Madras High Court
M/S.Five Star Marine Exports ... vs M/S.Empire Industries Ltd on 11 August, 2022
Arb.O.P(Com.Div) No.318 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 11.08.2022
CORAM
THE HON'BLE Mr.JUSTICE M.SUNDAR
Arb.O.P(Com.Div) No.318 of 2022
M/s.Five Star Marine Exports Private Limited,
Represented by its Managing Director Mr.K.Eravikumar,
No.70 (Old No.55) Venkatesa Street,
Chintadripet, Chennai-600 002.
... Petitioner
Vs.
M/s.Empire Industries Ltd.,
Represented by its Chairman Mr.Sathish Chandra Malhotra,
"Empire Complex", No.414, Senapati Bapat Marg,
Lower Parel, Mumbai-400 013.
... Respondent
Prayer:- Arbitration Original Petition filed under Section 11(5) of The
Arbitration and Conciliation Act, 1996 praying to (a) appoint an independent
Sole Arbitrator to adjudicate the disputes arising between the petitioner and
the respondent pursuant to the Agreement dated 05.02.2018 (b) direct the
respondent to pay cost of this petition.
For Petitioner : Mr.R.Anish Kumar
For Respondent : Mr.P.V.Balasubramaniam
of M/s.BFS Legal (Law Firm)
****
1/9
https://www.mhc.tn.gov.in/judis
Arb.O.P(Com.Div) No.318 of 2022
ORDER
This order will now dispose of the captioned matter.
2. This order has to be read in conjunction with and in continuation of
earlier proceedings made in the first listing of captioned matter on
15.07.2022, which reads as follows:
'Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP'
for the sake of convenience and clarity] has been presented in this
Court on 28.04.2022 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. Ms.S.Sarojini, learned counsel for petitioner who is before
this Court submits that the captioned Arb OP is predicated on clause
20 of an agreement dated 05.02.2018. This 05.02.2018 agreement
shall hereinafter be referred to as 'primary contract' for the sake of
convenience and clarity.
3. Aforementioned clause 20 of primary contract reads as
follows:
'20. Any dispute or difference arising out of or in
connection with this agreement shall be settled by binding
Arbitration under the provisions of the Arbitration and
Conciliation Act, 1996. The Arbitration shall be conducted by
a sole arbitrator to be nominated by the Merchant Exporter &
Processor. The venue of the arbitration shall be Chennai.'
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Arb.O.P(Com.Div) No.318 of 2022
4. Aforementioned clause 20 of primary contract serves as
Arbitration Agreement between the parties 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.
5. Reverting to the primary contract, learned counsel submits
that the petitioner-Company had engaged the services of respondent
Company for processing and packing products manufactured by the
petitioner for export. When the primary contract was operated certain
disputes arose qua differential GST and as to who has to absorb the
differential GST. To be noted, 'GST' stands for 'Goods and Services
Tax'.
6. Owing to the aforementioned arbitrable dispute/s which
erupted between the parties i.e., between the petitioner and respondent,
notice invoking arbitration agreement i.e., trigger notice dated
21.02.2022 was issued by the petitioner suggesting a name of a learned
member of this Bar to act as sole arbitrator. Respondent replied vide
dated 15.03.2022 saying it does not agree for the name suggested by
the petitioner and some other names were suggested. This has resulted
in a deadlock qua appointment of Arbitrator. Learned counsel
emphasizes that this would demonstrate that there is no disputation or
disagreement about the existence of arbitration agreement and
deadlock is only with regard to appointment of Arbitrator.
7. Prima facie case for issue of notice has been made out.
8. Issue notice to respondent returnable in a fortnight i.e.,
returnable by 29.07.2022. Private notice permitted.
9. List on 29.07.2022.'
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Arb.O.P(Com.Div) No.318 of 2022
3. Aforementioned proceedings shall be read as an integral part and
parcel of this order. Therefore, abbreviations, short forms and short
references used in the earlier proceedings dated 15.07.2022 will continue to
be used in the instant order also for the sake of convenience and clarity.
4. To be noted, post aforementioned 15.07.2022 proceedings there
were two other listings on 29.07.2022 and 02.08.2022 but it may not be
necessary to extract and reproduce the proceedings made in those listings as
they only capture the trajectory the matter has taken before this Court.
