:1: IN THE HIGH COURT OF BOMBAY AT GOA APPLN. FOR APPOINTMENT OF ARBITRATOR NOS. 7 & 8 OF 2008 APPLN. FOR APPOINTMENT OF ARBITRATOR NO. 7 OF 2008 M/s. Timblo Minerals Private Limited, a Company incorporated under the Indian Companies Act, 1956 having its Administrative Office at Kadar Manzil, Margao, Salcete, Goa, through its Director, Shri Arvind Manguesh Hodarkar, son of Manguesh Hodarkar, aged about 74 years, resident of Flat No.7, 1st Floor, Alta Monte Co-operative Housing Society, Margao Goa. ... Applicant V e r s u s 1. Smt. Kamalini R. Painguinkar, wife of late Ramakant Painguinkar aged about 67 years, r/o House Number not known, Flat No.1, Ground Floor, Damodar Co-op. Housing Society, Aquem Alto, Margao, Salcete, Goa. 2. Shri Raju R. Painguinkar, son of late Ramakant Painguinkar, aged about 46 years, 3. Smt. Jyoti Raju Painguinkar, wife of Raju R. Painguinkar, major in age, both residents of B-2, House Number not known, Virginkar Classic, Nr. Maruti :2: Temple, Davorlim, Margao, Salcete Goa. 4. Shri Rasik R. Painguinkar, son of late Ramakant Painguinkar, aged about 45 years. 5. Smt. Tanuja Rasik Painguinkar, wife of Rasik Painguinkar, major in age, both residents of Flat No.1, House number not known, Ground Floor, Damodar Co-op. Housing Society, Aquem Alto, Margao, Salcete Goa. 6. Shri Navinchandra Ramakant Katkar, son of late Ramakant Katkar, aged about 58 years. 7. Smt. Sandhya Navinchandra Katkar, daughter of Ramakant Painguinkar, aged about 49 years, both residents of House number not known, Laxmi Bhuvan, Bandora, Ponda Goa. ... Respondents AND APPLN. FOR APPOINTMENT OF ARBITRATOR NO. 8 OF 2008 M/s Timblo Private Limited, a Company incorporated under the Indian Companies Act, 1956, having its registered office at Kadar Manzil, Margao Salcete, Goa, through its Managing Director, Radha Satish Timblo, wife of late Satish Timblo, aged about 54 years, resident of Porvorim, Bardez Goa. ... Applicant :3: V e r s u s 1. Smt. Kamalini R. Painguinkar, wife of late Ramakant Painguinkar aged about 67 years, r/o House Number not known, Flat No.1, Ground Floor, Damodar Co-op. Housing Society, Aquem Alto, Margao, Salcete, Goa. 2. Shri Raju R. Painguinkar, son of late Ramakant Painguinkar, aged about 46 years, 3. Smt. Jyoti Raju Painguinkar, wife of Raju R. Painguinkar, major in age, both residents of B-2, House Number not known, Virginkar Classic, Nr. Maruti Temple, Davorlim, Margao, Salcete Goa. 4. Shri Rasik R. Painguinkar, son of late Ramakant Painguinkar, aged about 45 years. 5. Smt. Tanuja Rasik Painguinkar, wife of Rasik Painguinkar, major in age, both residents of Flat No.1, House number not known, Ground Floor, Damodar Co-op. Housing Society, Aquem Alto, Margao, Salcete Goa. 6. Shri Navinchandra Ramakant Katkar, son of late Ramakant Katkar, aged about 58 years. :4: 7. Smt. Sandhya Navinchandra Katkar, daughter of Ramakant Painguinkar, aged about 49 years, both residents of House number not known, Laxmi Bhuvan, Bandora, Ponda Goa. ... Respondents Mr. V. B. Nadkarni, Senior Advocate with Mr. Y. V. Nadkarni, Advocate for the Applicant. Mr. S. G. Dessai, Senior Advocate with Mr. C. Mascarenhas, Advocate for the Respondents. CORAM : A. S. OKA , J DATED : 23 rd JULY, 2010 & CONTINUED ON 30 th JULY, 2010. JUDGMENT These are the applications filed under Section 11 of the Arbitration and Conciliation Act, 1996 ( hereinafter referred to as the said Act ). 2. With a view to appreciate the submissions made by the learned Counsel appearing for the parties, it will be necessary to briefly refer to the factual matrix of the case. The case made out by the Applicant is based on two different agreements dated 16th June, 2003. :5: In application No. 7 of 2008, the agreement relied upon has been executed by the Applicant and one Ramakant Rajaram Painguinkar. In the said agreement, the Applicant is described as the second party and the said Ramakant is described as the first party. The said agreement records that the said Ramakant had agreed to give a contract to the Applicant for extraction of iron ore. The said agreement records that the said Ramakant had appointed the Applicant as a contractor for carrying out various works mentioned in the said agreement in the area of the mine/lease including the work of extraction of crude mineral ore from sub-soil within such area. There are recitals in the agreement that the said Ramakant had secured from the erstwhile Portuguese Regime, a mining concession which is more particularly described in the agreement with reference to property in respect of which the same was granted. Clause 5 of the said agreement is