Gujarat High Court

Rspl Limited Through Shri Harish ... vs Simplex Infrastructure Ltd on 7 May, 2021

Bench: Bela M. Trivedi

        C/IAAP/51/2020                                       CAV JUDGMENT




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

            R/PETN. UNDER ARBITRATION ACT NO. 51 of 2020


FOR APPROVAL AND SIGNATURE:


HONOURABLE MS. JUSTICE BELA M. TRIVEDI

==========================================================

1 Whether Reporters of Local Papers may be allowed to NO see the judgment ?

2 To be referred to the Reporter or not ? YES

3 Whether their Lordships wish to see the fair copy of the NO judgment ?

4 Whether this case involves a substantial question of law NO as to the interpretation of the Constitution of India or any order made thereunder ?

========================================================== RSPL LIMITED THROUGH SHRI HARISH RAMCHANDANI ASSISTANT IVE PRESIDENT Versus SIMPLEX INFRASTRUCTURE LTD ========================================================== Appearance:

MR KAMAL TRIVEDI, SENIOR ADVOCATE FOR MR ABHISHEK M

MR RITIN RAI, SENIOR ADVOCATE WITH MR SAMRAT SENGUPTA FOR P

==========================================================

CORAM: HONOURABLE MS. JUSTICE BELA M. TRIVEDI

Date : 07/05/2021

CAV JUDGMENT

1. The moot question that falls for consideration before this

Court is :

Whether the appointment of the Sole Arbitrator made by

the PHD Chamber of Commerce and Industry, (PHDCCI) in

the unilateral proceedings initiated by the respondent is

exfacie invalid and nonest so as to warrant interference by

this Court, requiring an appointment of a Sole Arbitrator

under the provisions contained in Section 11(6) of the

Arbitration and Conciliation Act?

2. The factual conspectus as emerging from the pleadings of

the parties is as under:

     Serial Date               Event
     No.
     1.       02.02.2016       A letter of intent was issued by the
                               petitioner to the respondent. The LoI
                               specified that it would be followed by a
                               Contract    Agreement    specifying  the
                               detailed terms and conditions of the
                               contract.
     2.       25.04.2016       A work order was issued by the petitioner
                               to the respondent. The work order
                               specified that it was accompanied by a

service agreement dated 25.04.2016. It contained terms and conditions as to payment, delivery, initial security deposit, retention money deposit, and liquidated damages.

It further provided that all other conditions shall be as per the Service Agreement.

     3.       25.04.2016       A Form of Agreement was entered into
                               between   the  Petitioner and    the

Respondent. The relevant clauses thereof are as under:

a. Clause 1.1 of the From of Agreement listed the Contract Documents. These included the Form of Agreement, the General Condition of Contract ("GCC"), bulletins issued prior to the execution of the Form of Agreement, other documents listed in the Form of Agreement and modifications issued after the execution of the Form of Agreement.

b. Clause 1.3 provided that in case of conflict between the Contract Documents, the Form of Agreement shall have priority.

c. Clause 9 provided that any disputes shall be referred to arbitration by a sole Arbitrator appointed by PHDCCI and that the place of arbitration shall be Ahmedabad.

4. 25.04.2016 The GCC between the petitioner and the respondent were entered into. The following terms are noteworthy:

a. Cl. 1.2(iv) The terms of the Contract can only be varied in writing by the authorized representatives of the parties.

b. Cl. 2.4(iv) The Contract consists of the Form of Agreement, the GCC, the Special Conditions of Contract ("SCC"), site working conditions, technical specifications and drawings, and the Bill of Quantities.

c. Clause 20 Any disputes between the parties are to first be resolved through friendly consultations. If the disputes are not resolved within 90 days of commencement of discussions by notice from one party to other, either party may refer disputes to a sole arbitrator acceptable to both the parties. If parties

cannot agree on a sole arbitrator, the disputes are to be referred to two arbitrators and in case of disagreement between them, to an umpire. The arbitration proceedings shall be conducted in India in accordance with the Arbitration Act.

5. 25.04.2016 The SCC between the petitioner and the respondent were entered into. The following terms are noteworthy:

a. Cl. 1.3.7 in case of irreconcilable conflict in nontechnical matters between provisions in separate contract documents on the same aspect, precedence to be given to the documents in the following order:

                      i.     Formal contract
                      ii.    Prebid meeting confirmations
                      iii.   Price Schedule
                      iv.    Agreed variations
                      v.     SCC
                      vi.    GCC

                      Clause 1.3.7 further provided that any

variation or amendment issued after the execution of the formal contract shall take precedence over the formal contract and all other Contract Documents.

6. 24.05.2016 The respondent proposed an amendment to Clause 9 of the Form of Agreement to bring it in line with Clause 20 of the GCC. It stated that "Article09 may be modified accordingly for our acceptance".

