M/S.Daimler Financial Services ... vs Jaiswal Builders
2022 Latest Caselaw 8902 Mad

                                                                           Arb.O.P (Com.Div.) No. 14 of 2022

                                   IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                    DATED : 27.04.2022

                                                              CORAM

                                        THE HON'BLE MR. JUSTICE M.SUNDAR

                                             Arb.O.P (Com.Div.) No. 14 of 2022

                     M/s.Daimler Financial Services India Private Limited
                     5th Floor, Plot 8, Baashyam Willow Square 9 & 10,
                     First Street, Thiru Vi Ka Industrial Estate,
                     Guindy, Chennai 600 032
                     Represented by its Authorised Signatory.                              ... Petitioner

                                                                Vs.

                     Jaiswal Builders,
                     Prop.Manish Jaishwal
                     26,Chikitsak Nagar,
                     Gram, Nipaniya, High, Indore,
                     Madhya Pradesh 452 001                                        ... Respondent

                                  Arbitration Original Petition filed under Section 11(6) of the
                     Arbitration and Conciliation Act, 1996 to          appoint a sole arbitrator to
                     adjudicate the dispute between the petitioner and the respondent as per the
                     loan agreement dated 28.04.2016 bearing Contract No.10119978 and to
                     direct the respondent to pay the cost of this petition.
                                             For Petitioner    : Mr.D.Pradeep Kumar




                     1/10


https://www.mhc.tn.gov.in/judis
                                                                             Arb.O.P (Com.Div.) No. 14 of 2022


                                                          ORDER

This order will dispose of captioned 'Arbitration Original Petition'

['Arb.OP' for the sake of brevity] which has been presented in this Court

under Section 11 of 'The Arbitration and Conciliation Act, 1996 (Act No.26

of 1996)' [hereinafter referred to as 'A and C Act' for the sake of

convenience, clarity and brevity] with a prayer for appointment of a sole

Arbitrator.

2. Mr.D.Pradeep Kumar, learned counsel for sole petitioner, who is

before this Court, submits that the captioned Arb.OP is predicated on an

'agreement dated 28.04.2016 bearing Contract No.10119978' (hereinafter

'primary contract' for the sake of convenience and clarity) and more

particularly Clauses 66 and 67 thereat, which are arbitration clauses.

3. Learned counsel for petitioner, elaborating on the above

submission submits that the primary contract is for finance of an

automobile. Adverting to primary contract, learned counsel alleges that the

respondent who is a borrower has committed default in repayment after

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No. 14 of 2022

taking financial assistance for purchase of a Mercedes-Benz car. Owing to

captioned application being one under Section 11 of A and C Act, this Court

refrains itself from expressing any view or opinion on this alleged default

in repayment.

4. Aforementioned Clauses 66 and 67 of the primary contract read as

follows:

'66. Dispute Resolution

All claims and disputes arising under or relating to this loan agreement are to be settled by binding arbitration in the state of Tamil Nadu, specifically Chennai or another location as desired by the lender. The arbitration shall be conducted on a confidential basis and shall be subject to the Arbitration and Conciliation Act, 1996 of India. Any decision or award as a result of such arbitration proceeding shall be in writing and shall provide an explanation for all conclusions of law and fact and shall include the assessment of costs, expenses, and reasonable attorneys' fees. Any such arbitration shall be conducted by single arbitrator appointed by the Lender. The arbitration proceeds shall include a written record of the arbitration hearing. An award of arbitration may be confirmed in a Court of competent jurisdiction.

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67. Governing Law:

The loan, loan agreement and the other transaction documents shall (unless otherwise specified in the application or any such transaction document) be governed by and construed in accordance with laws of India.''

5. The aforementioned Clauses 66 and 67 of the primary contract

serve as 'arbitration agreement' between the petitioner and respondent i.e.,

'arbitration agreement' within the meaning of Section 2(1)(b) read with

Section 7 of A and C Act is learned counsel's say.

6. Learned counsel submits that owing to the alleged default in

repayment, arbitration agreement was invoked, a sole Arbitrator was

appointed by the petitioner but that sole Arbitrator vide proceedings dated

16.09.2021 recused himself owing to an application filed [before the

Arbitrator] by the respondent inter-alia under Section 12 of the A and C Act

necessitating the presentation of captioned Arb.OP in this Court on

10.12.2021 is learned counsel's further say.

