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2021 Supreme(Online)(KER) 4828
HIGH COURT OF KERALA
Devan Ramachandran, J
P.A.MUHAMMED NOWFAL – Appellant
Versus
SAJU SAHADEVAN – Respondent
Arb.A/4/2021
V.PHILIP MATHEWS, B.G.HARINDRANATH, SANTHOSH MATHEW
A valid and binding arbitration agreement is essential for invoking arbitration procedures as outlined in the Arbitration and Conciliation Act.
Headnote:
Arbitration - Arbitration and Conciliation Act - [Sections 9, 11] - The court held that the absence of a binding arbitration clause rendered the proceedings under Section 9 incompetent, emphasizing the necessity for a valid arbitration agreement for invoking arbitration mechanisms.
Fact of the Case:
The petitioner filed an appeal against the Commercial Court's rejection of an order under Section 9 of the Arbitration and Conciliation Act and also requested the nomination of a sole Arbitrator under Section 11 due to alleged disputes outlined in contracts lacking an arbitration clause.
Finding of the Court:
The court found that the agreements did not contain a valid arbitration clause, which invalidated the petitioner's requests under the Arbitration and Conciliation Act, thus allowing the petitioner to seek resolution in a competent Civil Court instead.
Issues: Whether there was a binding arbitration clause in the agreements that would allow for arbitration proceedings under the Arbitration and Conciliation Act.
Ratio Decidendi: The court ruled that the phrase 'Arbitration Centre in Kollam' did not constitute a valid arbitration clause, confirming the Commercial Court's findings and reiterating the requirement for a binding arbitration agreement to invoke Sections 9 or 11 of the Act.
Final Decision: Both the Arbitration Request and Appeal were dismissed, permitting the petitioner to seek civil remedies.
ORDER
I am considering these two matters together since the factual circumstances presented in them are interlayered and the relief to be granted in one, will certainly have an indelible impact on the relief to be granted in the other.
Among the two cases above, one is an Appeal; while the other is an Arbitration Request.
Arbitration Appeal No. 4/2021 has been filed by the petitioner impugning the order of the Commercial Court Kollam, in CMA (Arbitration) 26/2020, through which, an order under Section 9 of the Arbitration and Conciliation Act, 1996 ('the Act' for short), has been rejected citing various reasons.
While so, the petitioner filed Arbitration Request No.
31/2021, seeking that this Court nominate a suitable sole Arbitrator, under the provisions of Section 11 of the Act, alleging that the disputes between the parties can only be adjudicated and resolved through the mechanism of Arbitration, as per the stipulations in Annexures A1 to A3 agreements.
I have heard Sri. V.Philip Mathews - learned counsel for the petitioner and Sri. B.G.Harindranath - learned counsel appearing for the respondent in both cases.
As is discernible from the afore narrative, the edifice of the case of the petitioner is that Annexures A1 to A3 agreement produced along with AR No.31/2021 mandates that the parties subject themselves to arbitration for resolution of the disputes relating to its terms.
However, Sri. B.G.Harindranath - learned counsel appearing for the respondent, took me in detail through Annexures A1 to A3, to show that there is no Arbitration Clause anywhere in them; and thus argued that going by the rigor of Section 11 (6A) of the Act, this Court cannot refer the parties to Arbitration.
Pertinently, after saying as afore, Sri. B.G.Harindranath submitted that he will not stand in the way of this Court granting liberty to the petitioner to approach the competent Civil Court for adjudication of the disputes; but prayed that the Arbitration Appeal No. 4/2021 be dismissed, since the Commercial Court, has also found, interalia, that there is no Arbitration Clause between the parties, so as to justify an order under Section 9 of the Act.
In response, Sri. V. Philip Mathews tried his best to convince this Court that the words “Arbitration Centre in Kollam” will have to be construed as an Arbitration Clause, because it manifestly shows the intention of the parties to subject themselves to arbitration at Kollam. He then argued that Arbitration Appeal No. 4/2021 is also deserving to be allowed for the same reason; and predicated that the findings of the Commercial Court are without basis, particularly as to the liability to pay Stamp Duty on the agreements in question. Sri. V. Philip Mathews relied upon various judgments of the Hon'ble Supreme Court, including Vidya Drolia and Others vs Durga Trading Corporation (2021) 2 SCC 1 , in substantiation of his client's contentions as afore.
When I assess the afore rival contentions from the touchstone of Annexures A1 to A3 in AR No. 31/2021, it is rendered inevitable that the only place where the word “Arbitration” is mentioned therein is in the phrase “Arbitration Centre in Kollam” (sic). In fact, these follow the words “advance amount should be paid within today from the date of contract” (sic). Therefore, it does not require much of expatiation that the words “Arbitration Centre in Kollam” does not reflect any real meaning and semantically, no one can even assume that it refers to an Arbitration.
When I say as afore, I am cognizant of the submissions of Sri. V.Philip Mathews, that the agreements may have been unhappily worded, but that the real intent of its terms will have to be looked into by this Court.
However, even one examines the agreements from that perspective, it is indubitable that it provides for the payment of advance amounts “within today from the date of contract”
(sic) and then abruptly adds “the Arbitration Centre in Kollam”. Therefore, when I read the entire paragraph, which is on