7. 26.05.2016 The respondent issued a letter to the petitioner stating, "As conveyed by you over telephone that the Arbitration Clause (Indian, Arbitration and Conciliation Act, 1996) will be followed as per the GCC and in anticipation that the same will be incorporated suitably from your end, we

are forwarding all the documents duly signed for your record".

8. 31.01.2019 Petitioner issued a notice of termination of the Contract.

9. 11.05.2019 The respondent issued a notice invoking arbitration.

The respondent stated that it relied on the arbitration clause in the Form of Agreement. The respondent accordingly requested PHDCCI to appoint a sole arbitrator.

10. 22.05.2019 The PHDCCI informed the parties of the appointment of Hon'ble Justice (Retd.) JD Kapoor as sole arbitrator.

11. 27.05.2019 The Petitioner responded to the respondent's notice invoking arbitration. The petitioner raised the following objections:

i. The claims raised by the respondent are beyond the arbitration agreement.

ii. The respondent had requested that the arbitration clause in the Form of Agreement be brought in line with the GCC and the petitioner had agreed for the same.

Accordingly, the petitioner requested the respondent to withdraw its request for appointment of arbitrator by PHDCCI.

12 03.06.2019 The petitioner wrote a letter to the PHDCCI, raising the following objections:

i. No dispute has arisen which required arbitration;

ii. Clear understanding between the parties that if disputes arise, they shall be referred to arbitration in accordance with Clause 20 of GCC; and

iii. By letters dated 24.05.2016 and 26.05.2016, the respondent had itself stated that it would follow the arbitration clause provided in the GCC.

The petitioner requested the PHDCCI to return/ rescind/ cancel the reference made by the respondent and to withdraw its letter dated 22.05.2019 appointing a sole arbitrator.

13. 2.8.2019 The PHDCCI wrote to the parties seeking their consent for mediation by its Mediation and Conciliation Centre.

14. 14.8.2019 The Petitioner declined to proceed to mediation and reiterated its objections to the proceedings before the PHDCCI.

15. 15.10.2019 The respondent agreed to mediation.]

16. 1.11.2019 The PHDCCI issued a letter to the respondent's counsel, informing them that the petitioner had rejected the proposal for mediation. The PHDCCI recorded the petitioner's allegation that the respondent had misled the PHDCCI and that arbitration between the parties was to be as per Clause 20 of the GCC.

17. 28.06.2020 The petitioner issued a notice invoking arbitration as per Clause 20 of the GCC.

It proposed the name of Hon'ble Justice (Retd.) JC Upadhyaya as a sole arbitrator and requested the respondent to give its consent to the appointment within 30 days.

18. August 2020 The Petitioner filed the present petition.

19. 13.08.2020 The respondent replied to the notice invoking arbitration, stating that the invocation of Clause 20 of the GCC was

bad in law as the Form of Agreement was the parent contract and provided for appointment of an arbitrator by the PHDCCI.

5. The petitioner in the petition has prayed for the following

prayer:

"B. Your Lordships may be pleased to appoint Arbitrator on behalf of the respondent an the petitioner to resolve the dispute between the parties arising out of the contractual agreement including work order dated 25.04.2016 read with other connected documents including Form of Agreement dated 25.04.2016, GCC, SCC, LOI and the correspondences dated 23.05.2016 and dated 24.05.2016 and dated 26.05.2016 of the respondent."

Submissions made by the learned Advocates appearing for

the parties.

6. Learned Senior Advocate Mr. Kamal Trivedi appearing for

the petitioner made the following submissions:

6.1. Referring to the relevant clauses of the General

Conditions of the Contract (GCC) and to the Special

Conditions of the Contract (SCC) and also to the letters

dated 24.05.2016 and dated 26.05.2016 addressed by the

respondent to the petitioner, it has been submitted that the

respondent wanted to have the arbitration clause

contained in Article 20 of GCC to prevail and hold the field

for conducting the arbitration in case any disputes between

the parties arose, in accordance with the provisions of the

Act.

6.2. The said two letters clearly signified not only the

proposal of the respondent for the arbitration to be

governed by Article 20 of GCC instead of Article 9 of the

Form of Agreement but also the acceptance thereof by the

petitioner culminating into "amendment in writing" within

the meaning of Section 7(4) of the said Act.

6.3. The said letters dated 24.5.2016 and 26.05.2016 were

the "variation/amendment" in writing of the terms of the

contract with reference to the arbitration clause as per

Article 1.2(iv) of the Form of Agreement. Formal

amendment of the contract was not a precondition for

operation of arbitration clause and said clause Article 20

was deemed to have been incorporated in the contract.

6.4. Reliance is placed on the decision of the Supreme

Court in case of Ramji Dayawala & Sons (P) Ltd. vs.

