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2022 Supreme(Mad) 1606

IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR, J.
M/s. Okaya Infocom Pvt. Ltd., Rep. by its Authorised Representative, New Delhi - Appellant
Versus
M/s. Electronic Corporation of Tamil Nadu Ltd., (ELCOT), Rep. by its Managing Director, Chennai - Respondent
Arb.O.P. (Com.Div.) No. 184 of 2022
Decided On : 26-04-2022

Advocates appeared:
For the Petitioner:R. Gokul, Advocate.

The main legal point established in the judgment is the limited scope of a legal drill under Section 11 of the Arbitration and Conciliation Act, 1996, and the expeditious disposal of petitions under Section 11 of the Act.

Headnote:

Arbitration - Appointment of Sole Arbitrator - Arbitration and Conciliation Act, 1996, Section 11 - Clauses 17 and 18 of Lease Deed dated 05.11.2012 - Summary of Acts and Sections: The court discussed the provisions of the Arbitration and Conciliation Act, 1996, particularly Section 11(6A), and the interpretation provided by the Supreme Court in the cases of Mayavati Trading Private Limited Vs. Pradyuat Deb Burman and Duro Felguera, S.A. Vs. Gangavaram Port Limited. The court emphasized the limited scope of a legal drill under Section 11 and the expeditious disposal of petitions under Section 11 of the Act.

Fact of the Case:

The petitioner filed an Arbitration Original Petition seeking the appointment of a sole arbitrator as per Clause No.17 of the Memorandum of Lease Agreement dated 05.11.2012. The respondent did not contest the existence of the arbitration agreement despite being duly served with notices.

Finding of the Court:

The court found that the disputes were arbitrable as they were in the nature of money claims under the Lease Deed. The court appointed a sole arbitrator to adjudicate upon the arbitrable disputes and render an award.

Issues: The issues revolved around the appointment of a sole arbitrator as per the arbitration agreement in the Lease Deed and the respondent's failure to contest the existence of the arbitration agreement.

Ratio Decidendi: The court's decision was influenced by the interpretation of Section 11(6A) of the Arbitration and Conciliation Act, 1996, as provided in the cases of Mayavati Trading Private Limited Vs. Pradyuat Deb Burman and Duro Felguera, S.A. Vs. Gangavaram Port Limited, emphasizing the limited scope of a legal drill under Section 11 and the expeditious disposal of petitions under Section 11 of the Act.

Final Decision: The court appointed a sole arbitrator to adjudicate upon the arbitrable disputes and render an award, and disposed of the Arbitration Original Petition in this manner.

JUDGMENT

(Prayer: Arbitration Original Petition filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 to appoint an sole arbitrator as per Clause No.17 of the Memorandum of Lease Agreement dated 05.11.2012 between the petitioner and the respondent for resoling the disputes between the petitioner and respondent.)

1. This order will dispose of captioned 'Arbitration Original Petition' ['Arb.OP' for the sake of brevity].

2. This order has to be read in conjunction with and in continuation of earlier proceedings made in the listing before this Court on 11.04.2022, which reads as follows:

'In the captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the sake of convenience and clarity], Mr.R.Gokul, learned counsel representing Mr.S.L.Sudarsanam counsel on record for petitioner is before this Court.

2. Learned counsel submits that the prayer in the captioned Arb OP is for appointment of a sole Arbitrator.

3. Learned counsel draws the attention of this Court to a Lease Deed between the petitioner and respondent being 'Lease Deed dated 05.11.2012' [hereinafter 'primary contract' for the sake of convenience and clarity] and submits that clauses 17 and 18 thereat constitute Arbitration Agreement between the parties i.e., Arbitration Agreement within the meaning of Section 2(1)(b) read with Section 7 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)' [hereinafter referred to as 'A and C Act' for the sake of convenience, clarity and brevity].

4. To be noted, aforementioned clauses 17 and 18 of primary contract read as follows:

17. Any dispute arising out of or connected with this lease shall be referred to arbitration of a sole arbitrator as consented to by the LESSEE and LESSOR under the provisions of the Arbitration and Conciliation Act, 1996. In the event of non-agreement between the parties for a sole arbitrator, each party shall be entitled to appoint one arbitrator and such nominated arbitrators shall appoint the third arbitrator to form an arbitral tribunal for conducting the arbitration proceedings. The place of Arbitration shall be at Chennai in English proceedings. The place of Arbitration shall be at Chennai in English language and cost of such arbitration shall be such arbitration shall be borne equally by both parties.

18. Only the Courts situated in the City of Chennai shall have jurisdiction to decide upon any dispute or obligation between the parties to this lease deed subject to the arbitration clauses.'

5. A perusal of clause 17 of primary contract makes it clear that the place of arbitration is Chennai

6. Learned counsel submits that arbitrable disputes erupted qua primary contract, a notice dated 27.10.2020 was issued invoking the arbitration clause, respondent sent a reply notice dated 13.11.2020 inter alia stating that there are no arbitrable disputes, this was followed by a communication dated 29.07.2021 from the petitioner to respondent reiterating the claim but there has been no response.

7. In the light of the response given by respondent for the trigger notice issued by petitioner (notice dated 27.10.2020 invoking arbitration agreement) it has become necessary to present the captioned Arb OP in this Court on 21.03.2022 is learned counsel's say.

8. Adverting to Vidya Drolia principle i.e., ratio laid down by Hon'ble Suprme Court in Vidya Drolia & Ors. Vs. Durga Trading Corporation reported in 2019 SCC OnLine SC 358, learned counsel submits that the disputes are arbitrable as they are in the nature of money claims qua primary contract i.e., Lease Deed.

9. Prima facie case for issue of notice made out.

10. Issue notice to respondent returnable in a fortnight i.e., returnable by 25.04.2022. Private notice permitted.

11. List on 25.04.2022.'

3. Aforementioned 11.04.2022 proceedings/orders shall now be read as an integral part and parcel of this order. The short forms, abbreviations and short references made in the aforementioned 11.0

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