Madras High Court

M/S.Johnson Lifts Private ... vs M/S.Barnala Builders And ... on 8 August, 2022

                                                                             Arb.O.P (Com.Div) No.293 of 2022

                                   IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                        Dated : 08.08.2022

                                                             Coram

                                     THE HONOURABLE MR. JUSTICE M.SUNDAR

                                            Arb.O.P (Com.Div) No.293 of 2022

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

                                                               vs.

                     M/s.Barnala Builders and Property Consultant
                     Maya Garden Magnesia
                     Chandigarh – Ambala Highway
                     Zirakpur, Mohali
                     Punjab – 140 603                                                   ... Respondent



                                  Petitioner filed under Section 11(6) of the Arbitration and
                     Conciliation Act, 1996 to appoint a sole Arbitrator to adjudicate the
                     disputes that have arisen between the petitioner and the respondent under
                     the said contract.


                                       For Petitioner      : Mr.Benjamin E.Moses




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                                                                               Arb.O.P (Com.Div) No.293 of 2022

                                                                ORDER

This order will now dispose of captioned matter.

2. This order has to be read in conjunction with and in continuation

of earlier proceedings made in the previous listings on 07.07.2022 and

04.08.2022, which read as follows:

'Proceedings dated 07.07.2022 Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the sake of convenience and clarity] has been presented in this Court on 29.04.2022 under Section 11 of '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.

2. Mr.A.R.Karunakaran, learned counsel for sole petitioner is before this Court.

3. It is submitted that the captioned Arb OP is predicated on an arbitration clause in what is styled as 'Contract / Work Order dated 18.07.2019' [hereinafter 'primary contract' for the sake of convenience and clarity].

4. The arbitration clause in primary contract reads as follows:

'Arbitration:

If any dispute, controversy or claim between the parties arises out of or in connection with this contract, including its existence, breach, termination or validity thereof, the parties shall use all reasonable https://www.mhc.tn.gov.in/judis

Arb.O.P (Com.Div) No.293 of 2022

endeavours to negotiate with a view to resolve the dispute amicably. If the dispute has not been settled pursuant to the said negotiations and the parties are unable to resolve the dispute amicably, then the dispute shall be finally resolved by Arbitration as per the provisions of Arbitration and Conciliation, 1996 and the Rules framed therewith by a Sole Arbitrator appointed by Johnson Lifts from the panel of Arbitrators maintained by Johnson Lifts. Any such arbitration award passed by the said Arbitrator shall be final and binding on both parties. The seat of the arbitration shall be at Chennai and the language of the Arbitration proceedings shall be English.'

5. Adverting to the aforementioned clause in primary contract, it is submitted that the aforementioned clause serves 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. It is also pointed out that Chennai is the Venue.

6. Be that as it may, it is submitted that arbitrable disputes erupted between the petitioner and respondent as according to the petitioner, the respondent has not made payment in full for lifts that have been supplied/installed qua primary contract. This Court expresses no opinion on the lis as this is a Section 11 legal drill.

7. Owing to the aforesaid arbitrable dispute, a trigger notice being trigger notice dated 03.09.2021 was issued by the https://www.mhc.tn.gov.in/judis

Arb.O.P (Com.Div) No.293 of 2022

petitioner, in and by the trigger notice a sole Arbitrator was proposed. This trigger notice was served on the respondent on 08.09.2021 but there is no reply from the respondent is learned counsel's say.

8. To be noted, the Arbitrator suggested by the petitioner in the trigger notice had subsequently expressed reservation as the respondent had not replied to the trigger notice / consented for the name suggested by the petitioner. This has necessitated the presentation of the captioned Arb OP in this Court is learned counsel's further say.