Invest Import, reported in (1981) 1 SCC 80, in case of

Smita Conductors Ltd. vs. Euro Alloys Ltd. reported in

(2001) 7 SCC 728 and in case of Vishnu Bhagwan

Agrawal vs. National Insurance complainant. Ltd.

reported in (2018) 12 SCC 210 to submit that the

respondent having expressly agreed in writing to take

recourse to the provisions of the Act as provided in Article

20, it could not and should not have fallen back upon

Article 9, by unilaterally invoking the same, while

addressing a notice dated 11.05.2019 under Section 21 to

the petitioner with a copy thereof to the Chamber, followed

by the appointment of the Sole Arbitrator by the Chamber

vide its communication dated 22.05.2019 addressed to the

petitioner.

6.5. In view of Article 1.3.7. contained in the Special

Condition of the Contract, the variation/ amendment in

terms of the contract "in writing" with reference to the

applicability of the arbitration clause as contained in

Article 20, would take precedence over the Formal Contract

and other contract documents with respect to the specific

terms that have been modified.

6.6. The Notice dated 11.05.2019 addressed to the

petitioner as well as to the Chamber was to mislead the

Chamber. The Chamber also without waiting for any

response from the petitioner had unilaterally proceeded to

appoint a Sole Arbitrator vide its communication dated

22.04.2019, which was duly responded by the petitioner

vide its letter dated 27.05.2019.

6.7. As per the settled legal position, when the

appointment of a Sole Arbitrator by the Chamber is not ex

facie valid and is contrary to the agreed procedure for

appointment of Arbitrator, the High Court can exercise its

jurisdiction under Section 11(6) of the said Act to make

appointment of the Arbitrator.

6.8. As per Rule 15 of the "Rules of Arbitration and

Conciliation" of the Chamber, the Sole Arbitrator appointed

by the Chamber has so far not entered upon the reference,

nor the parties have filed their pleadings. The petitioner

has also not submitted to the so called jurisdiction of the

Sole Arbitrator appointed by the Chamber.

6.9. Reliance is placed upon the judgments of the

Supreme Court as under:

(a) In Walter Bau AG vs. Municipal Corporation of Greater Mumbai, reported in (2015) 3 SCC 800.

(b) Perkins Eastman Architects DPC and Another vs. HSCC (India) Ltd. reported in (2019) SCC Online SC 1517.

(d) Manish Chibber vs. Anil Sharma, Arbitration Petition 249 of 2020 in the High Court of Delhi.

(e) Oyo Hotels and Homes Pvt. Ltd. vs. Rajan Tewari and Another reported in 2021 SCC Online Del 446.

7. Learned Senior Advocate Mr. Ritin Rai appearing for the

respondent made the following submissions:

7.1. Pressing into service the provisions contained in the

said Act more particularly, Section 7 and Section 11, Mr.

Ritin Rai submitted that the existence of an arbitration

agreement is a prerequisite for the appointment of an

Arbitrator by a Court. Section 7 of the said Act stipulates

the requirements for a valid arbitration agreement. Section

11 provides for 'Appointment of Arbitrators' either as per

the agreement of the parties or in absence thereof by a

Court.

7.2. The Court will refrain itself from exercising

jurisdiction under Section 11 where an Arbitrator has

already been appointed in relation to the same disputes.

7.3. It is a well settled position of law that where an

arbitral tribunal has already been constituted and the

appointment is exfacie valid, there can be no recourse to

Section 11 for the purpose of appointment of an Arbitrator.

In the instant case, a sole arbitrator has been appointed in

accordance with Clause 9 of the Form of Agreement and no

amendment has been made thereto. Therefore, exfacie, the

appointment made by the PHDCCI is valid. In this regard,

reliance in placed on the decision of the Supreme Court in

case of Antrix Corporation Limited Vs. Devas

Multimedia Private Limited, reported in (2014) 11 SCC

560.

7.4. Reliance is also placed on the decision of the

Supreme Court in case of Pricol Ltd. v. Johnson

Controls Enterprise Ltd. reported in (2015) 4 SCC 177,

and also in the case of Balasore Alloys v. Medima

reported in (2020) 9 SCC 136, as also in case of

Eurobearings India v. Eurobearings R.I. (Arbitration

Petition Nos. 45/2021) decided on 01.02.2021 wherein

the Supreme Court had refused to entertain the petition

under Section 11 on the grounds that an Arbitrator had

already entered reference in the matter.

7.5. Distinguishing the decision in case of Perkins

Eastman Architects DPC and Another (supra) relied

upon by the learned Advocate appearing for the petitioner,

it was submitted that in the said case the arbitration

agreement itself was contrary to the mandatory provisions

of the Arbitration Act, whereas in the instance case, Clause

9 of the Form of Agreement could not be said to be

contrary to any mandatory provisions of the Arbitration

Act.

7.6. The respondent has correctly invoked the Clause 9 of

the Form of Agreement, whereas the petitioner has failed to

establish that the parties had amended Clause 9 of the

Form of Agreement, to give arbitration clause in GCC

overriding effect over the arbitration clause in the Form of

Agreement.

7.7. The two letters written by the respondent merely

contained a proposal to amend Clause 9 of the Form of

Agreement to bring it in line with Clause 20 of the GCC,

however there was nothing on record that any amendment

in writing to the Form of Agreement had taken place.

