Marymatha Infrastructure Private Limited (formerly M/s Marymatha Construction Company) v. Chief Engineer (CP), Cochin Port Trust and Chairman, Cochin Port Trust

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN TUESDAY, THE 23[RD] DAY OF NOVEMBER 2021 / 2ND AGRAHAYANA, 1943** **AR NO. 8 OF 2021** ## **PETITIONER:** MS/.MARYMATHA INFRASTRUCTURE PRIVATE LIMITED (FORMERLY M/S.MARYMATHA CONSTRUCTION COMPANY) MARYMATHA SQUARE,ARAKKUZHA ROAD, MUVATTUPUZHA.P.O,ERNAKULAM-686661. REPRESENTED BY ITS MANAGING DIRECTOR, SABU CHERIYAN. BY ADV P.SHANES METHAR ## **RESPONDENTS:** 1 THE CHIEF ENGINEER (CP) COCHIN PORT TRUST,WILLINGDON ISLAND,COCHIN-682009. 2 THE CHAIRMAN, COCHIN PORT TRUST,WILLINGDON ISLAND, COCHIN-682009. BY ADVS. SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS SRI.ISAAC THOMAS SHRI.ALEXANDER JOSEPH MARKOS SRI.P.G.CHANDAPILLAI ABRAHAM SHRI.SHARAD JOSEPH KODANTHARA THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 23.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **2** ## **ORDER** The applicant is stated to be a Company registered under the provisions of the Companies Act, 1956 and that they had entered into Annexure II Agreement with the respondents, relating to the _“construction of a Boat Jetty and allied facilities for the Government of India at Cochin Port”_ . They say that, pursuant to the agreement, work orders were executed between the parties, but that they were forced to suffer heavy losses on account of reasons that can only be attributed to the respondents. They say that, therefore, disputes have arisen between the parties, touching upon and relating to the terms of the agreement, but that on account of Clause 25 of Annexure II agreement, all such can be adjudicated and resolved only through the mechanism of arbitration. 2. The applicant says that, therefore, they addressed Annexure IX communication to the respondents on 18.12.2020, asking them to accede to ## **AR NO. 8 OF 2021** **3** their claim or subject the disputes to adjudication through the process of arbitration, as is mandated under the aforementioned Clause of the Agreement; but that they did not agree to either, thus constraining them to approach this Court through this Arbitration Request. 3. I have heard Shri.P.Shanes Methar, learned counsel for the applicant and Shri.Issac Thomas, learned Standing Counsel appearing for the respondents. 4. Shri.Issac Thomas opposed this Arbitration Request primarily on the ground that a statutory notice under Section 11(5) of the Arbitration and Conciliation Act (hereinafter referred to as 'the Act' for short) has not been issued to his clients. He explained that applicant cannot invoke the provisions of Section 11(6) of the Act in the absence of a procedure for appointment of an Arbitrator being specified in the Agreement as per Section 11(2) thereof; and that, in this case, it is clear that the **4** ## **AR NO. 8 OF 2021** procedure agreed between the parties has failed on account of the rigour of Section 12(5) of the Act. 5. Shri.Issac Thomas pointed out that, as per the relevant Clause of the Agreement, appointment of an Arbitrator is to made by his clients, but that because of the intervening effect of Section 12(5) of the Act, such a course has now become impossible, which is irrefragable going by the judgments of the Hon'ble Supreme Court in _**TRF Limited v. Energo Engineering Projects Limited [(2018) 8 SCC 377]**_ and _**Perkins Eastman Architects DPC v. HSCC (India)Ltd. [AIR 2020 SC 59].**_ 6. Shri.Issac Thomas then relied upon the judgment of this Court in _**Tulsi Developers India Pvt. Ltd. v. Dr.Appu Benny Thomas [2021(5) KLT 339]**_ to argue that when the procedure agreed between the parties fails, then an Arbitrator can be appointed only under the provisions of Section 11(5) of the Act, for which a mandatory one month notice ought to have been issued. He concluded his submissions by ## **AR NO. 8 OF 2021** ## **5** pointing out to Annexure IX notice, predicating that this can never satisfy the requirements of Section 11(5) of the Act, because it merely states that the applicant has already moved the High Court for appointment of an Arbitrator. He, therefore, prayed that this Arbitration Request be dismissed. 7. In reply, Shri.P.Shanes Methar learned counsel for the applicant, submitted that the procedure agreed upon between the parties in Annexure II Agreement for appointment of an Arbitrator cannot be seen to have been obliterated merely on account of the impact of Section 12(5) of the Act and he argued that, going by the said statutory provision, it only incapacitates the person, who is nominated by one of the parties, to act as an Arbitrator. He argued that this has been affirmatively declared by the Hon'ble Supreme Court in _**Perkins Eastman Architects (Supra);**_ and thus reiteratingly prayed that this Arbitration Request be allowed. 