Madras High Court

M/S Khwaahish Enterprises vs Plaza Properties Limited on 25 June, 2025

Author: Abdul Quddhose

Bench: Abdul Quddhose

                                                                                 Arb. O.P. (Com. Div.) No.32 of 2025

                                  THE HIGH COURT OF JUDICATURE AT MADRAS

                                                  DATED: 25.06.2025

                                                           CORAM:

                                  THE HON'BLE MR. JUSTICE ABDUL QUDDHOSE

                                          Arb. O.P. (Com. Div.) No.32 of 2025
                                                          and
                                                   A. No.228 of 2025
                                                          and
                                              Arb. Appln. No.759 of 2024
                                                          and
                                                 O.A. No.825 of 2024

                     M/s KHWAAHISH ENTERPRISES,
                     a Partnership Firm represented by its Partner,
                     Mr. Bharat M Shah,
                     No. 778, Poonamallee High Road,
                     Kilpauk, Chennai - 600 010.                                          .. Petitioner
                                                           Versus


                     PLAZA PROPERTIES LIMITED,
                     Rep. by its Managing Director,
                     Mr. T. Shyam Prasad,
                     New No. 5, Old No. 3, Thirumoorthy Street,
                     T. Nagar, Chennai - 600 017.
                     (Amended as per order, dt. 24.04.2025
                                     in Appln. No. 1855 of 2025)
                                                                                         .... Respondents




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                                                                                        Arb. O.P. (Com. Div.) No.32 of 2025

                     Prayer          : THIS PETITION HAS BEEN FILED UNDER SECTION
                     11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996
                     R.W.S. 2(1)(C)(vii), (xi) AND SECTION 7 AND SECTION 10(2) OF
                     THE COMMERCIAL COURTS ACT, 2015 to appoint a Sole Arbitrator
                     in terms of clause 10 of the said Memorandum of Understanding dated
                     04.06.2020 to adjudicate upon the disputes that have arisen between the
                     parties and pass such further or other orders as this Court may deem fit
                     and proper in the facts and circumstances of the case.



                                     For Petitioner        : Mr.P.V. Balasubramaniam
                                                            Senior Counsel

                                     For Respondents : Mr.Mukund
                                                      Senior Counsel for
                                                      Ms.Vandana Parasuran


                                                              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

respondent arising out of the Memorandum of Understanding dated

04.06.2020. The petitioner claims that they had advanced a sum of

Rs.15 Crores to the respondent under the said Memorandum of

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Understanding and that the respondent had committed breach of

contract. There exists an arbitration clause in the Memorandum of

Understanding, dated 04.06.2020, which the petitioner relies upon for

the purpose of appointment of an Arbitrator by this Court under Section

11 of the Arbitration and Conciliation Act, 1996. The said arbitration

clause relied upon by the petitioner is extracted hereunder :-

10. Any and all controversy (ies) / disputes) / difference(s) / claim(s) / claim(s) in tort arising out of or in connection with or in relation to this contract, including its existence, validity or termination, shall be referred to and finally resolved by arbitration of sole Arbitrator nominated by the parties of the second part. The award so rendered shall be final and binding on the parties. The language shall be English and the venue shall be at Chennai.

3. The petitioner has invoked arbitration in accordance with the

arbitration clause by issuing notice to the respondents on 12.09.2024,

to comply with the requirements of Section 21 of the Arbitration and

Conciliation Act, 1996. Admittedly, no reply was sent to the said notice

by the respondent.

4. A counter has been filed by the respondent disputing the

contentions of the petitioner. The objections raised by the respondent

are as follows :-

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a) The claim of the petitioner is hopelessly barred by the

law of limitation;

b) The respondent did not receive the sum of Rs.15 Crores

from the petitioner. According to the respondent, the petitioner

themselves have admitted to their notice, dated 02.08.2024 that

the monies were paid only to M/s.Virgo Realtors Pvt. Ltd. and

not to the respondent. It is also the case of the respondent that

the petitioner themselves have admitted that the monies were

paid ten years prior to the date of the notice issued by the

petitioner on 02.08.2024. Hence, according to the respondent,

the claim of the petitioner is barred by limitation. According to

the respondent, the Memorandum of Understanding, dated

04.06.2020, which the petitioner relies upon was never intended

by the respondent to be acted upon.

