M/S Tailor Birds vs Shri Gordhan Das Maheshwari
2021 Latest Caselaw 6952 Raj/2

        HIGH COURT OF JUDICATURE FOR RAJASTHAN
                    BENCH AT JAIPUR

              S.B. Arbitration Application No. 18/2020

M/s Tailor Birds, Through Its Proprietor Smt. Kavita Chaudhary
W/o Shri Suraj Chaudhary Having Its Office At Basement B-1,
Plot No. 23A, Shyam Vatika, Bharat Marg, Naminagar, Gandhi
Path, Vaishali Nagar, Jaipur
                                                         ----Petitioner/Applicant
                                        Versus
Shri    Gordhan       Das       Maheshwari,        Managing         Director,     M/s
Radhegovindkripa Developers Private Limited 18 Bardiya Colony,
Museum Road, Jaipur 302004
                                                                   ----Respondent

For Petitioner(s) : Mr. Anil Malani & Mr. Dheeraj Palia for Mr. R.B. Mathur For Respondent(s) : Mr. Jitendra Mohan Jain & Mr. Nikhil Jain

HON'BLE MR. JUSTICE PANKAJ BHANDARI

Judgment / Order

26/11/2021

1. Petitioner has filed an application under Section 11 of the

Arbitration and Conciliation Act, praying therein for an

appointment of an arbitrator as the non-applicant has failed to

appoint the arbitrator in terms of Clause-14 of the agreement.

2. It is contended by counsel for the applicant that a work order

was issued in favour of the applicant on 14.02.2014.

Supplementary work order was issued on 10.10.2014. A notice

was served on non-applicant on 12.05.2017 seeking appointment

of an arbitrator. In the said notice, the applicant claimed a sum of

Rs.51,23,597/- and proposed name of Mr. V.N. Saxena, Chief

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Engineer (Retired) Public Works Department as the arbitrator on

behalf of the applicant.

3. It is contended that in the reply to the said notice, non-

applicant in counter claim, claimed a sum of Rs.1,25,54,427/- The

non-applicant did not propose the name of his arbitrator. The non-

applicant also stated that Clause-14 of the said agreement would

not apply.

4. It is also contended that as per Clause-14 of the said

agreement, since non-applicant has not appointed the arbitrator,

applicant is entitled to have arbitrator appointed under the

provision of Section 11 of the Arbitration and Conciliation Act,

1996.

5. Counsel for the applicant has placed reliance on "M/S Duro

Felguera S.A vs M/S. Gangavaram Port Limited" 2017 (9)

(SCC) 729, wherein it was held by the Apex Court that at the time

of appointment for arbitrator, Courts are required only to see

whether there is an arbitration clause.

6. Counsel for the non-applicant has vehemently opposed the

application. It is contended that the applicant has filed a civil suit

on 04.07.2017 and therefore, he is barred from seeking

appointment and his application for appointment of arbitrator is

not maintainable. It is also contended that the dispute between

the parties is arising out of the same agreement and since

applicant has filed a civil suit, he is barred from now claiming the

relief claimed for in the application.

7. To this argument, counsel for the applicant contends that the

dispute or claim raised in the civil suit is not pertaining to the

present dispute. The parties to the civil suit are different. The

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claim raised by him has no connection whatsoever to the present

dispute.

8. Counsel for the non-applicant has placed reliance on

"Bharat Sanchar Nigam Ltd. & Anr. Vs. M/S Nortel

Networks India Pvt. Ltd." Civil Appeal Nos.843-844/2021

decided by the Apex Court on 10.03.2021, wherein the Apex Court

has held that while exercising jurisdiction under Section 11 of the

Act as the judicial forum, the court may exercise the prima facie

test to screen and knockdown ex facie meritless, frivolous, and

dishonest litigation. Limited jurisdiction of the Courts would ensure

expeditious and efficient disposal at the referral stage. At the

referral stage, the Court can interfere "only" when it is "manifest"

that the claims are ex facie time barred and dead, or there is no

subsisting dispute.

9. Reliance has also been placed on "Booz Allen and

Hamilton Inc. Vs. SBI Home Finance Ltd. & Ors." IV(2011)

BC 2016 (SC), wherein it is held that Even if there is an

arbitration agreement between the parties, and even if the dispute

is covered by the arbitration agreement, the court where the civil

suit is pending, will refuse an application under Section 8 of the

Act, to refer the parties to arbitration, if the subject matter of the

suit is capable of adjudication only by a public forum or the relief

claimed can only be granted by a special court or Tribunal.

