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,
Chennai(the NCLT). Such proceedings were dismissed by order dated
2 of 7
https://www.mhc.tn.gov.in/judis
Arb. O.P.No.155 of 2021
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 Petitioner and the
said Respondent which is capable of being resolved by arbitration.
3 of 7
https://www.mhc.tn.gov.in/judis
Arb. O.P.No.155 of 2021
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 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
4 of 7
https://www.mhc.tn.gov.in/judis
Arb. O.P.No.155 of 2021
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
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
5 of 7
https://www.mhc.tn.gov.in/judis
Arb. O.P.No.155 of 2021
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
23.11.2021
7 of 7
https://www.mhc.tn.gov.in/judis
