Suchitra S. Nair, Manoj Kumar and K.G. Ajayachandran Nair v. Agro Indus Credit Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **FRIDAY, THE 1[ST] DAY OF OCTOBER 2021 / 9TH ASWINA, 1943** ## **AR NO. 74 OF 2021** ## **APPLICANTS:** **1 SUCHITRA S. NAIR AGED 41 YEARS, W/O.MANOJKUMAR, SUCHITRABHAVAN, NJANDOORKONAM, CHEMPAZHANTHY P.O., ULIYAZHATHURA, THIRUVANANTHAPURAM, PIN-695587. 2 MANOJ KUMAR, AGED 46 YEARS, S/O.PARAMESWARAN NAIR, SUCHITRABHAVAN, NJANDOORKONAM, CHEMPAZHANTHY P.O., ULIYAZHATHURA, THIRUVANANTHAPURAM, PIN-695587. 3 K.G.AJAYACHANDRAN NAIR, AGED 60 YEARS, S/O.GOPALAKRISHNAN NAIR, MEENA, T/C NO.36/1690(1), SUBASH NAGAR, VALLAKADAVU P.O., THIRUVANANTHAPURAM, PIN-695008.** **BY ADVS. K.R.VINOD M.S.LETHA K.S.SREEREKHA** ## **RESPONDENT/OPPOSITE PARTY:** **M/S.AGRO INDUS CREDIT LTD. (FORMERLY M/S.AGRO INDUS FINANCE AND LEASING (INDIA) LTD.), MAZHUVANCHERRY BUILDING, 34/1873, MAMANGALAM, KOCHI-686025, REPRESENTED BY ITS MANAGING DIRECTOR.** **THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 01.10.2021,** **THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **A.R.No.74 of 2021** **2** ## **ORDER** Dated this the 01[st] day of October, 2021 ``` The applicants say that they had availed of a financial assistance from the respondent Company, which is one registered under the provisions of Companies Act, 1956, on the strength of Anneuxre A agreement; and that certain disputes arose between the parties relating to it and touching upon its terms. They say that, while so, they received Annexure Cnotice from the respondent, notifying them that large amounts are due from them and consequently that, clause 31 of the Annexure A agreement, was being invoked, so as to subject the disputes between the parties to Arbitration. ``` ``` 2.The applicants concede that Annexure A had been validly entered into between the parties; but assert that 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. They say ``` **A.R.No.74 of 2021** **3** ``` that, in spite of this, in Annexure C, the respondent unilaterally nominated a particular Advocate as an Arbitrator and that they therefore, responded to it, through Annexure D reply, suggesting another person and making it clear that if the said nomination is not acceptable, then an Arbitrator through the process of law be appointed. ``` ``` 3.The applicants say that notwithstanding their specific objection as afore, the respondent has nominated the person mentioned by them in Annexure C, as the Arbitrator and that he is now going ahead with the Arbitration proceedings. ``` ``` 4.The applicants say, that, therefore, they have been now constrained to approach this Court, invoking Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act” for short); and thus pray 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. ``` **A.R.No.74 of 2021** `5. I have heard Sri.K.R.Vinod` - `learned counsel for the applicants. Even though the respondent has been served validly from this Court, they have chosen not 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 the 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 Ernakulam, where the registered office of the respondent is situated and further that the Arbitrator shall be appointed by the 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 Annexure C as the Arbitrator, who appears to have now commenced proceedings pursuant there. ``` - `7. However, it is now well settled without` - `requirement for restatement that consequent to the` **A.R.No.74 of 2021** **5** ``` amendments to the Act and in particular 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 TRF Limited v. Energo Engineering Projects Limited [(2018) 8 SCC 377], 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 of Section 12(5) of the 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` **A.R.No.74 of 2021** **6** `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 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 ``` ``` (d)The fees of the Arbitrator shall be governed by the Fourth Schedule to the Arbitration and Conciliation ``` **A.R.No.74 of 2021** **7** ``` Act, 1996. ``` ``` (e)In order to enable the Arbitrator to commence the proceedings without delay, I direct the parties to mark appearance before himat 11.00 AM on 05.11.2021. ``` ``` Since the respondent remain 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 under the aegis of the person mentioned in Annexure C will cease and his mandate will stand terminated. ``` ``` Sd/- ``` **DEVAN RAMACHANDRAN JUDGE** NR/01/10/2021 **A.R.No.74 of 2021** ## **8** ## **APPENDIX** |**PETITIONERS' 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.**| |**Annexure B**|**THE COPY OF GUARANTEE AGREEMENT EXECUTED BETWEEN**| ||**THE 3RD APPLICANT AND THE RESPONDENT COMPANY**| ||**DATED 30.03.2019.**| |**Annexure C**|**THE COPY OF THE ARBITRATION NOTICE SENT BY THE**| ||**RESPONDENTS DATED 21.06.2021.**| |**Annexure D**|**THE COPY OF THE REPLY NOTICE SENT BY THE**| ||**APPLICANTS DATED 15.07.2021.**|