Madras High Court
M/S.Tamil Nadu Water Investment ... vs M/S.Kasipalayam Common Effluent ... on 30 June, 2022
Arb O.P(Com.Div.)No.22 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 30.06.2022
CORAM
THE HONOURABLE Mr.JUSTICE M.SUNDAR
Arb O.P(Com.Div.)No.22 of 2022
M/s.Tamil Nadu Water Investment Company Limited
Represented herein by its Authorised Signatory
'Polyhose Towers'
No.86, Mount Road
Guindy, Chennai-600 032. ... Petitioner
vs.
M/s.Kasipalayam Common Effluent Treatment Plant Pvt. Ltd.,
CETP Gardens
S.F.No.250/1
S.Periyapalayem (PO)
Tirupur - 641 607. ... Respondent
Arbitration Original Petition filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996 to
(a) Appoint the Presiding Arbitrator in terms of Clause 19 of the PMA
Agreement dated 10th April 2012 for the purpose of adjudicating the disputes
between the petitioner and the respondent;
(b) Direct the respondent to pay the costs of this proceeding to the
petitioner;
For Petitioner : Mr.S.Raghunathan
For Respondent : Ms.K.Subhashini
*****
1/10
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Arb O.P(Com.Div.)No.22 of 2022
ORDER
Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the
sake of convenience and clarity] has been presented in this Court on
08.09.2021 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 the Presiding Arbitrator.
2. Mr.S.Raghunathan, learned counsel for the petitioner assisted by
Ms.R.Sahana and Ms.K.Subhashini, learned counsel of Chennai Law
Associates (Law Firm) on behalf of the lone respondent are before this Court.
3. Both aforementioned learned counsel were heard.
4. There is no disputation that the captioned Arb OP is predicated on
clause 19 of an agreement which is referred to as 'PMA Agreement' (to be
noted, this Court is informed that 'PMA' stands for 'Project Management
Agency') dated 10.04.2012.
5. Aforementioned 'PMA agreement' dated 10.04.2012 shall hereinafter
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Arb O.P(Com.Div.)No.22 of 2022
be referred to as 'primary contract' and 'clause 19' thereat shall be referred to
as 'arbitration agreement' / 'arbitration clause' for the sake of convenience and
clarity.
6. Aforementioned clause 19 i.e., arbitration clause reads as follows:
'19. Arbitration
(a) It is hereby agreed between the parties that the project
shall be executed in the manner and form outlined in this
Agreement. If any difference or dispute of any kind whatsoever
arises between the parties in connection with or arising out or or
relating to or under this Agreement, the parties shall promptly
and in good faith negotiate with a view to its amicable resolution
and settlement. In the event no amicable resolution or settlement
is reached within a period of thirty (30) days from the date on
which the above mentioned dispute or difference arose, such
dispute or difference shall be referred to a panel of arbitrators.
The panel of arbitrators shall consist of three persons. Each
party hereto shall appoint one arbitrator and the two arbitrators
so appointed shall together appoint the third arbitrator, who shall
function as the presiding arbitrator. The seat of arbitration shall
be Chennai and the arbitration shall be conducted in the English
language. The Arbitration and Conciliation Act 1996, shall
govern Arbitral proceedings.
(b) The existence of any dispute or difference or the
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Arb O.P(Com.Div.)No.22 of 2022
initiation or continuance of the Arbitral proceedings shall not
postpone or delay the performance by the parties of their
respective obligations under or pursuant to this Agreement.
Further, this Agreement shall remain subsisting and operative
furing the Arbitral proceedings and no payment due and payable
to either party shall be withheld except the payment in dispute, if
any.
(c) The Courts of Chennai alone shall have jurisdiction
with respect to arbitration or any other dispute.'
7. Aforementioned arbitration clause in primary contract serves as an
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.
8. Primary contract is inter alia for design, consultancy and project
management for a 'Common Effluent Treatment Plant' ['CETP' for the sake of
convenience and clarity] at a place known as Kasipalayam. This Court is
informed that CETP is 4.4 MLD capacity and estimated costs is Rs.12.08
Crores. This Court is informed that MLD is a unit of measurement/unit. It is
not necessary to dilate any further on these aspects of the matter as there is
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Arb O.P(Com.Div.)No.22 of 2022
no disputation or disagreement between the parties about the existence of
arbitration agreement i.e., clause 19 of primary contract. To be noted, the
scope of a legal drill under Section 11 of A and C Act is largely limited and it
has to perambulate 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
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 the position, it is difficult to agree with the
reasoning contained in the aforesaid judgments, as Section 11(6-
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Arb O.P(Com.Div.)No.22 of 2022
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)
10. 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
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Arb O.P(Com.Div.)No.22 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.'
11. In the light of the narrative thus far, without further discussion the
following points are recorded.
(a) Learned counsel on both sides agreed for
downsizing the Arbitral Tribunal from a three member
Arbitral Tribunal to a sole Arbitrator;
(b) Learned counsel for petitioner therefore, requests
the prayer for appointment of a Presiding Arbitrator to be
treated as a prayer for appointment of a sole Arbitrator;
(c) Both the learned counsel request that a former
Hon'ble member of Bench of this Court may please be
appointed as an Arbitrator.
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Arb O.P(Com.Div.)No.22 of 2022
12. In the light of the narrative thus far, Hon'ble Mr.Justice
K.Venkatraman (Retd.), a former Judge of this Court, residing at L-Block,
125, 17th Street, East Anna Nagar, Chennai-600 102, Mobile
No.7708895435, Email ID : [email protected] is appointed as sole
Arbitrator. Hon'ble sole Arbitrator is requested to enter upon reference,
adjudicate arbitrable disputes that have arisen between the petitioner and
respondent qua primary contract i.e., PMA Agreement dated 10.04.2012 in
the light of arbitration clause thereat namely, clause 19 and render an award
by holding sittings in the 'Madras High Court Arbitration Centre under the
aegis of this Court' (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 Arbitrator's Fees) Rules 2017.
13. Though obvious, it is made clear that all questions including
arbitrability are left open, rights and contentions of both parties in this regard
are preserved for being raised before Hon'ble Arbitrator if so desired and if so
advised.
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Arb O.P(Com.Div.)No.22 of 2022
14. Captioned Arb OP is disposed of in the aforesaid manner. There
shall be no order as to costs.
30.06.2022
Speaking/Non-speaking order
Index : Yes / No
mk
Note: Registry is directed to communicate a copy of this order forthwith to
1. Hon'ble Mr.Justice K.Venkatraman (Retd.),
High Court, Madras,
L-Block, 125, 17th Street,
East Anna Nagar, Chennai-600 102,
Mobile No.7708895435,
Email ID : [email protected]
2. The Director
Tamil Nadu Mediation and Conciliation
Centre-cum-Ex-Officio Member
Madras High Court Arbitration Centre
Chennai - 104.
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Arb O.P(Com.Div.)No.22 of 2022
M.SUNDAR. J.,
mk
Arb O.P(Com.Div.)No.22 of 2022
30.06.2022
https://www.mhc.tn.gov.in/judis
