IMPORTANT POINT
Appointment of Arbitrator - Issue with respect to arbitrability of dispute is to be decided by Arbitrator.

JUDGMENT :

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 05.08.2021 passed by the High Court of Judicature at Madras in O.P. No. 304/2019, by which, the High Court has dismissed the said application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act, 1996) and has refused to appoint an arbitrator and refer the dispute to the arbitrator, original applicant has preferred the present appeal.

2. That the appellants herein approached the High Court under Section 11(6) of the Act, 1996 by way of O.P. No. 304/2019 to appoint an arbitrator so that the arbitral tribunal can be constituted in terms of clause 17.1.2 of the Share Subscription and Shareholders Agreement entered into between the appellants and the respondent at Chennai on 27.04.2016. By the impugned judgment and order the High Court has dismissed the said application and refused to appoint an arbitrator mainly on the grounds that at the time when the application under Section 11(6) of the Act, 1996 was filed in the year 2019, the matter was already referred to the arbitral tribunal with respect to agreement dated 27.04.2016, subsequent amendment agreement dated 06.12.2017 and addendum agreement dated 28.05.2018 and also on the ground that the proceedings were pending before the National Company Law Tribunal (NCLT) initiated by the respondent for various acts of oppression and mismanagement as a minority shareholder.

3. Shri K.V. Viswanathan, learned Senior Advocate appearing on behalf of the appellants has submitted that in the present case there is a different Share Subscription and Shareholders Agreement dated 27.04.2016 which contains the arbitration clause in case of any dispute between the parties (clause 17.1.2 of the Share Subscription and Shareholders Agreement). It is further submitted that in view of the dispute between the parties the appellants issued notice of termination of the Second SHA (Shareholders Agreement). It is submitted that thereafter the appellants served a notice upon the respondent invoking the arbitration clause 17.1.2. However, there was a failure on the part of the respondent to nominate an arbitrator which compelled and/or constrained the appellants approaching the High Court for appointment of an arbitrator under Section 11(6) of the Act, 1996. It is vehemently submitted by Shri K.V. Viswanathan, learned Senior Advocate appearing on behalf of the appellants that the dispute between the parties is with respect to a separate shareholders agreement and the said dispute was the subject matter of another arbitral proceedings. It is submitted that even the appellant was not a party to the earlier arbitral proceedings.

3.1 Now so far as the proceedings pending before the NCLT initiated by the respondent with respect to the oppression and mismanagement as a minority shareholder is concerned, pendency of such proceedings cannot be a ground to not to refer the dispute between the parties and appoint an arbitrator.

3.2 Making the above submissions and relying upon the decision of this Court in the case of Vidya Drolia and Others vs. Durga Trading Corporation, (2021) 2 SCC 1 (paragraphs 147.9, 147.11 and 225), it is prayed to allow the present appeal.

4. Learned counsel appearing on behalf of the respondent relying upon the decisions of this Court in the cases of Booz Allen and Hamilton Inc. vs. SBI Home Finance Ltd. (2011) 5 SCC 532, Chloro Controls India Private Limited vs. Severn Trent Water Purification Inc. and Others, (2013) 1 SCC 641 and Vidya Drolia (supra) and by supporting the impugned judgment and order passed by the High Court and even relying upon some of the observations made by this Court in the case of Vidya Drolia (supra) has prayed to dismiss the present appeal.

4.1 It is submitted that all the three agreements are/were interlinked and therefore, in view of earlier award with respect to other two agreements the present dispute with respect to th