7.8. The PHDCCI has acted in accordance with the

parties' agreement in appointing a sole arbitrator and is

not required to wait for a period of thirty days or for the

petitioner's response to the notice invoking the arbitration

given by the respondent.

7.9. The petitioner's reliance on the PHDCCI's letter dated

1.11.2019 addressed to the respondent's Counsel was also

misplaced and such letter could not be interpreted as a

comment on the legality of the arbitral proceedings.

8. Now in the instant case, all the documents pertaining to

the contract agreement in question i.e. the Service Agreement,

Form of Agreement, General Conditions of Contract, Special

Conditions of Contract, etc., as also the correspondence that

ensued between the parties have not been disputed by either

side. The controversy therefore runs in a very narrow compass

as to whether the Clause9 of the Form of Agreement had stood

amended by virtue of the letters dated 24.05.2016 and

26.05.2016 addressed by the respondent to the petitioner, so as

to bring it in line with Clause 20 of the GCC?

9. As stated earlier, Clause 1.1 of the Form of Agreement

listed the contract documents. Clause 1.3 thereof provided that

in case of conflict between the contract documents, the Form of

Agreement shall have priority. Clause 9 provided that any

disputes shall be referred to Arbitration by a Sole Arbitrator

appointed by the PHDCCI and that the place of Arbitration shall

be Ahmedabad. The Clause 1.2 (iv) of the GCC stated that the

terms of contract can only be varied in writing by the authorised

representatives of the parties. Clause 20 of the GCC stated that:

"Clause 20 Any disputes between the parties are to first be resolved through friendly consultations. If the disputes are not resolved within 90 days of commencement of discussions by notice from one party to other, either party may refer disputes to a sole arbitrator acceptable to both the parties. If parties cannot agree on a sole arbitrator, the disputes are to be referred to two arbitrators and in case of disagreement between them, to an umpire. The arbitration proceedings shall be conducted in India in accordance with the Arbitration Act."

Clause 1.3.7 inter alia provided that any variation to amendment

executed after the execution of the formal contract shall take

precedence over the formal contract and all the contract

documents.

10. In the backdrop of these provisions in the contract

documents, let us examine the contents of the letters dated

24.05.2016 and 26.05.2016 written by the respondent to the

petitioner. For the ready reference, the relevant part of both the

letters are reproduced hereunder. Vide the letter dated

24.05.2016, the respondent proposed as under:

"This has reference to the discussion we had with you this morning regarding Arbitration Clause:

Please note that your General Condition of Contract (Article20, Page 49 of 53) refers Arbitration Clause as per "Indian Arbitration and Conciliation Act, 1996" which is a standard contract clause and acceptable to us; whereas your Form of Agreement (Article 09 Page 3 of 4) mentions about sole arbitrator which needs to be amended and the same should be in line with Indian Arbitration and Conciliation Act, 1996 to avoid any dispute at a later date. This is a very important clause in the contract and as such, Article 09 may be modified accordingly for our acceptance.

Thanking you in anticipation,"

On 26.05.2016, the respondent wrote as under:

"We acknowledge receipt of your Work Order No. RSPL/CCG/VIK/WO/006/201617 dated 25.04.2016 for the subject job.

As desired by you, we are returning a copy of the aforesaid Work Order duly stamped and signed by the authorised signatory as a token of our acceptance. As conveyed by you

over telephone that the Arbitration Clause (Indian Arbitration and Conciliation Act, 1996) will be followed as per GCC and in anticipation that the same will be incorporated suitably from your end, we are forwarding all the documents duly signed for your record."

11. From the aforestated letters, it is very clear that the

respondent in its letter dated 24.05.2016 not only proposed but

insisted that the Article 9 of the Form of Agreement pertaining to

the very important clause of Arbitration should be brought in

line with the Article 20 of the GCC which provided for the

Arbitration Clause as per the Arbitration and Conciliation Act,

1996. Thereafter, while acknowledging the receipt of the work

order dated 25.04.2016 issued by the petitioner, and referring to

the telephonic message conveyed by the petitioner agreeing for

the Arbitration Clause of GCC, the respondent wrote the letter

dated 26.04.2016 and forwarded all the documents duly signed,

as desired by the petitioner. Thus the contents of the said two

letters leave no shadow of doubt that the proposal made by the

respondent in the letter dated 24.05.2016 to bring Clause 9 of

the Form of Agreement in line with Clause 20 of the GCC, was

accepted by the petitioner on telephone, as confirmed by the

respondent in its letter dated 26.05.2016. Both the parties

therefore had not only intended but specifically agreed to follow

the Clause 20 of GCC for referring the disputes to the

Arbitration. Accordingly, Clause 9 of the Form of Agreement had

stood modified as desired by the respondent. Though, the

modified Clause 9 has not been brought on record, there is also

nothing on record to suggest that the petitioner had not agreed

for such modification or that both the parties had subsequently

decided to follow Clause 9 of the Form of Agreement and not

Clause 20 of the GCC. On the contrary, as transpiring from the

letter dated 26.05.2016, the respondent had forwarded the

documents duly signed only on the petitioner's having agreed to

modify Clause 9 of the Form of Agreement so as to bring it in

line of Clause 20 of GCC. The recording of the telephonic

agreement in the letter dated 26.05.2016 was nothing but

modification or amendment of Clause 9 of Form of Agreement so

as to bring it in line with Clause 20 of the GCC as agreed by

both the parties.

