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Sumita Abhishek Sundaram v/s Sankalpan Infrastructure Private Limited, Hiranandani

    Civil Miscellaneous Petition No. 194 of 2021

    Decided On, 01 October 2021

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE M. NAGAPRASANNA

    For the Petitioner: Shailja Agarwal, Advocate (Physical Hearing). For the Respondent: Parikshith Warrier, Advocate (Physical Hearing).



Judgment Text

(Prayer: This Civil Miscellaneous Petition is filed under Sec.11(5) of the Arbitration and Conciliation Act, 1996, praying this Hon’ble Court to appoint a Sole Arbitrator to Arbitrate all disputes arising between the petitioner and respondent arising under and in relation to the Exclusive Consultancy Agreement dated 03 February 2017, grant costs of this petition to the petitioner, and grant such other reliefs as the Hon’ble Court deems fit in the circumstances of the case in the interests of Justice and Equity.)

1. The petition is filed under Section 11(5) of the Arbitration and Conciliation Act, (hereinafter referred to as ‘the said Act’ for short) to appoint an Arbitrator to arbitrate upon that dispute that has arisen between the parues.

2. Heard Smt. Shailaja Agarwal, learned counsel appearing for the petitioner, Sri. Parikshith Warrier, learned counsel appearing for the respondent and perused the material on record.

3. Brief facts leading to the filling of the present petition as borne out from the pleadings are as follows:

The respondent is a Infrastructure Development Company (hereinafter referred to as ‘the Company’ for short). The petitioner is an Architecture Design Consultant. The petitioner is appointed by the respondent-Company on 23.03.2017, who starts to work at the respondent-Company as an Exclusive Consultant and Design Director at Bangalore office/branch of the respondent-Company. The petitioner starts to work on the strength of an ‘Exclusive Consultancy Agreement’ between the parties, wherein, the petitioner was appointed as an Exclusive Consultant and Design Director.

4. Certain dispute arose between the parties, when the petitioner’s engagement with the respondent-Company came to be terminated on 15.04.2019. After which, the respondent-Company and the petitioner have corresponded by way of several e-mails with regard to settlement of dues that the petitioner had to get on account of the working or a termination of the engagement of the petitioner w.e.f. 15.04.2019.

5. The Exclusive Consultancy Agreement on the strength of which the petitioner began to function also contemplates resolution of a dispute by way of an Arbitration. Clause 10 of the agreement reads as follows:

“10) Miscellaneous Provisions

a) Arbitration: In case of any dispute between the parties arising under the Terms and Conditions of Engagement or in any mater connected to it shall be settled through Arbitration under Indian Arbitration and Conciliation Act, 1996 by the sole Arbitrator to be appointed by ‘Sankalpam’. The parties shall determine the place of arbitration. The Arbitration award shall be final and binding upon the parties.

b) Notices: Any notice, request or instructions permitted to be given hereunder by any part to the other shall be in writing and deemed sufficiently given if delivered personality, send by registered or certified mail/e-mail, postage prepaid or sent by facsimile.

c) Severability: Any provision of the Terms and Conditions of Engagement, which is held to be invalid or unenforceable for any reason, shall be ineffective to the extent of such invalidity or unenforceable only, without affecting in any way the remaining provisions hereof.

Please note that any previous communication (verbal or written) made with respect to the ‘Exclusive Consultant’ offer proceedings stands cancelled with this agreement coming into effect. ‘Exclusive Consultant’ has clarified and all the finalized terms and conditions are mentioned in this agreement binding both the parties.

IN WITNESS WHEREOF, the parties execute this Agreement at Mumbai. Each person who signs the Agreement below represents that such person is fully authorized to sing the Agreement of behalf of the applicable party.”

(emphasis added)

In terms of the afore-extracted clause of arbitration for resolution of the dispute, a sole Arbitrator is to be appointed by the respondent-Company and the parties would mandatorily determine the place of arbitration. Insofar as it pertains to appointment of a sole Arbitrator by the respondent-Company, the said right is unavailable today, in the light of the judgment of the Apex Court in the case of PERKINS EASTMAN ARCHITECTS DPC AND ANR. v. HSCC (INDIA) LTD. 2019 SCC Online SC 1517. Therefore, the appointment of an Arbitrator would be only at mutually agreed terms or by an order passed by this Court in terms of Section 11(6) of the said Act.

6. Every other transaction between the parties is admitted in terms of the agreement except the place of arbitration. The phrase in the Clause 10 of the agreement “the party shall determine the place of arbitration,” is the bone of contention in the lis brought before this Court.’

7. Learned counsel appearing for the petitioner would submit that the petitioner entered into an agreement with the respondent-Company and begins to function at Bangalore. All the other correspondences are at Bangalore and has also initiated proceedings under Section 9 of the said Act before the competent Court at Bangalore. Therefore, she would submit that part of cause of action has arisen in the Court before the jurisdiction at Bangalore and would submit that the proceedings be directed to be conducted at Bangalore.

8. On the other hand, Sri. Parikshith Warier, learned counsel appearing for the respondent would vehemently refute the submissions made by the learned counsel appearing for the petitioner and would submit that the registered office of the petitioner is at Mumbai; all the communications made between the parties are to Mumbai; the only notice that was sent is by the learned counsel appearing for the petitioner at Bangalore and is replied to by the office at Mumbai that would not give cause of action to the petitioner to insist on jurisdiction of arbitration being at Bangalore. He would submit that in terms of the agreement, the parties at the outset, had to sit across and determine the place of arbitration, approaching this Court without such determination, would render the petition not maintainable at this juncture and seeks dismissal of the case of the petitioner.

