TaxTMI 
TaxTMI 
2018 (3) TMI 1750
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....ns, shall be resolved by a final and binding arbitration to be held in Pune. The Arbitration Clause further provides that the disputes shall be referred to a Sole Arbitrator to be appointed by the Petitioner and the Respondent jointly. This matter was argued before me on 5th February, 2018 and the parties asked for time till 20th February, 2018 to file written submissions. Accordingly, both parties have also filed written submissions before me. Before I deal with the rival contentions it would be appropriate to refer to a few facts, which are really undisputed. They are as follows:- (a) The Petitioner is a company registered under the provisions of the Companies Act, 1956 and is inter alia engaged in the business of marine engineering, geophysical and geotechnical survey etc. The Respondent is also a company registered under the provisions of Companies Act, 1956. (b) The Executive Engineer, Aul Embankment Division, Aul, District-Kendrapara floated a tender inviting bids inter alia for the "installation of geo-textile tubes embankment with toe mound' at village Pentha in Odisha for protection against coastal erosion. The said tender was awarded to the Responden....
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....of the arbitration and the appointment of said Mr. Naniwadekar as the Sole Arbitrator. It is in these circumstances that the provisions of Section 11 of the Arbitration and Conciliation Act, 1996 have been invoked for appointment of a Sole Arbitrator to decide the disputes and differences that have arisen between the Petitioner and the Respondent under the sub-contract dated 14th June, 2013 and which admittedly contains an arbitration clause. It is also not in dispute before me that the arbitration clause has been invoked by the Petitioner. Since the Respondent has failed to agree to a Sole Arbitrator as suggested by the Petitioner, and neither has the Respondent proposed the name of any other arbitrator, the present Petition has been filed. 2. In this factual backdrop, Ms. Nyati, the learned counsel appearing on behalf of the Petitioner, submitted that there was no reason why this Court ought not to appoint an arbitrator as contemplated under Section 11 of the Arbitration and Conciliation Act, 1996. She submitted that in the facts of the present case, admittedly there was an arbitration clause that was contained in the sub-contract dated 14th June, 2013. Pursuant to this clause....
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....) 1 Mh.L.J. 489. (vii) Lakdawala Developers Pvt Ltd v/s Badal Mittal and Others; Appeal (L) No.272 of 2013 in Arbitration Petition No.221 of 2013 decided on 25th June, 2013. 5. As far as the second issue is concerned, namely that the arbitration was premature and therefore the pre-arbitral procedure of amicably settling the matter was not resorted to, Mr. Kamat relied upon the decision of the Supreme Court in the case of Iron and Steel Co Ltd v/s Tiwari Road Lines reported in (2007) 5 SCC 703. 6. In rejoinder, Ms. Nyati, the learned counsel for the Petitioner, submitted that the reliance placed by the Respondent on the aforesaid decisions and more particularly in the case of SMS Tea Estates Pvt Ltd (supra), was wholly misplaced. Ms. Nyati was at pains to point that after all these decisions were passed, the Arbitration and Conciliation Act, 1996 has been amended and Section 11(6-A) has been inserted which categorically contemplates that this Court, whilst appointing an arbitrator, must confine itself to the examination of the existence of an arbitration agreement. In the facts of the present case, she submitted that the Respondent had not denied the existence of the ....
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....had taken a rigid stand by making allegations and counter allegations as well as raising counter claims against each other. This, according to Ms. Nyati, was clear from a bare perusal of the letters dated 7th October, 2015 (Exhibit-D) and 24th October, 2015 (Exhibit-E) to the application. Over and above this, she submitted that notwithstanding the above, after the dispute had arisen and the contract was terminated, Mr. Vivek Bansal (the Petitioner's Group CEO) addressed numerous requests between 24th March, 2015 to 11th May, 2015 to Mr. Tiru Kulkarni, (Respondent's Vice President) to schedule a meeting for negotiation. Despite this, there was no response forthcoming. In these circumstances, Ms. Nyati submitted that in any event the said requests are in sufficient compliance with the Arbitration Clause and therefore it was incorrect to contend that invocation of the arbitration was premature. In support of this submission, Ms. Nyati relied upon a decision of the Supreme Court in the case of Visa International Limited v/s Continental Resources (USA) Ltd. reported in AIR 2009 SC 1366. 9. I have heard the learned counsel for the parties at length and have perused the papers ....
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....rator / arbitrators are to be appointed by the Court when the parties fail to agree on the appointment of the arbitrator / arbitrators. What is really relevant for my purpose are the amendments that are carried out to Section 11 by Act 3 of 2016 w.r.e.f. 23rd October, 2015 (amendment of 2015). By virtue of the amendment of 2015, sub-section 6-A was inserted in Section 11 which reads thus:- "(6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or subsection (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement." 11. What can be seen from a plain reading of this subsection is that the Supreme Court or as the case may be the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6) of Section 11 shall, notwithstanding any judgment, decree or order of any Court, confine itself to the examination of the existence of an arbitration agreement. The purpose for bringing this provision into force can be seen from the 246th Report of the Commission on 'Amendmen....