5. The learned Senior Counsel appearing for the petitioner drew

the attention of this Court to the arbitration clause contained in the

Memorandum of Understanding, dated 04.06.2020 which has been

extracted supra and would submit that only in accordance with the said

arbitration clause, the petitioner had invoked arbitration since the

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respondent had committed breach of contract by not fulfilling the

respondent's obligations under the Memorandum of Understanding,

dated 04.06.2020.

6. He also drew the attention of this Court to the arbitration

invocation notice, dated 12.09.2024 sent by the petitioner to the

respondent which was duly acknowledged by the respondent and would

submit that the petitioner has complied with the requirements of Section

21 of the Arbitration and Conciliation Act, 1996. He would further

submit that no reply was sent to the same. He would submit that only

for the first time through the counter filed by the respondent before this

Court in this petition, objections have been raised by the respondent

with regard to the limitation, as well as with regard to the merits of the

petitioner's claim.

7. He would also rely upon a judgment of this Court, dated

26.02.2025 in the case of South Ganga Waters Technologies (P) Ltd.,

vs. Vedanta Limited, rendered in Arb. O.P. (Com.Div.) No.19 of 2025

and would submit that this Court after following the decisions rendered

by the Hon'ble Supreme Court in the case of i) SBI General Insurance

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Co. Ltd., vs. Krish Spinning reported in 2024 SCC ONLINE SC 1754

and ii) Re : Interplay between arbitration agreements under the

Arbitration and Conciliation Act, 1996 and the Indian Stamp Act,

1899 [AIR 2024 SC 1] has held as follows :

a) The word “examine” found in Section 11(6-A) of the

Arbitration and Conciliation Act, 1996 has a very narrow scope

in terms of Section 11(6-A) and is limited to the requirement of a

formal validity.

b) The use of the term ‘examination’ under Section 11(6-

A) as distinguished from the use of the term ‘rule’ under Section

16 implies that the scope of enquiry under Section 11(6-A) is

limited to a prima facie scrutiny of the existence of the

arbitration agreement, and does not include a contested or

laborious enquiry, which is left for the Arbitral Tribunal to rule

under Section 16 of the Arbitration and Conciliation Act, 1996.

c) The prima facie view on existence of the arbitration

agreement taken by the referral court does not bind either the

Arbitral Tribunal or the court enforcing the arbitral award.

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d) The scope of judicial interference under Section 11(6-

A) of the Act is only confined to the limited scrutiny of prima

facie existence of the arbitration agreement, “nothing more and

nothing else” and the competence of the Arbitral Tribunal under

Section 16 of the Act confers complete arbitral autonomy to rule,

determine and act on the issues pertaining to impleadment or

deletion of a party, signatory or non-signatory, arbitrality or non-

arbitrality, necessary or not necessary party, joinder or non-

joinder to the arbitration in depth even if the ruling is contrary to

that of the referral court under Section 11(6) of the Act.

8. Therefore, the learned Senior Counsel appearing for the

petitioner would submit that since it is not in dispute that there is an

arbitration clause in the contract, which is the subject matter of the

dispute between the parties and since the petitioner has complied with

the requirements of Section 21 of the Arbitration and Conciliation Act,

1996, this Court has to necessarily appoint an Arbitrator under Section

11 of the Arbitration and Conciliation Act, 1996. He would submit that

the disputes raised by the respondents in their counter cannot be

adjudicated by this Court and that it is only the Arbitrator, who can

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adjudicate the same either through an application filed under Section 16

of the Arbitration and Conciliation Act, 1996 or based on the counter

and other evidence filed by the respondent in the main arbitral

proceedings.

