Bombay High Court
Arnav Vipankumar Goyal vs Executive Ship Management Private ... on 6 August, 2024
Author: Madhav J. Jamdar
Bench: Madhav J. Jamdar
507 IAL 17367.24 in ARBPL 16859.24.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO.17367 OF 2024
IN
ARBITRATION PETITION (L) NO.16859 OF 2024
Arnav Vipankumar Goyal & Anr. ...Applicants
V/s.
Executive Ship Management Pvt. Ltd. ...Respondent
Mr. Tushad Kakalia a/w Mr. Kayomars Kerawalla i/by Vohuman Legal
for Applicants/Petitioners.
Mr. K.P. Anil Kumar a/w Mr. Amit Saple, Ms. Priyanka Kumar, Mr.
Chinmay Apte for Respondent.
CORAM : MADHAV J. JAMDAR, J.
DATE : 6th August 2024
P.C. :
1. Heard Mr. Tushad Kakalia, learned Counsel appearing for the
Petitioners and Mr. Anil Kumar, the learned Counsel for the
Respondent.
2. The Respondent is the original Claimant and the Petitioners
are the original Respondents in the Arbitration proceeding in which
the impugned Award dated 16 th October 2019 has been passed by
the sole Arbitrator.
3. The Petitioners have raised two contentions. The first
contention raised is that although the award is dated 16 th October
2019, the Petitioners were not communicated about the said award.
The second point raised is that the Petitioners have not agreed for an
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appointment of the Arbitrator and that award is passed in favour of
the party with whom the Petitioners have no privity of contract and
no agreement of arbitration. He relied on the decision of the
Supreme Court in the case of Perkins Eastman Architects DPC Vs.
HSCC (India) Limited1, and emphasized on paragraph 21 of the
same. The said paragraph 21 reads as follows:
"21. But, in our view that has to be the logical
deduction from TRF Limited. Para 50 of the decision
shows that this Court was concerned with the issue,
"whether the Managing Director, after becoming
ineligible by operation of law, is he still eligible to
nominate an Arbitrator" The ineligibility referred to
therein, was as a result of operation of law, in that a
person having an interest in the dispute or in the
outcome or decision thereof, must not only be ineligible
to act as an arbitrator but must also not be eligible to
appoint anyone else as an arbitrator and that such
person cannot and should not have any role in charting
out any course to the dispute resolution by having the
power to appoint an arbitrator. The next sentences in
the paragraph, further show that cases where both the
parties could nominate respective arbitrators of their
choice were found to be completely a different
situation. The reason is clear that whatever advantage a
party may derive by nominating an arbitrator of its
choice would get counter-balanced by equal power with
the other party. But, in a case where only one party has
a right to appoint a sole arbitrator, its choice will always
have an element of exclusivity in determining or
charting the course for dispute resolution. Naturally, the
person who has an interest in the outcome or decision
of the dispute must not have the power to appoint a
1 (2020) 20 SCC 760
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sole arbitrator. That has to be taken as the essence of
the amendments brought in by the Arbitration and
Conciliation (Amendment) Act, 2015 (3 of 2016) and
recognised by the decision of this Court in TRF
Limited."
4. He submits that appointment of Arbitrator is contrary to the
law laid down by the Supreme Court. The Respondent has
unilaterally appointed the sole Arbitrator under clause 5 of the Bond
Agreement. He submits that after amendment of 2015 to the
Arbitration and Conciliation Act, 1996, a party cannot unilaterally
appoint the Arbitral Tribunal.
5. On the other hand, Mr. Anil Kumar, learned Counsel for the
Respondent states that various notices were sent to the present
Petitioners and all the notices have returned back with the remark
unclaimed. He states that the notices sent by the learned sole
Arbitrator has also come back with the remark unclaimed. He relies
on the decision of the Supreme Court dated 13 th October 2023 in the
case of Priyanka Kumari Vs. Shailendra Kumar2, to contend that
when the notice has returned, which shall be deemed to be duly
served upon the addressee and the same is a proper service of notice.
