Madras High Court
M/S.P & C Projects (P) Ltd vs The Government Of Tamil Nadu on 7 March, 2022
Arb.O.P (Com.Div) No.56 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 07.03.2022
CORAM
THE HON'BLE MR. JUSTICE M.SUNDAR
Arb.O.P (Com.Div) No.56 of 2022
M/s.P & C Projects (P) Ltd.
Represented by its Authorized Signatory
Mr.M.A.Syed Sirajudeen
(Formerly known as P & C Constructions Pvt. Ltd.,)
P & C Towers, II Floor, 140 Perundurai Road
Erode - 638 011 ... Petitioner
Vs.
The Government of Tamil Nadu
Madurai Municipal Corporation
Represented by the Commissioner
Annamaligai, Alagar Kovil Road
Tallakulam
Madurai - 625 001 .... Respondent
Original Petition filed under Section 11 of the Arbitration and
Conciliation Act, 1996 to appoint an arbitrator on behalf of the Respondent
and direct such appointed arbitrator along with the nominee arbitrator of the
petitioner to appoint a Presiding arbitrator and constitute the Arbitral
Tribunal within 30 days from such appointment by this Hon'ble Court to
adjudicate the disputes between the petitioner and the respondent in terms
of the arbitration agreement dated 28.02.2007 and to direct the respondents
to pay costs.
https://www.mhc.tn.gov.in/judis For Petitioner : Mr.P.J.Rishikesh
1/9
Arb.O.P (Com.Div) No.56 of 2022
For Respondent : Mr.T.Shanmugam
ORDER
In the captioned 'Arbitration Original Petition' ['Arb.OP' for the sake
of brevity] Mr.P.J.Rishikesh, learned counsel for sole petitioner and
Mr.T.Shanmugam, learned Standing Counsel for Madurai Corporation on
behalf of the lone respondent are before this Court.
2. This order shall be read in continuation of and in conjunction with
earlier proceedings made in the previous listing on 14.02.2022 which reads
as follows:
'Captioned 'arbitration original petition' ['Arb OP'] has
been filed under Section 11 of 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.P.J.Rishikesh, learned counsel for petitioner
submits that the captioned Arb OP is under Sub Section (6) of
Section 11 of A and C Act, as the procedure for appointment of
Arbitrator has been agreed. Therefore, captioned Arb OP is
one under Section 11(6) of A and C Act.
3. Contract between petitioner and respondent is for
'Construction of Head Works & Break Pressure Tank, Raw
Water & Clear Water Transmission Main, Feeder Main
Package-I' [hereinafter 'said work' for the sake of convenience
and clarity]. Learned counsel submits that the contract is
dated 28.02.2007 and relevant clauses are Clause 3 of Special
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Arb.O.P (Com.Div) No.56 of 2022
Conditions of Contract and Clause 25 of Conditions of
Contract which read as follows:-
Clause 3 of Special Conditions of Contract:
'3. Arbitration
The procedure for arbitration will be as follows:
(a) In case of Dispute or difference arising between the
Employer and contractor relating to any matter arising out of
or connected with this agreement, such disputes or difference
shall be settled in accordance with the Arbitration and
Conciliation Act, 1996. The arbitral tribunal shall consist of 3
arbitrators one each to be appointed by the Employer and the
contractor. The third arbitrator shall be chosen by the two
arbitrators so appointed by the parties and shall act as
presiding arbitrator. In case of failure of the two arbitrators
appointed by the parties to reach upon a consensus within a
period of 30 days from the appointment of the arbitrator
appointed subsequently, presiding arbitrator shall be
appointed by the President of Institution of Engineers (India),
Chennai Chapter.'
Clause 25 of Conditions of Contract:
'25. Procedure for Disputes
25.1 The Adjudicator shall give a decision in writing
within 28 days of receipt of a notification of a dispute.
25.2 The Adjudicator shall be paid daily at the rate
specified in the Contract Data together with reimbursable
expenses of the types specified in the Contract Data and the
cost shall be divided equally between the Employer and the
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Arb.O.P (Com.Div) No.56 of 2022
Either party may refer a decision of the Adjudicator to an
Arbitrator within 28 days of the Adjudicator's written decision.
If neither party refers the dispute to arbitration within the
above 28 days, the Adjudicator's decision will be final and
binding.
25.3 The arbitration shall be conducted in accordance
with the arbitration procedure stated in the Special Conditions
of the Contract.'
4. Learned counsel submits that the trigger notice is
dated 07.08.2021 (page No.263 of typed set of papers),
respondent did not respond, therefore, petitioner approached
the Institution of Engineers (India) in and by letter dated
11.12.2021 (page No.268 of typed set of papers) as per the
agreed procedure and as that has not evoked any response in
spite of reminder captioned Arb OP has been filed.
