Marymatha Infrastructure ... vs The Chief Engineer (Cp)
2021 Latest Caselaw 22796 Ker

               IN THE HIGH COURT OF KERALA AT ERNAKULAM
                               PRESENT
         THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN
 TUESDAY, THE 23RD DAY OF NOVEMBER 2021 / 2ND AGRAHAYANA, 1943
                           AR NO. 8 OF 2021
PETITIONER:

          MS/.MARYMATHA INFRASTRUCTURE PRIVATE LIMITED
          (FORMERLY M/S.MARYMATHA CONSTRUCTION COMPANY)
          MARYMATHA SQUARE,ARAKKUZHA ROAD,
          MUVATTUPUZHA.P.O,ERNAKULAM-686661.
          REPRESENTED BY ITS MANAGING DIRECTOR,
          SABU CHERIYAN.

          BY ADV P.SHANES METHAR



RESPONDENTS:

    1     THE CHIEF ENGINEER (CP)
          COCHIN PORT TRUST,WILLINGDON ISLAND,COCHIN-682009.

    2     THE CHAIRMAN,
          COCHIN PORT TRUST,WILLINGDON ISLAND,
          COCHIN-682009.

          BY ADVS.
          SRI.V.ABRAHAM MARKOS
          SRI.ABRAHAM JOSEPH MARKOS
          SRI.ISAAC THOMAS
          SHRI.ALEXANDER JOSEPH MARKOS
          SRI.P.G.CHANDAPILLAI ABRAHAM
          SHRI.SHARAD JOSEPH KODANTHARA




     THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON
23.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 AR NO. 8 OF 2021
                                        2

                                   ORDER

The applicant is stated to be a Company

registered under the provisions of the Companies Act,

1956 and that they had entered into Annexure II

Agreement with the respondents, relating to the

"construction of a Boat Jetty and allied facilities

for the Government of India at Cochin Port". They say

that, pursuant to the agreement, work orders were

executed between the parties, but that they were

forced to suffer heavy losses on account of reasons

that can only be attributed to the respondents. They

say that, therefore, disputes have arisen between the

parties, touching upon and relating to the terms of

the agreement, but that on account of Clause 25 of

Annexure II agreement, all such can be adjudicated

and resolved only through the mechanism of

arbitration.

2. The applicant says that, therefore, they

addressed Annexure IX communication to the

respondents on 18.12.2020, asking them to accede to AR NO. 8 OF 2021

their claim or subject the disputes to adjudication

through the process of arbitration, as is mandated

under the aforementioned Clause of the Agreement; but

that they did not agree to either, thus constraining

them to approach this Court through this Arbitration

Request.

3. I have heard Shri.P.Shanes Methar, learned

counsel for the applicant and Shri.Issac Thomas,

learned Standing Counsel appearing for the

respondents.

4. Shri.Issac Thomas opposed this Arbitration

Request primarily on the ground that a statutory

notice under Section 11(5) of the Arbitration and

Conciliation Act (hereinafter referred to as 'the

Act' for short) has not been issued to his clients.

He explained that applicant cannot invoke the

provisions of Section 11(6) of the Act in the absence

of a procedure for appointment of an Arbitrator being

specified in the Agreement as per Section 11(2)

thereof; and that, in this case, it is clear that the AR NO. 8 OF 2021

procedure agreed between the parties has failed on

account of the rigour of Section 12(5) of the Act.

5. Shri.Issac Thomas pointed out that, as per

the relevant Clause of the Agreement, appointment of

an Arbitrator is to made by his clients, but that

because of the intervening effect of Section 12(5) of

the Act, such a course has now become impossible,

which is irrefragable going by the judgments of the

Hon'ble Supreme Court in TRF Limited v. Energo

Engineering Projects Limited [(2018) 8 SCC 377] and

Perkins Eastman Architects DPC v. HSCC (India)Ltd.

[AIR 2020 SC 59].

6. Shri.Issac Thomas then relied upon the

judgment of this Court in Tulsi Developers India

Pvt. Ltd. v. Dr.Appu Benny Thomas [2021(5) KLT 339]

to argue that when the procedure agreed between the

parties fails, then an Arbitrator can be appointed

only under the provisions of Section 11(5) of the

Act, for which a mandatory one month notice ought to

have been issued. He concluded his submissions by AR NO. 8 OF 2021

pointing out to Annexure IX notice, predicating that

this can never satisfy the requirements of Section

11(5) of the Act, because it merely states that the

applicant has already moved the High Court for

appointment of an Arbitrator. He, therefore, prayed

that this Arbitration Request be dismissed.

7. In reply, Shri.P.Shanes Methar learned

counsel for the applicant, submitted that the

procedure agreed upon between the parties in Annexure

II Agreement for appointment of an Arbitrator cannot

be seen to have been obliterated merely on account of

the impact of Section 12(5) of the Act and he argued

that, going by the said statutory provision, it only

incapacitates the person, who is nominated by one of

the parties, to act as an Arbitrator. He argued that

this has been affirmatively declared by the Hon'ble

Supreme Court in Perkins Eastman Architects (Supra);

and thus reiteratingly prayed that this Arbitration

Request be allowed.

