2015 Supreme(Mad) 2699

IN THE HIGH COURT OF JUDICATURE AT MADRAS
SANJAY KISHAN KAUL, J.
Karismaa MEP Services Pvt. Ltd. - Petitioner in all OPs
Versus
KGS Milestone Constructions Ltd. - Respondent in all OPs
Original Petition Nos.768 to 770 of 2014
Decided On : 21.08.2015

Headnote:

Madras High Court Arbitration Centre (MHCAC) (Arbitration Proceedings) & (Administrative Cost and Arbitrators Fees) Rules, 2014. – Arbitration and Conciliation Act, 1996 – Sections 4, 11, 9 – Arbitration – These are three petitions under Section 11 of the Arbitration and Conciliation Act, 1996, – Contractual arrangments were entered into inter se the parties whereby the petitioner was required to carry out electrical works in the respondents development projects “KGS-VRUDHI” and “KGS-GREEN”, at Chennai and Trivandrum, for which contracts were executed – It is the case of the petitioner that progress of the work was slow, which was eating up the profits and since the position did not improve, a decision was taken by the petitioner to relieve itself from the projects in the month of January, 2012 and January 2013 respectively. – The final running bills are said to have been executed on 25.02.2012, 30.01.2012 and 25.01.2012 for Rs.64,89,825.63, Rs.12,23,742.00 and 7,67,067.00 respectively and the respondents have not paid the amounts due. – Held, Power of the Court while exercising jurisdiction under Section 11 of the said Act to replace the arbitrator cannot be said to be in dispute in view of the observations in Indian Oil Corporation case cited supra. The Honble Supreme Court has traversed a slightly different path from the judgments referred to by the learned counsel for the respondent subsequently to by referring of the Judgments of the Appellate Division of the Supreme Court of New York in the Matter of Cross Brown Co. (Nelson) and the Supreme Court of the State of New Mexico in Kim Rivera vs. American General Financial Services, Inc. (cited supra). – If the view reflected by the Court on the issue was that the clause itself would stand obilerated, in such a case, there would have been no occasion to make the observations qua replacement of the arbitrator while exercising jurisdiction under Section 11 and appointing an independent Arbitrator in accordance with Section 11(a) of the said Act. – Clause-29 therein which was referred to as an Arbitration Clause did not provide for any dispute resolution through arbitration at all. It had not used the phrase, “Arbitration or Arbitrator”. – Not only that, the mechanism of decision to be invoked by the Chief Engineer and the dispute being unsolved with the same, was specified as the reason for approaching the Civil Court for settlement of disputes. – The decision of the Chief Engineer was to be binding only on the contractor and not on both the parties. – It has rightly been submitted by the petitioner that the phrase for exclusivity of the “Director alone” being the arbitrator does not form the base/substratum of the arbitration clause. It is also quite apparent that the respondent has been seeking to improve the case from time to time. – This is fortified by the fact that in proceedings under Section 9 of the said Act initiated by the petitioner, there was no such plea as aforesaid and a decision has been given on merits of the case holding there was manifest intention of the parties to arbitrate. – Thus it appears that faced with the situation wherein the Director holding such a large share in the respondent company cannot proceed to arbitrate, an endeavor is being made by the respondent to somehow wriggle out of the obligation of having the disputes resolved through the chosen method of arbitration. – Court is of the view that the aforesaid position clearly shows that there is a valid and binding arbitration clause, disputes having arisen inter se the parties, jurisdiction is of this Court, and this Court has to exercise power under Section 11(a) of the said Act to substitute the Arbitrator. – Court hereby appoint Thirumathi Justice Prabha Sridevan, a retired Judge of this Court as the Sole Arbitrator to enter upon the reference and adjudicate the disputes inter se the parties. – The arbitration proceedings will be conducted under the ageis of the Madras High Court Arbitration Centre and the parties will be governed by the Rules of the Madras High Court Arbitration Centre (MHCAC) (Arbitration Proceedings) & (Administrative Cost and Arbitrators Fees) Rules, 2014. – Original Petition Allowed