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ASV Industrial Park LLP, Chennai, Represented by its designated Partner Bharat Kumar K Kamdar v/s M/s. Flextronics Technologies (India) Private Limited, Tamil Nadu

    Arb. O.P (Com.Div.) No. 221 of 2022 & O.A. Nos. 279, 280 & 284 of 2022 & A.No. 2017 of 2022

    Decided On, 06 June 2022

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE M. SUNDAR

    For the Petitioner: Madhan Babu, R. Parthasarathy, Advocates. For the Respondent: Srinath Sridevan, Advocate.



Judgment Text

(Prayer: Arbitration Original Petition filed under Section 11(5) read with 10(2) of the Arbitration and Conciliation Act, 1996 to appoint an arbitrator to adjudicate upon the differences and disputes that have arisen between the parties hereto.)

Common Order

1. This common order will dispose of the captioned 'Arbitration Original Petition' ['Arb.OP' for the sake of brevity] i.e., Arb.O.P(Com.Div.)No.221 of 2022 and captioned four applications.

2. Captioned Arb.O.P(Com.Div.)No.221 of 2022 has been presented in this Court inter alia under Section 11 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)', which shall hereinafter be referred to as 'A and C Act' for the sake of brevity and the same shall be treated as the lead matter. To be noted, the other four applications are applications under Section 9 of A and C Act.

3. When four of the captioned applications, namely O.A.Nos.279, 280, 284 of 2022 and A.No.2017 of 2022 came up before a Hon'ble single Judge, an order came to be made on 11.05.2022 and the same reads as follows:

'Both the parties have presented applications under Section 9 of the Arbitration and Conciliation Act, 1996. M/s.ASV Industrial Park LLP is the landlord and M/s.Flextronics Technologies (India) Private Limited is the tenant. A dispute has arisen between the parties with regard to the termination of the Lease Deed dated 27.09.2018 and in particular, the effective date of termination. The landlord relies upon clause 27 of the lease deed and asserts its right to buy the fittings and fixtures installed by the tenant in the premises. The tenant contends that the landlord may not be interested in purchasing all the fittings and fixtures and that the process of removal thereof would be derailed, if the removal is interfered with at this juncture.

2. Upon considering the rival contentions, the following interim arrangement is made:

i) Mr.Mr.Dominic S.David, Advocate, "Vanguard House", 3rd Floor, No.48, Second Line Beach, Parrys, Chennai - 600 001, Mobile No.9894229210, is appointed as the Commissioner to inspect the premises upon issuing notice to both parties. The inspection shall be undertaken on or before 18.05.2022. The applicant shall pay a sum of Rs. 75,000/- as initial remuneration to the Advocate Commissioner. The warrant shall be issued to the Advocate Commissioner on or before 13.05.2022. Both parties are directed to extend full cooperation to the Advocate Commissioner. Both parties are permitted to be presented along with their representative consultants. Based on such inspection, the advocate commissioner is directed to file a report on the next hearing date.

ii) Upon completion of such inspection, the landlord shall make an offer for the purchase of the fittings and fixtures at a reasonable price within one(1) week of the date of inspection.

iii) At the time of inspection, the tenant shall provide copies of available documents as per the list provided by the landlord so as to enable the landlord to make a reasonable offer.

iv) Upon receipt of the offer from the landlord, the tenant shall revert on such offer on or before 01.06.2022.

v) The tenant is restrained from taking further steps to remove the fixtures and furniture until the landlord inspects the premises and makes an offer for the purchase of the fixtures and furniture. If the landlord does not make the offer on or before 25.05.2022 after inspecting the premises, the tenant may remove the furniture and fixtures, albeit without causing damage to the premises. However, if such offer is made, the tenant shall not remove the fittings and fixtures until the next date of hearing.

(vi) Since the process of removal of the fittings and fixtures has been disrupted by this interim arrangement, the tenant is entitled to exclude the disruption period plus 15 days as regards liability for rent and other charges.

(vii) It is made clear that no view is being expressed on the effective date of termination.

3. List on 06.06.2022.’

4. The aforementioned order is telltale qua factual matrix and the trajectory the matter has taken. Therefore, elaboration regarding further particulars or granular details is not necessary.

5. A decision in captioned Arb.OP which is under Section 11 of A and C Act can give a quietus to all the captioned matters.

6. A legal drill under Section 11 of A and C Act has to perambulate within the statutory perimeter of sub-section (6A) of Section 11 of A and C Act, which reads as follows:

'(6A) 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), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.'

7. The aforesaid principle has been clearly laid down by Hon'ble Supreme Court in Duro Felguera case law [Duro Felguera, S.A. versus Gangavaram Port Limited reported in (2017) 9 SCC 729] followed by Mayavati Trading case law [Mayavati Trading Private Limited Vs. Pradyuat Deb Burman reported in (2019) 8 SCC 714]. Relevant paragraphs in Duro Felguera case law are Paragraphs 47, 59 and relevant paragraph in Mayavati Trading case law is paragraph 10, which read as follows:

Paragraphs 47 and 59 of Duro Felguera case law:

'47. What is the effects of the change introduced by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as 'the 2015 Amendment') with particular reference to Section 11(6) and the newly added Section 11(6-A) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as “the 1996 Act”) is the crucial question arising for consideration in this case.'