12. At this juncture a beneficial reference of the decision of

the Supreme Court in case of Govind Rubber Limited Vs. Louis

Dreyfus Commodities Asia Private Limited reported in (2015)

13 SCC 477 be made, in which the Supreme Court while

interpreting Section 7 of the Act, pertaining to the Arbitration

Agreement held inter alia that the Arbitration Agreement can be

culled out from an exchange of letters, telex, telegrams or other

means of communication which provides a record of agreement.

Para. Nos. 15 to 17 thereof reads as under.

"15. A perusal of the aforesaid provisions would show that in order to constitute an arbitration agreement, it need not be signed by all the parties. Section 7(3) of the Act provides that the arbitration agreement shall be in writing, which is a mandatory requirement. Section 7(4) states that the arbitration agreement shall be in writing, if it is a document signed by all the parties. But a perusal of clauses (b) and (c) of Section 7(4) would show that a written document which may not be signed by the parties even then it can be arbitration agreement. Section (4)(b) provides that an arbitration agreement can be culled out from an exchange of letters, telex, telegrams or other means of telecommunication which provides a record of the agreement.

16. On reading the provisions it can safely be concluded that an arbitration agreement even though in writing need not be signed by the parties if the record of agreement is provided by exchange of letters, telex, telegrams or other means of telecommunication, Section 7(4)(c) provides that there can be an arbitration agreement in the exchange of statements of claims and defence in which the existence of the agreement is alleged by one party and not denied by the other. If it can be prima facie shown that the parties are at ad idem, then the mere fact of one party not signing the agreement cannot absolve him from the liability under the agreement. In the present day of ecommerce, in cases of internet purchases, tele purchases, ticket booking on internet and in standard forms of contract, terms and conditions are agreed upon. In such agreements, if the identity of the parties is established, and there is a record of agreement it becomes an arbitration agreement if there is an arbitration clause showing ad idem between the

parties. Therefore, signature is not a formal requirement under Section 7(4)(b) or 7(4)(c) or under Section 7(5) of the Act.

17. We are also of the opinion that a commercial document having an arbitration Clause has to be interpreted in such a manner as to give effect to the agreement rather than invalidate it. On the principle of construction of a commercial agreement, Scrutton on Charter Parties (17th Edn., Sweet & Maxwell, London, 1964) explained that a commercial agreement has to be b construed, according to the sense and meaning as collected in the first place from the terms used and understood in the plain, ordinary and popular sense (see Article 6 at p. 16). The learned author also said that the agreement has to be interpreted "in order to effectuate the immediate intention of the parties". Similarly, Russell on Arbitration (21st Edn.) opined, relying on Astro Vencedor Compania Naviera S.A. v. Mabanaft GmbH, that the court should, if the circumstances allow, lean in favour of giving effect to the arbitration Clause to which the parties have agreed. The learned author has also referred to another judgment in Paul Smith Ltd. v. H and S International Holdings lnc. in order to emphasise that in construing an arbitration agreement the court should seek to "give effect to the intentions of the parties".

In the instant case also from the letters written by the

respondent recording the agreement between the parties, the

intention of parties to agree on Clause 20 of GCC is clearly

culled out. Under the circumstances, it does not lie in the mouth

of the respondent to say that the parties had agreed to follow

Clause 9 of the Form of Agreement and not Clause 20 of GCC.

Such a stand on the part of the respondent is not only

unjustified and not tenable at law but is absolutely unreasonable

and lacks bonafides.

13. There being an arbitration agreement in term of Clause 20

of GCC agreed upon by the parties, the respondent could not

have approached the PHDCCI, for the appointment of the

Arbitrator under the guise of Clause 9 of the Form of Agreement,

nor PHDCCI could have appointed the Arbitrator dehorse the

agreement entered into between the parties. Pertinently, the

petitioner at the earliest point of time in the reply dated

27.05.2019 to the notice dated 11.05.2019 of the respondent, had

raised the objections, giving reference to the letters dated

24.05.2016 and 26.05.2016 of the respondent that the parties

had agreed to follow Clause 20 of the GCC, and that the

respondent could not have invoked Clause 9 of the Form of

Agreement. The petitioner also wrote a letter to the PHDCCI on

03.06.2019 raising the objections against proceeding further

with the reference made by the respondent and requesting it to

withdraw its letter dated 22.05.2019 appointing a Sole Arbitrator.

