Karnataka High Court

Svaryu Energy Limited vs Bhrat Heavy Electrical Limited on 3 January, 2023

Bench: R Devdas

                          -1-
                                      CMP No. 753 of 2022


IN THE HIGH COURT OF KARNATAKA AT BENGALURU

    DATED THIS THE 3RD DAY OF JANUARY, 2023

                       BEFORE
        THE HON'BLE MR. JUSTICE R DEVDAS
       CIVIL MISC. PETITION NO. 753 OF 2022



BETWEEN:

SVARYU ENERGY LIMITED
(FORMERLY KNOWN AS REFEX ENERGY LIMITED)
A COMPANY INCORPORATED UNDER THE
PROVISIONS OF THE COMPANIES ACT 1956
NO.202, 2ND FLOOR,
OPP TO PAREL POST OFFICE
JIJIBHOY LANE, LALBAUG, MUMBAI-400012
REPRESENTED HEREIN
BY ITS AUTHORISED RERPESENTATIVE
MR PRADEEP KISHANRAO PUJARI
                                            ...PETITIONER

(BY SRI. SANDEEP HUILGOL, ADVOCATE)

AND:

BHRAT HEAVY ELECTRICAL LIMITED
ELECTRONICS DIVISION
P B NO.2606
MYSORE ROAD
BANGALORE-560026

ALSO AT
BHRAT HEAVY ELECTRICAL LIMITED
SOLAR BUSINESS DIVISION
PROF CRN RAO CIRCLE, IISC POST,
MALELSWARAM
BANGALORE-560012
                                           ...RESPONDENT

(REPONDENT SERVED - UNREPRESENTED)
                              -2-
                                          CMP No. 753 of 2022


     THIS CIVIL MISCELLANEOUS PETITION IS FILED UNDER
SEC.11(5) OF THE ARBITRATION AND CONCILIATION ACT
1996, PRAYING THAT THIS HONBLE COURT MAY BE PLEASED
TO APPOINT A SOLE LEARNED ARBITRATOR ON BEHALF OF
THE PARTIES TO THIS PETITION UNDER SECTION 11(5) OF
THE ARBITRATION AND CONCILIATION ACT, 1996, AND
CLAUSE 23 OF THE GENERAL TERMS OF CONDITIONS
(INDIGENOUS PURCHASE) BEARING DOC. REF EDN/IND/ENQ-
01 (ANNEXURE-A) TO ADJUDICATE UPON THE DISPUTES
ARISING BETWEEN THE PETITIONER AND THE RESPONDENT
HEREIN ARISING OUT OF AND IN CONNECTION WITH THE
SUBJECT MATTER OF THIS PETITION, AND ETC.,

     THIS PETITION, COMING ON FOR ADMISSION, THIS DAY,

THE COURT MADE THE FOLLOWING:


                           ORDER

R.DEVDAS J., (ORAL):

The petitioner is before this Court in this Civil

Miscellaneous Petition under Section 11(5) of the

Arbitration and Conciliation Act, 1996.

2. It is not disputed that earlier a sole arbitrator

was appointed and sole arbitrator passed an award on

23.05.2018 partly in favour of the petitioner and partly in

favour of the respondent. In the meantime, in October,

2020 there was a restructuring in the division of the

respondent and a separate division was created in

Bangalore to deal with the Solar business. The award

CMP No. 753 of 2022

passed by the sole arbitrator was challenged by the

petitioner as well as the respondent before the City Civil

Court, Bengaluru in AS Nos.176 and 180/2018. The City

Civil Court, Bengaluru allowed both the arbitral suits by

way of two separate judgments, both dated 20.12.2021

while setting aside the arbitral award dated 23.05.2018.

