Hbm Print Ltd Vs. Scantrans India Pvt. Ltd [2007] Insc 336 (29 March 2007)
K.G. BALAKRISHNAN
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 This application was withdrawn by the petitioner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.
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