CASE NO.: Arbitration Petition 17 of 2005 PETITIONER: HBM PRINT LTD RESPONDENT: SCANTRANS INDIA PVT. LTD DATE OF JUDGMENT: 29/03/2007 BENCH: K.G. BALAKRISHNAN JUDGMENT:
JUDGMENT
O R D E R
K.G. BALAKRISHNAN, CJI.
The petitioner herein has filed an application under
Section 11 of the Arbitration and Conciliation Act, 1996. The
petitioner, a company incorporated under the laws of
Singapore is carrying on business at No. 745, Toa Payoh
Lorong 5, Singapore, 1231, now known as SHC CAPITAL
LIMITED, 302 Orchard Road, # 10-01 Singapore 238862. The
respondent company, Scantrans India Pvt. Ltd. was
incorporated under the Companies Act, 1956, having its
registered Office at 425, Pantheon Road, Egmore, Chennai-
600008. The petitioner alleges that petitioner and respondent
entered into a joint venture agreement on 15-12-1993 for
setting up a manufacturing unit in Chennai and to carry on
the business of printing and colour separation. The Reserve
Bank of India (RBI) granted permission to the joint venture
company and the joint venture agreement was executed on
15-12-1993. The Sale Deed was executed on 26-4-1995. A
dispute arose between the parties under Clause 8 of the Sale
Deed relating to Arbitration. Clause 8 reads as follows :-
“8.1Any dispute arising out of or
in connection with this Sale Deed,
including any question regarding its
existence, validity or termination,
shall be referred to and finally
resolved by arbitration in India in
accordance with the Arbitration
Rules in the Indian Republic for the
time being in force which rules are
deemed to be incorporated by
reference into this Clause”.
The petitioner issued a notice for appointment of an
arbitrator on 1-3-2000 and the respondent replied that the
petitioner cannot resort to Arbitration Proceedings alongwith
the winding up proceedings and the agreement does not
provide for more than one Arbitrator. Thereafter, on 5-6-2000,
the petitioner filed an application before the Chief Justice of
High Court of Madras for appointment of an Arbitrator. This
application was withdrawn by the petitioner on 26-8-2004 as
the Chief Justice of Madras High Court had no jurisdiction as
only the Chief Justice of India or his nominee could appoint
an Arbitrator. Thereafter on 31-1-2005 the present application
was filed under Section 11 of the Arbitration and Conciliation
Act, 1996 seeking appointment of an Arbitrator. As the matter
has been assigned to me, I heard the parties on either side.
The respondent filed detailed objection wherein it is contended
that the application filed under Section 11 of the Act is barred
by limitation. The main contention urged by the respondent is
that the notice was served on the respondent by the petitioner
on 25-3-2000 and the application for appointment of the
Arbitrator should have been filed on or before 25-4-2003 and
as the present application was filed only on 31-1-2005, it is
barred by time. The petitioner on the other hand contended
that though he bona fide believed that the Chief Justice of the
High Court of Madras was the competent authority to appoint
the Arbitrator, but only after the filing of the application, he
realized that this being a dispute under an International
Commercial Agreement would fall under the domain of
Section 2(f) of the Arbitration and Conciliation Act, 1996. The
Chief Justice of India is the appropriate authority to appoint
the Arbitrator. Therefore, the application filed before the Chief
Justice of the High Court of Madras was withdrawn and filed
before this Court. It is prayed that under Section 14 of the
Limitation Act, the petitioner is entitled to exclude the period
during which the petitioner’s application was pending before
the Chief Justice of the High Court of Madras.
I find force in the contention urged by the petitioner.
Petitioner filed the application before the Chief Justice of the
High Court of Madras thinking that the Chief Justice of that
court was the competent authority to appoint an Arbitrator,
but later realized that in respect of International Commercial
Agreement, Chief Justice of India was the competent
authority and, therefore, filed the instant application under
Section 11 of the Arbitration Act. Section 14 of the Limitation
Act has wider amplitude and provides that the time spent in
prior proceedings is liable to be excluded provided the
proceedings relating to the same matter were in issue and
prosecuted in good faith in the court which from the
definition of the jurisdiction either because of like nature was
unable to entertain it. I find no reason to hold that the earlier
proceedings before the Chief Justice of the High Court of
Madras were not filed in good faith. The petitioner might have
realized later that the application is to be filed under Section
11 of the Act before the Chief Justice of India. The respondent
has not pointed anything to show that there was willful
negligence or lack of good faith on the part of the petitioner in
having filed the application before the Chief Justice of Madras
High Court. Therefore, the contention raised by the
respondent as to limitation is only to be rejected.
Another strange contention has been advanced by the
respondent that if under Section 42 of the Arbitration Act once
an application has been filed before particular court, that
court has got jurisdiction over the arbitral proceedings and
also all subsequent applications arising out of that agreement
shall be filed in that court. Section 42 of the Arbitration and
Conciliation Act, 1996 reads as follows :-
“42. Jurisdiction.-Notwithstanding anything
contained elsewhere in this Part or in any other
law for the time being in force, where with respect
to an arbitration agreement any application
under this Part has been made in a Court, that
Court alone shall have jurisdiction over the
arbitral proceedings and all subsequent
applications arising out of that agreement and
the arbitral proceedings shall be made in that
Court and in no other Court”.
Section 42 has no application to the fact of the present
case. Section 42 is applicable in a case where the party has
submitted to the jurisdiction of a particular court and has filed
an application before that court. All subsequent proceedings
in such a case shall be initiated only in that court. The
Arbitration agreement if any arbitral proceedings applicable on
appointment was filed before the Chief Justice of the High
Court and subsequently any modification or anything is to be
required or in any matter relating the award itself comes for
decision, the party can file application only in that court and
in no other court. In the present case, the Chief Justice of
the Madras High Court had no jurisdiction but appointment of
Arbitrator in the matter being a dispute between the parties
related to International Commercial Agreement and under
Section 11 Chief Justice of India alone or any other person or
institution designated by him alone has jurisdiction to appoint
the Arbitrator. Therefore, the contention raised as to Section
42 of the Act also is without any basis.
In the result, the matter is to be referred to the
Arbitrator and out of the names as suggested by the parties, I
hereby appoint Mr. Justice P. Shanmugam a retired Judge of
Madras High Court as an Arbitrator. The dispute between the
parties is referred to the Arbitrator. The Arbitrator is requested
to pass a reasoned award within eight months from this Order.
The remuneration of the Arbitrator shall be fixed by the
Arbitrator in consultation with the parties.