Orbit Infrastructure Developers (India) Pvt Ltd v Sastra Properties (India) Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE V.CHITAMBARESH TUESDAY, THE 11TH DAY OF MARCH 2014/20TH PHALGUNA, 1935 AR.No. 17 of 2013 () --------------------- ## PETITIONER(S)/PETITIONER: ----------------- 1. M/S. ORBIT INFRASTRUCTURE DEVELOPERS(INDIA) PVT.LTD. A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 HAVING ITS REGISTERED OFFICE AT T NO 704. WARD NO.3 OSC COMPLEX, MANORAMA JUNCTION, WAYNAD ROAD CALICUT-673011, REP BY ITS DIRECTOR, MOHAMMED BABU AGED 40, S/O.MOHAMMED ALI, PARAMBOOR HOUSE PERINTHALMANNA, MALAPPURAM DIST. - 676509 2. M/S.UNIQUESTEP MARINE INDIA PVT LTD., A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 HAVING ITS REGISTERED OFFICE AT 111 & 112 ROYAL PALACE BUILDING, OPPOSITE GLOMAX SECTOR-2, KHARGHAR, NAVIMUMBAI-410210 REP. BY ITS DIRECTOR, MOHAMED BABU, AGED 40 S/O.MOHAMMED ALI, PARAMBOOR HOUSE, PERINTHALMANNA MALAPPURAM DIST-676509 BY ADV. SRI.BABU PAUL RESPONDENT(S): - ------------------- M/S. SASTRA PROPERTIES (INDIA) LTD. DEV PLAZA, 2ND FLOOR, OPP.ANDHERI FIRE STATION S V ROAD, ANDHERI (WEST), MUMBAI-0 400058 R1 BY ADV. SRI.ANIL S.RAJ R1 BY ADV. SMT.K.N.RAJANI R1 BY ADV. SMT.ANILA PETER R1 BY ADV. SRI.J.VIVEK GEORGE R1 BY ADV. SMT.C.PRABITHA THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 11-03-2014, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: APPENDIX IN ARBITRATION REQUEST NO.17/2013 ANNEXURE I TRUE COPY OF THE AGREEMENT DT. 30/11/2010 ANNEXURE II TRUE COPY OF THE I.A.NO.4910/12 IN O.S.NO.670/12 ANNEXURE III TRUE COPY OF THE LAWYER NOTICE DATED 7/1/2013 ISSUED BY THE COUNSEL FOR APPLICANT. ANNEXURE IV REPLY NOTICE DATED 14/2/13 ISSUED BY THE COUNSEL FOR THE OPPOSITE PARTY. //TRUE COPY// P.S. TO JUDGE. “C.R.” V.CHITAMBARESH, J. --------------------Arbitration Request No.17 of 2013 --------------------Dated this the 11[th] day of March, 2014 **==> picture [80 x 14] intentionally omitted <==** Are not the parties free to agree on the place of arbitration notwithstanding the fact that no part of the cause of action has arisen within its jurisdiction? 2. The subject matter of the dispute is 85.120 cents of land in Block No.3 of Mulavukkad Village, Kanayanoor Taluk, Ernakulam District which originally belonged to the respondent. The respondent agreed to sell the land to the second petitioner under Annexure-I memorandum of understanding in supercession of an earlier agreement with the first petitioner. The total sale consideration was fixed at Rs.15 crores out of which a sum of Rs.80 lakhs was paid by the second petitioner on the date of agreement itself. The second petitioner as well as the respondent blame each other for the breach of the terms of the agreement and it is conceded that the transaction fell through. The second petitioner issued Annexure-III notice demanding arbitration to which Annexure-IV notice in reply was A.R.No.17/2013 2 issued by the respondent. It is evident therefrom that the parties could not agree on the Arbitrator even though they was unanimity in their stand about the necessity for arbitration to resolve the dispute. 3. The petitioners have thus filed this Arbitration Request seeking to appoint an arbitrator in terms of Section 11(6) of the Arbitration and Conciliation Act, 1996 ('the Act' for short). The second petitioner contends that the place of arbitration should be Ernakulam since the land involved in the dispute is within its limits. It is pointed out that Annexure-I memorandum of understanding between the second petitioner and the respondent was executed at Ernakulam only. The fact that the petitioners moved the court of the District Judge of Ernakulam in Arb.O.P.No.507/2013 for interim measures under Section 9 of the Act is highlighted. 4. The respondent does not dispute the jurisdiction of this Court to appoint an Arbitrator even though it is asserted that the place of arbitration as agreed is Mumbai. The respondent adds that the place of arbitration cannot be Ernakulam contrary to that agreed upon in Annexure-I memorandum A.R.No.17/2013 3 of understanding. The respondent reiterates that the place of arbitration should be Mumbai only notwithstanding the fact that no part of the cause of action had arisen within its jurisdiction. 5. I heard Mr.Babu Paul, Advocate on behalf of the petitioners and Mr.Anil S Raj, Advocate on behalf of the respondent. 6. Section 20 of the Act is as follows:- “20. Place of arbitration- (1) The parties are free to agree on the place of arbitration. (2) Failing any agreement referred to in subsection (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. (3) Notwithstanding sub-section (1) or subsection (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.” It is clear therefore that the parties are free to agree on the place of arbitration and that the same can also be determined by the Arbitrator in the absence of any agreement between the parties in that regard. The Arbitrator is however free to meet at any place he A.R.No.17/2013 4 considers appropriate for hearing unless the same is expressly prohibited under the agreement. 