a renewal clause which reads as under :- “5. This Agreement shall come into force on the day of execution of this agreement and shall initially remain in force for a period of 5 (five) years from the date of execution of this agreement and the same shall be renewed for further like period of five years at the sole option of the SECOND PARTY on the same terms and :6: conditions herein. In the event the SECOND PARTY desires to renew the agreement for a further periods of five years each, the SECOND PARTY shall exercise the option of renewal at least six months before the expiry of the period so also the revision in the rates shall also be finalized six months earlier”. There are various clauses regarding the payments to be made to the Applicant. The Arbitration clause is clause 36 which reads thus :- “36. In the event of any dispute or difference or question arising between the parties hereto, or between any of them and the successors and/or heirs and/or legal representatives of the other or others, arising out of and/or in connection with and/or in relation to and/or in consequence of and/or concerning and/or howsoever touching this Agreement, or any of the terms, clauses or things herein contained, or as to the rights, duties and liabilities of the parties hereto under these presents, whether during the continuance of this agreement or after, then the same shall be referred to the Arbitration. Such Arbitration shall, save and except to the extent as hereinafter provided, be governed by the provisions of the Arbitration & Conciliation Act, 1996 or its statutory re-enactment or amendments thereto or thereof, in force at the relevant time.” :7: 3. As far as application No. 8 of 2008 is concerned, the agreement dated 16th June, 2003 is between the Applicant and the said Ramakant. There are recitals which relate to mining concession obtained by the said Ramakant from the erstwhile Portuguese Regime. In the agreement, the Applicant is described as the buyer and the said Ramakant is described as the seller. The agreement provides that the said Ramakant shall exclusively sell all the marketable iron ore extracted and/or duly processed from the area of the above mentioned mining concession only to the Applicant during the term of the agreement and its renewal. One of the material clauses in the said agreement is clause 4(a) which reads thus : “4(a) This agreement shall come into force on the day of execution of this agreement and shall initially remain in force for a period of 5 (five) years from the date of execution of this agreement and the same shall be renewed by the SELLER for further like periods of five years at the sole option of the BUYER on the same terms and conditions herein contained. In the event the BUYER desires to renew the agreement for further period of 5 (five) years, the BUYER shall exercise the option of renewal at least six months before the expiry of the period so also the revision in the rates shall also be finalized six :8: months earlier”. There is an arbitration clause in said Agreement which is clause 23, which reads thus :- “23. In the event of any dispute or difference or questions arising between the parties hereto, or between any of them and the successors-in-title and/or heirs and/or legal representatives of the other or others, arising out of and/or in connection with and/or in relation to and/or in consequence of and/or concerning and/or howsoever touching this Agreement or any of the terms, clauses or things herein contained, or as to the rights, duties and liabilities of the parties hereto under these presents, whether during the continuance of this agreement, its renewals or after, then the same shall be referred to the Arbitration under the provisions of the Arbitration & Conciliation Act, 1996 or its statutory re-enactment or modification thereto or thereof, for the time being in force”. 4. The case of the Applicant in both the applications is that by communications issued on 19th November, 2007, the Applicant exercised the option provided for in the agreements of renewal for :9: further period of five years. Both the communications record that the Applicant exercised the option under the relevant clause of the agreements to renew the agreement for a further period of five years commencing from 16th June, 2008. It is stated that to further record the renewal, the Applicant proposes to execute an agreement as per the draft enclosed along with the said communications. 