He further points out paragraph No.4(C) (page 33) of the Arbitration
Petition and submits that the Petitioners have received the emails
2 .Transfer Petition (s) (Civil) No(s). 2090 of 2019
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from the sole Arbitrator in the year 2019 and the same were ignored
by the Petitioners on the ground that at no point prior to receipt of
said emails from the sole Arbitrator, notice of appointment of sole
Arbitrator was received or notices for commencement of the Arbitral
proceedings was received by the Petitioners. Apart from that, in said
paragraph 4(C), it is contended that all the communications were
deliberately sent only to the Petitioner No.1 and not to the Petitioner
No.2. Mr. Anil Kumar, learned Counsel submits that the Petitioner
No.2 is the father of the Petitioner No.1 and they could have
appeared before the sole Arbitrator and could have raised point
regarding the jurisdiction of the Arbitrator to proceed with the
Arbitration proceedings. He relied on Sections 4, 16 and 20 of the
Arbitration and Conciliation Act, 1996. He also relied on the
judgment of the Supreme Court in the case of Quippo Construction
Equipment Limited Vs. Janardan Nirman Private Limited3.
6. At the outset, it is required to be noted that one of the point
raised by the Petitioners is that the appointment of sole Arbitrator
unilaterally at the instance of the Respondent is contrary to 2015
amendment to the said Act, the Arbitration Petition deserves to be
admitted.
7. As far as the prayer to stay the execution of Award is
3 (2020) 18 SCC 277
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concerned, it is required to be noted Ground No. 4(C) on page 33 of
the Arbitration Petition raised by the Petitioners which reads as
under:
"(C) The Petitioners first learned of the arbitral
proceedings when Petitioner No. 1 received an email
dated 11th May 2019 from the Sole Arbitrator, which
attached certain minutes of arbitration proceedings
dated 12th April 2019. At no point prior to receipt of the
said email did the Respondent give notice of the
appointment of the Sole Arbitrator or for that matter, of
the commencement of the arbitral proceedings.
Moreover, in so far as the email dated 11 th May 2019,
and letter dated 13th May 2019 and 15th May 2019 are
concerned, all the said communications were
deliberately sent only to Petitioner No. 1 and not to
Petitioner No.2. Neither of the Petitioners were ever
afforded an opportunity to present their case before the
Sole Arbitrator. In the circumstances, the Petitioners
were not given proper notice of the appointment of the
Sole Arbitrator and were also otherwise unable to
present their case. The Impugned Award is, on this
ground also, liable to be set aside."
(Emphasis added)
Thus, even as per the case of the Petitioners, the Petitioner
No.1 received email from the sole Arbitrator on 11 th May 2019. The
Petitioner No.1 is the son of the Petitioner No.2 and both of them are
staying together. Thus, it is clear that the Petitioners were completely
aware about the Arbitration proceedings at least since 11 th May 2019
and still they have not appeared before the learned Arbitrator. In
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Quippo Construction Equipment Ltd.(supra) after noticing Sections 4
and 16 of the Arbitration Act, in paragraph 22, it has been held that
considering the fact that the Respondent has failed to participate in
the proceedings before the Arbitrator and did not raise any
submission that the Arbitrator did not have jurisdiction or that he
was exceeding the scope of his authority the Respondent must be
deemed to have waived all such objections.
8. It is to be noted that the award is dated 16 th October 2019.
The Petitioners are completely aware about the arbitration
proceedings and they have come before this Court by filing the
Arbitration Petition on 16th May 2024 i.e. almost about 4 years and 8
months. Thus, no case is made out for granting stay without any
condition.
9. Accordingly, the following order is passed:
ORDER
(a) Arbitration Petition is admitted. Learned Counsel
appearing for the Respondent waives service of notice.
(b) Ad-interim relief in terms of prayer clause (b) on the
condition that the Petitioners deposit in this Court 50%
of the amount as per the impugned Award dated 16 th
October 2019, within a period of four weeks from
today.
507 IAL 17367.24 in ARBPL 16859.24.doc
(c) As short point is involved in the Arbitration Petition,
the Arbitration Petition is placed for final hearing on
12th September 2024. In the meanwhile, parties to
complete the pleadings, if not already completed.
(MADHAV J. JAMDAR, J.)
