Madras High Court
Uvm Renewables Energy Private Limited vs Jayabal on 24 June, 2025
Author: Abdul Quddhose
Bench: Abdul Quddhose
Arb. O.P. (Com. Div.) No.14 of 2025
THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 24.06.2025
CORAM:
THE HON'BLE MR. JUSTICE ABDUL QUDDHOSE
Arb. O.P. (Com. Div.) No.14 of 2025
UVM Renewables Energy Private Limited
Represented by U Vinay Metha
No112, Nungambakkam High Road,
6A, 6th Floor, Eldorado Building,
Chennai- 600 034. ... Petitioner
Versus
1. Jayabal
Ammaiyar Milk Factory
Melakasagudi Nedungadu Road
Near Sanjeev Gas Agency
Karaikal
Puducherry – 609609.
2. J.Kamalachi
Ammaiyar Milk Factory
Melakasagudi Nedungadu Road
Near Sanjeev Gas Agency
Karaikal
Puducherry – 609609.
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Arb. O.P. (Com. Div.) No.14 of 2025
3. D.Saraswathi
Ammaiyar Milk Factory
Melakasagudi Nedungadu Road
Near Sanjeev Gas Agency, Karaikal
Puducherry - 609609. ... Respondents
Prayer : Arbitration Original Petition (Commercial Division) has been
filed under Section 11(6) of the Arbitration and Conciliation Act, 1996
as amended Act, 2019, for the following reliefs :-
a) Appoint a Sole Arbitrator to adjudicate upon the disputes arisen
between the parties under the Letter of Intent, dated 03.07.2024.
b) Directing the respondents to pay the cost of this petition;
c) Pass such further other orders as this Court may deem fit.
For Petitioner : Mr.Vijay
for Ms.C. Meena
For Respondents : Mr.S.P. Harikrishnan
for M/s.K.M. Vijaayan Associates
ORDER
This petition has been filed under Section 11 of the Arbitration
and Conciliation Act, 1996, seeking for appointment of an Arbitrator by
this Court.
2. There seems to be a dispute between the petitioner and the
respondents arising out of the Letter of Intent, dated 03.07.2024. There
exists an arbitration clause in the Letter of Intent, dated 03.07.2024 and
the same is extracted hereunder :-
Arbitration: Any dispute between the Parties in connection with
this LOI shall be submitted for binding resolution to a single
arbitrator to be appointed by the Parties jointly under the
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Arb. O.P. (Com. Div.) No.14 of 2025
provisions of the Arbitration Act, 1996. The place of arbitration
shall be Chennai and the arbitration shall be conducted wholly in
the English language.
3. The petitioner has invoked arbitration in accordance with the
arbitration clause by issuing notice to the respondents on 04.12.2024 to
comply with the requirements of Section 21 of the Arbitration and
Conciliation Act, 1996. According to the petitioner, no reply has been
sent by the respondents to the same.
4. A counter has been filed by the respondents stating that this
petition is not maintainable as against 2nd and 3rd respondents, who are
not signatories to the Letter of Intent, dated 03.07.2024. They would
also rely upon an order passed by this Court in the Section 9 application,
wherein an observation has been made that since the 2nd and 3rd
respondents are not signatories to the Letter of Intent, no relief can be
granted against them in a Section 9 application.
5. The learned counsel for the petitioner drew the attention of this
Court to the order, dated 19.03.2025 passed by this Court in Arb. O.P.
(Com. Div.) No.575 of 2024 and would submit that under similar
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Arb. O.P. (Com. Div.) No.14 of 2025
circumstances, where a party was not a signatory to the arbitration
agreement, this Court after giving due consideration to the surrounding
circumstances held that an Arbitrator can be appointed under Section 11
of the Arbitration and Conciliation Act, 1996, even in cases where
parties have not signed the arbitration agreement.
6. The learned counsel for the petitioner also drew the attention of
this Court to the decision of the Hon'ble Supreme Court in the case of
SBI General Insurance Co. Ltd. vs. Krish Spinning reported in 2024
SCC Online SC 1754. Relying upon the said judgment, he would
submit that whether the respondents 2 and 3 are bound by the arbitration
agreement or not, will have to be determined only by the Arbitral
Tribunal by applying the Kompetenz-kompetenz principle.
7. On the other hand, the learned counsel for the respondents
would reiterate the contents of the counter affidavit filed before this
Court by stating that since the respondents 2 and 3 are not signatories to
the Letter of Intent, which is the subject matter of the dispute between
the petitioner and the respondents and that they never participated in any
negotiations with the petitioner, they cannot be bound by the arbitration
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Arb. O.P. (Com. Div.) No.14 of 2025
clause contained in the Letter of Intent. He would also submit that in the
order passed by this Court in the Section 9 application filed by the
applicant, it has been made clear that the respondents 2 and 3 therein are
not signatories to the Letter of Intent which is the subject matter of the
dispute between the petitioner and the 1st respondent and therefore, no
order can be passed against the 2nd and 3rd respondents arising out of the
Letter of Intent, which is the subject matter of the dispute between the
petitioner and the 1st respondent.
