M/S Cynosure Designs vs The Mstc Ltd. & Others
2009 Latest Caselaw 3677 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                 Arb. P. No.216/2009

%                                 Date of decision: 10.09.2009

M/S CYNOSURE DESIGNS                                  ....Petitioner
                       Through:   Mr. Avinash Lakhan Pal & Mr. Rahul
                                  Kumar Singh, Advocates

                               Versus

THE MSTC LTD. & OTHERS                             ... Respondents
                       Through:      Ms. Sonia Arora, Advocate for
                                     Respondent No.1/MSTC.
                                     Mr. Satish Aggarwal & Ms. Pooja
                                     Bhasker, Advocates for Respondent
                                     No.2


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may
      be allowed to see the judgment?                 No

2.    To be referred to the reporter or not?          No

3.    Whether the judgment should be reported         No
      in the Digest?


RAJIV SAHAI ENDLAW, J.

1. The petition is preferred under Section 11 (6) of the

Arbitration Act, 1996. The counsel for the respondent No.1 accepted

notice of the petition on 29th May, 2009. No reply has been filed.

Notice was also ordered to be issued to the other respondents.

Besides the respondent No.1, the Commissioner of Customs

(Preventive) Mumbai has been impleaded as the respondent No.2

and the Chairman-cum-Managing Director of the respondent No.1

has been impleaded as the respondent No.3. The respondent No.2

Commissioner of Customs (Preventive) has filed a reply to the

petition. The respondent No.3 Chairman-cum-Managing Director of

the respondent No.1 has been impleaded merely as a appointing

authority. The counsels for the petitioner, respondent No.1 and

respondent No.2 have been heard.

2. It is not in dispute that the petitioner and the respondent No.1

are parties to an agreement in writing containing a clause for

resolution of disputes arising in connection with the interpretation or

implementation of the terms & conditions of the agreement by

arbitration under the Arbitration Act, 1996; the language of

arbitration was agreed as English, the place of arbitration as Kolkata

and it was further agreed that the disputes covered under the

agreement shall be referred to the Chairman-cum-Managing Director

of the respondent No.1 for adjudication by him or by his nominee.

3. The said agreement also provides that only the courts at

Kolkata shall have the exclusive jurisdiction to entertain any dispute

connected with the arbitration proceedings. Upon enquiry, being

made from the counsel for the petitioner as to how this petition was

maintainable before this court, attention was invited to the order

dated 8th April, 2009 of this court in OMP No.154/2009 under Section

9 of the Act between the parties wherein also the respondent No.1

herein had taken objection about the territorial jurisdiction; it was

held that the courts at Kolkata had no jurisdiction in law qua the

disputes between the parties and the parties could not by agreement

vest jurisdiction in the courts at Kolkata. The petition under Section

9 of the Act was thus held maintainable in this court. The said order

having attained finality, the question of territorial jurisdiction need

not detain me any further.

4. Though the petitioner and the respondent No.1 only are parties

to the agreement containing the arbitration clause aforesaid but the

said agreement inter-alia was of participation by the petitioner in the

e-auction conducted by the respondent No.1 on behalf of others. The

disputes between the parties requiring arbitration are stated to be in

respect of an auction conducted by the respondent No.1 on behalf of

the respondent No.2 and in which the petitioner had participated. It

is the pleading of the petitioner that the respondent No.1 in the

matter of the said e-auction had been acting on behalf of the

respondent No.2. The respondent No.2 has in its reply stated that it

is not concerned with the arbitration proceedings between the

respondent No.1 and its buyers. Else the reply of the respondent

No.2 is on the merits of the disputes. The counsels have also not

addressed any arguments in this respect. All that can be said at this

stage is that the order under Section 9 of the Act in the OMP

aforesaid were issued qua the respondent No.2 as well and the

respondent No.2 from a perusal of the said order does not appear to

have taken any objection as to the maintainability of the petition

under Section 9 of the Act qua the respondent No.2.

5. It is the case of the petitioner and which is not rebutted that

the petitioner vide its letter dated 14th April, 2009 to the Chairman-

cum-Managing Director of the respondent No.1 being the named

arbitrator and/or the appointing authority for the arbitrator called

upon to either arbitrate or to appoint an arbitrator and that no action

has been taken pursuant thereto.

6. I am satisfied that the petitioner and the respondent No.1 are

parties to an arbitration agreement and disputes have arisen. There

is ambiguity as to whether the disputes raised by the petitioner are

with the respondent No.1 acting on behalf of respondent No.2 and

whether the same are arbitrable or not. However, since the

Supreme Court in National Insurance Co. Ltd. Vs. Boghara

Polyfab Pvt. Ltd. AIR 2009 SC 170 has held that whether a claim

falls within the arbitration clause or not should be left to be

determined by the arbitrator, the question whether the claims made

by the petitioner before the arbitrator are against the respondent

No.1 only or if against the respondent No.2 are arbitrable or not is

left to be determined by the Arbitral Tribunal.

7. Though the petitioner has applied for appointment of an

arbitrator in accordance with law and though the appointing

authority has failed to appoint the arbitrator but the Supreme Court

in Ace Pipeline Contracts Pvt. Ltd. Vs.

Bharat Petroleum Corporation Limited (2007) 5 SCC 304 and in

Northern Railway Administration, Ministry of Railway, New

Delhi Vs. Patel Engineering Company Ltd. (2008) 10 SCC 240

has held that even in exercise of powers under Section 11 (6) of the

Act the Chief Justice or his designate can give a mandate to the

appointing authority to appoint the arbitrator as per the agreement

or appoint the arbitrator in terms of the agreed mechanism, I

consider the present case to be such where it is more appropriate to

call upon the Chairman-cum-Managing Director of the respondent

No.1 to appoint the arbitrator rather than this court appointing an

independent arbitrator. I may also notice that though this court has

in OMP No.154/2009 held that the Kolkata courts have no

jurisdiction but the same will not interfere with the venue of the

arbitration agreed by the parties in as much as under Section 20 of

the Act the parties are free to agree on the place of arbitration and

the same is not relatable to Section 2 (e) of the Act and the parties in

this case have agreed to Kolkata being the venue of arbitration.

8. This petition is accordingly allowed.

9. The Chairman-cum-Managing Director of the respondent No.1

MSTC Ltd. is directed to appoint an arbitrator within four weeks of

today.

No order as to costs.

RAJIV SAHAI ENDLAW (JUDGE)

September 10th, 2009 PP