Court No. - 16
Case :- ARBITRATION AND CONCILI. APPL.U/S11(4) No. - 99 of 2017 Applicant :- M/S Entertainment City Limited Opposite Party :- Mr. Justice (Retd.) M.L. Mehta Ld. Arbitrator & 2 Ors.
Counsel for Applicant :- Syed Fahim Ahmed,Anurag Khanna
Hon'ble Ashwani Kumar Mishra,J.
1. This petition has been filed under section 11(6) read with section 11(14) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator. Admittedly, parties have entered into an agreement which contains an arbitration clause. Clauses 27 and 28 of the agreement reads as under:-
“27. All or any disputes arising out or touching upon or in relation to the terms of this MOU and transaction detailed to herein, including the interpretation and validity of the terms thereof shall be referred to Retired Delhi High Court Judge, Mutually agreed as a Sole Arbitrator and the Arbitrator's decision shall be final and binding upon the parties. The provisions of the Arbitration and Conciliation Act, 1996 as amended, restated and replaced would govern such arbitration proceedings. The Allottee hereby confirms that it/they shall have no objection to this appointment of the Sole Arbitrator and shall have no doubts as to the independence or impartiality of the said Sole Arbitrator so appointed by the Developer. The venue of the arbitration shall be Noida New Delhi at the discretion of the Sole Arbitrator.
28. Only the courts in Noida and the High Court at Allahabad shall have jurisdiction in all matters arising out of or concerning this transaction.”
2. Accrual of dispute between the parties is not in issue. It appears that the opposite party approached the Delhi High Court under section 11 for appointment of an arbitrator after the parties failed to agree upon appointment of arbitrator in the matter. The Delhi High Court in Arbitration Petition No.156 of 2017 proceeded to pass following orders on 17.4.2017:-
“1. The petitioners have filed the present petition under Section 11 of the Arbitration and Conciliation Act, 1996, inter alia, praying that an Arbitrator be appointed to adjudicate the disputes that have arisen between the parties in relation to a Memorandum of Understanding and Sub Lease Agreement (hereafter the ‘Agreement’) dated 19.09.2013. The Agreement includes an arbitration clause, which is set out below: “28. The Parties shall endeavour to settle any dispute or difference arising between the Parties with respect to validity or interpretation or any or all of the terms and conditions of this agreement by mutual negotiations. The attempt to bring about an amicable settlement shall be deemed to have been failed as soon as one of the parties after reasonable attempts, which attempts shall continue for not less than 30 (thirty) days gives 15 (fifteen) days notice thereof to the other party(s) in writing. In case of such failure, the dispute shall be referred to and settled by a Sole Arbitrator Retired Delhi High Court Judge, mutually agreed and the Arbitrator's decision shall be final and binding upon the parties. The provisions of the Arbitration and Conciliation Act, 1996 as amended, restated and replaced would govern such arbitration proceedings. The Allottee hereby confirms that it / they shall have no objection to this appointment of the Sole Arbitrator and shall have no doubts as to the independence or impartiality of the said Sole Arbitrator so appointed by the Developer. The arbitration proceedings shall be held in accordance with the provisions of the Arbitration & Conciliation Act, 1996. The venue of the arbitration shall be Noida New Delhi at the discretion of the Sole Arbitrator. The arbitration proceedings shall be conducted in English language and the award shall also be in English.”
2. The petitioners state that the said agreement as well as the Memorandum of Understanding entered into between the respondent and Mrs Samina Usman have been assigned to the petitioners.
3. The petitioners claim that since certain disputes had arisen between the parties which could not be resolved amicably, the petitioners caused a notice dated 05.01.2017 to be issued to the respondent suggesting that Justice R. C. Chopra (Retired), a former Judge of this court be appointed as a sole Arbitrator.
4. The respondent responded to the aforesaid notice by its letter dated 01.02.2017. The respondent did not agree to appointment of the arbitrator suggested by the petitioners but instead suggested four other names and also indicated that the respondent had appointed Justice Z.
