Madras High Court

M/S.Johnson Lifts Private ... vs M/S.Apex Construction Co on 21 April, 2022

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATE: 21.04.2022

CORAM

THE HONOURABLE MR.JUSTICE M.SUNDAR

Arb. O.P. (Com.Div.) No.10 of 2022

M/s.Johnson Lifts Private Limited
rep. by its Authorised Signatory
Rose Blessed King,
No.1, East Main Road,
Anna Nagar West Extension,
Chennai - 600 101. ... Petitioner

Vs.

M/s.Apex Construction Co.,
No.808, Ashoka Bhawan,
93, Nehru Palace,
New Delhi - 110 019. ... Respondent

Petition filed under Section 11 (6)(b) of The Arbitration and
Conciliation Act, 1996 praying to appoint an arbitrator to adjudicate
the disputes that have arisen between the petitioner and the
respondent under the said contract.

For Petitioner : Mr.A.R.Karunakaran

For Respondent : No appearance

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2

ORDER

Captioned Arb OP will be disposed of by this order.

2. Captioned Arb OP has been presented in this Court on

30.11.2021 under Section 11(6) of the 'The Arbitration and

Conciliation Act, 1996 (Act No.26 of 1996)' [hereinafter 'A and C Act'

for the sake of convenience and clarity] with a prayer for appointment

of an arbitrator (sole arbitrator) to enter upon reference and

adjudicate the arbitrable disputes that have arisen between the

petitioner company and respondent qua an 'agreement dated

05.08.2014 which constituted by contracts, work orders bearing

reference No.JL/50/DL01/00471/E/A03 and B03' (hereinafter

collectively 'primary contract' for the sake of convenience and clarity).

3. This being a legal drill under Section 11 of A and C Act,

short facts will serve the purpose and therefore it will suffice to say

that under the primary contract, the respondent placed orders for

supply of five numbers of lifts, petitioner company supplied four

numbers but petitioner company alleges delay attributable to the

respondent. To be noted, the petitioner company has also averred that

the fifth lift has also been left at the site of the respondent.

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4. The above has been set out as a thumbnail sketch of the

arbitrable disputes that have arisen between the parties and it is made

clear that this Court has not expressed any view or opinion on the

merits of the matter as this is a Section 11 legal drill.

5. As regards the captioned Arb OP, the case file placed

before this Court brings to light that the sole respondent has been duly

served through the jurisdictional Court on 28.01.2022 and a scanned

reproduction of service particulars is as follows:

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6. To be noted, Honourable predecessor Judge issued notice

on 11.01.2022, the sole respondent was served in the aforesaid

manner (through Court) pursuant to 11.01.2022 proceedings.

Thereafter, i.e., post service on the lone respondent, the lone

respondent entered appearance through a counsel but this is second

consecutive listing in which there is no representation on behalf of the

respondent. This Court considers it appropriate to extract and

reproduce the proceedings of this Court made in the previous listing on

18.04.2022, which reads as follows:

'Read this in conjunction with and in continuation of earlier proceedings made by Hon'ble predecessor Judge on 01.02.2022.

2. Mr.A.R.Karunakaran, learned counsel on record for petitioner is before this Court but there is no representation for respondent though the name of respondent and respondent's counsel are duly shown in the cause list.

3. With the intention of giving opportunity to respondent and respondent's counsel, Registry to list this matter again on Thursday.

4. List on 21.04.2022.'

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7. This Court reminds itself of sub-section (13) of Section 11

of A and C Act, which reads as follows:

'(13). An application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the Supreme Court or the High Court or the person or institution designated by such Court, as the case may be, as expeditiously as possible and an endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party.'

To be noted, in and by the Amending Act viz., Act 33 of 2019,

aforementioned sub- section (13) is to be amended in the following

manner:

'(13). An application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the arbitral institution within a period of thirty days from the date of service of notice on the opposite party.'

However, Section 3 of this Amending Act dated 09.08.2019

has not kicked in and therefore, I have deemed it appropriate to

extract and reproduce sub-section (13) of Section 11 as it stood prior

to Amending Act 33 of 2019.

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8. The above narrative means that captioned Arb OP has to

be disposed of as expeditiously as possible and an endeavour should

be made to dispose of the matter within a period of 60 days from the

date of service of notice on the opposite party. In this case, from the

narrative supra, it comes to light that the service of notice on the

opposite party was on 28.01.2022 and 60 days therefrom elapsed on

29.03.2022. Therefore, this Court deems it appropriate to proceed and

make orders in the captioned Arb OP.

9. There is yet another reason as to why this Court proceeds

to make an order in the captioned Arb OP. That reason is the limited

legal landscape of Section 11 as the perimeter within which a legal drill

under Section 11 should perambulate is statutorily sketched by sub-

section (6A) thereat, which reads as follows:

'(6A). The Supreme Court or, as the case may be,

the High Court while considering any application under sub-

section(4) or sub-section (5) or sub-section(6), shall

notwithstanding any judgment, decree or order of any

Court, confine to the examination of the existence of an

arbitration agreement.'