8. I have considered the afore submissions with ## **AR NO. 8 OF 2021** **6** great amount of care and have also examined the various documents available on record. 9. As far as the contentions of Shri.Issac Thomas relating to the procedure for appointment of an Arbitrator is concerned, it is conceded - being not contested at all - that Clause 25 of Annexure II covers the field. It is perspicuous therefrom that the various mandatory steps which have to be followed by the parties, until the appointment of an Arbitrator, are clearly enumerated therein and it is also luculent that the parties have, concededly, followed the same, until the actual nomination of the Arbitrator. 10. However, when it came to the nomination of the Arbitrator, the applicant issued Annexure IX notice to the respondents saying that, because of the impact of Section 12(5) of the Act, they cannot nominate an Arbitrator unilaterally and therefore, that _“we have moved the Hon'ble High Court of Kerala by filing Arbitration Request to appoint an_ ## **AR NO. 8 OF 2021** **7** _Arbitrator to Adjudicate and settle the disputes”_ (Sic). 11. Therefore, the twin questions that arise for my consideration is: for the first, whether this Arbitration Request, filed under Section 11(6) of the Act is maintainable; and, for the second, whether Annexure XI can be seen to be an Arbitration Request under the mandate of Section 21 of the Act. 12. As far as the question of maintainability of this Arbitration Request is concerned, I am afraid that I cannot find favour with Shri.Issac Thomas because the provisions of Section 11(5) of the Act will apply only in the event when there is no procedure agreed upon between the parties for appointing an Arbitrator/s [see for support _**Tulsi Developers (Supra)**_ ]. In the case at hand, Clause 25 in Annexure II Agreement clearly postulates the manner in which the parties have to deal with their disputes until the stage of nomination of the Arbitrator. ## **AR NO. 8 OF 2021** **8** 13. If, through the afore said process, an amiable settlement is not able to be obtained between the parties, then certainly the stage of appointment of an Arbitrator would arise. 14. It is without contest, as I have already seen above, that the parties are _ad idem_ that they have travelled together as per Clause 25 of Annexure II Agreement, until the stage of appointment of an Arbitrator, but that when it came to that point, the applicant issued Annexure IX and took the stand that they will not agree to the unilateral appointment of an Arbitrator by the respondents in view of Section 12(5) of the Act. 15. It is this letter which is now sought to be impeached by Shri.Issac Thomas, contending that it does not fall within the parameters of Section 11(5) of the Act. However, as I have already indited above, Section 11(5) of the Act would apply only when there is no procedure mandated for the appointment of an Arbitrator; but Clause 25 of Annexure II speaks **AR NO. 8 OF 2021** **9** completely to the contrary. 16. That being said, the acme question is whether the rigour of Section 12(5) of the Act would obliterate the procedure agreed upon between the parties in the agreement and it is indubitable from an _ex facie_ reading of its provisions, that it cannot be so construed. This is because, Section 12(5) of the Act says that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or the subject matter of the dispute falls under any one of the categories specified in the VII[th] schedule of the Act, shall be ineligible to be appointed as an Arbitrator. Therefore, it is luculent that Section 12(5) does not efface or annihilate the procedure agreed between the parties, but makes it incompetent for one of the parties to nominate the Arbitrator on their own and this is what has been affirmatively declared by the Hon'ble Supreme Court in _**Perkins Eastman Architects (Supra).**_ ## **AR NO. 8 OF 2021** ## **10** 17. I am, therefore, of the firm view that merely because of the rigour of Section 12(5) of the Act, the agreed procedure between the parties cannot be construed to have been expunged or erased; and therefore, that an Arbitration Request can only be made under Section 11(6) of the Act and not under Section 11(5) thereof, as has been now argued by Shri.Issac Thomas. 