Full Judgment
OD84AP1154of 2015 IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction ORIGINAL SIDE PARVATI DEVI KHEMKA & ORS.VERSUS M/S.J.J.GRIHANIRMAN PVT.LTD.BEFORE: The Hon'ble JUSTICE SANJIB BANERJEE Date : 13th July, 2015.
For the petitioners : Mr.Anirban Ray,Advocate For the respondents : Mr.Debasish Kundu,Sr.Advocate Ms.Arunima Lala,Advocate Mr.Prabir Banerjee,Advocate The Court :- The respondent seeks to resist the arbitral reference on the ground that a suit has been instituted in the District Courts and an order of injunction is subsisting therein.
The further ground urged is that since it is the admitted position that the second agreement of the year 1999 contains the arbitration clause, the disputes that have arisen between the parties under the fiRs.agreement on November 16,1996 cannot be a part of the reference.
In support of the fiRs.limb of the respondent’s argument, an appellate order of September 11,2014 passed by a Division Bench of this Court is placed.
It appears that the order of injunction passed by the Trial Court was also made applicable to the plaintiffs in the suit by the modification thereof in the appeal.
The second paragraph of the appellate order is of relevance since the petitioners say that their assertion of the arbitration agreement resulted in the Appeal Court leaving the petitioners herein free to pursue such legal remedy as may be open to them in accordance with law.
The parties entered into an agreement for the development of a property on November 16, 1996.
A subsequent agreement was executed on May 15,1999, the last clause of the recital whereof recognised that the parties had “agreed to enter into these presents for the purpose of recording further clauses in addition to the clauses contained in the previous agreement dated 16.11.96.” The arbitration clause contained in the supplementary agreement of May 15,1999 provides as follows : “48.
Should there be any dispute or difference or question arising between the parties hereto under or with regard to the provisions of this agreement or interpretation of the terms and conditions herein contained or anything done in pursuance hereof the same shall be referred to the arbitration of two arbitrators one to be appointed by each of the parties.
Such arbitration shall otherwise be in accordance with the Arbitration & Conciliation Act, 1996 as modified from time to time and the arbitrators shall have power to proceed summarily and make interim awards.” Upon disputes and differences arising between the parties, the petitioners invoked the arbitration agreement by a letter dated March 25, 2015.
There is no dispute that the respondent received such letter and that an Arbitrator was nominated by the petitioner in such letter.
The respondent replied to the letter of invocation on April 23,2015, seeking, in effect, to refuse to go to a reference since a “composite” suit had been filed and the matters covered by the suit could not be carved out for a part of the suit to be disposed of or permanently stayed and an arbitral reference in respect of the disputes covered thereby being conducted.
The respondent’s reply to the letter of invocation resulted in the present request being carried to the Chief Justice of this Court or her designate on June 25,2015.
Since there is no dispute as to the existence of the arbitration agreement, it is necessary that an arbitral tribunal be constituted to adjudicate upon the disputes between the parties covered by the arbitration agreement.
There is no need at this stage to conclusively pronounce on the objection raised by the respondent that the arbitration clause covers only the supplementary agreement of May 15,1999 and not the original of November 16,1996, particularly since it is within the exclusive domain of the Arbitrator or the arbitral tribunal to adjudicate upon the width of the authority under the arbitration agreement and the scope of the reference covered thereby.
Since the arbitration agreement exists and there is no dispute as to the validity thereof, an arbitral tribunal has to be constituted.
However, there is a difficulty in the flawed procedure for constitution of the tribunal as provided for in the arbitration agreement.
The 1996 Act is a departure from the Arbitration Act, 1940 and it is not possible for an arbitral tribunal to be constituted with an even number of Arbitrat ORS.Since it is evident that the number of members on the arbitral tribunal can be severed from the substantive arbitration agreement entered into between the parties, the arbitral tribunal has now to be constituted in accordance with the statute governing the field.
Accordingly, the nominee named by the petitioners in their letter of invocation of March 25,2015 will be regarded as their nominee on the arbitral tribunal.
The respondent is permitted a fortnight from date to intimate Advocate for the petitioner in writing as to who its nominee on the arbitral tribunal will be.
If the right of nomination is exercised within the time permitted, the two nominees will decide on the third Arbitrator.
If the respondent fails to make the nomination within the time permitted, Mr.Suman Dutta, Advocate will be the second Arbitrator and the petitioners’ nominee and the second Arbitrator will decide on the third Arbitrator.
Upon the constitution of the arbitral tribunal being completed, the Arbitrators will decide on a consolidated remuneration for each of the members on the tribunal.
The petitioners will be liable to pay the remuneration of the petitioners’ nominee; the respondent will be liable to pay the remuneration of the second Arbitrator and the petitioners on the one hand and the respondent on the other will share in equal measure the remuneration payable to the third Arbitrator, subject to the direction as to costs that may be contained in the award.
It is hoped that the arbitral tribunal concludes the reference within six months of the completion of the pleadings.
AP1154of 2015 is disposed of without any order as to costs.
Urgent certified website copies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(SANJIB BANERJEE, J.) S.Chandra