IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24th DAY OF OCTOBER 2019 BEFORE THE HON'BLE Mr. JUSTICE B.VEERAPPA CIVIL MISCELLANEOUS PETITION NO.171/2018 BETWEEN:
JPR Industries, Having its registered office at 1699/1, Madurai Road, Opposite ABCOY Garden, Sankar Nagar, 627 357, Tirunelveli, Represented by its Sole Proprietor Mr.N.Ravinthiran.
….. Petitioner (By Ms. Raksha Daffari for Sri Venkatesh S. Arabatti, Advocate) AND:
1. FEAST – (Energy with Advanced Suitable Technologies Foundation), Having it registered office at: 7/1, Janani, Kavi Keshirja Road, Pipeline, Srinagar, Bengaluru – 560 050.
2. Sri Pawan Pawan Goenka, Managing Director, Indian Institute of Technology, Madras, Mahindra and Mahindra, Mahindra Towers, Dr. G.M. Bhosale Marg, Worli, Mumbai – 400 018.
3. Sri Bhaskar Ramamurthi, Director, 4. Sri Krishnan Balasubramaniam, DEAN, Centre for Industrial Consultancy and Sponsored Research, 5. Dr. Varun Shivakumar, Assistant Professor, Department of Mechanical Engineering, Respondent Nos.3 to 5 at:
Indian Institute of Technology, Madras, Chennai – 600 036.
6. Zigma Engineering, No.A 75(B) – 2nd Stage, Peenya Industrial Estate, Bengaluru – 560 058.
.... Respondents (By Sri Venugopal M.S., Advocate for R-1 & R-6 Sri N. Manohar, Advocate for R-2 to R-5) ***** This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 praying to appoint a sole arbitrator in terms of Section 11(6) of the Arbitration and Conciliation Act, 1996 to adjudicate the dispute that has arisen between the parties; as per Annexure-A, Memorandum of Understanding dated 06.07.2015 and etc.
This Civil Miscellaneous Petition coming on for Admission, this day, the court made the following:-
O R D E R The petitioner filed the present Civil Miscellaneous Petition under the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of sole Arbitrator to adjudicate the dispute between the parties in terms of clause 9.2 of the Memorandum of Understanding dated 06.07.2015 entered into between the parties.
2. It is the case of the petitioner that the petitioner is a Small Scale Micro Industry and is inter alia involved in the business of production and manufacturing of lime powder. The respondent No.1 involved in the business of developing technologies for the continuous clean combustion of solid fuels like bio-mass and designing of limestone reactors for combustion systems. The respondent Nos.2 to 6 are the responsible officers of an educational and research institute and who are technical experts and have expertise in the area of academics and research. The respondents approached the petitioner with a scheme and certain ides for development and betterment of business of the petitioner which was named and styled as ‘Horizontal Continuous Clean Combustion Device with Vertical Kiln’ (hereinafter referred to as ‘Project’ for short). In pursuance of the same, the respondents persuaded the petitioner to enter into a Memorandum of Understanding dated 06.07.2015.
3. It is further case of the petitioner that subsequent to execution of the Memorandum of Understating, the petitioner had agreed to pay total cost of Rs.3,00,000/- and initially the petitioner was directed to pay a sum of Rs.2,00,000/-. Mere perusal of the said Memorandum of Understanding, it is clear that the responsibility of the petitioner was limited and the same was performed by the petitioner to complete the extent. Subsequently, the petitioner approached the bank for project loan and got approved the same. Thereafter, the petitioner was in constant follow up with the respondents for implementation of the project. The petitioner was directed to construct/prepare a civil foundation work for the kiln at the cost of the petitioner and which was to be in accordance with Dr.Varun’s team design. Accordingly, the petitioner executed civil work as per the design given by the respondents. The respondents informed the petitioner that a trial run will be performed at his site and he was supposed to procure the raw material for trial run. However, to the shock and dismay of the petitioner, the entire project failed and did not yield the desired result.
4. Inspite of the same, the respondents decided to hold another trial, for the said test, the respondents requested the petitioner to procure some extract materials which were in the nature of smaller size of wood pieces and larger size of limestone, the petitioner procured the same, Ultimately, the petitioner suffered for the shortcomings of the respondents and presently, the petitioner is in a debt trap due to the faulty design and technology proposed and given by the respondents. When the petitioner has made attempts to confront the respondents, they have willfully avoided the petitioner, therefore, the petitioner having no other alternative, issued a legal notice dated 28.12.2015 invoking clause 9 of the Memorandum of Understanding dated 06.07.2015. The respondents have replied to the said notice and have denied all the allegations made against them. Therefore, the petitioner is before this Court for the relief sought for.
