IMPORTANT POINT
A Director per se cannot be said to be an employee or servant of the Company.

JUDGMENT

C.K. Thakker, J. —

1. The present petition is filed by the petitioner under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) praying to Hon’ble the Chief Justice of India to appoint third Arbitrator as Presiding Arbitrator or to appoint Sole Arbitrator as deemed fit in the facts and circumstances of the case.

2. It is the case of the applicant that it is a Company known as M/s Comed Chemicals Ltd. registered under the Indian Companies Act, 1956. Mr. Ashwani Kapil is the authorized signatory who has approached this Court. It is stated in the application that the Company is doing business in chemicals in the field of bio-technology. To expand the business, the Company floated a subsidiary company in the name and style of Comed Biotech Ltd. For the said purpose, it entered into a Memorandum of Understanding (‘MoU’ for short) and appointed Dr. C.N. Ramchand (respondent herein) on September 4, 2003 for the development of products in the field of bio-industries and manufacturing and marketing of such products. After various meetings and negotiations, terms and conditions were finalized between the parties and the respondent was appointed as Director (Technical) by the applicant Company. A copy of the agreement has been annexed to the Application. MoU also provided that the respondent will work full time with the Company at least for next eight years from the date of signing of the agreement. According to the Company, it invested large amount in the new adventure and paid substantial sum as remuneration to the respondent for the work.

3. It is the allegation of the Company that the respondent did not take interest in work and failed to attend Board Meetings held in May and June, 2004 in spite of prior notice and information in advance about such meetings. A notice was issued by the Company to the respondent on July 14, 2004 asking him to remain present at the Board Meeting scheduled to be held on July 30, 2004. The respondent, however, sent a Letter of Resignation on July 17, 2004. The Company has alleged that not only the respondent wanted to quit the Company before completing the work assigned to him in violation of the agreement, but he also instigated other subordinate staff-workers to leave the organization. Resultantly, other staff members also resigned. In view of the large investment by the Company, it refused to accept the resignation of the respondent. There was correspondence and exchange of legal notices between the parties. It is, however, not necessary to enter into the details thereof in the present proceedings.

4. By a communication dated August 12, 2005, the applicant through his advocate sent a notice to the respondent for appointment of an arbitrator in accordance with Clause 12 of MoU and informed him that the applicant-Company had decided to appoint Ramesh H. Nanavati, retired District Judge as his arbitrator. The applicant called upon the respondent to state whether he was agreeable to the said name. It also stated that if he was not agreeable, he could suggest any other name and/or appoint an arbitrator for resolving the dispute failing which the applicant would be constrained to take appropriate action in accordance with law. The respondent through his advocate informed the Company on September 12, 2005 that he was not agreeable to the arbitrator suggested by the Company. He, however, suggested three names. At Sl. No. 1, there was a name of Dr. Sandeep H. Shah, President, Indian Psychiatric Association.

5. In view of non-agreement between the applicant and respondent, the Company filed Arbitration Application No. 9 of 2006 under Section 11 of the Act in the High Court of Gujarat at Ahmedabad requesting the Hon’ble Chief Justice of the High Court to appoint an arbitrator. Notice was issued to the respondent who filed his reply. In the reply, he asserted that he is a ‘British national’ and hence any question of arbitration between the applicant-Company which is