Madras High Court

Varenya Constructions Limited vs M/S.Sumanth & Co on 4 July, 2022

                                                                         Arb O.P(Com.Div.)No.288 of 2022



                                  IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                    Dated : 04.07.2022

                                                          CORAM

                                    THE HONOURABLE Mr.JUSTICE M.SUNDAR

                                           Arb O.P(Com.Div.)No.288 of 2022

                  Varenya Constructions Limited
                  Represented by its Authorized Signatory
                  Having its registered office at
                  No.3 (Old No.25), Ganapathy Colony
                  3rd Lane, Off. Cenotaph Road, Teynampet
                  Chennai-600 018.                                                   ... Petitioner
                                                      vs.
                  M/s.Sumanth & Co.,
                  Rep. by its Managing Partner
                  Mr.Sumanth Subramanian
                  No.8 (57), Luz Avenue
                  Mylapore, Chennai-600 004.                                     ... Respondent

                            Arbitration Original Petition filed under Section 11(5) of the
                  Arbitration and Conciliation Act, 1996 to appoint a sole Arbitrator to
                  adjudicate the differences and disputes between the parties in terms of the
                  Agreement to Assign dated 15th December 2015.
                                   For Petitioner     :     Mr.M.S.Murali
                                                            along with Ms.Gurmeet Kour
                                                            of M/s.R & P Partners (Law Firm)
                                   For Respondent     :     Mr.K.Arun Pradeesh
                                                            of M/s.AAV Partners (Law Firm)

                                                          *****


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                                                                          Arb O.P(Com.Div.)No.288 of 2022




                                                      ORDER

Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the

sake of convenience and clarity] has been presented in this Court on

30.06.2022 with a prayer for appointment of a sole Arbitrator, obviously

captioned Arb OP has been presented 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].

2. Mr.M.S.Murali, learned counsel along with Ms.Gurmeet Kour both

of M/s.R & P Partners (Law Firm) on behalf of petitioner are before this

Court.

3. Mr.K.Arun Pradeesh, learned counsel of M/s.AAV Partners (Law

Firm) who is present in Court accepts notice on behalf of lone respondent.

Learned counsel submits that Vakalatnama will be filed on behalf of lone

respondent in the course of the day today before close of working hours.

https://www.mhc.tn.gov.in/judis Arb O.P(Com.Div.)No.288 of 2022

4. Therefore, with the consent of learned counsel on both sides the

captioned Arb OP was taken up.

5. As regards the captioned Arb OP, the same being a legal drill under

Section 11 of A and C Act, scope is largely confined to Statutory perimeter

sketched by sub-section (6A) thereat. As there are no deadwood i.e., ex facie

limitation issues here and as both learned counsel submit that there is no

disputation about the existence of arbitration clause between the parties, the

task of disposal of the captioned Arb OP is fairly simple.

6. It is submitted by both sides that the captioned Arb OP is predicated

on clause 7 of an 'agreement dated 15.12.2015' [hereinafter 'primary contract'

for the sake of convenience and clarity]. This Court is informed that primary

contract is inter alia for an assignment of what is known as 'Transferable

Development Rights' [hereinafter 'TDR' for the sake of convenience and

clarity] said to have been assigned to the petitioner by 'Chennai Metropolitan

Development Authority' ['CMDA'] in lieu of certain lands acquired from

project/s qua petitioner, respondent assignee has exploited the assigned TDR

but has not made good agreed consideration for the assignment is the

https://www.mhc.tn.gov.in/judis Arb O.P(Com.Div.)No.288 of 2022

complaint of the petitioner. Learned counsel for respondent submits that

there is serious disputation on this and the respondent is in denial mode.

Broadly stated, these are the arbitrable disputes that have arisen between the

parties qua primary contract. It is not necessary to dilate further qua

arbitratble disputes owing to scope of a legal drill under Section 11 which

has been already alluded to supra. Though obvious, it is made clear that this

Court is not expressing any view or opinion on the arbitrable disputes that

have arisen between the parties as all questions including arbitrability are left

open, to be raised before Hon'ble Arbitrator (to be appointed infra in this

order).

7. Before proceeding further, this Court reminds itself of oft-quoted

Mayavati Trading case law [Mayavati Trading Pvt. Ltd vs Pradyuat Deb

Burman reported in (2019) 8 SCC 714]. To be noted 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

https://www.mhc.tn.gov.in/judis Arb O.P(Com.Div.)No.288 of 2022

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)

8. Aforementioned paragraph No.10 of Mayavati Trading case law

takes this Court to Duro Felguera principle i.e., Duro Felguera S.A. Vs

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

paragraphs in Duro Felguera case law are paragraph Nos.47, 59 and the

same 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

https://www.mhc.tn.gov.in/judis Arb O.P(Com.Div.)No.288 of 2022

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.'

9. The above captures the principle that a Section 11 legal drill should

perambulate within the Statutory perimeter sketched by sub-section (6A)

thereat. As already alluded to supra, there is no deadwood i.e, ex facie

limitation argument in the case on hand. This Court therefore, now proceeds

to appoint sole Arbitrator.

10. In the light of the narrative thus far, Hon'ble Mr. Justice

V.Bharathidasan (Retd.), Former Judge of this Court, residing at No.42 (NB)

Greenways Road, Chennai - 600 028, Mob: 94443 83139 and 94455 00224,

E-mail: [email protected] is appointed as sole Arbitrator. Hon'ble sole

Arbitrator is requested to enter upon reference, qua primary contract i.e.,

Agreement dated 15.12.2015, adjudicate upon arbitrable disputes that have

arisen between the parties and render an Arbitral Award by holding sittings in

the 'Madras High Court Arbitration Centre under the aegis of this Court'

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(MHCAC) as per Madras High Court Arbitration Proceedings Rules 2017

and fee of Hon'ble sole Arbitrator shall be in accordance with the Madras

High Court Arbitration Centre (MHCAC) (Administrative Cost and