18. If I am to construe otherwise, then certainly, I will have to hold that the entire procedure under Clause 25 of Annexure II Agreement is incompetent, but it is pertinent that it is argued to the contrary even by the respondents. 19. That leaves me to the consideration as to whether Annexure IX notice can be construed to be one issued under Section 11(6) of the Act. True, the applicant has stated therein that they have already moved this Court by filing an Arbitration Request. However, the facts involved speak to the contrary because said notice is dated 18.12.2020, while this **11** Arbitration Request was preferred only on 01.01.2021. 20. Obviously, therefore, I have to accept the argument of Shri.Issac Thomas that Annexure IX cannot be seen to be a notice as postulated under Section 11(5)of the Act; but as I have already found, this Arbitration Request has been validly preferred under Section 11(6) of the Act; and consequently, it is upto any party to approach this Court even without a notice, in the event, the other side refuses to act as per the agreed procedure or they fail to perform any function expected of them under the said procedure. 21. To reiterate, in this case it is without any doubt that, though the parties had admittedly acted in conformity with Clause 25 of Annexure II Agreement, they were unable to break the ice and obtain an amicable solution, which obviously left no other option to the applicant, but to approach this Court and seek appointment of a sole independent Arbitrator. ## **AR NO. 8 OF 2021** ## **12** 22. Therefore, on both the afore counts, I find in favour of the applicant. 23. At this time, Shri.Issac Thomas intervened to say that if this Court is inclined to appoint an Arbitrator, acceding to the request of the applicant, then all his clients' contentions – including that the dispute is not maintainable since they had accepted the entire contract amount without demur and had agreed to full and final settlement of their bills – be left open to be decided by the said Authority in terms of law. 24. I cannot find any reason not to accede to the afore request of Shri.Issac Thomas and record that Shri.P.Shanes Methar, learned counsel for the applicant also did not oppose it. 25. Before I tread forward, I must certainly examine Annexure II Agreement to verify whether the parties had committed themselves to an arbitration agreement therein. It is indubitable from Clause 25 of the said Agreement – as is also unequivocally ## **AR NO. 8 OF 2021** ## **13** admitted by the parties – that same operates as a binding arbitration agreement between the parties. In the afore circumstances, I allow this Arbitration Request in the following manner: - (a) I nominate Mr.Justice Pius C.Kuriakose, 'Chakkalayil', Door No.44/809 F, Achutham Layout, Aryapadam Lane, Kaloor, Kochi - 682017, as the sole Arbitrator, to adjudicate and resolve the disputes and differences between the parties to this case arising from Annexure II 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 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 **14** copy of the said statement appended to it, retaining the original of the same on the files of this case. **==> picture [392 x 12] intentionally omitted <==** governed by the Fourth Schedule of the Arbitration and Conciliation Act, 1996. (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 a.m. on 16.12.2021. **Sd/-** **DEVAN RAMACHANDRAN** **JUDGE** **MC/23.11** **AR NO. 8 OF 2021** ## **15** ## **APPENDIX OF AR 8/2021** PETITIONER ANNEXURE ANNEXURE I TRUE COPY OF THE LETTER OF ACCEPTANCE NO.T10-1794/2016-C/908(W)DATED 08.08.2017 ANNEXURE II TRUE COPY OF CONTRACT AGREEMENT NO.08 OF 2017-18 DATED 03.10.2017 TOGETHER WITH RELEVANT PAGES OF ARBITRATION CLAUSE ANNEXURE III TRUE COPY OF COMPLETION CERTIFICATE DATED 16.06.2020 ANNEXURE IV TRUE COPY OF CLAIM STATEMENT SUBMITTED BY THE APPLICANT BEFORE THE RESPONDENT ON 10.09.2020 ANNEXURE VI TRUE COPY OF THE LETTER DATED 31.10.2020 ADDRESSED TO THE 1ST RESPONDENT ANNEXURE VII TRUE COPY OF THE LETTER DATED 30.11.2020 OF THE 1ST RESPONDENT. ANNEXURE VIII TRUE COPY OF THE PRINTOUT OF E.MAIL DATED 14.5.2020 (TOGETHER WITH ATTACHMENT) FROM THE 2ND RESPONDENT ANNEXURE IX TRUE COPY OF THE LETTER NO.MIPLC/PK/20/3250 DATED 18.12.2020 ADDRESSED TO THE RESPONDENT. RESPONDENTS EXHIBITS ANNEXURE R1(A) TRUE COPY OF THE NO CLAIM CERTIFICATE DATED 15.5.2020 ANNEXURE R1(B) TRUE COPY OF THE JUDGMENT DATE 25.7.2016 IN 2016 KHC 6509 – UNION OF INDIA AND ANOTHER VS. PREMCO -DKSPL(JV) AND OTHERS ANNEXURER1(C) TRUE COPY OF THE JUDGMENT DATED 4.09.2015 HUAWEI TECHNOLOGIES COMPANY LIMITED V. STERLITE TECHNOLOGIES LIMITED – (2016) 1 SCC 721.