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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
Pankaj Bhandari, J.
Tirupati Balaji Furnaces Private Limited & Ors. – Appellants
Versus
Shri Jaswant Singh & Ors. – Respondents
S.B. Arbitration Application No. 69 of 2019
Decided On : 14-07-2022
Arbitration Application - Appointment of Sole Arbitrator - Arbitration and Conciliation Act, 1996, Section 11(6) - Section 8
Fact of the Case:
The applicant filed an arbitration application seeking appointment of a sole arbitrator for resolution of disputes between the parties. The respondents objected to the appointment, citing the matter being filed before the National Company Law Tribunal (NCLT) and the applicants' alleged waiver of the arbitration clause.
Finding of the Court:
The Court found that the pendency of the proceedings before the NCLT did not debar it from appointing an arbitrator under Section 11(6) of the Act of 1996. It also held that the non-signatory to the MOU could raise objections before the arbitrator.
Issues: Dispute over appointment of sole arbitrator, objections raised by respondents, pendency of proceedings before NCLT, and jurisdiction over non-signatory to the MOU.
Ratio Decidendi: The pendency of proceedings before the NCLT does not prevent the Court from appointing an arbitrator under Section 11(6) of the Act of 1996. The non-signatory to the MOU can raise objections before the arbitrator.
Final Decision: The Court allowed the arbitration application, appointed a sole arbitrator, and directed the non-applicants to raise their objections before the arbitrator.
ORDER
1. The applicant has filed this arbitration application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act of 1996") seeking appointment of a sole arbitrator for resolution of the disputes between the parties.
2. It is pleaded in the application that a Memorandum of Understanding (hereinafter referred to as "the MOU") was executed between the parties on 07.10.2017. Clause 13 of the MOU provided that in case of any dispute, the same shall be settled by mutual negotiations and failing which the dispute shall be referred to arbitration as per the provisions of the Act of 1996. It is also pleaded in the application that a legal notice was issued on 16.03.2019 to make the payment of demanded amount and in case of non-compliance, to refer the disputes to the sole arbitrator. A reply was received from the non-applicants wherein they declined appointment of the sole arbitrator.
3. Reply to the application has been filed by the respondents. It is stated in the reply by the non-applicants that the matter was filed before the National Company Law Tribunal (hereinafter referred to as "the NCLT") and reply was filed by the non- applicants. Respondent Nos.11 and 12 have agreed for appointment of the sole arbitrator. However, respondent Nos.2, 3, 4, 8 and 9 have objected to the appointment of an arbitrator and have prayed for dismissal of the arbitration application.
4. In the reply filed by respondent Nos.2, 3, 4, 8 and 9, it is mentioned that the matter was filed before the NCLT and that the applicants have concealed material facts. It is also stated in the reply that the applicants after service have appeared before the NCLT and no application was filed for reference of the dispute to appoint an arbitrator, hence, it can be deduced that the applicants have waived the arbitration clause. It is after taking many opportunities, the applicants have filed an application under Section 8 of the Act of 1996 before the NCLT and the NCLT is having exclusive jurisdiction to resolve the dispute and the applicants deliberately to escape from the order of the NCLT wherein the applicants have been directed to pay a sum of Rs.46 lakhs, have filed the present application.
5. Non-applicant No.7 has filed preliminary objection stating therein that she is not a signatory to the arbitration agreement, hence, non-signatory to the MOU cannot be forcefully subjected to the agreement in which she was not a party. The applicants have filed rejoinder to the preliminary objection raised by the non- applicant No.7 - Ms. Neetu Yadav wherein it is mentioned that the non-applicant No.7 arrayed herself as appellant No.7 in Appeal No.140/59/ND/02018 before the NCLT, hence, she cannot now claim that she is not a signatory to the MOU. Rejoinder with regard to the reply filed by the non-applicant Nos.2, 3, 4, 8 and 9 has also been filed by the applicants.
6. It is contended by the counsel for the applicants that there is an arbitration clause and therefore, the applicants are entitled to have a right to appoint an arbitrator for resolving the dispute, which has arisen between the parties. Counsel for the applicants has placed reliance on Vidya Drolia Versus Durga Trading Corporation: (2021) 2 SCC 1 and Firm Ashok Traders & Anr. Versus Gurumukh Das Saluja & Ors.: (2004) 3 SCC 155.
7. It is contended by the counsel for the non-applicants that the dispute was pending before the NCLT and no application was filed with regard to there being an arbitration clause and only after passing of more than one year, an application has been moved by the applicants before the NCLT that there is an arbitration clause under Section 8(1) of the Act of 1996. It is also contended that the NCLT is ceased with the matter and since the applicants have not filed the application within the time prescribed under Section 8(1) of the Act of 1996 and have submitted to the jurisdiction of the NCLT, an arbitrator cannot be appointed by the Court. It is
Pendency of proceedings before another tribunal does not preclude the Court from appointing an arbitrator under Section 11(6) of the Act of 1996.
The court clarified that post-2015 amendments, its role under Section 11 is limited to verifying the existence of an arbitration agreement, with other issues, including limitation, to be resolved by ....
The main legal principle established in the judgment is the court's authority to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 when a dispute arises and no arbi....
The appointment of the arbitrator must be in accordance with the arbitration agreement and must satisfy the provisions of the arbitration act.
Appointment of Arbitrator - Issue with respect to arbitrability of dispute is to be decided by Arbitrator.
The main legal point established is the court's adherence to the narrow examination of the existence of an arbitration agreement under Section 11(6A) and the emphasis on expeditious disposal of Secti....
The court appointed an arbitrator as the parties consented to arbitration under the existing arbitration clause, complying with statutory requirements.
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