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10. The aforementioned sub-section (6A) came up for

consideration before the Honourable Supreme Court in the oft-quoted

Mayavati Trading case law i.e., Mayavati Trading Pvt. Ltd., Vs.

Pradyuat Deb Burman reported in (2019) 8 SCC 714. Relevant

paragraph in Mayavati Trading case law is Paragraph 10 and the

same reads as follows:

'10. This being the position, it is clear that the law prior to the 2015 Amendment that has been laid down by this Court, which would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgments, as Section 11(6-A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment in Duro Felguera SA.'

11. Aforementioned paragraph 10 of Mayavati Trading case

law takes this Court to Duro Felguera case law i.e., Duro Felguera

Vs. Gangavaram Port Ltd., reported in (2017) 9 SCC 729, relevant

paragraphs in Duro Felguera are paragraphs 47, 59 and the same

read as follows:

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'47. What is the effects of the change introduced by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as 'the 2015 Amendment' ) with particular reference to Section 11(6) and the newly added Section 11(6-A) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as “the 1996 Act”) is the crucial question arising for consideration in this case.' '59. The scope of the power under Section 11 (6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. (supra) and Boghara Polyfab (supra). This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an arbitration agreement exists - nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected. '

12. In the case on hand, vide the trigger notice i.e., notice

invoking the arbitration clause dated 12.01.2021 (to be noted, by this

notice, an arbitrator was appointed by the petitioner pursuant to the

arbitration clause in primary contract) and this arbitration clause in the

primary contract reads as follows:

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'ARBITRATION:

In case of any dispute between us, the matter shall have to be settled by arbitration in Chennai by an arbitrator appointed by Johnson Lifts and courts in Chennai city shall have exclusive jurisdiction.'

13. When the arbitrator appointed by the petitioner entered

upon reference, respondent raised an objection inter-alia on the

Perkins principle i.e., ratio in Perkins Eastman Architects DPC and

Another Vs. HSCC (India) Ltd. reported in 2019 SCC Online SC

1517 and the arbitrator recused himself by proceedings dated

22.11.2021, which reads as follows:

'Dear Sir, Reference: Your letter dated 15.11.2021 regarding appointment of arbitrator in the Matter of Arbitration between M/s.Johnson Lifts Private Limited and M/s.Apex Construction Co., In view of your letter dated 15.11.2021 and the objections therein to my appointment as the sole arbitrator, I recuse myself as Arbitrator in the matter of M/s.Johnson Lifts Private Limited and M/s.Apex Construction Co., The proceedings are accordingly terminated.

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Accordingly interim orders passed on 30.10.2021 under Section 17 of the Arbitration and Conciliation Act 1996 prohibiting M/s.HSCC Limited, E6A Sector 1, Noida, Uttar Pradesh – 201 301, from making any payments to Apex Construction Co., stands revoked.'

14. The above necessitated the presentation of captioned Arb

OP in this Court on 30.11.2021 (as alluded to supra) is learned

counsel's say. To be noted, by operation of sub-section (2) of Section

15 of A and C Act, in cases of this nature where mandate of an

arbitrator gets terminated the original procedure applicable for

appointment of arbitrator gets resuscitated but learned counsel

submits that in the light of Perkins principle as a matter of abundant

caution, captioned Arb OP has been presented in this Court.

15. In the light of the narrative thus far, it would be

appropriate to appoint a sole arbitrator and Mr.S.R.Sundar, Advocate,

II Floor, Rohith Tower, New No.271, Old No.127, Angappa Naicker

Street, Chennai 600 001 (Mobile No.9444055853) is appointed as

arbitrator.

16. Learned sole arbitrator is requested to enter upon

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reference, adjudicate the disputes that have arisen qua primary

contract by holding sittings in the Arbitration and Conciliation Centre

under the aegis of this Court (MHCAC) in accordance with the Madras

High Court Arbitration Proceedings Rules, 2017 and Hon'ble

Arbitrator's fee shall be in accordance with Madras High Court

Arbitration Centre (MHCAC) (Administrative Cost and Arbitrator's

Fees), Rules 2017.

17. Captioned Arb OP is disposed of on merits in the

aforesaid manner. There shall be no order as to costs.

21.04.2022

mmi

P.S.: Registry to communicate a copy of this order to

1. Mr.S.R.Sundar, Advocate, II Floor, Rohith Tower, New No.271, Old No.127, Angappa Naicker Street, Chennai 600 001.

2. The Director, Tamil Nadu Mediation and Conciliation Centre, cum-Ex Officio Member Madras High Court Arbitration Centre, Madras High Court, Chennai-600 104.

M.SUNDAR,J.,

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mmi

Arb. O.P. (Com.Div.) No.10 of

21.04.2022

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