Madhya Pradesh High Court
Mapaex Minerals A Partmership ... vs M/S Power Mech Projects Limited on 21 April, 2023
Author: Vishal Dhagat
1
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
AC No. 110 of 2022
(MAPAEX MINERALS A PARTMERSHIP FIRM Vs M/S POWER MECH PROJECTS LIMITED)
Dated : 21-04-2023
Shri R.S. Jaiswal - Senior Advocate with Shri Kartikeya Jaiswal -
Advocate for the applicant.
Shri Siddharth Sharma - Advocate for respondent No.1.
Applicant has filed an application under Section 11 (6) of the Arbitration
and Conciliation Act, 1996 for appointment of sole Arbitrator.
2. Applicant has entered into Memorandum of Understanding (MoU)
dated 25.01.2020 in which Clause-20 stipulates arbitration clause which makes
dispute between the parties arbitrable. Seat of arbitration is fixed at Bhopal.
3. Non-applicant i.e. M/S Power Mech Projects Limited was declared
lowest bidder by Madhya Pradesh State Mining Corporation (MPSMC) in
relation to its bid for three projects and same were related to extraction, mining
of sand at Hoshangabad, Sehore and Bhind. Non-applicant was unable to bear
financial obligation of Rs. 204 Crores, therefore, it approached various parties.
There was agreement between applicant (Mapaex Minerals), non-applicant (M/S
Power Mech Projects Limited) and Anshika Builders for bearing burden of
aforesaid financial commitment and each party was entitled to profits and loss
from projects in respect of their funding percentage. Parties entered into Memo
of Understanding on 25.01.2020. Non-applicant gave 60% funding, Anshika
Builders gave 20% and applicant gave 20% funding amount. Obligations and
liabilities of parties were laid down in said memo of understanding (MoU). It is
alleged that non-applicant failed to adhere to primary and essential obligations
of MoU and failed to pay its own capital commitment. Due to breach by non-
applicant, applicant was unable to perform and implement the terms to project
as required by MPSMC. Hoshangabad project was cancelled. Applicant's
financial contribution fund was not returned despite repeated request. Non-
applicant also proposed to surrender other two mines in Sehore and Bhind.
Aggrieved by aforesaid, applicant issue notice of breach dated 14.08.2022 and
also a notice for invoking arbitration dated 21.09.2022 as per Clause-20.3 and
Clause-20.5 of the MoU. Non-applicant rejected appointment of nominated sole
Arbitrator suggested by applicant and also denied existence valid arbitration
clause in MoU. In view of aforesaid circumstances, counsel appearing for
applicant made a prayer for appointment of sole Arbitrator.
4. Learned Senior Counsel appearing for applicant relied on judgment
reported in (2020) 2 SCC 455 {M/s. Uttarakhand Purv Sainik Kalyan
Nigam Limited Vs. Northern Coal Field Limited}. He read paragraph-7.10
which is quoted as under:-
"7.10 In view of the legislative mandate contained in Section
11(6-A), the Court is now required only to examine the existence of
the arbitration agreement. All other preliminary or threshold issues
are left to be decided by the arbitrator under Section 16, which
enshrines the kompetenz-kompetenz principle."
5. In view of same, it is submitted that matter may be referred to
arbitration and other preliminary objections are to be considered by the
Arbitrator.
6. Learned counsel appearing for respondent raised preliminary
objection. It is submitted that there was no valid arbitration clause neither MoU
was legally binding. MoU was tripartite agreement. Anshika Builder was not
impleaded as party. Case is devoid of merits and deserves to be dismissed.
MoU was co-terminus with termination or expiration of contract between the
MP State Mining Corporation and PMPL. Contract was never entered between
three zones i.e. Hoshangabad, Sehore and Bhind. MoU was only limited to
confidentiality.
7. Respondent also relied on M/s. Uttarakhand Purv Sainik Kalyan
Nigam Limited (supra) and stated that if an arbitration agreement is not valid
or non-existent, the Arbitral Tribunal cannot assume jurisdiction to adjudicate
upon the disputes. Appointment of an Arbitrator may be refused if arbitration
agreement is not in writing or the disputes are beyond the scope of arbitration
agreement. Enforcement of arbitration award may be refused if there is no valid
arbitration agreement. In view of aforesaid, prayer is made for dismissal of
arbitration case for appointment of Arbitration.
8. Heard the counsel for the parties.
9. Principal objections raised by respondent for appointment of
Arbitrator are that Memo of Understanding (MoU) is not binding, memo of
understanding has been terminated and there is want of impleadment of
necessary party. It is settled law that arbitration clause in agreement itself forms
arbitration agreement and even if agreement is terminated, said clause can be
invoked for appointment of Arbitrator for settlement of dispute. Arbitration
clause cannot be limited by provision of confidentiality and dispute resolution.
Divulging data and agreement between the parties to Arbitrator will not amount
to disclosure to third party and confidentiality can be maintained by Arbitrator
during course of proceedings, therefore, confidentiality clause will not stop
operation of arbitration clause. There is dispute regarding finances between the
parties. Anshika Builders is not necessary party as dispute is between applicant
and non-applicant. Applicant is not claiming any relief against Anshika Builders,
therefore, there is no defect of joining of necessary party in application for
appointment of Arbitrator. Arbitration clause and agreement is binding between
the parties.
10. Respondent may raise all other objections before Arbitrator
appointed.
11. In view of same, parties are directed to suggest the name of mutually
agreed Arbitrator to this Court within period of seven days. If parties fail to
submit name of mutually agreeable sole arbitrator then after period of seven
days Court will appoint sole Arbitrator in the case.
12. List the matter after seven days for passing of order for appointment
of Arbitrator in the case.
VISHAL DHAGAT)
JUDGE
shabana
Digitally signed by SHABANA ANSARI
Date: 2023.04.26 11:14:01 +05'30'