5. There was a further correspondence made which is placed on record in the application and/or along with further affidavits filed. It must be noted here that on 28th May, 2006 the said Ramakant expired. The Applicant has impleaded the Respondents to the application in their capacity as the legal representatives of Ramakant. The communications dated 19th November, 2007 have been addressed by the Applicant to the present Respondents enclosing therein a draft of the agreement. There is a further letter dated 5th May, 2008 placed on record which has a reference to the earlier letter of the Applicant. In the said letter, the Applicant has reiterated that an option to renew the agreements has been exercised and in fact Applicant sought a meeting to finalise the agreement. A communication was issued by the :10: Respondents on 9th June, 2008 to the Managing Director of the Applicant. The letter records that the said Ramakant has passed away on 28th May, 2006 and, thereafter, a deed of succession dated 18th December, 2007 has been drawn up before the Notary Public whereby the only heirs of the said Ramakant are the first Respondent, second Respondent and fourth Respondent herein. It is recorded in the said letter that several meetings were held with the Applicant culminating in the meeting dated 29th May, 2008. A hope was expressed by the said letter that mutually acceptable arrangement will be arrived at. Thereafter, the Applicant addressed a letter dated 10th June, 2008 to the Respondents wherein they reiterated to have exercised the option to renew the agreement for a further period of five years. A reference is made in the said letter to various meetings held between the parties. The said letter was replied by the Respondents vide their letter dated 13th June, 2008 wherein they have denied that the agreement stands renewed from the year 2008 to 2013. It is contended that as there is no agreement as to the terms of the fresh agreement, there will be no agreement in existence after 15th June, 2008 unless the parties execute a fresh agreement in writing containing agreed terms. On the receipt of :11: the said letter, the Applicant issued a notice dated 14th June, 2008 and invoked the arbitration clause by appointing Justice Dr. G. F. Couto ( a retired Judge of this Court ) as the learned arbitrator. As there was no response from the Respondents, the present applications have been filed. There is a reply filed by the Respondents and there are various affidavits of the parties on record of these applications. 6. The learned Senior Counsel appearing for the Applicant in both the applications invited attention of this Court to the decision of the Apex Court in the case of National Insurance Co. Ltd. V/s M/s. Boghara Polyfab Pvt. Ltd. ( 2008 AIR SCW 7084). He invited attention of the Court to the scope of the proceedings under Section 11 of the said Act. He submitted that it is mandatory to decide only two issues namely whether the party making an application has approached the appropriate High Court and whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to the said agreement. He invited my attention to the various clauses in the extraction agreement as well as the sale agreement. He pointed out that an option was given to the Applicant to :12: renew the agreements on expiry of initial period of five years. He submitted that for renewal of the agreements, the concurrence of the deceased Ramakant was not required and the renewal was entirely at the option of the Applicant. He pointed out that the agreement will bind the legal representatives of the deceased Ramakant and the agreement will not come to end on demise of the deceased Ramakant. He submitted that both the agreements do not contemplate the execution of renewal agreement in writing and once the Applicant exercised the option of renewal, the other party had no option. He submitted that merely because there is no fresh agreement executed incorporating the renewal , it will not affect the rights of the Applicant to renewal of the said agreements. He submitted that the Respondents have raised a contention that the renewal can be brought into existence provided there is a fresh document executed by and between the parties. He submitted that this dispute is a dispute relating to the terms and conditions of both the agreements containing arbitration clauses. 