Madras High Court

M/S.Trans Pacific Logistics Pvt. ... vs M/S.Joraj Shipping Service ... on 28 March, 2022

                                                                              Arb.O.P (Com.Div.) No. 304 of 2021

                                    IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                       DATED : 28.03.2022

                                                              CORAM

                                          THE HON'BLE MR. JUSTICE M.SUNDAR

                                               Arb.O.P (Com.Div.) No. 304 of 2021

                     M/s.Trans Pacific Logistics Pvt. Ltd.,
                     Rep By its Director, Mrs.Kusuma Kumari,
                     W/o.Late.M.Dhanraj,
                     No.150/126, 4th Floor,
                     Cisons Complex,
                     Montieth Road, Egmore,
                     Chennai 600 008.                                                  ... Petitioner
                                                      Vs.

                     M/s.Joraj Shipping Service Pvt.Ltd.,
                     Rep by its Manager,
                     No.24, Landons Road,
                     Kilpauk,
                     Chennai 600 008.                                                  ... Respondent

                                  Arbitration Original Petition filed under Section 11 of the Arbitration
                     and Conciliation Act, 1996 to appoint an Arbitrator to
                                  (a) direct the respondent to name or appoint an Arbitrator on his side
                     to adjudicate all the disputes between the petitioner and the respondent
                     arising out of the equipment lease agreement dated 11.06.2018 in
                     accordance with the provisions of Arbitration and Conciliation Act, 1996;
                                  (b) to direct the Respondent to pay the costs;

                     1/9


https://www.mhc.tn.gov.in/judis
                                                                              Arb.O.P (Com.Div.) No. 304 of 2021

                                              For Petitioner    : Mr.R.S.Mohan

                                              For Respondent : No appearance


                                                           ORDER

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

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

23.08.2021 under Section 11 of 'The Arbitration and Conciliation Act, 1996

(Act No.26 of 1996)' [hereinafter 'A and C Act' for the sake of brevity,

convenience and clarity] inter alia with a prayer for appointment of an

Arbitrator.

2. Mr.R.S.Mohan, learned counsel for sole petitioner who is before

this Court submits that notice was issued by Hon'ble Predecessor Judge and

notice has been duly served on the lone respondent. To be noted, name of

the lone respondent together with full/complete address is shown in the

cause list but there is no representation. This Court is informed that the lone

respondent has not entered appearance through any counsel.

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No. 304 of 2021

3. Be that as it may, learned counsel for petitioner submits that

captioned Arb OP is predicated on Clauses 26 and 27 in an 'agreement

captioned EQUIPMENT LEASE AGREEMENT and dated 11.06.2018'

[hereinafter 'primary contract' for the sake of convenience and clarity].

4. Clauses 26 and 27 of primary contract read as follows:

'26.ARBITRATION: In the event of any dispute or difference of opinion arising out of or in respect of this agreement or the commission of any breach of any terms thereof or of compensation payable thereof or in any manner whatsoever in connection with it, the same shall be referred to arbitration of three arbitrators (Each party shall select an arbitrator and both such selected arbitrators will select the third arbitrator) and such arbitration shall be governed by the UNCITRAL Arbitration Rules as at present in force. The decision or award so given shall be binding on the parties hereto.

27.GOVERNING LAW: This Lease Agreement shall be governed by and construed under the laws of India and subject to Arbitration Clause the Courts in Chennai shall have jurisdiction.'

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No. 304 of 2021

5. The aforementioned clauses 26 and 27 in the primary contract

serve 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 is learned counsel's say.

6. Learned counsel also submits that the arbitration agreement

contemplates arbitration by a three member Arbitral Tribunal but the same

can be downsized and made a sole Arbitral Tribunal considering the

arbitrable disputes that have arisen between the parties qua primary

contract. Learned counsel submits that according to petitioner lease amount

for the equipment taken on lease has not been paid but this is disputed by

respondent and this is one of the primary disputes between the parties.

7. Captioned Arb OP is under Section 11 of A and C Act and as

already alluded to supra, in a Section 11 legal drill, legal perimeter is largely

drawn by sub-section (6A) thereat. This principle has been laid down by

Hon'ble Supreme Court in Mayavati Trading case law {Mayavati Trading

Private Limited Vs. Pradyuat Deb Burman reported in (2019) 8 SCC 714},

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No. 304 of 2021

relevant paragraph in Mayavati Trading case law 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)

8. Paragraph 10 of Mayavati Trading case law takes this Court to

Duro Felguera principle [Duro Felguera, S.A. versus Gangavaram Port

Limited reported in (2017) 9 SCC 729]. To be noted, relevant Paragraphs

in Duro Felguera case law are paragraphs 47 and 59, which read as

follows:

'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.'

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'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. '

9. In the case on hand, lone respondent has not chosen to come before

this Court and dispute the existence of arbitration agreement in spite of

being duly served with notice and in spite of name together with

full/complete address being duly shown in the cause list. This means that

there is no disputation or contestation before this Court about the existence

of arbitration agreement. Expeditious disposal being the sublime philosophy

qua ADR mechanism it is not desirable to adjourn captioned Arb. OP more

so as it is a Section 11 legal drill that perambulates within a limited

landscape {to be noted, 'ADR' stands for 'Alternate Dispute Resolution'}

Therefore, if the aforementioned Mayavati Trading and Duro Felguera

principles are applied, this Court can proceed to appoint an Arbitrator.

https://www.mhc.tn.gov.in/judis Arb.O.P (Com.Div.) No. 304 of 2021

There is no difficulty in accepting the submission that a Section 11 Court

can downsize the Arbitral Tribunal i.e., number of Arbitrators. Therefore,

the plea of petitioner to downsize the Arbitral Tribunal and appoint a Sole

Arbitrator is acceded to.

10. In the light of narrative thus far, Mr.Adithya Reddy, Advocate

with address for service at D2, Vasanth Apartments, Avvai Shanmugam

Salai, Chennai 600 018 (Mobile No:98848 11101) (E-mail:

[email protected]) is appointed as Sole Arbitrator. Learned Sole

Arbitrator is requested to enter upon reference and adjudicate arbitrable

dispute that have arisen between the petitioner and respondent qua

aforementioned primary contract by conducting arbitration in the 'Madras