Pcr Warehousing Ltd. v. Central Railside Warehousing Company Ltd.

$~40 *

IN THE HIGH COURT OF DELHI AT NEW DELHI

+ O.M.P. (T) (COMM.) 80/2016 & I.A. 15000/2016 PCR WAREHOUSING LTD.

..... Petitioner Through:

Mr Chava Badrinath Babu, Advocate.

versus CENTRAL RAILSIDE WAREHOUSING COMPANY LTD.

..... Respondent Through:

Mr Gourab Banerji, Senior Advocate with Mr Ashish Tiwari and Ms Vaidehi Mishra, Advocates.

CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRU

O R D E R

% 05.12.2016 1.

The petitioner has filed the present petition under Section 14 & 15 of the Arbitration and Conciliation Act, 1996 (hereafter 'the Act'), inter alia, praying as under:- "i.

declare that the unilateral Appointment of Sole Arbitrator by the Claimant/Respondent herein is illegal and set aside the Letter of Appointment dt. 04.03.2016 appointing Sole Arbitrator by the Claimant;"

2.

The respondent had floated an online tender on 04.06.2015 for utilizing covered storage space at RWC, Mysore on "dedicated warehousing basis" on payment of monthly warehousing rent subject to minimum fixed monthly rent of `5,00,000/-.

The petitioner participated in the aforesaid tender and its bid was accepted. Consequently, a Letter of Award dated

16.07.2015 was issued by the respondent.

3.

Thereafter, an Agreement dated 17.08.2015 (hereafter 'the Agreement') was also executed between the parties. Certain disputes have arisen between the parties in relation to the Agreement; according to the petitioner, the respondent has failed to pay amounts due to the petitioner. The documents on record indicate that the parties had also exchanged certain correspondence in respect to the said disputes. Finally, on 04.03.2016, the respondent sent a letter to the Panel Arbitrator, seeking to appoint Mr Subbaroyan Krishnan as a Sole Arbitrator to adjudicate the disputes between the parties. A copy of the said letter was also sent to the petitioner. 4.

Mr Babu, the learned counsel for the petitioner drew the attention of this Court to the arbitration clause contained in the Agreement which reads as under:- "39. Arbitration Clause:- All disputes and differences arising out of or in any way touching upon or concerning this agreement whatsoever shall be referred to the sole Arbitration of any person appointed by the Managing Director, Central Railside Warehouse Company limited, New Delhi. The award of such arbitrator shall be final and binding on the parties to this agreement. It is a term of this agreement that in the event of such arbitrator to whom the matter is originally referred/being transferred or vacating his office or being unable to act for any reason, the Central Railside Warehouse Company Ltd. at that time shall appoint any other person to act as Arbitrator in accordance with the terms of this agreement. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessors. It is also a term of this contract that no person other than a person appointed by the Managing

Director, Central Railside Warehouse Company Ltd. New Delhi as aforesaid should act as Arbitrator and if for any reason that is no possible the matter is not to be referred to arbitration at all. The Arbitrator shall give a reason of his award.

Provided further that any demand for arbitration in respect of any claim (s) of the party or of the Company under the contract shall be in writing and made within one year of the date of termination or completion (expiry of the period) of the contract and where this provision is not complied with the claim (s) of the party shall be deemed to have been waived and absolutely barred and the CRWC shall be discharged and released of the liabilities under the contract. The venue of Arbitration shall be at such place as may be fixed by the Arbitrator at his sole discretion.

The arbitral proceedings in respect of dispute shall commence on the date on which the Arbitrator calls upon the parties to file their claim and defence statement.

The work under the contract shall, if reasonably possible, continue during the arbitration proceedings and no payment due or payable to the contractor shall be withheld on account of such proceedings.

The cost of arbitration shall be borne by parties as per the decision of the Arbitrator.

The arbitrator shall give separate award in respect of such dispute of difference referred to him.

Subject as aforesaid, the Arbitration & Conciliation Act, 1996 shall apply to the arbitration proceedings under this clause." 5.

He also drew the attention of this Court to Clause 36 of the Agreement, which provides that the arrangement between the parties could

be terminated by either party by giving three months advance notice or charges in lieu thereof, however, the said option cannot be exercised by either party within the first term of one year. After referring to the aforesaid clause, the learned counsel for the petitioner made submissions in support of the relief claimed, broadly urging three grounds. First, that the Agreement is unregistered and, therefore, an Arbitrator could not be appointed; second that no notice for invocation of the arbitration had been issued; and third, that the appointment was contrary to the procedure specified under Section 11(6) of the Act. The learned counsel for the petitioner also submitted that the aforesaid objections had been raised before the Arbitrator, however, the Arbitrator had rejected the same.

6.

In my view, the aforesaid petition is wholly misconceived. The first objection raised by the petitioner is, at best, an objection with regard to jurisdiction of the Arbitrator and the same has to be pursued in accordance with Section 16 of the Act; that is; in the event the petitioner is aggrieved by the decision rendered by the Arbitrator rejecting the objections, the only recourse available to the petitioner would be to challenge the award as and when passed.

7.

Insofar as the petitioner's contention as to non-issuance of notice to the petitioner is concerned, the same is clearly without any merit. There is correspondence between the parties, which clearly indicates that the disputes had arisen between the parties. In the context of the disputes having arisen, the respondent had sent a letter dated 04.03.2016 appointing an arbitrator. The letter appointing the Arbitrator had been marked to the petitioner. Plainly, this letter has to be considered as the respondent's invocation of the

arbitration clause. It is also not disputed that the Managing Director of the respondent was the authority who is required to appoint the Arbitrator and the appointment of the Arbitrator is in accordance with the arbitration clause. Even if it is assumed that the contention advanced by the petitioner has any merit, the same cannot be a ground for terminating the mandate of the Arbitrator. The Arbitrator was appointed by the Managing Director of the respondent in terms of Clause 39 of the Agreement and thus it cannot be asserted that the arbitrator's mandate has terminated. 8.

The objections as raised by the petitioner in this regard have also been heard by the Arbitrator and decided. In terms of Section 5 of the Act, the scope of interference by the Court in arbitral proceedings is very restricted. Even if it is assumed that the petitioner has a genuine grievance, the same cannot be addressed in the proceedings under Section 14 of the Act. 9.

Lastly, the petitioner's contention that the procedure under Section 11(6) of the Act was not followed as in terms of Section 11(2) of the Act, the parties were to mutually agree to appointment of an Arbitrator, is also clearly without any merit. A plain reading of the arbitration clause (clause 39 of the Agreement) indicates that the parties had agreed that the disputes would be referred to arbitration to be conducted by a person appointed by the Managing Director of the respondent.

Indisputably, the Managing Director of the respondent has appointed the Arbitrator in accordance with the said clause. The contention that the petitioner had to be consulted prior to appointment does not flow from the contractual provision between the parties.

10.

In my view, the petition is frivolous and misconceived and is, therefore, dismissed with costs of `20,000/-. The costs shall be deposited with the Delhi High Court Legal Aid Services within a period of two weeks from today. Pending application also stands disposed of. VIBHU BAKHRU, J DECEMBER 05, 2016 MK