7. He invited attention of the Court to the various provisions of the said Act and in particular Section 40 of the said Act by :13: contending that an arbitration agreement is not discharged by the death of any party to it but it shall be enforceable by or against the legal representatives of the deceased party. He invited the attention of the Court to the definition of the legal representative incorporated in clause 2(1)(g) of the said Act. Pointing out the definition of legal representative under Code of Civil Procedure, 1908, he submitted that the definitions are also identical and, which include even a person who intermeddles with the estate of the deceased is a legal representative. He relied upon a decision of the Apex court in the case of Custodian of Branches of BANCO National Ultramarino ( AIR 1989 SC 1589 ) and a decision of this Court in the case of Sadanand Shankar Naik V/s Smt. Ravita Ravindra Ratwal ( 1991(1) Goa L.T. 52) and submitted that the 1st Respondent is certainly a legal representative of her deceased husband Ramakant. 8. The learned Counsel appearing for the Respondents contended that the Respondent No.1 (the widow of Ramakant) is a moiety holder and not a heir of Ramakant. He pointed out that the decision of the Apex Court in the case of Custodian of Branches :14: (supra ) is based on a concession and, therefore, it does not lay down any law. He submitted that the decision of this Court in the case of Sadanand Shankar Naik (supra ) is based only on the aforesaid decision of the Apex Court. Hence, it is not a binding precedent. He placed reliance on a decision of Allahabad High Court in the case of Amarchand and another V/s Parmanand and others ( AIR 1934 Allahabad 474 ) . Relying upon what is held by the Allahabad High Court, he submitted that it is only after a suit has been instituted, the Civil Procedure Code comes into operation and the definition of legal representative to be found in the Civil Procedure Code is meant only for the purposes of the Code and not as a general statement of a substantive rule of law. He submitted that the first Respondent is not a legal representative under the substantive law. The wife has inherent right in the property of her husband. He relied upon Article 1119. He submitted that the first Respondent has an inherent right. He, therefore, submitted that the first Respondent by no stretch of imagination can be a legal representative of deceased Ramakant. He, therefore, submitted that the first Respondent is not bound by agreement which allegedly contains an arbitration clause. He :15: submitted that even assuming that there was a renewal of the agreement, the same will not bind the first Respondent. 9. He submitted that there is no document executed on the basis of so called renewal clause. He submitted that unless an agreement is executed by the parties incorporating terms and conditions of renewal, there is no agreement in existence. His submission is that the existence of arbitration agreement has not been established. In any event, the first Respondent is not a legal representative of deceased Ramakant. He, therefore, submitted that there is no merit in the applications and the same deserve to be dismissed. 10. The learned Senior Counsel appearing for the Applicant invited my attention to the various documents which according to him show that it is undisputed that the first Respondent is the legal representative of deceased Ramakant. 11. I have given careful consideration to the submissions. The scope of application under Section 11 of the said Act is no more res :16: integra. In paragraph 17 of the decision in the case of National Insurance Co. Ltd. (supra ), the Apex Court has divided the issues arising for determination in such applications into three categories. Paragraph 17 reads thus : “17. Where the intervention of the Court is sought for appointment of an Arbitral Tribunal under Section 11, the duty of the Chief Justice or his designate is defined in SBP & Co. This Court identified and segregated the preliminary issues that may arise for consideration in an application under Section 11 of the Act into three categories, that is (i) issues which the Chief Justice or his Designate is bound to decide; (ii) issues which he can also decide, that is issues which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide. 17.1 The issues (first category) which Chief Justice/his designate will have to decide are : (a) Whether the party making the application has approached the appropriate High Court. (b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement. 17.2 The issues (second category) which the Chief Justice/his designate may :17: choose to decide ( or leave them to the decision of the arbitral tribunal) are : (a) Whether the claim is a dead ( long barred) claim or a live claim. (b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection. 