IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR, J.
Green Malabar Finance Ventures Limited, Rep by its Authorised Signatory, R. Ramesh, Chennai - Appellant
Versus
K. Prajesh & Another - Respondent
Arb O.P.(Com. Div.) No. 340 of 2022
Decided On : 25-08-2022
Arbitration - Loan Agreement - Arbitration and Conciliation Act, 1996 - Section 11(5), Section 2(1)(b), Section 7, Section 2(1)(h), Section 11(6A) - The court appointed a sole arbitrator under clause 16 xv of the Loan Agreement dated 09.04.2021 to adjudicate the dispute between the parties. The court's decision was influenced by the existence of the arbitration agreement, as per the provisions of the Arbitration and Conciliation Act, 1996, and the narrow scope of examination under Section 11(6A). The court referred to relevant case laws to support its decision.
Fact of the Case:
The petitioner filed an Arbitration Original Petition under Section 11(5) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator to adjudicate a dispute arising from a Loan Agreement dated 09.04.2021. The respondent, a natural person, did not dispute the existence of the arbitration agreement.
Finding of the Court:
The court appointed a sole arbitrator as there was no dispute regarding the existence of the arbitration agreement, and the provisions of Section 11(6A) of the Arbitration and Conciliation Act, 1996, confined the examination to the existence of the arbitration agreement.
Issues: Appointment of a sole arbitrator under the Loan Agreement, existence of the arbitration agreement, and the scope of examination under Section 11(6A) of the Arbitration and Conciliation Act, 1996.
Ratio Decidendi: The court's decision was based on the absence of dispute regarding the existence of the arbitration agreement and the narrow scope of examination under Section 11(6A) of the Arbitration and Conciliation Act, 1996.
Final Decision: The court appointed a sole arbitrator to adjudicate the dispute between the parties as per the provisions of the Loan Agreement and the Arbitration and Conciliation Act, 1996.
JUDGMENT
(Prayer: Arbitration Original Petition filed under Section 11(5) of Arbitration and Conciliation Act 1996, as amended by the Arbitration and Conciliation (Amendment) Act, 2015 praying to (a) allow this petition and appoint a sole Arbitrator under clause 16 xv of the Loan Agreement dated 09.04.2021 of the Loan Agreement to adjudicate the dispute between the parties; (b) award the cost of present proceedings; and (c) pass such further or other orders as this Court may deem fit and proper in the circumstances of the case.)
1. This order will now dispose of the captioned Arb.OP.
2. This order has to be read in conjunction with and in continuation of earlier proceedings made in the previous listing on 02.08.2022, which reads as follows :
'Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the sake of convenience and clarity] has been presented in this Court on 13.07.2022 under Section 11 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] with a prayer for appointment of sole Arbitrator.
2. Mr.A.G.Sathyanarayana, learned counsel for sole petitioner company who is before this Court submits that the captioned Arb OP is predicated on sub-clause (xv) captioned 'Arbitration' of clause 16 captioned 'MISCELANEOUS' in an agreement dated 09.04.2021 captioned 'LOAN AGREEMENT'. To be noted, this Loan Agreement shall hereinafter be referred to as 'primary contract' for the sake of convenience and clarity.
3. Aforementioned sub-clause (xv) of clause 16 of primary contract reads as follows:
'(xv) Arbitration:
In the event of any dispute or differences arising under this Agreement including any dispute as to any amount outstanding, the real meaning or purport hereof ("Dispute"), such Dispute shall be finally resolved by arbitration. Such arbitration shall be conducted in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996 or any amendment or reenactment thereof by a single arbitrator to be appointed by the Lender. The venue of arbitration shall be at as decided by the Lender and the arbitration shall be conducted in English language.'
4. It is necessary to read the above along with sub-clause (xvi) of clause 16 and the same reads as follows:
'(xvi) Governing Law & Jurisdiction :
That this Agreement shall be governed by the laws of Tamilnadu and the Courts as mentioned in Schedule alone shall have exclusive jurisdiction in respect of any matter, claim or dispute arising out of or in any way relating to these presents or to anything to be done pursuant to these presents or in regard to interpretation of these presents or of any clause or provision thereof. This shall not, however, limit the rights of GMFVL to take proceedings in any other Court of competent jurisdiction including, but not limited to, the Courts as mentioned in Schedule hereunder.'
5. Aforementioned clauses in primary contract serve as arbitration agreement between the parties i.e., 'arbitration agreement' within the meaning of Section 2(1)(b) read with Section 7 of A and C Act is learned counsel's say.
6. A careful perusal of primary contract brings to light that it is between the petitioner company and first respondent which is a natural person. The first respondent is carrying on business in the name and style of 'KPR Fuels' as sole proprietor. Therefore, the first respondent will be 'party' qua primary contract i.e., 'party' within the meaning of Section 2(1)(h) of A and C Act. There could be an entity which is either juristic person or a natural person. However, the first respondent has been clearly described as proprietor of 'KPR Fuels'.
7. Faced with the above situation, learned counsel for petitioner submitted that he would delete the second respondent from the array of parties qua captioned Arb OP. Learned counsel has made an endorsement
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The main legal point established in the judgment is that the statutory perimeter under Section 11(6A) of the Arbitration and Conciliation Act, 1996, confines the examination of the existence of an ar....
The main legal point established in the judgment is the narrow scope of examination of the existence of an arbitration agreement under Section 11 of the Arbitration and Conciliation Act, 1996, and th....
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....
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The main legal point established in the judgment is the conclusive decision on the limitation plea and the importance of expeditious disposal of arbitration matters.
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