3. Following the award being set aside at the

hands of the City Civil Court, the petitioner once again

issued notice invoking Clause 23 of the general terms and

conditions of the purchase orders. The notice was issued

on 31.03.2022 suggesting the names of four arbitrators

and calling upon the respondents to choose any one of the

arbitrators suggested by the petitioners or as an

alternative if the names were not acceptable then the

respondent was required to sent a panel of three names so

that the petitioner could choose one amongst the panel of

the arbitrators. Nevertheless since the respondent failed

to respond to the notice issued by the petitioner within the

statutory period of 30 days, the petitioner has approached

CMP No. 753 of 2022

this Court invoking Section 11(5) of the Arbitration and

Conciliation Act, 1996 for appointment of a sole arbitrator.

4. Though notice was issued to the respondent,

there is no representation.

5. Learned counsel for the petitioner has placed

reliance on the decision of the Delhi high Court in the case

of Steel Authority of India Limited/vs./ Indian

Council of Arbitration - 2015 SCC OnLine Del 13394.

Learned counsel has pointed out from the paragraph No.3

of the judgment that an issue similar to one on hand was

raised as follows: "Whether the arbitration proceedings

initiated by GE shipping are maintainable, given that the

proceedings are in respect of disputes that have been the

subject matter of an earlier arbitration award, which was

set aside under Section 34 of the Act."

6. In this regard, the Delhi High Court has opined

that an arbitration agreement merely provides for an

alternative forum for resolution of disputes. Thus, all

disputes that the parties agree to resolve by arbitration

CMP No. 753 of 2022

are to be resolved by arbitration. Thus, as long as the

disputes that are covered under the arbitration agreement

remain unresolved, the parties would be free to take

recourse to arbitration of the said disputes and the other

party would be contractually bound to submit the disputes

to arbitration. The Delhi High Court has rejected the

contention that the subsequent invocation of the arbitral

clauses would be hit by the principles of res judicata. It

was contended that since the disputes have been subject

matter of the arbitration award, the arbitration agreement

stood exhausted. Such contention was also not accepted

by the Delhi High Court. The Delhi High Court also notices

the fact that the power of the Court to remand the dispute

to arbitrations under Section 34 have been considered in

various decisions. However it was held that it is now no

longer open for the petitioner to contend that since the

court did not remit the matter under section 34 of the Act,

the disputes therein could not be referred to a de novo

arbitration.

CMP No. 753 of 2022

7. Having heard the learned counsel for the

petitioner and having perused the petition papers this

Court finds that in fact both the parties herein had

approached the City Civil Court, Bangalore challenging the

earlier award passed by the sole arbitrator. Both the

parties wanted the arbitral award to be set aside and

accordingly arbitral award has been set aside by the City

Civil Court and therefore, what was required to be

considered is whether a de novo arbitration proceedings

are require to be permitted to be initiated by the parties

invoking the arbitral clause contained in the agreement.

Having noticed the judgment of the Hon'ble Delhi High

Court (supra), this Court is of the considered opinion that

it is the intention of both the parties to have the disputes

settled through an arbitrator. Nevertheless since the

earlier award passed by the sole arbitrator has been set

aside and the parties are left with no other option then to

have a dispute resolved through appointment of another

arbitrator, this Court finds that the issue stands squarely

covered in the decision of the Delhi High Court.

CMP No. 753 of 2022

8. In the light of the aforesaid clause of arbitration

and the contentions advanced by the petitioner the

following order is passed:

ORDER

(a) The petition is allowed appointing

Hon'ble Sri Justice P.Krishna Bhat,

Former Judge, High Court of Karnataka,

as the sole arbitrator to enter reference

of the disputes between the petitioner

and the respondents and conduct

proceeding at the Arbitration and

Conciliation Centre (Domestic and

International), Bengaluru according to

the Rules governing the said Arbitration

Centre.

(b) All contentions inter se parties are left

open for adjudication in the arbitration

proceedings.

CMP No. 753 of 2022

(c) The office is directed to communicate this

order to the Arbitration and Conciliation

Centre and to Hon'ble Sri Justice

P.Krishna Bhat, Former Judge, High

Court of Karnataka, as required under

the Arbitration and Conciliation Centre

Rules, 2012.