8. I have considered the afore submissions with AR NO. 8 OF 2021

great amount of care and have also examined the

various documents available on record.

9. As far as the contentions of Shri.Issac

Thomas relating to the procedure for appointment of

an Arbitrator is concerned, it is conceded - being

not contested at all - that Clause 25 of Annexure II

covers the field. It is perspicuous therefrom that

the various mandatory steps which have to be followed

by the parties, until the appointment of an

Arbitrator, are clearly enumerated therein and it is

also luculent that the parties have, concededly,

followed the same, until the actual nomination of the

Arbitrator.

10. However, when it came to the nomination of

the Arbitrator, the applicant issued Annexure IX

notice to the respondents saying that, because of the

impact of Section 12(5) of the Act, they cannot

nominate an Arbitrator unilaterally and therefore,

that "we have moved the Hon'ble High Court of Kerala

by filing Arbitration Request to appoint an AR NO. 8 OF 2021

Arbitrator to Adjudicate and settle the disputes"

(Sic).

11. Therefore, the twin questions that arise

for my consideration is: for the first, whether this

Arbitration Request, filed under Section 11(6) of the

Act is maintainable; and, for the second, whether

Annexure XI can be seen to be an Arbitration Request

under the mandate of Section 21 of the Act.

12. As far as the question of maintainability of

this Arbitration Request is concerned, I am afraid

that I cannot find favour with Shri.Issac Thomas

because the provisions of Section 11(5) of the Act

will apply only in the event when there is no

procedure agreed upon between the parties for

appointing an Arbitrator/s [see for support Tulsi

Developers (Supra)]. In the case at hand, Clause 25

in Annexure II Agreement clearly postulates the

manner in which the parties have to deal with their

disputes until the stage of nomination of the

Arbitrator.

AR NO. 8 OF 2021

13. If, through the afore said process, an

amiable settlement is not able to be obtained between

the parties, then certainly the stage of appointment

of an Arbitrator would arise.

14. It is without contest, as I have already

seen above, that the parties are ad idem that they

have travelled together as per Clause 25 of Annexure

II Agreement, until the stage of appointment of an

Arbitrator, but that when it came to that point, the

applicant issued Annexure IX and took the stand that

they will not agree to the unilateral appointment of

an Arbitrator by the respondents in view of Section

12(5) of the Act.

15. It is this letter which is now sought to be

impeached by Shri.Issac Thomas, contending that it

does not fall within the parameters of Section 11(5)

of the Act. However, as I have already indited above,

Section 11(5) of the Act would apply only when there

is no procedure mandated for the appointment of an

Arbitrator; but Clause 25 of Annexure II speaks AR NO. 8 OF 2021

completely to the contrary.

16. That being said, the acme question is

whether the rigour of Section 12(5) of the Act would

obliterate the procedure agreed upon between the

parties in the agreement and it is indubitable from

an ex facie reading of its provisions, that it cannot

be so construed. This is because, Section 12(5) of

the Act says that notwithstanding any prior agreement

to the contrary, any person whose relationship with

the parties or counsel or the subject matter of the

dispute falls under any one of the categories

specified in the VIIth schedule of the Act, shall be

ineligible to be appointed as an Arbitrator.

Therefore, it is luculent that Section 12(5) does not

efface or annihilate the procedure agreed between the

parties, but makes it incompetent for one of the

parties to nominate the Arbitrator on their own and

this is what has been affirmatively declared by the

Hon'ble Supreme Court in Perkins Eastman Architects

(Supra).

AR NO. 8 OF 2021

17. I am, therefore, of the firm view that

merely because of the rigour of Section 12(5) of the

Act, the agreed procedure between the parties cannot

be construed to have been expunged or erased; and

therefore, that an Arbitration Request can only be

made under Section 11(6) of the Act and not under

Section 11(5) thereof, as has been now argued by

Shri.Issac Thomas.

18. If I am to construe otherwise, then

certainly, I will have to hold that the entire

procedure under Clause 25 of Annexure II Agreement is

incompetent, but it is pertinent that it is argued to

the contrary even by the respondents.

19. That leaves me to the consideration as to

whether Annexure IX notice can be construed to be one

issued under Section 11(6) of the Act. True, the

applicant has stated therein that they have already

moved this Court by filing an Arbitration Request.

However, the facts involved speak to the contrary

because said notice is dated 18.12.2020, while this AR NO. 8 OF 2021

Arbitration Request was preferred only on 01.01.2021.