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7. Post presentation of captioned Arb.OP in this Court on 10.12.2021,

it was listed before Hon'ble predecessor Judge on 20.01.2022, 03.02.2022

and the proceedings made by Hon'ble predecessor Judge in these two

previous listings are as follows:

'Proceedings made on 20.01.2022 Issue notice to the respondent returnable on 03.02.2022. Private notice is also permitted.

2. Let the matter appear on 03.02.2022.' 'Proceedings made on 03.02.2022 Notice was ordered on the respondent on 20.01.2022. Pursuant thereto, the petitioner has filed an Affidavit of Service indicating that the respondent was served. The name of the respondent is also printed in the cause list today.

2. However, in view of the fact that the respondent is based at Madhya Pradesh, a further opportunity is provided to the respondent.

List on 17.02.2022.'

8. Aforementioned proceedings are telltale qua the trajectory the

matter has taken before this Court. The case file placed before this Court

shows that the lone respondent has been duly served through Court notice

and private notice. Aforementioned proceedings dated 03.02.2022

demonstrates that the respondent has not come before this Court post such

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No. 14 of 2022

service being effected and Hon'ble predecessor Judge has given a further

opportunity to the lone respondent but the position is no different today. In

other words, name of the lone respondent together with full/complete

address as in the short cause title is shown in the cause list but there is no

representation for the lone respondent. This Court is informed that the lone

respondent has not entered appearance through any counsel. This means

that lone respondent has not come before this Court and dispute the

existence of aforementioned arbitration agreement between the parties.

9. The scope of a legal drill under Section 11 of A and C Act is

circumscribed by the statutory perimeter sketched by sub-section (6A) of

Section 11 of A and C Act, 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.'

10. Aforementioned sub-section (6A) of Section 11 of A and C Act

came up for consideration before Hon'ble Supreme Court in the oft-quoted

Mayavati Trading case law i.e., Mayavati Trading Private Limited Vs.

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No. 14 of 2022

Pradyuat Deb Burman reported in (2019) 8 SCC 714], relevant paragraph

in Mayavati Trading case law is paragraph No.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.' (underlining made by this Court to supply emphasis and highlight)

11. Aforementioned paragraph 10 of Mayavati Trading case law

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

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

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

read as follows:

'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

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No. 14 of 2022

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 light of the narrative thus far, as the respondent has not

chosen to come before this Court and dispute the existence of the arbitration

agreement between the parties in spite of more than one opportunity being

given after service being duly effected through Court notice and private

notice, this Court deems it appropriate to accede to the petitioner's prayer

for appointment of a sole Arbitrator.

13. Mr.Naveen Kumar Murthy, Advocate, with address for service at

S2, 2nd Floor, Singapore Plaza, No.164, New No.337, Linghi Chetty Street,

Chennai - 600 001, Mob: 98847 40424 [E-mail:

[email protected] and [email protected]] is appointed

as sole Arbitrator. Learned arbitrator shall enter upon reference, adjudicate

the arbitrable disputes that have arisen between the parties qua primary

contract dated 28.04.2016, make an award by holding sittings in the

'Madras High Court Arbitration and Conciliation Centre under the aegis of

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No. 14 of 2022

this Court' (MHCAC) in accordance with the Madras High Court

Arbitration Proceedings Rules 2017 and fee of the Hon'ble Arbitrator shall

be as per Madras High Court Arbitration Centre (MHCAC) (Administrative

Cost and Arbitrator's Fees) Rules 2017.

14. Captioned Arb.OP disposed of in the aforesaid manner. There

shall be no order as to costs.

27.04.2022

gpa Index: Yes/no Internet: Yes Note: Registry to communicate this order forthwith to:

1. Mr.Naveen Kumar Murthy, Advocate, S2, 2nd Floor, Singapore Plaza, No.164, New No.337, Linghi Chetty Street, Chennai - 600 001, Mob: 98847 40424 E-mail: [email protected] and [email protected]

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.,

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No. 14 of 2022

gpa

Arb.O.P (Com.Div.) No. 14 of 2022

27.04.2022

https://www.mhc.tn.gov.in/judis