5. Issue notice to respondent. Private notice permitted.
Private notice through electronic modes of service (subject to
proof being demonstrated) also permitted. Learned counsel is
also permitted to serve on learned standing counsel for
Madurai Corporation, if any.
6. List on 28.02.2022.'
3. The short forms and abbreviations used in the aforementioned
proceedings will continue to be used in the instant order also for the sake of
convenience and clarity. The aforementioned proceedings shall be read as
integral part and parcel of this order.
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4. There is no disputation or disagreement before this Court that the
Arb.O.P (Com.Div) No.56 of 2022
aforementioned proceedings capture the factual matrix, the trajectory the
matter has taken thus far and the bone of contention as between the parties
i.e., bone of contention to the extent necessary for a legal drill under Section
11 of 'The Arbitration and Conciliation Act, 1996 (Act 26 of 1996)', which
shall hereinafter be referred to as 'A and C Act' for the sake of brevity.
5. In the case on hand, there is no disputation or disagreement about
the existence of 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.
6. The scope of a legal drill under Section 11 of A and C Act is
largely controlled 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.'
7. This Court reminds itself of the principle laid down in Mayavati
Trading being ratio laid down in Mayavati Trading [Mayavati Trading
Pvt. Ltd., Vs. Pradyuat Deb Burman reported in (2019) 8 SCC 7961].
Relevant paragraph in Mayavati Trading is paragraph 10 and the same
reads as follows:
https://www.mhc.tn.gov.in/judis '10. This being the position, it is clear that the law prior to
Arb.O.P (Com.Div) No.56 of 2022
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)
8. This Court deems it appropriate to not to burden this order with
further excerpted portions from Duro Felguera, S.A. [Duro Felguera, S.A.
versus Gangavaram Port Limited reported in (2017) 9 SCC 729I]. In the
light of there being no disputation or disagreement about the existence of
arbitration agreement between the parties, this Court is now left with the
question of downsizing the 'Arbitral Tribunal' ['AT' for the sake of
convenience and clarity]. Arbitration agreement between the parties
provides for a three member AT. Learned counsel for petitioner makes a
request that this Court may please consider downsizing the AT and refer the
matter to sole Arbitrator. That a Section 11 Court can downsize an Arbitral
Tribunal is not in dispute.
9. This Court carefully considered the nature of the claim and the
parties. The point involved is broadly on one facet of the transaction and
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Arb.O.P (Com.Div) No.56 of 2022
the quantum of the claim is in the region of 4.67 Crores (INR). Therefore,
this Court taking into account interest of all concerned i.e., petitioner,
respondent and ease of arbitral proceedings, considers it appropriate to
accede to the request to downsize the AT and refer the matter to a sole
Arbitrator.
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Arb.O.P (Com.Div) No.56 of 2022
10. Though obvious it is made clear that all questions are left open to
be decided by the Arbitral Tribunal. It is also made clear that this Court has
not expressed any view or opinion on the merits of the matter in this order.
Hon'ble Mr. Justice T.Ravindran (Retd.,), a former Judge of this Court at
New No.27, Old No.12, 3rd Avenue, Indira Nagar, Adyar, Chennai - 600
020 [Mob: 9941350926 & 9444399700] is appointed as the sole Arbitrator
to enter upon reference and adjudicate qua the arbitral disputes that have
arisen between the parties. Hon'ble Arbitrator is requested to conduct
arbitration in the 'Arbitration and Conciliation Centre under the aegis of this
Court' (MHCAC) in accordance with the Madras High Court Arbitration
Proceedings Rules, 2017 and Hon'ble Arbitrator's fee shall be as per Madras
High Court Arbitration Centre (MHCAC) (Administrative Cost and
Arbitrator's Fees), Rules 2017.
Captioned Arb.OP is disposed of in the aforesaid manner. There shall
be no order as to costs.
07.03.2022
gpa
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Arb.O.P (Com.Div) No.56 of 2022
M.SUNDAR.J.,
gpa
To
1. Mr. Justice T.Ravindran (Retd.,),
New No.27, Old No.12,
3rd Avenue, Indira Nagar,
Adyar, Chennai - 600 020
[Mob: 9941350926 & 9444399700]
2. The Director
Tamil Nadu Mediation and Conciliation Centre
- cum- Ex-Officio Member
Madras High Court, Arbitration Centre
Chennai - 104
Arb.O.P (Com.Div) No.56 of 2022
https://www.mhc.tn.gov.in/judis 07.03.2022