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....d Conciliation Act, 1996. Another important and telling factor can also be found in the Statement of Objects and Reasons. This clearly states that India has been ranked at 178 out of 189 nations in the world in contract enforcement. It is therefore high time that urgent steps are taken to facilitate quick enforcement of contracts, easy recovery of monetary claims and award of just compensation for damages suffered, and reduce the pendency of cases in courts and hasten the process of dispute resolution through arbitration, so as to encourage investment and economic activity. It is in these circumstances that clause 6 of the Amendment Bill states that sub-section 6-A is inserted to provide that the Supreme Court or the High Court, while considering the application under sub-sections 4 to 6, shall confine itself to the examination of the existence of the arbitration agreement. When one looks at the intention of the Legislature for bringing about this amendment, I find considerable force in the argument of Ms Nyati that what has to be looked into is only about the existence of the arbitration agreement and nothing more or nothing less. 13. In the facts of the present case, and as ri....
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....d in subsection (6-B) that designation of any person or institution by the Supreme Court or High Court would not be construed as delegation of judicial power. The order passed by a designated person or institution would continue to be regarded as a judicial order. 4. It has been provided in sub-section (7) that the order passed under this section shall not be appealable. This change means that finality is attached to the order passed under this section and it would not be subject to further examination by an appellate court. 5. Sub-section (8) has been amended to bring it in conformity with amended Section 12 with regard to ensuring independence and impartiality of the arbitrator. Before appointing any arbitrator, a disclosure in writing has to be obtained in terms of Section 12(1) of the Act. This is to ensure that the appointed arbitrator shall be independent and impartial and also harmonizes the provisions of Sections 11 and 12 of the Act. 6. The amending Act has introduced sub-section (13) which provides that the disposal of the application under this section has to be expeditious and endeavour shall be made to dispose of the application within a peri....
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....t are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple-it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement." (emphasis supplied) 15. On a plain reading of this decision, it is ex-facie clear that the Supreme Court has opined that the intention of the Legislature is crystal clear i.e. the court should and need only look into one aspect, namely the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement, the Supreme Court has clearly stated that it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement. That would suffice. 16. In the facts of the present case, there is no dispute with reference to the existence of the arbitration agreement. This being the case, I find that Mr. Kamat is not correct in submitting that the dispute cannot be referred to arbitration merely because the sub-contract dated 14th Ju....
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....ponent. I do not think that by accepting this technical defence, the Respondent can be allowed to frustrate and delay the arbitration proceedings. This would clearly be contrary to the objects and reasons for which the amendments were brought about to Arbitration and Conciliation Act, 1996 in 2015. 19. Having said this, I shall now deal with the judgments relied upon by Mr. Kamat. The first decision relied upon by Mr. Kamat was in the case of SMS Tea Estates Private Limited (supra). In this case, the facts would reveal that the Appellant before the Supreme Court requested the Respondent therein to grant a long term lease in respect of two tea estates. Accordingly, a lease deed was executed under which the respondent granted a lease to the Appellant for a term of 30 years. Clause 35 of the said lease deed provided for settlement of disputes between the parties by arbitration. As the dispute arose between the parties, as per Clause 35 of the lease deed, the Appellant issued a notice calling upon the Respondent to refer the matter to arbitration. This application was opposed by the Respondent who contended that the unregistered lease deed was invalid, unenforceable and not binding ....
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....ty and penalty due in respect of the instrument is paid, the court cannot act upon the instrument, which means that it cannot act upon the arbitration agreement also which is part of the instrument. As far as the stamping issue is concerned, I find that this decision does support Mr. Kamat's contention. However, I find that this decision has lost its efficacy after the amendment to Section 11 and more particularly Section 11 (6-A). What I must note is that SMS Tea Estates Private Limited (supra) was decided on 20th July, 2011 whereas the amendments to the Arbitration and Conciliation Act, 1996 came into effect from 23rd October, 2015. Now, after the amendment and as held by the Supreme Court in the case of Duro Felguera, S. A.(supra), under sub-section 6-A of Section 11 the power of the Court has now been restricted only to examination of the existence of the agreement and nothing more and nothing less. As stated earlier, the existence of the arbitration agreement has never been disputed, and in my view correctly so. This being the case, I find that the reliance placed by Mr. Kamat on the decision of the Supreme Court in the case of SMS Tea Estates Private Limited (supra), is w....
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....ovisions of the MOU so as to enable the Court to grant interim measures. It is in these circumstances that the Division Bench held that the view taken by the learned Single Judge was prima facie contrary to the decision of the Supreme Court in the case of SMS Tea Estates Private Limited (supra). Apart from what I have stated with reference to the decision in the case of SMS Tea Estates Private Limited (supra), I find that this decision is wholly distinguishable on facts as different considerations would apply when a party applies for interim measures under section 9 and when it applies for appointment of the arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. I, therefore, find that the reliance placed on this decision also is wholly misplaced. 23. Before parting, I must also mention that prima facie I find the argument made by Ms. Nyati that the liability to pay stamp duty was on the Respondent herein, well founded. The clause which was relied upon by Ms. Nyati reads thus:- "ROYALTIES / LICENSES/ MINING PERMITS / OTHER STATUTORY REQUIREMENTS ETC It will be GWRL responsibility to obtain all requisite statutory Licenses/Permits from variou....