U. Khan (Retired), a former Judge of Allahabad High Court, as the arbitrator. Since the same was not acceptable to the petitioners, the petitioners have filed the present petition.
5. The learned counsel for the petitioners submits that in terms of the arbitration clause only a former Judge of this court could be appointed as an arbitrator. Concededly, this is apparent from the plain language of the arbitration clause set out above.
6. It is also apparent that there is no dispute that an arbitrator has to be appointed as the respondent had also suggested names of persons, who could be appointed as the arbitrator and had further proceeded to appoint one of them as the arbitrator.
7. In view of the above, it is also apparent that the parties have been unable to concur on the appointment of the sole arbitrator and, therefore, an arbitrator is required to be appointed. Accordingly, Justice M L Mehta (Retd.) former Judge of this Court (Mobile No. +91 9910384620) is appointed as a sole arbitrator to adjudicate the disputes between the parties. This is subject to the arbitrator making the necessary disclosure under Section 12(1) of the Act and not being ineligible under Section 12(5) of the Act.
8. With the consent of the parties, it is directed that the arbitration shall be conducted under the aegis of Delhi International and Arbitration Centre (DIAC) and in accordance with its Rules.
9. The parties are at liberty to approach the Coordinator DIAC/Arbitrator for further proceedings.
10. The petition stands disposed of.”
3. It appears that thereafter an application for recall was filed by the present applicant, who was respondent before the Delhi High Court, contending that by virtue of clause 28 it was the courts at Noida and High Court at Allahabad, which alone had jurisdiction in all matters arising out of or concerning this transaction. The application was disposed of by the Delhi High Court vide following orders on 25.5.2017:-
“IA No. 5970/2017
1. This is an application filed on behalf of the respondent for recall of the order dated 17.04.2017. By the said order, an arbitrator had been appointed and it was further directed that the arbitration shall be conducted under the aegis of DIAC and in accordance with its Rules.
2. Learned counsel for the applicant submits that she was unable to point on the said date that this court would have no territorial jurisdiction to entertain the petition in view of the express provisions of the contract. She has drawn the attention of this court to clause 29 of the Agreement to Sub Lease dated 19.09.2013 which expressly provides that “The Courts at Noida and the High Court at Allahabad shall have jurisdiction in all matters arising out of or concerning this transaction”. Further the arbitration clause itself is unclear as it states that the venue of the arbitration proceedings shall be “Noida New Delhi”.
3. After some arguments, the learned counsel for the parties agree that the arbitrator appointed by the order dated 17.04.2017 would continue as the sole arbitrator jointly appointed by parties. However, the direction that the arbitration shall be conducted under the aegis of DIAC and in accordance with its Rules be deleted. It is, accordingly, so directed.
4. The order dated 17.04.2017 is recalled, while recording that the parties have jointly appointed Justice M.L. Mehta (Retd.) and further clarifying that neither the present order nor the order dated 17.04.2017 ought not be construed as this court entertaining the present petition so as to attract the applicability of Section 42 of the Arbitration and Conciliation Act, 1996.
5. The application is disposed of. ”
4. While allowing the recall application the Delhi High Court categorically recorded agreement of the parties to appointment of Justice M. L. Mehta (retired) as the arbitrator in the matter. It is not disputed that applicant gave consent for appointment of arbitrator. The only ground taken before this Court is that the arbitrator has demanded deposit of amount which is more than what is contemplated under Fourth Schedule. An electronic mail is stated to have been sent to the arbitrator objecting to the determination of fee to be paid to the arbitrator. Without waiting for any further orders to be passed by the arbitrator the applicant has rushed to this Court by filing present petition, and an order has been passed staying the further proceedings before the arbitrator. Notice has been issued to the learned arbitrator, which has returned unserved. It is in this context that the matter is taken up by the Court.
