K.G. Ajayachandran Nair v. Agro Indus Credit Ltd

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** # **`PRESENT`** # **`THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN THURSDAY, THE 9[TH] DAY OF DECEMBER 2021 / 18TH AGRAHAYANA,`** ``` 1943 ``` ## **`AR NO. 77 OF 2021`** ## **`APPLICANT:`** ``` K.G.AJAYACHANDRAN NAIR, AGED 60 S/O. GOPALAKRISHNAN NAIR, MEENA, T/C.NO.36/1690(1), SUBASH NAGAR, VALLAKADAVU P.O, THIRUVANANTHAPURAM PIN-695 008. ``` ``` BY ADVS. K.R.VINOD M.S.LETHA K.S.SREEREKHA MARIYA ANTONY ``` ## **`OPPOSITE PARTY/RESPONDENT:`** ``` M/S.AGRO INDUS CREDIT LTD, (FORMERLY M/S. AGRO INDUS FINANCE AND LEASING (INDIA) LTD.), MAZHUVANCHERRY BUILDING, 34/1873, MAMANGALAM, KOCHI-686 025, REPRESENTED BY ITS MANAGING DIRECTOR. ``` ``` BY ADVS. M.RAMESH CHANDER (SR.) BALU TOM BONNY BENNY ``` ``` THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 09.12.2021, THE COURT ON ``` ``` THE SAME DAY DELIVERED THE FOLLOWING: ``` 2 A.R.No. 77 of 2021 ## **O R D E R** ## **Dated this the 9th day of December, 2021.** The applicant says that he had availed of a financial assistance from the respondent – Company registered under the provisions of the Companies Act, 1956, on the strength of Anneuxre-A agreement; and that certain disputes arose between the parties relating to and touching upon its terms. He says that, while so, he received an arbitration notice from the respondent, notifying him that large amounts are due from him and consequently that, clause 31 of Annexure-A agreement was being invoked, so as to subject the disputes between the parties to Arbitration. 2. The applicant concedes that Annexure-A agreement had been validly entered into between the 3 A.R.No. 77 of 2021 parties; but asserts that it only stipulates that the disputes between them be resolved through the mechanism of Arbitration, but without nominating any particular person for such purpose. He says that, in spite of this, the respondent unilaterally, in their notice, has nominated a particular Advocate as an Arbitrator and that he, therefore, responded to it, through his reply notice, suggesting another person, making it clear that if the said nomination is not acceptable, then an Arbitrator through the process of law be appointed. 3. The applicant says that, notwithstanding his specific objection as afore, the respondent has confirmed the nomination of the person mentioned by them in their arbitration notice and that he is now going ahead with the Arbitration proceedings. 4. The applicant says that, therefore, he has been now constrained to approach this Court, invoking Section 4 A.R.No. 77 of 2021 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act” for short); and thus prays that this Court appoint a sole independent Arbitrator in terms of Clause 31 of Annexure A agreement, so as to adjudicate and resolve the disputes between the parties. 5. I have heard Sri.K.R.Vinod - learned counsel for the applicant. Even though the respondent has been served with a notice validly from this Court, they have chosen not to be present in person or to be represented through counsel, thus constraining me to dispose of this Arbitration Request in their absence. 6. I have examined Annexure-A agreement and it is indubitable therefrom that disputes between the parties will have to be resolved only through the process of Arbitration. It further says that the seat of Arbitration shall be at Ernakulam, where the registered office of the respondent is situated and that an Arbitrator shall be appointed by the 5 A.R.No. 77 of 2021 said respondent. It is presumably because of these stipulations in Clause 31 of Annexure-A agreement, that the respondent has nominated the person mentioned in their notice as the Arbitrator, who appears to have now commenced proceedings pursuant thereto. 7. However, it is now well settled - without requirement for restatement - that consequent to the amendments to the Act, particularly by the introduction of Section 12(5) thereof, no person to an arbitration agreement can arbitrate or nominate an Arbitrator to resolve the disputes. This has been affirmed by the Honourable Supreme Court in **Perkins Eastman Architects DPS & otheres Vs HSCC (India) Limited AIR 2020 SC 59** which has been followed by this Court in **Tulsi Developers India Pvt. Ltd. v. Dr. Appu Benny Thomas (2021(5) KHC 404)** , unambiguously declaring that, after the amendment to Section 12(5) of the 6 A.R.No. 77 of 2021 Arbitration and Conciliation Act, neither of the parties to the agreement can nominate an Arbitrator with respect to the disputes between them. It is, therefore, apodictic that I will have to disregard that stipulation in clause 31 of the agreement and that a sole Arbitrator will certainly have to be appointed. Resultantly, I allow this Arbitration Request in the following terms: (a) I nominate, Mr.Justice N.K.Balakrishnan Punartham, Savitha Road, Near Kottankavu Temple, Vennala P.O., Kochi – 682 028, as the sole Arbitrator, to adjudicate and resolve the disputes and differences between the parties to this case arising from Annexure A agreement. (b) The Registry is directed to communicate a copy of this order to the learned Arbitrator within a period of two weeks from today and to obtain a Statement of Disclosure 7 A.R.No. 77 of 2021 from him under Section 11(8) read with Section 12(1) of the Arbitration and Conciliation Act, 1996. (c) Once the Disclosure Statement is obtained from the learned Arbitrator, the Registry shall release the certified copy of this order, with a copy of the said statement appended to it, retaining the original of the same on the files of this case. - (d) The fees of the Arbitrator shall be governed by the - Fourth Schedule to the Arbitration and Conciliation. (e) In order to enable the Arbitrator to commence the proceedings without delay, I direct the parties to mark appearance before him at 11.00 AM on 28.01.2022. Since the respondent has remained ex parte before me, I request the learned Arbitrator to notify them of the afore date or of a future date appropriately. Needless to say, in view of the afore nomination, the Arbitration proceedings now being stated to be proceeding 8 A.R.No. 77 of 2021 under the aegis of the person mentioned in arbitration notice will cease and his mandate will stand terminated. **Sd/DEVAN RAMACHANDRAN JUDGE** Raj/07.01.2022. 9 A.R.No. 77 of 2021 ## **`APPENDIX OF AR 77/2021`** ``` PETITIONER ANNEXURE ``` ``` Annexure A ``` ``` THE TRUE COPY OF THE SECURED LOAN AGREEMENT EXECUTED BETWEEN THE 1ST AND 2ND APPLICANTS AND THE RESPONDENT COMPANY DATED 30.03.2019. ```