Point of Law: Unilateral appointment of arbitrator - Not a ground to challenge award - When no objection was raised to the appointment of learned Arbitrator and therefore, cannot now be allowed to raise this objection after pronouncement of the Award

JUDGMENT :

1. The present petition has been preferred by the petitioner challenging the Award dated 09.03.2021 passed by the learned Arbitrator in Case Ref. No. 3005/2018, titled as “M/s Dalmia Cement (Bharat) Limited Vs. M/s Kanodia Infratech Limited” on the ground that the learned Arbitrator lacked inherent jurisdiction to entertain and try the disputes being unilaterally appointed by the respondent, which is contrary to the settled proposition of law.

2. Petitioner- M/s Kanodia Infratech Limited, a company incorporated under the provisions of Companies Act, is involved in the business of producing, grinding, blending, manufacturing, finishing, packaging, repacking, mixing, grading, supply of Portland cement and Portland Pozzolona cement. Respondent- M/s Dalmia Cement (Bharat) Limited is also in the business of manufacturing and marketing of cement.

3. According to petitioner, the parties to the present petition entered into a Memorandum of Understanding dated 13.12.2016 for use of cement griding plant at village Kurari, Distt. Kaimur (Bhabhua), Bihar by the respondent for conversion of clinker into cement at an agreed rate of conversion and further purchase of the plant itself by the respondent through a Share Purchase Agreement, in terms enumerated in Clause-12 thereof. In furtherance thereto, detailed discussions between the parties took place with regard to legal, financial and technical aspects and after due diligence, respondent vide its email dated 15.02.2017 shared a draft of Share Purchase Agreement and thereby, parties were ad idem on the sale of the said plant through purchase of entire shareholding of the petitioner. Finally, respondent made an offer to take over the share holding of the petitioner in the said plant at a price of Rs.250 crores plus tax implications on the purchase, which is said to have been accepted by the petitioner. According to petitioner, in addition to above, the petitioner was also liable to release of VAT incentives offered by the State of Bihar, which were to accrue to the respondent upon eventual purchase of the plant. However, since the State Government took longer than expected to release the VAT incentives, the respondent deferred the execution of the proposed Share Purchase Agreement till the first instalment of VAT incentive was received. It was therefore agreed between the parties that the respondent shall operate the said plant till the time VAT incentives are released and thereafter, shall acquire the shareholding of the company and stationed its employees at the said plant from February, 2017.

4. At the hearing, learned counsel for the petitioner submitted that in order to discharge capital liabilities towards its creditors, petitioner had applied for loan of Rs.25 crores, which was sanctioned from Corporation Bank, Varanasi Branch. However, since respondent was poised to purchase the plant, it discouraged the petitioner and offered Rs.25 crores being 10% of the total consideration of the plant agreed upon i.e. Rs.250 crores. Thereafter, formal negotiations were drawn into writing in minutes of meeting dated 06.03.2017, which were exchanged between the parties and thereafter, parties also entered into the following agreements:-

(a) The Cement Supply Agreement (CSA) dated 16.03.2017, which effective from 01.04.2017;

(b) The unattested Deed of Hypothecation (DOH) dated 17.03.2017; and

(c) The Operations and Maintenance Agreement (O&MA) dated 17.10.2017 effective from 01.04.2017.

5. It is the claim of petitioner that at the request of respondent, with an understanding that respondent shall bear the costs of operations and shall buy the entire cement under the terms of the CSA, the entire control of management, administration, accounts and books of the petitioner and operations of the plant, was handed over to the respondent. However, since petitioner was not being timely informed about the functioning of the plant, therefore, petitioner vide email dated 13.04.2017, called upon the respon