9. I have given my anxious consideration to the contentions of respective learned counsel.

10. In the light of the aforesaid-narrated events, the only issue that fall for consideration is whether the arbitration would be within the jurisdiction of Bangalore or Mumbai, where the registered office of the respondent-Company exists. Certain events are necessary to be reiterated to consider the issue. The agreement though was signed between the parties at Mumbai, the petitioner was put in place an Exclusive Consultant and Design Director at the branch of the respondent-Com-any at Bangalore, the petitioner functioned from 23.03.2017 till the date, she was disengaged on 15.04.2019 at Bangalore. Therefore, the petitioner did function with the branch of the respondent-Company at Bangalore for close to 26 months.

11. It is after the disengagement of the petitioner that correspondences between the parties have taken place, where notices are issued and the reply is given. Notices being issued from Bangalore and the reply being given from the registered office at Mumbai by the respondent.

12. In the light of the fact that the agreement directed the petitioner to work at Bangalore and after the disengagement of the petitioner, the petitioner communicating several e-mails or otherwise Bangalore and also the fact that an application under Section 9 of the said Act is filed by the petitioner at Bangalore. The inescapable conclusion is that a part of cause of action has arisen within the jurisdiction of Bangalore. Therefore, the respondent-Company cannot contend that it is wholly without jurisdiction for maintainability of the petition before this Court or for an Arbitrator to be appointed to arbitrate between the parties at Bangalore.

13. The learned counsel appearing for the respondent as stated hereinabove would submit that the parties, at the outset should mutually determine the place of arbitration and then approach this Court, by this petitioner would also be unacceptable for the reason that the petitioner after filing the petition, the respondent-Company have filed their objections and have vehemently contended that the seat of arbitration shall be at Mumbai and the petitioner has contended that the seat of arbitration would be at Bangalore. Therefore, there is n consensus for a determination on the seat of arbitration. That being the fact it would be an exercise in futility for the parties now to be referred in terms of the Clause 10 (supra)that they should determine the place of arbitration and then in the event, the dispute subsists, approach this Court for consideration or determination of a seat of arbitration.

14. In the light of the vehement opposition to be Bangalore being the center, I deem it appropriate to consider the issue with regard to jurisdiction notwithstanding the parties not arriving at a consensus in terms of Clause 10(a) of the agreement.

15. Reference to the latest judgment of the Apex Court in the case of BGS SGS SOMA JV v. NHPC LIMITED (2020) 4 SCC 234, in the circumstances is apposite. The Apex Court at paragraph 59, has held as follows:

“59. Equally incorrect is the finding in Antrix Corpn. Ltd. that Section 42 of the Arbitration Act, 1996 would be rendered ineffective and useless. Section 42 is meant to avoid conflicts in jurisdiction of courts by placing the supervisory jurisdiction over all arbitral proceedings in connection with the arbitration in one court exclusively. This is why the section begins with a non obstante clause, and then goes on to state “…..where with respect to an arbitration agreement any application under this part has been made in a court…”

The Apex Court in the case afore-extracted, considering the fact of a part if cause of action having arisen in a particular palace, where an application is made at the first instance to be the seat of arbitration. The afore-narrated chain of events have all happened in Bangalore, therefore, in the light of the judgment of the Apex Court in the case of BGS SGS SOMA JN (supra), Bangalore will be the seat of arbitration.

16. It is a germane to refer to the judgment of the Apex Court in the case of Patel Road ways limited vs. Prasad Trading Company interpreting Section 20 of the CPC, which determines cause of action. The Apex Court has held as follows:

“The clear intendment of the Explanation, however, is that, where the corporation has a subordinate office in the place where the cause of action arises, it cannot be heard to say that it cannot be sued there because it does not carry on business at that place. It would be a great hardship, if in spite of the corporation having a sub-ordinate office at the place where the cause of action arises (with which in all probability the plaintiff has had dealings), such plaintiff is to be compelled to travel to the place where the corporation has its principal place. That place should be convenient to the plaintiff; and since the corporation has an office as such place, it will also be under no disadvantage. Thus the Explanation provides an alternative locus for the corporation’s place of business, not an additional one.”

17. It is not in dispute that the respondent-Company has its business or a branch at Bangalore, where the petitioner was functioning. Therefore, it would not lie with the respondent-Company to contend that th

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ere is no cause of action at all for the petitioner to insist upon or contend that the seat of arbitration should be Bangalore. In my considered view, in the light of the facts narrated hereinabove and the judgments of the Apex Court, part of cause of action having arisen in Bangalore, the dispute is arbitrable within the jurisdiction of Bangalore. 18. Therefore, the following: ORDER [a] The petition is allowed, appointing Sri. C.K. Nandakumar, Advocate, No.519-520, Prestige Centre Point, Level-5, No.7, Cunningham Road, Bengaluru-560 052 (Mob No. 8884713999) as the sole arbitrator to enter reference of the disputes between the parties and conduct proceedings at the Arbitration and Conciliation Centre (Domestic and International), Bengaluru according to the Rules governing the said Arbitration Centre. [b] All contentions inter se parties are left open for adjudication in the arbitration proceedings. [c] The Office is directed to communicate this order to the Arbitration and Conciliation Centre and C.K. Nandakumar, Advocate, No.519-520, Prestige Centre Point, Level-5, No.7, Cunningham Road, Bengaluru-560 052 (Mob No. 8884713999) as required under the Appointment of Arbitrators by the Chief Justice of Karnataka High Court Scheme, 1996.
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