5. Sri Anurag Khanna, learned Senior Counsel appearing for the applicant states that the Delhi High Court had no jurisdiction to appoint the arbitrator and the appointment since is by a quorum not competent in law, as such the same is unjust. Reliance is placed upon para 10 of the judgment of the Apex Court in Walter Bau AG. Legal Successors of the Original Contractor, Dyckerhoff and Widmann AG. vs. Municipal Corporation of Greater Mumbai and another, (2015) 3 SCC 800. Para 10 of the report is extracted hereinafter:-
“10. Unless the appointment of the arbitrator is ex facie valid and such appointment satisfies the Court exercising jurisdiction under Section 11(6) of the Arbitration Act, acceptance of such appointment as a fait accompli to debar the jurisdiction under Section 11(6) cannot be countenanced in law. In the present case, the agreed upon procedure between the parties contemplated the appointment of the arbitrator by the second party within 30 days of receipt of a notice from the first party. While the decision in Datar Switchgears Ltd. [Datar Switchgears Ltd. v. Tata Finance Ltd., (2000) 8 SCC 151] may have introduced some flexibility in the time frame agreed upon by the parties by extending it till a point of time anterior to the filing of the application under Section 11(6) of the Arbitration Act, it cannot be lost sight of that in the present case the appointment of Shri Justice A.D. Mane is clearly contrary to the provisions of the Rules governing the appointment of arbitrators by LCADR, which the parties had agreed to abide by in the matter of such appointment. The option given to the respondent Corporation to go beyond the panel submitted by LCADR and to appoint any person of its choice was clearly not in the contemplation of the parties. If that be so, obviously, the appointment of Shri Justice A.D. Mane is non est in law. Such an appointment, therefore, will not inhibit the exercise of jurisdiction by this Court under Section 11(6) of the Arbitration Act. It cannot, therefore, be held that the present proceeding is not maintainable in law. The appointment of Shri Justice A.D. Mane made beyond 30 days of the receipt of notice by the petitioner, though may appear to be in conformity with the law laid down in Datar Switchgears Ltd. [Datar Switchgears Ltd. v. Tata Finance Ltd., (2000) 8 SCC 151] , is clearly contrary to the agreed procedure which required the appointment made by the respondent Corporation to be from the panel submitted by LCADR. The said appointment, therefore, is clearly invalid in law.”
6. So far as the submission advanced by learned Senior Counsel for the applicant that the Delhi High Court had no jurisdiction to proceed in the matter is concerned, the same has already been accepted by the Delhi High Court itself and the earlier order passed has been recalled. The issue of jurisdiction, therefore, is not what has to be examined now by this Court. What is relevant to notice is that the applicant has consented to appointment of Justice M. L. Mehta (retired) as arbitrator, which fact is clearly recorded in the order of the Delhi High Court itself. Attention of this Court has not been invited to any averment in this petition disputing the consent given by the applicant before the Delhi High Court. Once the applicant has consented to appointment of arbitrator, it is not open for it to resile from it, and thereafter challenge the proceedings on the ground of jurisdiction. The conduct of applicant in that regard cannot be encouraged.
7. So far as the charging of fee is concerned, it was always open for the applicant to have invited attention of the learned arbitrator to the claim itself for necessary amendments. The communication of the arbitrator appears to be upon a printed form and otherwise there does not appear to be any conscious decision by the arbitrator in that regard. It would still be open for the applicant to raise the issue of determination of fee in accordance with Fourth Schedule before the arbitrator concerned. The plea taken, in such circumstances, by the applicant to challenge the continuance of arbitration before Justice M. L. Mehta (retired) is wholly misconceived.
8. In the facts and circumstances, filing of this petition is found to be wholly misconceived. Petition is accordingly rejected with cost assessed at Rs.1 lac to be deposited with the Allahabad High Court Bar Library within a month.
Order Date :- 23.2.2018 Ashok Kr.