10. I have considered the contentions.

11. Arbitration Clause-14 of the Agreement reads as under:-

"All disputes arising out of or in connection with or relating to this agreement and all questions affecting the parties in respect of the said works shall be referred to the arbitration in accordance with a provision of Indian Arbitration

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and Conciliation Act, 1996 and as amended. Both the parties of the agreement shall nominate one arbitrator each and both the arbitration so nominated may nominate a third arbitrator/chairperson for the purpose of the arbitration which shall be conducted in accordance with the provision of Indian Arbitration and Conciliation Act, 1996 as amended. Venue for arbitration proceedings shall be at Jaipur Only Courts in Jaipur shall have the exclusive jurisdiction in respect of any matter arising under or in connection with or relating to this contract referred to the courts for adjudication with reference to the arbitration agreement or any matter arising thereof. No other court shall have jurisdiction in any litigation arising between the parties."

12. In the present case in hand, the notice for appointment of an

arbitrator was served on non-applicant on 12.05.2017, reply to

which was given on 31.05.2017. The civil suit on account of which

objection is raised by the non-applicant, was filed on 04.07.2017

i.e. after the notice was served on the non-applicant. In the civil

suit, the applicant has claimed a sum of Rs.2,10,737/-. In the civil

suit in addition to the petitioner, there is yet another plaintiff Mr.

Anil Kumar and the list of the defendants in addition to the non-

applicants, there is Rameshwar Mantri M/S Radhegovindkripa

Developers Pvt. Ltd. and Sain Engineer and Consultants. That

there is an arbitration clause is not in dispute between the parties

as Clause-14 of the agreement is an arbitration clause.

13. The judgment cited by the counsel for the non-applicant in

"Bharat Sanchar Nigam Ltd. & Anr. Vs. M/S Nortel

Networks India Pvt. Ltd." (supra) authorizes the Court to

prima facie test to screen and knockdown ex facie meritless,

frivolous, and dishonest litigation.

14. The present dispute cannot be said to be a dishonest or

frivolous litigation so as to knockdown the same at this stage.

Filing of the civil suit also do not debar the applicant from seeking

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appointment of arbitrator, as the dispute before the civil Court

cannot be said to be same for which the notice was given by the

claimant on 12.05.2017.

15. It is observed by the Apex Court that the scope of the power

under Section 11(6) of the Arbitration and Conciliation Act 1996

was considerably wide in view of the decisions and 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 minimise the Court's

intervention at the stage of appointing the arbitrator and this

intention as incorporated in Section 11(6-A) of the Act ought to be

respected.

16. Sub-section 6 of Section 11 of the Arbitration and

Conciliation Act provides where, under an appointment procedure

agreed upon by the parties-

(a) a party fails to act as required under that procedure; or,

(b) the parties, or the two appointed arbitrators, fail to reach an

agreement expected of them under that procedure; or,

(C) a person, including an institution, fails to perform any function

entrusted to him or it under that procedure, a party may request

the Chief Justice or any person or institution designated by him to

take the necessary measure, unless the agreement on the

appointment procedure provides other means for securing the

appointment.

17. Filing of civil suit does not debar the Courts for appointing an

arbitrator, as the dispute referred therein cannot be said to be

covered within the dispute raised before this Court for

appointment of an arbitration. Since the non-applicant has not

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appointed his arbitrator in terms of the arbitration agreement, the

arbitration application deserves to be and is accordingly, allowed.

18. This Court appoints Hon'ble Mr. Justice Alok Sharma (Retd.)

K-39 Income Tax Colony, Tonk Road, Jaipur as an Arbitrator to

decide the dispute.

19. Registry is directed to intimate Hon'ble Mr. Justice Alok

Sharma (Retd.) and obtain his formal consent.

20 Accordingly, Arbitration Application stands allowed. The

arbitrator shall be entitled to lay down fees as provided under

Manual of Procedure for Alternative Disputes Resolution, 2009 as

amended from time to time. Formal consent shall be obtained

from Hon'ble Mr. Justice Alok Sharma (Retd.).

(PANKAJ BHANDARI),J

ARTI SHARMA/10

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