The petitioner also did not consent for the mediation as proposed

by the PHDCCI and reiterated its objections to the proceedings

before the PHDCCI. The PHDCCI also vide its letter dated

1.11.2019 informed the respondent's Counsel that the petitioner

had rejected the proposal for mediation, on the ground that the

respondent had misled the PHDCCI by suppressing the fact that

the parties had the Arbitration Clause provided in the GCC as

per the Arbitration Act. It appears that thereafter no proceedings

have proceeded further either before the PHDCCI or before the

Arbitrator appointed by it, as the petitioner in the meantime had

filed the present petition.

14. In view of the aforestated silhouette of facts, the Court is of

the opinion that the entire proceedings initiated by the

respondent with the PHDCCI, without disclosing the correct

facts before the PHDCCI for appointment of an Arbitrator, were

dehorse the arbitration clause agreed upon by and between the

parties, and therefore the appointment of Arbitrator made by the

PHDCCI in the unilateral proceedings initiated by the respondent

was also illegal, invalid and nonest in the eye of law.

15. The reliance placed by Mr. Ritin Rai appearing for the

respondent on the decisions of the Antrix Corporation Limited

(supra) and on Pricol Ltd. (supra) is absolutely misplaced. In

case of Antrix Corporation Limited (supra), the parties had

agreed that the arbitration proceedings would be held in

accordance with the rules and procedure of the International

Chamber of Commerce or UNICITRAL, and the respondent

Devas Multimedia Private Limited invoking the said

arbitration clause approached the ICC and nominated its

Arbitrator. The petitioner Antrix Corporation Limited, when

called upon to nominate the Arbitrator, it nominated the

Arbitrator with a caveat that the arbitration would be governed

by the Arbitration Act, 1996 and called upon Devas Multimedia

Private Limited to appoint its nominee Arbitrator under the

said provisions. As Devas Multimedia Private Limited did not

respond to the said notice of the petitioner, the petitioner filed an

application under Section 11(6) of the said Act. The Supreme

Court after considering the scope of Section 11(6) and after

drawing a distinction between the law which was to operate as

the governing law of the agreement and the law which was to

govern the arbitration proceedings, rejected the application

under Section 11(6) of the Act, by holding as under:

"33. SubSection (6) of Section 11 of the 1996 Act, quite categorically provides that where the parties fail to act in terms of a procedure agreed upon by them, the provisions of SubSection (6) may be invoked by any of the parties.

Where in terms of the Agreement, the arbitration clause has already been invoked by one of the parties thereto un der the I.C.C. Rules, the provisions of Subsection (6) can not be invoked again, and, in case the other party is dissat isfied or aggrieved by the appointment of an Arbitrator in terms of the Agreement, his/its remedy would be by way of a petition under Section 13, and, thereafter, under Section 34 of the 1996 Act.

34. The law is well settled that where an Arbitrator had already been appointed and intimation thereof had been conveyed to the other party, a separate application for ap pointment of an Arbitrator is not maintainable. Once the power has been exercised under the Arbitration Agreement, there is no power left to, once again, refer the same dis putes to arbitration under Section 11 of the 1996 Act, un less the order closing the proceedings is subsequently set aside. In Som Datt Builders Pvt. Ltd. Vs. State of Punjab [2006 (3) RAJ 144 (P&H)], the Division Bench of the Punjab & Haryana High Court held, and we agree with the finding, that when the Arbitral Tribunal is already seized of the dis putes between the parties to the Arbitration Agreement, constitution of another Arbitral Tribunal in respect of those same issues which are already pending before the Arbitral Tribunal for adjudication, would be without jurisdiction.

35. In view of the language of Article 20 of the Arbitration Agreement which provided that the arbitration proceedings would be held in accordance with the rules and procedures of the International Chamber of Commerce or UNCITRAL, Devas was entitled to invoke the Rules of Arbitration of the ICC for the conduct of the arbitration proceedings. Article 19 of the Agreement provided that the rights and respons ibilities of the parties thereunder would be subject to and construed in accordance with the laws of India. There is, therefore, a clear distinction between the law which was to operate as the governing law of the Agreement and the law which was to govern the arbitration proceedings. Once the provisions of the ICC Rules of Arbitration had been invoked by Devas, the proceedings initiated thereunder could not be interfered with in a proceeding under Section 11 of the 1996 Act. The invocation of the ICC Rules would, of course,

be subject to challenge in appropriate proceedings but not by way of an application under Section 11(6) of the 1996 Act. Where the parties had agreed that the procedure for the arbitration would be governed by the ICC Rules, the same would necessarily include the appointment of an Ar bitral Tribunal in terms of the Arbitration Agreement and the said Rules. Arbitration Petition No.20 of 2011 un der Section 11(6) of the 1996 Act for the appointment of an Arbitrator must, therefore, fail and is rejected, but this will not prevent the Petitioner from taking recourse to other provisions of the aforesaid Act for appropriate relief."

