IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 15TH DAY OF FEBRUARY 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE C.M.P.307 OF 2018 BETWEEN:
1. MR. J. RAJENDRA RAO SON OF MR J. PRABHAKAR RAO RESIDING AT NO C - 3, MEENAKSHI TRIDENT TOWERS SY NO 30, HYDERABAD – 500032.
2. DR. BATTULA SRINIVAS REDDY SON OF MR BATTULA GOPI REDDY RESIDING AT NO 204, GAMA BLOCK JAYABEHRI SILICON COUNTY KOTTAGUDA NEAR GOOGLE OFFICE HYDERABAD – 500084.
… PETITIONERS (By Mr. K. SHASHIKIRAN SHETTY, SR. ADV., A/W Ms. PRINCY PONNAH & Mr. SHYAM PRASAD, ADVS.) AND:
1. RA CHEM PHARMA LTD HAVING ITS REGISTERED OFFICE AT PLOT NO 26 & 27, 1ST FLOOR TECHNO INDUSTRIES ESTATE BLANAGAR, HYDERABAD - 500037 REP. BY ITS MANAGING DIRECTOR.
2. MICRO LABS LTD HAVING ITS REGISTERED OFFICE AT 27 RACE COURSE ROAD BENGALURU - 560001 REPRESENTED BY ITS MANAGING DIRECTOR.
… RESPONDENTS (By Mr. UDAY HOLLA, SR. ADV., A/W Mr. GERALD MANOHARAM, ADV., FOR R1 & R2) - - -
THIS CIVIL MISC. PETITION IS FILED UNDER SECTION 11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996 PRAYING TO IT IS HUMBLY SUBMITTED THAT, THIS HON'BLE COURT HAS JURISDICTION TO ENTERTAIN AND GRANT NECESSARY RELIEF UNDER SECTION 11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996 FOR THE APPOINTMENT OF THE THIRD ARBITRATOR TO RESOLVE THE DISPUTE BETWEEN THE PARTIES INCLUDING THE DISPUTE WHETHER ANY ARBITRAL PROCEEDING CAN BE INITIATED AGAINST THE PETITIONER, AS PER PURPORTED SPA DATED:23/12/2016 VIDE ANNEXURE-A & ETC.
THIS CIVIL MISC. PETITION COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER Mr.K.Shashikiran Shetty, learned Senior counsel along with Smt.Princy Ponnah & Mr.Shyam Prasad, learned counsel for the petitioners.
Mr.Uday Holla, learned Senior counsel along with Mr.Gerald Manoharan for the respondent Nos.1 and 2.
2. The petition is admitted for hearing. With consent of the parties, the same is heard finally.
3. By means of this petition under Section 11(6) of Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’ for short) the petitioners seeks intervention of this Court for appointment of third Arbitrator.
4. Facts leading to filing of this petition briefly stated are that a share purchase agreement was executed between the parties on 23.12.2016. Clause 12.15 of the aforesaid agreement provides for dispute resolution through arbitration under the International Chamber of Commerce Rules (hereinafter referred to as ‘the ICC’ Rules). The aforesaid clause provides that Arbitral Tribunal shall comprise of three arbitrators and each of the parties shall appoint an arbitrator of their choice and two arbitrators shall appoint third Arbitrator within a period of 30 days therefrom.
5. The respondents, sent mail on 01.10.2018 stating appointment of Miss.Sherina Petit, Queens Council as their nominee Arbitrator. While the petitioners appointed Mr.Anand Byrareddy as their nominee Arbitrator. The International Court of Arbitration of the ICC confirmed the appointment of two Arbitrators and granted them 30 days time to nominate the third Arbitrator viz., the Presiding Arbitrator. It was further provided that if two nominee Arbitrators fail to nominate the third Arbitrator, the International Court of Arbitration will appoint the third Arbitrator under Rule 5(2) of the ICC Rules. Ms.Sherin Petit on 25.10.2018 sent an e-mail to all the parties and also to the ICC informing that the two Arbitrators have failed to agree upon third Arbitrator and therefore, the procedure for appointment of the Presiding Arbitrator is to be followed as per ICC Rules and both the Arbitrators are of the opinion that the third Arbitrator will have to be appointed by International Court of Arbitration. Thereupon, the International Court of Arbitration, by communication dated 30.11.2018, appointed Mr.Christopher Boog as the Presiding Arbitrator.
6. Learned Senior counsel for the petitioners has invited the attention of this Court to Clause 12.14 and Clause 12.15 of the share purchase agreement and has submitted that the dispute between the parties shall be governed by the laws of India and the ICC Rules come into force after the Arbitrator is appointed and therefore, this Court alone has the jurisdiction to appoint the Presiding Arbitrator.
7. On the other hand, Learned Senior Counsel for the respondents submitted that the Presiding Arbitrator is appointed by the International Court of Arbitration and therefore, the relief claimed in the petition does not survive for consideration. It is further submitted that the petitioner itself has appointed Mr.Justice Anand Byrareddy as Arbitrator under Rule 5(2) of the ICC Rules and the dispute between the parties had to be settled by Arbitration under the ICC Rules. In support of his submissions, Learned Senior Counsel for the respondents has placed reliance on the decisions of the Supreme Court in ‘IRON & STEEL CO. LTD. VS. TIWARI ROAD LINES’, (2007) 5 SCC 703’, ‘S.B.P.AND COMPANY VS. PATEL ENGINEERING LIMITED AND ANOTHER’, (2009) 10 SCC 293, and ‘ANTRIX CORPORATION LIMITED VS. DEVAS MULTIMEDIA PRIVATE LIMITED’, (2014) 11 SCC 560.
8. I have considered the submissions made on both sides. The Supreme Court in ‘IRON & STEEL CO. LTD., supra has held that all the disputes and differences arising between the parties have to be settled in accordance with the agreed procedure prescribed under the agreement and a party can approach this Court by filing a petition under Section 11 of the Arbitration and Conciliation Act, 1995 only if parties have not agreed on a procedure for appointing the Arbitrator. In ‘S.B.P. & COMPANY’ supra the legislature has emphasized on the necessity of the adherence to the terms of the agreement between the parties in the matter of appointment of Arbitrators and the procedure to be followed for such appointment. In the instant case, Clause 12.15 clearly provides that dispute between the parties shall be referred to and settled by arbitration under the ICC Rules as amended from time to time. It is pertinent to note that the petitioners himself has nominated an Arbitrator under Rule 5(2) of the ICC Rules, which is evident from the communication dated 12.08.2018. Ms.Sherina Petit the nominee Arbitrator of the respondent by an e-mail dated 25.10.2018 sent to all the parties and the ICC has informed that two Arbitrators have not been able to agree on the third Arbitrator and therefore, the procedure for appointment of third Arbitrator is required to be followed as per ICC Rules. Thereupon, the International Court of Arbitration, by a communication dated 30.11.2018, has appointed the Presiding Arbitrator as per the ICC Rules. Thus, the appointment of the Presiding Arbitrator has been made in accordance with the procedure agreed upon by the parties.
In view of preceding analysis, nothing survives for adjudication in this petition. Accordingly, the same fails and is hereby dismissed.
Sd/- JUDGE ss