IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF MARCH 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE C.M.P.No.32 OF 2017 BETWEEN:
SHRI. K. GANGADHARA GOWDA S/O LATE AIYYANNA GOWDA AGED ABOUT 65 YEARS RESIDING OPPOSITE GOVERNMENT HOSPITAL, BELTHANGADY DAKSHINA KANNADA DISTRICT-574214.
(By Mr. GAUTAM S. BHARADVAJ, ADV., FOR Mr. RAJENDRA S, ADV.,) AND:
… PETITIONER M/S INTERNATIONAL POWER CORPORATION LIMITED A COMPANY REGISTERED UNDER THE COMPANIES ACT, HAVING ITS REGISTERED OFFICE AT No.19, 3RD FLOOR SHIVSHANKAR PLAZA, RESIDENCY ROAD LANGFORD GARDENS, BENGALURU-560027.
REP. THROUGH ITS AUTHORIZED SIGNATORY.
… RESPONDENT (By Mr. VIKRAM PHADKE, ADV.) - - -
THIS CIVIL MISC. PETITION IS FILED UNDER SECTION 11(5) OF THE ARBITRATION AND CONCILIATION ACT, 1996 PRAYER TO APPOINT A SOLE ARBITRATOR UNDER THE ARBITRATION CENTRE – KARNATAKA (DOMESTIC AND INTERNATIONAL) RULES, 2012 TO RESOLVE THE EXISTING DISPUTE BETWEEN THE PARTIES & ETC.
THIS CIVIL MISC. PETITION COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER Sri.Gautam.S.Bharadvaj, learned counsel for Sri.Rajendra.S, learned counsel for the petitioner.
Sri.Vikram Phadke, learned counsel for the respondent.
2. The writ petition is admitted for hearing.
With consent of the parties, the same is heard finally.
3. In this petition under Section 11(5) of Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’ for short) the petitioner seeks appointment of the sole Arbitrator to resolve the existing disputes between the parties under clause 16 of the agreement dated 25.11.2008.
4. Facts giving rise to filing of this petition briefly stated are that petitioner is engaged in the business of power generation and along with others had formed two companies viz., M/s Prasanna Power Limited and M/s SLV Power Limited with which the petitioner was associated as promoter / Director. M/s Prasanna Ltd., represented by its Director viz., the petitioner entered into an agreement with respondent on 26.04.2006. Subsequently, the aforesaid Prasanna Power Limited represented by its Director viz., the petitioner entered into an agreement with respondent on 25.11.2008 and subsequently, the petitioner entered into a compromise with the respondent on 15.11.2012. It appears that the dispute had arisen in relation to the agreement dated 25.11.2008, therefore, the petitioner in his individual capacity sent a notice invoking the arbitration clause. The respondent sent a reply stating and refused to submit itself to the arbitration proceeding.
5. Learned counsel for the petitioner submitted that even though the petitioner is not a party to the arbitration agreement, the court has to approach the matter by attributing to the transactions a meaning consistent with business sense which was intended to be ascribed to them. It is further submitted that where the circumstances indicate that intent was to bind both signatories and non signatories, even a non signatory to an agreement can invoke the arbitration clause. It is further submitted that the M/s Pransanna Power Ltd., has merged with the respondent company and therefore the petitioner can invoke the arbitration clause for settlement of claim. In support of his submissions, learned counsel for the petitioner has placed reliance on the decision of the Supreme Court in ‘CHERAN PROPERTIES LIMITED VS. KASTURI AND SONS LIMITED AND OTHERS’, (2018) 16 SCC 413. On the other hand, learned counsel for the respondent submitted that the agreement dated 25.11.2008 was executed by the petitioner in the capacity as a Director of M/s Prasanna Power Ltd., and the petitioner is not a party to the agreement and therefore, is not entitled to invoke the arbitration clause.
6. I have considered the submissions made by learned counsel for the parties and have perused the record. Section 2(h) of the Act defines the expression ‘party’ and means a party to an arbitration agreement. Section 7 of the Act defines the expression ‘arbitration agreement’ and provides that arbitration agreement means an agreement by the parties to submit to the arbitration all or certain disputes. Section 11 of the Act deals with ‘appointment of Arbitrators’. Section 11(5) provides that failing an agreement referred to in Sub Section (2) in an arbitration with a sole arbitrator if the parties fail to agree on the arbitrator within 30 days, such a party may approach the Court seeking appointment of an arbitrator. In the instant case, the petitioner has invoked the arbitration clause contained in the agreement dated 25.11.2008. The petitioner is not a party to the aforesaid agreement. From close scrutiny of the aforesaid agreement, it is evident that there is no intention of the parties to bind signatories and non-signatories to the agreement. The petitioner is not a signatory to the agreement dated 25.11.2008. Even in the notice invoking the arbitration clause, the petitioner has referred to the agreement dated 25.11.2008. Therefore, in the fact situation of the case he is not entitled to invoke the arbitration clause. Needless to state that in case the petitioner has any claim with regard to the agreement dated 15.11.2012, he is at liberty to take recourse to the remedy of Arbitration as provided under the agreement.
With the aforesaid liberty, the petition is disposed of.
Sd/- JUDGE ss