9. On the other hand, the learned Senior Counsel appearing for

the respondent would reiterate the contents of the counter filed by the

respondent before this Court. He would also rely upon the documents

filed along with the typed set of papers filed by the respondents, more

particularly

a) Letter of Demand issued by the applicant to the respondent,

dated 02.08.2024.

b) Copy of the dishonoured cheque issued in favour of the

applicant by M/s.Virgo Realtors Pvt. Ltd., dated 14.08.2024.

c) Statutory notice issued by the petitioner to M/s.Virgo Realtors

Pvt. Ltd., under Section 138 of the Negotiable Instruments Act, 1881.

d) In the notice, dated 02.08.2024, through which, the petitioner

had demanded money from the respondent, the petitioner has admitted

that the sum of Rs.15 Crores was received ten years prior to the said

notice and therefore, the claim of the petitioner is barred by limitation.

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10. The objections raised by the respondent cannot be adjudicated

by this Court while deciding an application under Section 11 of the

Arbitration and Conciliation Act, 1996, when this Court being a referral

Court has got a limited scrutiny. Even the objection with regard to the

limitation, the learned Senior Counsel appearing for the petitioner

pointed out to this Court that since the Memorandum of Understanding

is dated 04.06.2020 and the Hon'ble Supreme Court has also excluded

the Covid period for the purpose of saving limitation, the claim of the

petitioner is well within the period of limitation. Therefore, even the

question of limitation raised by the respondent cannot be adjudicated by

this Court. It is only the Arbitrator, who can decide the same either

under Section 16 of the Arbitration and Conciliation Act, 1996 or in the

final Arbitral Award.

11. As held by the Hon'ble Supreme Court in the aforesaid

decisions, which have been followed by this Court through this Court's

order, dated 26.02.2025 passed in Arb. O.P. (Com. Div.) No.19 of 2025

in South Ganga's case referred to supra, this Court need not make a

roving enquiry with regard to the objections raised by the respondent in

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an application filed under Section 11 of the Arbitration and Conciliation

Act, 1996.

12. When there exists an arbitration clause in the contract, which

is the subject matter of the dispute between the parties, this Court will

have to necessarily appoint an Arbitrator under Section 11 of the

Arbitration and Conciliation Act, 1996 as prayed for in this petition,

leaving it open for the respondent to raise all objections which have

been raised in the counter filed before this Court before the Arbitrator

either by filing an application under Section 16 of the Arbitration and

Conciliation Act, 1996 or through the counter and other supporting

evidence in the arbitral proceedings.

13. For the foregoing reasons, this Arbitration Original Petition is

allowed as prayed for by issuing the following directions :-

a) This Court appoints Hon'ble Ms. Justice Indira Banerjee, former Judge of Supreme Court of India, residing at B-339, Lake Gardens, Kolkatta – 700 045 (Mobile 9560808777) as the sole Arbitrator to adjudicate the dispute as the sole Arbitrator to adjudicate the dispute between the parties arising out of the Memorandum of Understanding dated 04.06.2020.

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(b) The Arbitrator shall be paid her remuneration / fees in accordance with the 4th schedule of the Arbitration and Conciliation Act, 1996.

(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.

14. The applicant is having the benefit of a status quo order in

O.A. No.825 of 2024, since 29.10.2024. Since the applicant had made

out a prima facie case for the grant of the status quo order and the

balance of convenience as well as irreparable hardship have also been

established, as seen from the averments made in the affidavit filed in

support of this application and the supporting documents, the status quo

order granted by this Court in O.A. No.825 of 2024 is made absolute.

Both the parties are granted liberty to file applications under Section 17

of the Arbitration and Conciliation Act, 1996 before the Arbitrator and

the Arbitrator shall decide the same on merits and in accordance with

law. In view of the aforesaid order, Arb. Appln. No.759 of 2024 is

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