17.3 The issues ( third category ) which the Chief Justice/his designate should leave exclusively to the arbitral tribunal are : (i) Whether a claim made falls within the arbitration clause ( as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration). (ii) Merits or any claim involved in the arbitration. It is clear from the scheme of the Act as explained by this Court in SBP & Co., that in regard to issues falling under the second category, if raised in any application under Section 11 of the Act, the Chief Justice/his designate may decide them, if necessary by taking evidence. Alternatively, he may leave those issues open with a direction to the Arbitral Tribunal to decide the same. If the Chief Justice of his Designate chooses to examine the issue and decides it, the Arbitral Tribunal cannot re-examine the same issue. The Chief Justice/his designate will, in choosing whether he will decide such issue or leave it to the Arbitral Tribunal, be guided by the object of the Act ( that is expediting the :18: arbitration process with minimum judicial intervention ). Where allegations of forgery/fabrication are made in regard to the document recording discharge of contract by full and final settlement, it would be appropriate if the Chief Justice/his designate decides the issue.” 12. As far as first question in paragraph 17.1 is concerned, in the present case there is no dispute. For answering the second issue in paragraph 17.1 of the decision of the Apex Court, the question to be decided is whether there is an arbitration Agreement. Both the Agreements admittedly contain arbitration clauses. However, it is contended by the respondents that there is no renewal of the agreements dated 16th June, 2003. 13. The renewal clause in the agreement subject matter of Application No. 7 of 2008 is clause 5 which reads thus : “5. This Agreement shall come into force on the day of execution of this agreement and shall initially remain in force for a period of 5 (five) years from the date of execution of this agreement and the same shall be renewed for further like period of five years at the sole option of the SECOND PARTY on the same terms :19: and conditions herein. In the event the SECOND PARTY desires to renew the agreement for a further periods of five years each, the SECOND PARTY shall exercise the option of renewal at least six months before the expiry of the period so also the revision in the rates shall also be finalized six months earlier”. 14. There is an identical clause No.4(a) in the Agreement subject matter of the Application No. 8 of 2008. On plain reading of the renewal clause, it appears that an option has been given to the second party (the Applicant herein ) to renew the agreement for a further period of five years as a matter of right. The Applicant is given an option of renewal which has to be exercised at least six months before the expiry of the period of the Agreement. The renewal clause provides that the revision in the rates shall be finalised six months earlier. 15. It is true that in the letter dated 19th November, 2007 sent by the Applicant to the Respondents, it is stated that a draft of agreement proposed to be executed was enclosed therewith. What is stated in the said letter reads thus : :20: “As you may be aware the period of five years stipulated in the above agreement would expire on 15/6/2008. In terms of Clause 5 of the Agreement we hereby exercise our option to renew the said Agreement for a period of five years commencing 16/6/2008. To further record the renewal we propose to execute an agreement as per draft enclosed. May we therefore suggest a meeting with you in our office at any time convenient to you for execution of the agreement.” In the said letter, there is an unequivocal exercise of option to renew the agreement for a period of five years commencing from 16th June, 2008. It is stated that “to further record the renewal”, the Applicant was proposing to execute an agreement. The exercise of option by the Applicant is admittedly before six months prior to the date on which the period of the Agreement was to come to an end. 16. The letter referred to above is followed by another letter dated 5th May, 2008 sent by the Applicant to the Respondents which again records the exercise of option in terms of renewal clause of the agreement and a meeting was sought for execution of the agreement. In the letter dated 13th June, 2008 sent by the Respondents, it is stated :21: that the Respondents had not accepted the contention of the Applicant that the agreement stands renewed for a period of five years from 16th June, 2008. It is stated that no agreement will be in existence after 15th June, 2008 unless a fresh agreement is