7. The relevant clause in Annexure-I memorandum of understanding is as follows:- “7. It is agreed by and between the parties hereto that difference of opinion and/or dispute if any arises between the parties hereto, as regards the interpretation, implementation or enforcement of the terms and conditions recorded herein, in that event, the same shall be referred to the Sole Arbitration under the provisions of Arbitration and Conciliation Act, 1996 whose decision shall be final and binding upon the parties hereto. The Arbitration shall be held at Mumbai.” (emphasis supplied) It cannot therefore be of any doubt that the parties consciously agreed to have the place of arbitration as Mumbai even though that the entire cause of action will arise within Ernakulam only. 8. The Supreme Court has in Indian Oil Corporation Ltd. and others v. M/s.Raja Transport (P) Ltd. [(2009) 8 SCC 520] observed that Arbitration clause is a complete package in itself as follows:- “No party can say he will be bound by only one part of the agreement and not the other part, unless such other part is impossible of performance or is void being A.R.No.17/2013 5 contrary to the provisions of the Act, and such part is severable from the remaining part of the agreement. The arbitration clause is a package which may provide for what disputes are arbitrable, at what stage the disputes are arbitrable, who should be the arbitrator, what should be the venue, what law would govern the parties etc. A party to the contract cannot claim the benefit of arbitration under the arbitration clause, but ignore the appointment procedure relating to the named Arbitrator contained in the arbitration clause.” (emphasis supplied) The Supreme Court in Shin Satellite Public Co. Ltd.v. Jaim Studio Ltd. [(2006) 2 SCC 628] has held that the parties cannot resile from the agreement as regards the place of arbitration as follows:- “It may be stated here that on behalf of the respondents, it was submitted that if the matter is referred to arbitration in London or in Singapore, it had no objection. But as the arbitration agreement provides 'Delhi' as the venue and since that part of the agreement is enforceable, the prayer of the respondent cannot be granted.” 9. The Supreme Court in Sanshil Chemicals Industry v. Oriental Carbons and Chemicals Ltd. [2001 (3) SCC 341] has contemplated a contingency wherein an Arbitrator can determine the place of arbitration:- A.R.No.17/2013 6 “6. ............ Section 20 is the provision which sees that the parties are free to agree on the place of arbitration and failing upon any agreement, then under subsection (2) it has to be determined depending upon the circumstances of the case and convenience of the parties. A conjoint reading of Section 2(6) and Section 20 therefore leads to the conclusion that in the event, parties do not agree with regard to the place of arbitration, though they were free to determine the same then they had the right to authorise any person including an institution and in the case in hand the Joint Committee is such an institution for deciding the venue of the arbitration and such decision of the Committee will not partake the character of adjudication of a dispute arising out of the agreement, so as to clothe it the character of an award.” (emphasis supplied) Again the Supreme Court after noticing the subtle difference between international commercial arbitration and purely domestic arbitration observed in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services [Inc.(2012) 9 SCC 552] as follows:- “A plain reading of Section 20 leaves no room for doubt that where the place of arbitration is in India, the parties are free to agree to any 'place' or 'seat' within India, be it Delhi, Mumbai, etc. In the A.R.No.17/2013 7 absence of the parties' agreement thereto, Section 20(2) authorises the tribunal to determine the place/seat of such arbitration. Section 20(3) enables the tribunal to meet at any place for conducting hearings at a place of convenience in matters such as consultations among its members for hearing witnesses, experts or the parties. The fixation of the most convenient 'venue' is taken care of by Section 20(3). Section 20, has to be read in the context of Section 2(2), which places a threshold limitation on the applicability of Part I, where the place of arbitration is in India.” 10. The petitioners finally contend that a clause oustering jurisdiction should be construed strictly especially in the absence of the words like 'exclusive', 'alone', 'only' and the like. The following decisions are relied on by the petitioners to contend that Ernakulam should not be stripped of the jurisdiction to resolve the dispute: - i) A.B.C Laminart (P) Ltd. v. A.P.Agencies [1989 (2) SCC 163] ii) Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd. [2004 (4) SCC 671] I am afraid that the petitioners are missing the wood for the trees in that the respondent does not dispute the jurisdiction of the Courts at Ernakulam even though A.R.No.17/2013 8 it maintains that the place of arbitration is Mumbai. The petitioners are bound by the agreement wherein the place of arbitration agreed upon is Mumbai even though the Arbitrator is free to have his sittings at Ernakulam to suit the convenience of parties. 11. I therefore appoint Mr.Justice S.Sankara Subban who is a retired Judge of this Court and now settled at Mumbai as the Sole Arbitrator to resolve the dispute and differences between the parties. The Arbitrator is free to fix his fee. The Arbitration Request is allowed. No costs. Sd/V.CHITAMBARESH, Judge. nj.