'59. The scope of the power under Section 11 (6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. (supra) and Boghara Poly fab (supra). This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an arbitration agreement exists - nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected.

' Paragraph 10 of Mayavati Trading case law:

'10. This being the position, it is clear that the law prior to the 2015 Amendment that has been laid down by this Court, which would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgments, as Section 11(6-A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment in Duro Felguera SA.

'(underlining made by this Court to supply emphasis and highlight)

8. In the case on hand, the lone respondent in captioned Arb.OP has also moved an application under Section 9 of A and C Act and therefore obviously there is no disputation or disagreement about the existence of arbitration agreement between the parties i.e., arbitration agreement within the meaning of Section 2(1)(b) read with Section 7 of A and C Act. This makes the task of disposing of Section 11 petition fairly simple. In other words, prayer in the captioned Arb.OP will now be answered in the affirmative.

9. Once an arbitrator is appointed and an 'Arbitral Tribunal' ['AT' for the sake of brevity] is constituted, all the captioned applications which are under Section 9 of A and C Act can go before AT by way of applications under Section 17 of A and C Act. It is in this context that all the captioned applications and Arb.OP will be given a quietus by this common order.

10. Mr.Madhan Babu, learned counsel for petitioner in Arb.OP and Mr.Srinath Sridevan, learned counsel for lone respondent in the Arb.OP adverting to aforementioned 11.05.2022 order made by a Hon'ble single Judge submit that the disruption period which has been alluded to by learned Judge in paragraph 2(vi) is gravitating towards some conclusion and is therefore a matter which has to be decided by the Hon'ble Arbitrator (to be appointed by this order). This Court refrains itself from expressing any opinion or view on this as this would be a matter which will be decided by the Hon'ble Arbitrator who is to be appointed by this order.

11. In the light of the narrative thus far, the following order is made:

a) Hon'ble Mr. Justice N. Paul Vasanthakumar, Retired Chief Justice of Jammu & Kashmir High Court residing at 'ASHIRVADH', No.24A, II Street, Kamaraj Avenue, Adyar, Chennai - 600 020 (Ph: 24452817, 24454381) is appointed as sole Arbitrator and is requested to enter upon reference qua all arbitrable disputes that have arisen between the parties qua a lease deed dated 27.09.2018;

b) Hon'ble Arbitrator is requested to fix his fee in accordance with the Fourth Schedule of A and C Act and/or in accordance with the Madras High Court Arbitration Centre (MHCAC) (Administrative Cost and Arbitrator's Fees) Rules 2017;

c) It is open to the parties to present the captioned applications or copies of the same before the Hon'ble Arbitrator with a request to treat the same as applications under Section 17 of A and C Act. If this course is adopted, though obvious, it is made clear that Hon'ble Arbitrator shall deal with the applications on their own merits and in accordance with law notwithstanding any observations in the judicial order made herein or the aforementioned 11.05.2022 order;

d) Though obvious it is made clear that it is open to both sides to make a request to Hon'ble Arbitrator to enter upon reference and hold the first sitting at his earliest convenience;

e) The disruption period and the reckoning date in this regard qua paragraph 2(vi) of 11.05.2022 order alluded to supra is a matter which will be decided by Hon'ble Arbitrator on its own merits and in accordance with law;

(f) As regards the Advocate Commissioner who has been appointed in and by 11.05.2022 order, learned Advocate Commissioner Mr.Dominic S.David is present in Court. Learned counsel on both sides submit that a report has been submitted and his services may need to be continued depending on the trajectory the matter takes. Therefore, this Court is not discharging the Advocate Commissioner at this stage and leaves it open to the Hon'ble Arbitrator to do the needful notwithstanding there being a judicial order;

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/> (g) As regards the Advocate Commissioner's report, it will be open to both sides to file objection, if any and the same will be dealt with by the Hon'ble Arbitrator on its own merits at his discretion; (h) As regards remuneration for the Advocate Commissioner, a further sum of Rs.75,000/- [Rupees Seventy Five Thousand only] will be paid as further and final remuneration for the work done thus far. This sum shall be shared in equal moieties by both parties subject to the outcome of the arbitral proceedings before the Hon'ble Arbitrator; (i) Mr.Srinath Sridevan, learned counsel for lone respondent in captioned Section 11 Arb.OP submitted that he has moved one more Section 9 application i.e., an application in addition to the applications on Board today. Learned counsel submitted that the same is O.A.No.299 of 2022. It is open to learned counsel/applicant therein to present that application also or a copy of the same also before the Hon'ble Arbitrator with a prayer to treat the same as an application under Section 17 of A and C Act. Captioned Arb.OP and applications are disposed of in the aforesaid manner. There shall be no order as to costs.
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