Madras High Court
K.S.Srinivasan vs M/S.Land Mark Housing Projects ... on 23 November, 2021
Arb. O.P.No.155 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 23.11.2021
CORAM:
THE HON'BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
Arbitration O.P.(Com. Div.)No.155 of 2021
K.S.Srinivasan ... Petitioner
Vs.
1.M/s.Land Mark Housing Projects (India) Pvt. Ltd.,
No.27, Saravana Street,
T.Nagar, Chennai – 600 017.
2.T.Udayakumar ... Respondents
This Petition has been filed under Section 11(6) of the Arbitration
and Conciliation Act, 1996 to appoint an Arbitrator on behalf of the
Respondents in terms of clause 15 of the Agreement dated 03.04.2015 to
adjudicate upon the disputes that have been arises between the parties
in relation to the said agreement.
For Applicant : Mr.AR.L.Sundaresan S.C.
for M/s.AL.Ganthimathi
For Respondents : Mr.S.Ramesh
1 of 7
https://www.mhc.tn.gov.in/judis
Arb. O.P.No.155 of 2021
ORDER
The Petitioner seeks appointment of an Arbitrator in terms of
Clause 15 of the Agreement of Sale dated 03.04.2015.
2. The Petitioner and the first Respondent entered into an
Agreement of Sale dated 03.04.2015. The said agreement contains an
arbitration clause, which is as under:
''15. If any difference of opinion arises
between the parties herein, the same shall be
sorted by way of arbitration, in accordance with
the Arbitration & Cancellation(Sic) Act, 1996. The
place of arbitration shall be Chennai.''
3. In relation to its claim against the first Respondent, the
Petitioner relies upon a letter dated 07.02.2019 from the first
Respondent. On such basis, after issuing a notice dated 13.02.2019,
proceedings were initiated before the National Company Law Tribunal,
2 of 7
https://www.mhc.tn.gov.in/judis
Arb. O.P.No.155 of 2021
Chennai(the NCLT). Such proceedings were dismissed by order dated
12.12.2019. The Petitioner carried the matter in appeal before the
National Company Law Appellate Tribunal(the NCLAT). The appeal was
rejected by order dated 24.11.2020. As against the said order, Civil
Appeal No.767 of 2021 was filed before the Hon'ble Supreme Court.
Such civil appeal was dismissed by judgment dated 10.03.2021. After
filing an application under Section 9 of the Arbitration and Conciliation
Act 1996, which also came to be rejected by order dated 04.08.2021,
the present petition is filed pursuant to notice dated 07.08.2021.
4. The first Respondent contests the Petition primarily on
the ground that the Petitioner elected to avail of the statutory remedy
under the Insolvency and Bankruptcy Code 2016(the IBC). Upon such
election, the NCLAT, by order dated 24.11.2020, recorded a categorical
finding that the Petitioner had failed to establish that there was a
financial debt in law or fact, which was payable by the first Respondent
herein to the Petitioner. In light of the said categorical finding, the first
Respondent contends that there is no live dispute between the
3 of 7
https://www.mhc.tn.gov.in/judis
Arb. O.P.No.155 of 2021
Petitioner and the said Respondent which is capable of being resolved by
arbitration.
5. The IBC defines the expression ''financial debt'' under
Section 5(8). Therefore, if a claim is made by the Petitioner, it would
have to be determined as to whether such claim is liable to be rejected
because the NCLT concluded that there is no financial debt due and
payable by the first Respondent to the Petitioner and such finding was
affirmed in appellate proceedings. Such determination cannot be made
in a Section 11 Petition. Indeed, at this juncture, the Petitioner has not
even made a claim by filing a claim statement. Hence, the objection on
this basis cannot be sustained in the present petition.
6. The scope of Section 11 of the Arbitration and
Conciliation Act, 1996 has been considerably whittled down pursuant to
the amendment effected thereto. In the case at hand, there is no
dispute that the Agreement of Sale contains an arbitration clause and
such clause was invoked by notice dated 07.08.2021. While
4 of 7
https://www.mhc.tn.gov.in/judis
Arb. O.P.No.155 of 2021
Mr.T.Udayakumar, the second Respondent, represented the first
Respondent and signed the Agreement of Sale on its behalf, he is not a
party to the Agreement of Sale or the arbitration clause contained
therein. Therefore, he cannot be joined, in his individual capacity, as a
party to the arbitration. Given the fact that the parties admit that
there is an arbitration clause, the arbitral tribunal and not this Court
should consider and adjudicate, inter alia, disputes with regard to
whether: the dispute is arbitrable; the Petitioner is indulging in re-
litigation; or the Petitioner is disentitled on account of res judicata.
Needless to say, in that regard, it is open to the first Respondent to
raise objections or file an application under Section 16 of the Arbitration
and Conciliation Act, 1996 before the arbitral tribunal. It is open to the
Petitioner also to raise all disputes arising out of the Agreement of Sale
before the arbitral tribunal.
7. For reasons set out above, the Petitioner is entitled to
succeed. Accordingly, Arbitration O.P.No.155 of 2021 is allowed by
appointing Mr. Justice K.Kannan, former Judge, Punjab & Haryana High
5 of 7
https://www.mhc.tn.gov.in/judis
Arb. O.P.No.155 of 2021
Court, (Cell No.9780008145) as the sole Arbitrator. The Arbitral
Tribunal is directed to enter upon reference and adjudicate the dispute
between the Petitioner and the first Respondent in accordance with
law. The Arbitral Tribunal may fix its fees and expenses in accordance
with the Arbitration and Conciliation Act,1996.
23.11.2021
rrg
Index : Yes/No
Internet : Yes/No
6 of 7
https://www.mhc.tn.gov.in/judis
Arb. O.P.No.155 of 2021
SENTHILKUMAR RAMAMOORTHY J.,
rrg
Arb. O.P.No.155 of 2021
7 of 7
https://www.mhc.tn.gov.in/judis
Arb. O.P.No.155 of 2021
23.11.2021
8 of 7
https://www.mhc.tn.gov.in/judis