9. Prima facie case for issue of notice made out.

10. Issue notice to respondent returnable in four weeks i.e., returnable by 04.08.2022. Private notice permitted.

11. List on 04.08.2022'

'Proceedings dated 04.08.2022 Mr.Benjamin E. Moses, learned counsel for sole petitioner is before this Court. Learned counsel adverting to earlier proceedings dated 07.07.2022 submits that the lone respondent has since been duly served. Learned counsel also submits that 'Affidavit of Service' [AOS] has been filed vide Diary No.19842 of 2022 dated 25.07.2022. To be noted, this AOS is before this Court. Name of the lone respondent is shown in the cause title part of the cause list today. However, Registry to print the name of the sole respondent together with full/complete address as in the short and long titles of the petition in the next listing with the intention of giving adequate and ample opportunity to the respondent. https://www.mhc.tn.gov.in/judis

Arb.O.P (Com.Div) No.293 of 2022

2. List on Monday i.e., 08.08.2022.'

3. Today, Mr.Benjamin E.Moses, learned counsel for sole

petitioner who is before this Court adverting to earlier proceedings made

in the previous listings on 07.07.2022 and 04.08.2022 submits that name

of the lone respondent together with full/complete address as in the short

and long cause titles is shown in the cause list as per earlier direction.

4. The position is no different today. Name of the respondent

called out aloud thrice but there is no representation. This Court is

informed that the respondent has not chosen to enter appearance through

any counsel.

5. As the respondent has not chosen to come before this Court and

raise any issue, it will suffice if the captioned Arb.OP perambulates

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

11, 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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Arb.O.P (Com.Div) No.293 of 2022

6. The aforementioned sub-section (6A) of Section 11 came up for

consideration before Hon'ble Supreme Court in oft-quoted Mayavati

Trading principle [Mayavati Trading Private Limited Vs. 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)

7. Aforementioned paragraph 10 of Mayavati Trading case law

takes this Court to Duro Felguera, S.A case law [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:

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Arb.O.P (Com.Div) No.293 of 2022

'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. '

8. This Court also 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 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. ' (underlining made by this Court for ease of

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Arb.O.P (Com.Div) No.293 of 2022

reference and for highlighting/supplying emphasis)

9. Hon'ble Supreme Court vide order dated 19th May 2022 made in

Shree Vishnu Constructions case law [Shree Vishnu Constructions Vs.

The Engineer in Chief Military Engineering Service & Ors.]

emphasized the need to dispose of Section 11 applications expeditiously.

The two most relevant observations of Hon'ble Supreme Court in Vishnu

Constructions case law are as follows:

'..... Therefore, if the arbitrators are not appointed at the earliest and the applications under Sections 11(5) and 11(6) of the Arbitration Act are kept pending for a number of years, it will defeat the object and purpose of the enactment of the Arbitration Act and it may lose the significance of an effective Alternative Dispute Resolution Mechanism. If the Commercial disputes are not resolved at the earliest, not only it would affect the commercial relations between the parties but it would also affect economy of the country. It may affect the ease of doing business in the country.' '..... The litigant may lose the faith in the justice delivery system, which may ultimately affect not only rule of law but commerce and business in the country.

Therefore, the applications under Sections 11(5) and 11(6) of the Arbitration Act and other applications, either for substitution and/or change of the Arbitrator have to https://www.mhc.tn.gov.in/judis

Arb.O.P (Com.Div) No.293 of 2022

be decided and disposed of at the earliest.'

10. In the light of the narrative thus far, Ms.V.Usha Rani,

Advocate, No.21, Lakshmi Nagar, 2nd Main Road, Chembakkam,

Chennai – 600 073, Mob:98400 96812 [Email:[email protected]]

is appointed as sole Arbitrator. Learned Arbitrator is requested to enter

upon reference, adjudicate the arbitrable disputes that have arisen

between the parties by holding sittings in 'Madras High Court Arbitration

and Conciliation Centre under the aegis of this Court' (MHCAC) in

accordance with the Madras High Court Arbitration Proceedings Rules,

2017 and fee of the learned Arbitrator shall be as per Madras High Court

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