5. The respondent Nos.2 to 5 have filed objections denying the averments made in the present Civil Miscellaneous Petition and contended that the test for a large combustion system was supposed to have been conducted at Bengaluru, but the petitioner did not agree to that because of the increase in the cost. After the hardware was built by FEAST as per the specifications of the petitioner, it was installed at Tirunelveli and tow tests were conducted on the system by the petitioner in the presence of respondents. Even when the system was delivered, it was found that the existing infrastructure at the petitioner company was incomplete and there was no facility to feed the biomass but best efforts were made by the respondents to success the project. It is the petitioner who failed to perform his duty as per the terms and conditions of the Memorandum of Understanding. Therefore, they sought to dismiss the Civil Miscellaneous Petition.
6. I have heard learned counsel for the parties to lis.
7. Ms.Raksha Daftari, learned counsel for Sri Venkatesh S. Arabatti, learned counsel appearing for the petitioner reiterating the averments made in the Civil Miscellaneous Petition contended that it is the mistake on the part of the respondents who failed to fulfill the terms and conditions of the Memorandum of Understanding to complete the project. Because of the mistake committed by the respondents, the petitioner suffered huge and heavy loss. She further contended that there is no dispute with regard to existence of the Memorandum of Understanding dated 06.07.2015 duly signed by both the parties and there exists arbitration clause. The petitioner has complied the provisions of Section 11(5) of the Arbitration and Conciliation Act by issuing a legal notice. Therefore, she sought to allow the Civil Miscellaneous Petition.
8. Per contra Sri Venugopal M.S., learned counsel appearing for respondent No.1 and 6 adopting the statement of objections filed by respondent Nos.2 to 5 submits that, it is the mistake on the part of the petitioner and the respondents in no way responsible for the loss or shortcomings as alleged. Therefore, he sought to dismiss the Civil Miscellaneous Petition.
9. Sri N. Manohar, learned counsel appearing for respondent Nos.2 to 5 reiterating the objections filed to the Civil Miscellaneous Petition contended that the respondents have not given any guarantee to the petitioner under the Memorandum of Understanding and as it is the nature of any development project, the results are dependent on site conditions, therefore, the respondents are not responsible for failure of the project and the business loss incurred by the petitioner. Therefore, he sought to dismiss the Civil Miscellaneous Petition.
10. Having heard the learned counsel for the parties, it is an undisputed fact that the petitioner and the respondents have entered into Memorandum of Understanding dated 06.07.2015 duly signed by both the parties. There is no dispute that there exists arbitration clause in the Memorandum of Understanding. Clause 9.2 of the Memorandum of Understanding dated 06.07.2015 reads as under:
“9.2 If such a resolution is not possible, then, only the unresolved portion of the dispute or difference shall be referred for arbitration as per the provisions of the Arbitration and Conciliation Act, 1996 and the Rules there under, as amended from time to time, or any enactment in place thereof by a sole arbitrator to be agreed by all the parties a) The seat of arbitration shall be Bangalore.
b) The language to be used in the arbitration proceedings shall be English, Only the competent Courts at Bangalore will have jurisdiction in respect of this Agreement.”
11. It is also not in dispute that the petitioner has complied the provisions of Section 11(5) of the Arbitration and Conciliation Act by issuing a legal notice dated 28.12.2017. The respondents have denied the same in their statement of objections filed. In view of the rival contentions, it is clear that there is dispute/difference between the parties, which requires to be adjudicated before the learned Arbitrator.
12. In view of the aforesaid admitted facts and the existence of arbitration clause and compliance of provisions of Section 11(5) of the Arbitration and Conciliation Act, there is no impediment for this Court for appointing sole arbitrator to adjudicate the dispute between the parties in terms of clause 9.2 of the Memorandum of Understanding.
13. For the reasons stated above, the Civil Miscellaneous Petition is allowed. Sri S. Siddalingesh, former District Judge is appointed as sole arbitrator to adjudicate the dispute in terms of clause 9.2 of the Memorandum of Understanding dated 06.07.2015 entered into between the parties.
14. Registry is directed to send a copy of this order to Sri S. Siddalingesh, former District Judge and Arbitration Centre for reference forthwith.
Sd/- JUDGE PN/-