5. Suffice to say that in the listing today, Mr.R.Anish Kumar, learned
counsel for sole petitioner-Company and Mr.P.V.Balasubramaniam of
M/s.BFS Legal [Law Firm] for the lone respondent-Company are before this
Court.
6. Adverting to aforementioned 15.07.2022 proceedings, both learned
counsel submit that the crux and gravamen of captioned Arb OP has been
captured correctly.
7. Learned counsel for sole respondent very fairly submits that there is
no disputation regarding the existence of arbitration agreement. In other
words, the existence of Clause 20 of primary contract is not subjected to
disputation.
https://www.mhc.tn.gov.in/judis
Arb.O.P(Com.Div) No.318 of 2022
8. To be noted, a legal drill under Section 11 of A and C Act usually
perambulates within the statutory perimeter 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.'
9. Aforementioned sub-section (6A) of Section 11 of A and C Act
came up for consideration before Hon'ble Supreme Court in oft quoted
Mayavati case law i.e., Mayavati Trading Pvt. Ltd vs Pradyuat Deb Burman
reported in (2019) 8 SCC 714. Relevant paragraph 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.'
(underlining made by this Court to supply
emphasis and highlight)
https://www.mhc.tn.gov.in/judis
Arb.O.P(Com.Div) No.318 of 2022
10. Mayavati case law (paragraph 10 that has been extracted and
reproduced supra) takes this Court to Duro Felguera case law i.e., Duro
Felguera S.A. Vs Gangavaram Port Limited reported in 2017 (9) SCC 729,
relevant paragraphs are paragraph Nos.47 and 59, which read as follows:
'47. What is the effect 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.
and Boghara Polyfab. 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 Courts intervention at the stage of appointing the
arbitrator and this intention as incorporated in Section 11(6-A)
ought to be respected.'
https://www.mhc.tn.gov.in/judis
Arb.O.P(Com.Div) No.318 of 2022
11. In the light of the fair stand taken by learned counsel for lone
respondent, the task of disposing of captioned Arb OP [by appointing a sole
Arbitrator] has become fairly simple. Before I do so, for the purpose of
specificity, it is clarified that the consent is limited to existence of arbitration
agreement between the parties and there is no other concession or consent
regarding the lis. All questions pertaining to arbitrable disputes that have
arisen between the parties are left open to be decided by Hon'ble Arbitrator to
be appointed [to be noted, to be appointed infra elsewhere in this order] on
their own merits and in accordance with law.
12. Hon'ble Mr.Justice P.P.S.Janarthana Raja (Retd.), Former Judge of
this Court residing at Flat No.GB, Ground Floor, Ponmari Towers, Old No.7,
New No.13, Montieth Lane, Egmore, Chennai-8, Mobile No.91767 93240
Phone No.2852 2535 is appointed as sole Arbitrator. Hon'ble sole Arbitrator
is requested to enter upon reference qua primary contract i.e., Agreement
dated 05.02.2018 between the parties, adjudicate upon the arbitrable disputes
that have arisen between the parties qua primary contract and render an award
by holding sittings in the 'Madras High Court Arbitration Centre under the
aegis of this Court' (MHCAC) in accordance with the Madras High Court
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Arb.O.P(Com.Div) No.318 of 2022
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.
13. Captioned Arb.OP is disposed of in the aforesaid manner. There
shall be no order as to costs.
11.08.2022
kmi
Note: The Registry is directed to communicate this order forthwith
To
1. Hon'ble Mr.Justice P.P.S.Janarthana Raja (Retd.),
Former Judge of Madras High Court
Flat No.GB, Ground Floor, Ponmari Towers,
Old No.7, New No.13, Montieth Lane,
Egmore, Chennai-8,
Mobile No.9176793240
Phone No.28522535
2.The Director,
Tamil Nadu Mediation and Conciliation Centre
cum – Ex Officio Member,
Madras High Court Arbitration Centre,
Madras High Court, Chennai – 600 104.
https://www.mhc.tn.gov.in/judis
Arb.O.P(Com.Div) No.318 of 2022
M.SUNDAR J
kmi
Arb.O.P(Com.Div) No.318 of 2022
11.08.2022
https://www.mhc.tn.gov.in/judis