20. Obviously, therefore, I have to accept the

argument of Shri.Issac Thomas that Annexure IX cannot

be seen to be a notice as postulated under Section

11(5)of the Act; but as I have already found, this

Arbitration Request has been validly preferred under

Section 11(6) of the Act; and consequently, it is

upto any party to approach this Court even without a

notice, in the event, the other side refuses to act

as per the agreed procedure or they fail to perform

any function expected of them under the said

procedure.

21. To reiterate, in this case it is without any

doubt that, though the parties had admittedly acted

in conformity with Clause 25 of Annexure II

Agreement, they were unable to break the ice and

obtain an amicable solution, which obviously left no

other option to the applicant, but to approach this

Court and seek appointment of a sole independent

Arbitrator.

AR NO. 8 OF 2021

22. Therefore, on both the afore counts, I find

in favour of the applicant.

23. At this time, Shri.Issac Thomas intervened

to say that if this Court is inclined to appoint an

Arbitrator, acceding to the request of the applicant,

then all his clients' contentions - including that

the dispute is not maintainable since they had

accepted the entire contract amount without demur and

had agreed to full and final settlement of their

bills - be left open to be decided by the said

Authority in terms of law.

24. I cannot find any reason not to accede to

the afore request of Shri.Issac Thomas and record

that Shri.P.Shanes Methar, learned counsel for the

applicant also did not oppose it.

25. Before I tread forward, I must certainly

examine Annexure II Agreement to verify whether the

parties had committed themselves to an arbitration

agreement therein. It is indubitable from Clause 25

of the said Agreement - as is also unequivocally AR NO. 8 OF 2021

admitted by the parties - that same operates as a

binding arbitration agreement between the parties.

In the afore circumstances, I allow this

Arbitration Request in the following manner:

(a) I nominate Mr.Justice Pius C.Kuriakose,

'Chakkalayil', Door No.44/809 F, Achutham Layout,

Aryapadam Lane, Kaloor, Kochi - 682017, as the

sole Arbitrator, to adjudicate and resolve the

disputes and differences between the parties to

this case arising from Annexure II agreement.

(b) The Registry is directed to communicate a

copy of this order to the learned Arbitrator

within a period of two weeks from today and to

obtain a Statement of Disclosure from him under

Section 11(8) read with Section 12(1) of the

Arbitration and Conciliation Act, 1996.

(c) Once the Disclosure Statement is obtained

from the learned Arbitrator, the Registry shall

release the certified copy of this order, with a AR NO. 8 OF 2021

copy of the said statement appended to it,

retaining the original of the same on the files of

this case.

(d) The fees of the Arbitrator shall be

governed by the Fourth Schedule of the Arbitration

and Conciliation Act, 1996.

(e) In order to enable the Arbitrator to

commence the proceedings without delay, I direct

the parties to mark appearance before him at 11.00

a.m. on 16.12.2021.

Sd/-

DEVAN RAMACHANDRAN JUDGE MC/23.11 AR NO. 8 OF 2021

APPENDIX OF AR 8/2021 PETITIONER ANNEXURE

ANNEXURE I TRUE COPY OF THE LETTER OF ACCEPTANCE NO.T10-1794/2016-C/908(W)DATED 08.08.2017

ANNEXURE II TRUE COPY OF CONTRACT AGREEMENT NO.08 OF 2017-18 DATED 03.10.2017 TOGETHER WITH RELEVANT PAGES OF ARBITRATION CLAUSE

ANNEXURE III TRUE COPY OF COMPLETION CERTIFICATE DATED 16.06.2020

ANNEXURE IV TRUE COPY OF CLAIM STATEMENT SUBMITTED BY THE APPLICANT BEFORE THE RESPONDENT ON 10.09.2020

ANNEXURE VI TRUE COPY OF THE LETTER DATED 31.10.2020 ADDRESSED TO THE 1ST RESPONDENT

ANNEXURE VII TRUE COPY OF THE LETTER DATED 30.11.2020 OF THE 1ST RESPONDENT.

ANNEXURE VIII TRUE COPY OF THE PRINTOUT OF E.MAIL DATED 14.5.2020 (TOGETHER WITH ATTACHMENT) FROM THE 2ND RESPONDENT

ANNEXURE IX TRUE COPY OF THE LETTER NO.MIPL-

C/PK/20/3250 DATED 18.12.2020 ADDRESSED TO THE RESPONDENT.

RESPONDENTS EXHIBITS

ANNEXURE R1(A) TRUE COPY OF THE NO CLAIM CERTIFICATE DATED 15.5.2020

ANNEXURE R1(B) TRUE COPY OF THE JUDGMENT DATE 25.7.2016 IN 2016 KHC 6509 - UNION OF INDIA AND ANOTHER VS. PREMCO -DKSPL(JV) AND OTHERS

ANNEXURER1(C) TRUE COPY OF THE JUDGMENT DATED 4.09.2015 HUAWEI TECHNOLOGIES COMPANY LIMITED V. STERLITE TECHNOLOGIES LIMITED

- (2016) 1 SCC 721.