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2016 Supreme(MP) 712
IN THE HIGH COURT OF MADHYA PRADESH AT INDORE BENCH
J.K. Maheshwari, J.
TDB Spinners Pvt. Ltd., though Laxmi Narayan Gupta - Applicant
Versus
Parasram Puria Internatin (A Division of Parasrampuriya Synthentic Ltd.) - Respondent
A.C. No. 18 of 2015
Decided on : 01-12-2016
Advocate Appeared:
For the Applicant : Shri Vijay Kumar Asudani, Learned Counsel
For the Respondent No. 1: Shri Sajal Tiwari, Learned Counsel
The court has the power to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, and objections regarding the pendency of proceedings under other acts may not be tenable.
Headnote:
Arbitration - Appointment of Independent Arbitrator - Arbitration and Conciliation Act, 1996 - Section 11
Fact of the Case:
The applicant, a private limited company, sought the appointment of an independent arbitrator for disputes arising from a memorandum of understanding with the respondents. The respondents, registered under the Sick Industrial Companies (Special Provisions) Act, 1985, objected to the appointment of the proposed arbitrator.
Finding of the Court:
The court found that the objections raised by the respondents regarding the pendency of proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 were not tenable. The court exercised its power under Section 11 of the Arbitration and Conciliation Act, 1996 and appointed an arbitrator.
Issues: Dispute over non-payment of rent and job work, objection to the proposed arbitrator, and the pendency of proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985.
Ratio Decidendi: The court held that the objections regarding the pendency of proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 were not valid. It exercised its power under Section 11 of the Arbitration and Conciliation Act, 1996 to appoint an arbitrator.
Final Decision: The application was allowed, and an arbitrator was appointed by the court.
J.K. Maheshwari, J.
1. This application under Section 11 of the Arbitration and Conciliation Act, 1996 has been filed by the applicant seeking appointment of independent arbitrator for adjudication of the disputes arisen between the applicant and respondents.
2. The facts in brief are that the applicant is a private limited company incorporated under the provisions of Companies Act. The Director of the company is authorised by Board as per resolution dated 16.3.2015 to file this application. The respondent no.1/Company was doing the job work, manufacturing yarn on supply of raw material by the applicant. The respondent no.1/Company represented through respondent nos.2 and 3 approached to applicant, stating transformer required for manufacture of yarn at Pithampur has become very old, which needs immediate replacement. The applicant under the threat of losing the facility of manufacturing operations agreed to install 12.5 MVA transformer at their own cost in the premises of respondent no.1 situated at Plot No.432, Sector-III, Industrial Area, Pithampur, District Dhar to which a memorandum of understanding was executed. Clause-8 of the MOU contains arbitration clause. As per MOU, the terms and conditions were settled. Due to non-observance of those terms and conditions, dispute arose as regards to non-payment of rent and job work may be carried out by the respondents, which resulted into substantial loss to the applicant. However, alleging criminal breach and also to resolve the dispute, notice was served on the respondents on 10.10.2015 for appointment of arbitrator proposing the name of Hon'ble Mr. Justice P.D. Mule (Retd.).
3. In reply to the said notice, it is inter alia contended that the respondent is registered with the Board of Industrial and Financial Reconstruction (BIFR) under Sick Industrial Companies (Special Provisions) Act, 1985 as Case No.67/2013 which was granted on 3.10.2013, however, no arbitration proceeding or any other similar proceeding for appointment of arbitrator can be initiated against the respondents. It is also stated that as per the arbitration clause, appointment of arbitrator may be by mutual consent and the name offered by the applicant to appoint Hon'ble Mr. Justice P.D. Mule (Retd.) is not acceptable.
4. It is to be noted here that on filing of this application seeking appointment of arbitrator, notices were issued and the respondents are represented w.e.f. 19.2.2016. They have not filed the reply, however, time was granted on 22.2.2016, 22.4.2016, 14.6.2016, 6.9.2016 and 18.10.2016. On 23.11.2016, learned counsel for the respondents has stated across the Bar that they are going to file reply today. This Court observed, in case reply is not filed, his right to file reply shall be closed and it was ordered to be listed for today. On 23.11.2016, reply has been filed on behalf of respondent no.1 only and not for Chairman and Managing Director (respondent nos.2 and 3 herein) without filing any affidavit in support thereto. In the reply, the aforesaid two conditions have been elaborated and document Annexure A/1 i.e. reference of registration as made in the reply to notice dated 3.10.2013 under the provisions of SICA Act has been filed. In view of the aforesaid facts, it is apparent that despite ample opportunities, reply has not been filed by respondent nos.1 to 3, though, they are served and learned counsel appearing on behalf of respondent no.1 was granted time as prayed on various dates. Looking to the last order-sheet, the right to file reply is hereby closed, however, this Court has proceeded to decide the case as per the material brought on record.
5. After hearing learned counsel appearing on behalf of both the parties and on perusal of the facts of this case, the dispute is on account of non-payment of monthly rent of Rs.50,000/- which was fixed as per the agreement for use of transformer installed by the applicant. The payment was required to be made till March, 2015. Under the guise of
