Case Note & Summary
The applicant, Mr. Rajiv Vyas, filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitral tribunal to resolve disputes arising from a Shareholder Agreement entered into in 2007 with the respondents, Johnwin Manavalan and another. The respondents had previously contested the existence of the arbitration agreement in Arbitration Petition No. 222 of 2008, but the court held that the agreement was complete and binding, and the arbitration clause was valid. That judgment was binding on the parties. The applicant made several attempts to refer disputes to conciliation and arbitration, including agreeing to a conciliator suggested by the respondents and offering to refer disputes to a sole arbitrator appointed by the respondents, but the respondents rejected all proposals on hyper-technical grounds. The court, noting the binding nature of the prior judgment and the respondents' unreasonable conduct, appointed a sole arbitrator to adjudicate the disputes. The court clarified that the appointment was subject to the outcome of any appeal against the prior judgment.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 of the Arbitration and Conciliation Act, 1996 - Existence of Arbitration Agreement - The court held that the existence of a valid arbitration agreement had already been determined by a prior judgment of the same court in Arbitration Petition No. 222 of 2008, which was binding. The respondents' objections based on the arbitration clause not being a concluded agreement were rejected. (Paras 2-3)
B) Arbitration Law - Appointment of Arbitrator - Section 11 of the Arbitration and Conciliation Act, 1996 - Procedural Objections - The court noted that the applicant had made every effort to refer disputes to conciliation and arbitration, but the respondents rejected all suggestions on hyper-technical grounds. The court appointed a sole arbitrator despite the clause requiring three arbitrators, as the applicant agreed to a sole arbitrator. (Paras 1, 4-5)
Issue of Consideration
Whether the court should appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 when the respondents dispute the existence of the arbitration agreement and raise procedural objections.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties, subject to the outcome of any appeal against the judgment in Arbitration Petition No. 222 of 2008.
Law Points
- Section 11 of the Arbitration and Conciliation Act
- 1996
- existence of arbitration agreement
- binding nature of prior judgment
- appointment of arbitrator despite procedural objections
Case Details
2010 LawText (BOM) (09) 44
Arbitration Application No. 162 of 2009
Ms. Soma Singh with Mr. Mahesh Londhe instructed by Mr. Sanjay Udeshi and Co. for the applicant; Mr. Sharan Jagtiani i/b M/s. Federal & Rashmikant for Respondent Nos. 1 and 2.
Johnwin Manavalan and another
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Nature of Litigation
Application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitral tribunal.
Remedy Sought
Appointment of a suitable arbitral tribunal to resolve disputes arising from a Shareholder Agreement.
Filing Reason
Respondents refused to refer disputes to conciliation or arbitration despite the existence of a valid arbitration clause.
Previous Decisions
In Arbitration Petition No. 222 of 2008, the court held that the Shareholder Agreement was complete and binding, and the arbitration clause was valid, subsisting, and binding between the parties.
Issues
Whether the court should appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 when the respondents dispute the existence of the arbitration agreement.
Whether the respondents' procedural objections to the appointment of an arbitrator are valid.
Submissions/Arguments
Applicant argued that the existence of the arbitration agreement was already determined by a prior judgment and that the respondents rejected all attempts at conciliation and arbitration on hyper-technical grounds.
Respondents contended that the arbitration clause was not part of a concluded agreement and that the applicant's proposals were not acceptable.
Ratio Decidendi
The existence of a valid arbitration agreement is binding on the parties as determined by a prior judgment. The court may appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 when the respondents unreasonably refuse to participate in the arbitration process.
Judgment Excerpts
Every attempt, every gesture on the applicant's part to have the disputes referred to a conciliator and thereafter if necessary to arbitration has been rejected by the respondents on hyper technical grounds.
I am saved the exercise of determining the issue as to the existence of the arbitration agreement as this question has already been determined by an order and judgment of this court dated 6th July 2009 in Arbitration Petition No. 222 of 2008.
Procedural History
The applicant filed Arbitration Petition No. 222 of 2008 under Section 9 of the Arbitration and Conciliation Act, 1996, in which the court held that the Shareholder Agreement and arbitration clause were valid and binding. The respondents appealed that judgment. Subsequently, the applicant filed the present application under Section 11 for appointment of an arbitrator.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 11, Section 9