16. In Pricol Ltd. (supra), the appointment of the Arbitrator

was sought under the Joint Venture Agreement entered into

between the parties, after the respondent had invoked the

concerned arbitration clause and moved the Singapore

International Arbitration Centre for the appointment of an

Arbitrator. During the pendency of the said application under

Section 11(6) of the said Act filed by the petitioner, the said

authority i.e. SIAC appointed an Arbitrator under the provisions

contained in the Singapore International Arbitration Act. The

Sole Arbitrator after the preliminary hearing on the issue of

jurisdiction passed a partial award holding that the appointment

was valid. In the backdrop of such facts, the Supreme Court did

not entertain the petitioner's petition under Section 11 (6) of the

said Act by holding as under:

"11. From the relevant facts of the case, it is also clear that the respondents at one time had suggested the name of a retired judge of the Supreme Court of India as the sole Arbitrator, which was not agreed to by the petitioner, who in turn, was inclined to nominate another learned judge. Be that as it may, in such a situation, the respondents by invoking Arbitration clause 30.2 had approached SIAC for appointment of an Arbitrator. This was on 5th September, 2014 i.e. before the present proceeding was instituted by the petitioner. Though the notice of the said request was served on the petitioner on 11th September, 2014, no steps were taken by the petitioner to pre empt the appointment of a sole Arbitrator by SIAC. Mr. Steven Y.H. Lim came to be appointed as the sole Arbitrator by the SIAC on 29th September, 2014. The petitioner has submitted to the jurisdiction of Mr. Steven Y.H. Lim. Even if it is held that such participation, being under protest, would not operate as an estoppel, what must be acknowledged is that the appointment of the sole Arbitrator made by SIAC and the partial award on the issue of jurisdiction cannot be questioned and examined in a proceeding under Section 11(6) of the Act which empowers the Chief Justice or his nominee only to appoint an Arbitrator in case the parties fail to do so in accordance with the terms agreed upon by them. To exercise the said power, in the facts and events that has taken place, would really amount to sitting in appeal over the decision of SIAC in appointing Mr. Lim as well as the partial award dated 27th November, 2014 passed by him acting as the sole Arbitrator. Such an exercise would be wholly inappropriate in the context of the jurisdiction under Section 11(6) of the Act, a view already

expressed by this Court in a recent decision in Antrix Corp. Ltd. vs. Devas Multimedia P. Ltd. "

17. So far as the facts of the present case are concerned, the

respondent has not followed the procedure as agreed between

the parties, as was done in case of Antrix Corporation Limited

(supra) nor the petitioner has submitted to the jurisdiction of the

Sole Arbitrator appointed by the PHDCCI at the instance of the

respondent, as was done in case of Pricol Ltd. (supra). Similarly,

the decision in case of Balasore Alloys Ltd. (supra) also would

not be applicable to the facts of the present case inasmuch as in

the said case, the parties had entered into an agreement

containing an arbitration clause, which was different from the

arbitration clause provided in the purchase order arising out of

the said main agreement. The Arbitrator was appointed by the

respondent invoking the arbitration clause contained in the

main agreement which was challenged by the petitioner by

invoking the arbitration clause contained in the purchase order.

The Supreme Court refused to entertain the said petition of the

petitioner filed under Section 11(6) of the said Act observing as

under:

"17. In that view of the matter, when admittedly the parties had entered into the agreement dated 31.03.2018 and there was consensus asidem to the terms and conditions contained therein which is comprehensive and encompassing all terms of the transaction and such agreement also contains an arbitration clause which is different from the arbitration clause provided in the purchase order which is for the limited purpose of supply of the produce with more specific details which arises out of Agreement dated 31.03.2018; the arbitration clause 16 contained in Clause 23 in the main agreement dated 31.03.2018 would govern the parties insofar as the present nature of dispute that has been raised by them with regard to the price and the terms of payment including recovery etc. In that view, it would not be appropriate for the applicant to invoke Clause 7 of the purchase orders more particularly when the arbitration clause contained in the Agreement dated 31.03.2018 has been invoked and the Arbitral Tribunal comprising of Mr. Jonathan Jacob Gass, Mr. Gaurab Banerji and Ms. Lucy Greenwood has already been appointed on 22.06.2020."