8. Admittedly, the 1st respondent is the Husband of the 2nd
respondent and the 3rd respondent is the Sister of the 1st respondent.
Admittedly, the names of the three respondents are reflected in the
Letter of Intent, which is the subject matter of the dispute raised by the
petitioner. The petitioner has categorically contended in this petition that
all the three respondents are bound by the arbitration clause contained in
the contract. The 1st respondent has also not disputed the existence of the
arbitration clause in the Letter of Intent, which is the subject matter of
the dispute between the petitioner and the respondents. The 1st
respondent has also signed the Letter of Intent, which is the subject
matter of the dispute between the petitioner and the respondents. The
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petitioner contends that the arbitration invocation notice has been sent to
all the three respondents, but the respondents chose not to reply to the
same. Though the same is disputed by the respondents, as seen from the
counter filed before this Court, it cannot be conclusively established by
this Court with the available materials placed on record as to whether
the said notice was received by the respondents or not.
9. In Cox and Kings Limited vs. SAP India Private Ltd. and
another reported in 2025 1 SCC 611, the Hon'ble Supreme Court has
made it clear that at the referral stage, the referral Court should leave it
open for the Arbitral Tribunal to decide whether a non-signatory is
bound by the arbitration agreement or not.
10. When a categorical assertion has been made by the petitioner
that all the three respondents are bound by the arbitration agreement,
which is also supported by the relationships of the respondents and is
also supported by their names being reflected in the Letter of Intent,
which is the subject matter of the dispute between the parties,
necessarily, this Court cannot adjudicate the said issue in this petition
filed under Section 11 of the Arbitration and Conciliation Act, 1996,
when this Court is having only a limited scrutiny.
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Arb. O.P. (Com. Div.) No.14 of 2025
11. As held in COX AND KINGS case, this Court being a referral
Court should leave it open for the Arbitral Tribunal to decide whether the
respondents 2 and 3 are bound by the arbitration agreement contained in
the Letter of Intent or not, by granting liberty to them to file an
application under Section 16 of the Arbitration and Conciliation Act,
1996 or file a counter in the arbitral proceedings questioning the
arbitrability of the dispute as against them.
12. By applying the Kompetenz-kompetenz principle, it can only
be the Arbitrator who can decide the dispute raised by the respondents
and not this Court under Section 11 of the Arbitration and Conciliation
Act, 1996 as this Court being a referral Court has to decide an
application filed under Section 11 of the Arbitration and Conciliation
Act, 1996, only based on the prima facie existence of the arbitration
clause in the contract, which is the subject matter of the dispute between
the parties.
13. When on a prima facie consideration, this Court finds that
there exists an arbitration clause in the contract viz., the Letter of Intent,
dated 03.07.2024 and that too when the contract discloses the names of
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Arb. O.P. (Com. Div.) No.14 of 2025
the respondents 2 and 3, necessarily this Court will have to appoint an
Arbitrator as prayed for in this petition. In fact, in the order passed by
this Court earlier under Section 9 of the Arbitration and Conciliation Act,
1996, the issue with regard to the arbitrability as against the respondents
2 and 3 was left open to decide in an application to be filed under
Section 11 of the Arbitration and Conciliation Act, 1996 by any of the
parties to the dispute.
14. As observed earlier, when the respondents 2 and 3 are the Wife
and Sister of the 1st respondent respectively and their names are also
reflected in the Letter of Intent, this Court will have to necessarily
appoint an Arbitrator as prayed for in this petition by leaving it open for
the Arbitral Tribunal to decide whether the non-signatories to the Letter
of Intent viz., the 2nd and 3rd respondents are bound by the arbitration
agreement or not, through an application filed under 16 of the
Arbitration and Conciliation Act, 1996 or by the counter filed by the
respective respondents before the Arbitrator. The other objections that
have been raised in this petition including the non-compliance of Section
21 of the Arbitration and Conciliation Act, 1996, by the respondents, can
also be considered by the Arbitrator once an Arbitrator is appointed by
this Court.
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Arb. O.P. (Com. Div.) No.14 of 2025
15. For the foregoing reasons, this Arbitration Original Petition is
allowed as prayed for by issuing the following directions :-
a) This Court appoints Hon'ble Mr.Justice
N.Kirubakaran, former Judge of Madras High Court, residing
at No.36, 2nd Cross Street, Rayala Nagar, Ramapuram,
Chennai – 600 089, (Mobile No.9445025454) (Email :
[email protected]) as the sole Arbitrator to
adjudicate the dispute between the parties arising out of the
Letter of Intent, dated 03.07.2024.
(b) The Arbitrator shall be paid his remuneration / fees
in accordance with the 4th schedule of the Arbitration and
Conciliation Act, 1996.
(c) Both the parties shall equally share the arbitrator's
fees.
(d) The Arbitrator shall conduct the arbitration in
accordance with the provisions of the Arbitration and
Conciliation Act, 1996 and shall complete the arbitration
within the specified time as prescribed under the said Act.
24.06.2025
Index: Yes/ No
Speaking order / Non speaking order
Neutral citation : Yes / No
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Arb. O.P. (Com. Div.) No.14 of 2025
ABDUL QUDDHOSE, J.
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24.06.2025
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