his authorized representative. This will

necessitate an inquiry to ascertain as to who could be called as

parties to the agreement. If the answer found is that apart from

from the applicant, Chairman-cum-Managing Director himself is

also a party then, the mutual discussion, as the first step of

mechanism of settlement of the dispute, would have to be there

between the applicant and the Chairman-cum-Managing Director

and if it is not so, the mutual discussion would have to take place

between the applicant and an officer of the non-applicant company,

who was authorized to sign the agreement or who is having control

over the execution of the work order by the applicant. [

6] Now, if one takes a look at the agreement between the

parties as well as work order issued by the non-applicant company,

one would find that the agreement has not been signed by the

J-mca 579.17.odt 6/9

Chairman-cum-Manging Director but it has been signed by an

officer, who was an authorized signatory of the company and who

was the General Manager (Mines). The agreement nowhere

discloses that the General Manager (Mines), who signed the

agreement, executed the agreement not on behalf of the company,

Manganese Ore India Limited, but on behalf of the Chairman-cum-

Managing Director, Manganese Ore India Limited. There are no

recitals in the agreement to the effect that the agreement was

entered into in the name of the Chairman cum Managing Director

and executed on behalf of the Chairman-cum-Managing Director on

the strength of the authority given to the executant by the

Chairman-cum-Manging Director. Even the work order dated

28.11.2016 has been issued under the signature of General

Manager (Mines) and not under the signature of Chairman-cum-

Manging Director. All these facts would be sufficient for me to

conclude that the agreement was between this applicant and the

authorized signatory of the Company, who was the General

Manager (Mines) and these were the persons, who were parties to

the agreement.

7] This would take me to notices dated 10.4.2017 and

28.4.2017. Both these notices have been issued to the General

J-mca 579.17.odt 7/9

Manager (Mines) of the non-applicant company. I have already

found that the General Manager (Mines) was one of the parties to

the agreement containing arbitration clause. So, the notices, it has

to be said, for following the procedure prescribed in the agreement,

were issued to an officer, who was party to the agreement. But,

there was no response from the noticee and thus, one has to further

say, there is a failure of mechanism provided in the agreement in

the present case.

8] This Court, in the case arising from MCA No. 701/2013

decided on 27.9.2013 held that the notice demanding appointment

of arbitrator was never issued and that the notice was issued only

for clarifying that the Chairman-cum-Managing Director or

authorized representative could not be appointed as an Arbitrator

as either of them were not likely to act impartially and

independently. Such are, however, not the facts of the present case

and so non-applicants would get no assistance from the decision of

this Court in MCA No. 701/2013. The notice dated 28.4.2017

issued in this case clearly shows that there has been a demand for

following the procedure prescribed under the Arbitration Clause 43

and also appointment of arbitrator, if the settlement was seen as

not reachable on the basis of mutual discussion and this notice was

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admittedly not responded to by the non-applicants. The applicant,

therefore, had no option other than to invoke the jurisdiction of this

Court under section 11(6) of the Arbitration Act and has rightly

done so.

9] In view of the above, I find that there has been a

compliance by the applicant with the procedure prescribed in

clause 43 which is there in the arbitration agreement and there has

also been a failure on the part of the non-applicants to refer the

matter for arbitration. It follows then that the applicant has become

entitled to get an independent person appointed as the sole

Arbitrator for resolution of the dispute arising between the parties

by this Court.

10] The applicant has suggested name of Advocate Amol

Prasad to be appointed as a sole Arbitrator. However, I do not find

his name included in the panel of arbitrators available with this

Court and, therefore, the request of the applicant cannot be

considered and instead the names of the persons included in the

panel of arbitrators will have to be considered.

11] In the circumstances, the application deserves to be

allowed.

        12]                The application is allowed.





               J-mca 579.17.odt                                                                                                 9/9  


              13]                Shri M. P. Kukday, retired District Judge, who is on the

panel of the Arbitrators, is appointed as a sole arbitrator for

resolution of the dispute between the parties.

14] Both parties have no objection to the appointment of

Shri M. P. Kukday, retired District Judge, as sole arbitrator.

15] The applicant shall deposit in this Court processing fee

of Rs.25,000/.

              16]                Parties to bear their own costs.                       [




              17]                Rule is made absolute in these terms. 

              18]                Application is disposed of.

                                       
                                                                                                   JUDGE

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