18. In the instant case, as discussed earlier the Court has

found that the appointment of the Sole Arbitrator by the PHDCCI

in the unilateral proceedings initiated by the respondent,

dehorse the arbitration clause agreed between the parties, is

illegal, invalid and nonest, and therefore the ratio of decision in

case of Perkins Eastman Architects DPC and Another (supra)

would squarely apply. In the said case, the Supreme Court in

exercise of the powers conferred under Section 11(6) of the said

Act, appointed the Sole Arbitrator, even when an appointment of

an Arbitrator was already made. The Supreme Court after

discussing various other judgments held as under:

"26. The further question that arises is whether the power can be exercised by this Court under Section 11 of the Act when the appointment of an arbitrator has already been made by the respondent and whether the appellant should be left to raise challenge at an appropriate stage in terms of remedies available in law. Similar controversy was gone into by a Designated Judge of this Court in Walter Bau AG3 and the discussion on the point was as under:

"9. While it is correct that in Antrix and Pricol Ltd., it was opined by this Court that after appointment of an arbitrator is made, the remedy of the aggrieved party is not under Section 11(6) but such remedy lies elsewhere and under different provisions of the Arbit ration Act (Sections 12 and 13), the context in which the aforesaid view was expressed cannot be lost sight of. In Antrix, appointment of the arbitrator, as per the ICC Rules, was as per the alternative procedure agreed upon, whereas in Pricol Ltd., the party which had filed the application under Section 11(6) of the Arbitration Act had already submitted to the jurisdic tion of the arbitrator. In the present case, the situ ation is otherwise.

10. Unless the appointment of the arbitrator is ex facie valid and such appointment satisfies the Court exercising jurisdiction under Section 11(6) of the Ar bitration Act, acceptance of such appointment as a fait accompli to debar the jurisdiction under Section 11(6) cannot be countenanced in law. In the present case, the agreed upon procedure between the parties contemplated the appointment of the arbitrator by the second party within 30 days of receipt of a notice from the first party. While the decision in Datar Switchgears Ltd.18 may have introduced some flexib ility in the time frame agreed upon by the parties by extending it till a point of time anterior to the filing of the application under Section 11(6) of the Arbitration Act, it cannot be lost sight of that in the present case the appointment of Shri Justice A.D. Mane is clearly contrary to the provisions of the Rules governing the appointment of arbitrators by ICADR, which the parties had agreed to abide by in the matter of such appointment. The option given to the respondent Cor

poration to go beyond the panel submitted by ICADR and to appoint any person of its choice was clearly not in the contemplation of the parties. If that be so, obviously, the appointment of Shri Justice A.D. Mane is non est in law. Such an appointment, therefore, will not inhibit the exercise of jurisdiction by this Court under Section 11(6) of the Arbitration Act. It cannot, therefore, be held that the present proceeding is not maintainable in law. The appointment of Shri Justice A.D. Mane made beyond 30 days of the re ceipt of notice by the petitioner, though may appear to be in conformity with the law laid down in Datar Switchgears Ltd., is clearly contrary to the agreed procedure which required the appointment made by the respondent Corporation to be from the panel sub mitted by ICADR. The said appointment, therefore, is clearly invalid in law."

27. It may be noted here that the aforesaid view of the Des ignated Judge in Walter Bau AG3 was pressed into service on behalf of the appellant in TRF Limited4 and the opinion expressed by the Designated Judge was found to be in con sonance with the binding authorities of this Court. It was observed:

"32. Mr Sundaram, learned Senior Counsel for the appellant has also drawn inspiration from the judg ment passed by the Designated Judge of this Court in Walter Bau AG3, where the learned Judge, after re ferring to Antrix Corpn. Ltd. , distinguished the same and also distinguished the authority in Pricol Ltd. v. Johnson Controls Enterprise Ltd. and came to hold that: (Walter Bau AG case3, SCC p. 806, para 10)

"10. Unless the appointment of the arbitrator is ex facie valid and such appointment satisfies the Court exercising jurisdiction under Section 11(6) of the Arbitration Act, acceptance of such appointment as a fait accompli to debar the jur isdiction under Section 11(6) cannot be coun tenanced in law. ..."

33. We may immediately state that the opinion ex pressed in the aforesaid case is in consonance with

the binding authorities we have referred to hereinbe fore."

28. In TRF Limited, the Managing Director of the respond ent had nominated a former Judge of this Court as sole ar bitrator in terms of aforesaid Clause 33(d), after which the appellant had preferred an application under Section 11(5) read with Section 11(6) of the Act. The plea was rejec ted by the High Court and the appeal therefrom on the is sue whether the Managing Director could nominate an ar bitrator was decided in favour of the appellant as stated hereinabove. As regards the issue about fresh appoint ment, this Court remanded the matter to the High Court for fresh consideration as is discernible from para 55 of the Judgment. In the light of these authorities there is no hindrance in entertaining the instant application preferred by the Applicants."

19. In the light of the afore discussed factual and legal

position, the Court has no hesitation in exercising the powers

conferred under Section 11(6) of the said Act for appointment of

an Arbitrator to resolve the disputes between the parties. The

Court therefore in exercise of the powers conferred under sub

section (6) of Section 11, appoints Mr. Justice Kalpesh Jhaveri,

Former Judge of High Court of Gujarat and Former Chief Justice

of the Orissa High Court, to act as an Arbitrator to resolve the

disputes between the parties. The learned Advocate Mr.

Abhishekh Mehta for the petitioner is directed to obtain the

requisite consent and declaration of Mr. Justice Jhaveri as

required in terms of Sixth Schedule, under Section 11(8) read