1 IN THE HIGH COURT OF BOMBAY AT GOA APPLICATION FOR APPOINTMENT OF ARBITRATOR NO.12/2008 Shivam Engineers & Shypwrights Pvt. Ltd., A Company incorporated under the Indian Companies Act, 1956, having its registered office at Ashish, 693, B.B. Borkar Road., Alto Porvorim, Bardez, Goa. ........ Applicant. V/s Shree Sagar Stevedores, a Partnership Firm, Registered under the provisions of the Indian Partnership Act, having office at 1546/47, Rameshwar Complex, 1st Floor, Ghogha Circle, Bhavnagar, Gujarat Pin 364 002. ......... Respondent. Mr. S. G. Dessai, Senior Advocate with Mr. S. D. Padiyar, Advocate for the applicant. Mr. H. D. Naik, Advocate for the respondent. CORAM :- A.S. OKA, J. Date :- 16th July, 2010. 2 ORAL JUDGMENT : 1. The submissions of the learned Counsel appearing for the parties were heard on 9th July, 2010. This is an application 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 set out the facts in brief. According to the case of the applicant, there was an agreement dated 10.9.1999 entered into between the applicant and the respondent. The agreement recites that the applicant is owner of a barge by the name “M.V. Sundaram”. The agreement is for charter of the said barge for the season commencing from 5th October, 1999 till 15th May, 2000. The respondent has been described as “the Charterer” in the said agreement. The respondent agreed to pay certain amounts to the applicant. There is an arbitration clause in the said agreement. According to the applicant, a fresh agreement dated 10th November, 2000 was executed by and between the parties in respect of the same 3 barge on the same terms and conditions. The agreement was for the subsequent period. The agreement provides that the period of time charter shall be a period of fair season which shall commence when the barge reaches at Magdalla till 15th May, 2001. It provides that the barge shall be delivered to the Charterers by the applicant at Magdalla Port. The case made out in the application is that the applicant is owner of another barge by the name “M.V. Jay Rameshwar”. Letters were written by the applicant to the respondent offering the said barge to the respondent on trip basis. According to the case of applicant, the offer given by the applicant was accepted by the respondent and it was agreed that the said barge M.V. Jay Rameshwar will be given to the respondent on hire, on trip basis. According to the applicant, it was agreed that payment for the first trip of the day would be Rs.22,000/- per trip and for the second trip of the day i.e. sailing on the said tide Rs.12,000/- per trip. It is contended that all terms and conditions on which the barge M.V. Jay Rameshwar was offered by the applicant were the same as provided for in the Agreement dated 10th May, 2000 relating to barge M.V. Sundaram. The contention is that in the said agreement dated 10th November, 2000, there was an arbitration clause. 4 3. The applicant relied upon Special Civil Suit No. 67/2004 filed by the respondent in the Court of Civil Judge, Senior Division at Bhavnagar in Gujarat for recovery of Rs.9,23,520/- towards damages. It is contended that the fact that the barge M.V. Jay Rameshwar was given by the applicant has been admitted in the plaint. The contention of the applicant is that certain amounts were due and payable by the respondent to the applicant under the Agreements dated 10th September, 1999 and 10th November, 2000. It is alleged that the respondent is liable to pay certain amounts for the use of the barge M.V. Jay Rameshwar and correspondence was exchanged between the parties. Reliance is placed on a letter dated 1st October, 2001, allegedly sent by the applicant to the respondent, demanding various amounts. According to the applicant, the said amounts relate to both the barges. There is a subsequent letter dated 23rd February, 2004 sent by the applicant to the respondent which is relied upon by the applicant and it is contended that the applicant was entitled to recover the amount as stated therein from the respondent. By a notice dated 30th July, 2004 arbitration clause was invoked by the applicant which is incorporated in the Agreement dated 10th November, 2000 and it was proposed to appoint one Mr. A.W.J. (Tony) Fernandez as sole 5 arbitrator. The applicant filed Application for Appointment of Arbitrator No.22/2004 in this Court by invoking Section 11(5) of the said Act. The said application was disposed of by this Court by an order dated 21st April, 2005 by appointing Justice G.D. Kamat, Retired Chief Justice of Gujarat High Court as the Arbitrator. The case of the applicant is that disputes as regards both the parties were referred to the learned Arbitrator. It appears that a statement of claim was filed by the applicant before the learned Arbitrator, making claims as regards use of the barge M.V. Jay Rameshwar, as well as the barge M.V. Sundaram. The claim made as regards the barge M.V. Sundaram appears to have been on the basis of the aforesaid agreements. The respondent filed reply to the said statement of claim and raised objection by contending that only the dispute arisen as regards Agreement dated 10th November, 2000 has been referred to the Arbitrator and other disputes have not been referred. The contention of the applicant is that the demand which preceded invocation of the arbitration clause was as regards both the agreements relating to barge M.V. Sundaram, as well as the agreement in respect of barge M.V. Jay Rameshwar. It appears that an application was made by the applicant in this Court seeking clarification as regards the order dated 21st April, 6 2005 passed in Application No.22/2004. The said application was disposed of by this Court by an order dated 21st September, 2007, without granting relief to the applicant. It is pointed out that this Court observed that the Arbitrator was appointed by this Court in respect of the dispute which had arisen pursuant to the Agreement dated 10th November, 2000 and no other agreement was subject-matter of the said application. The applicant has placed reliance on a notice dated 1st December, 2007 issued without prejudice, by which the arbitration clause was invoked as regards the Agreement dated 10th September, 1999 relating to barge M.V. Sundaram and as regards the agreement in respect of another barge M.V. Jay Rameshwar. By the said notice, the applicant called upon the respondent to agree for appointment of the Retired Chief Justice Shri G.D. Kamat as the arbitrator. As there was no response from the respondent, the present application has been filed, seeking appointment of an arbitrator relating to all alleged pending disputes between the applicant and the respondent pertaining to the agreement dated 10th September, 1999 and the agreement relating to the barge M.V. Jay Rameshwar. 4. Learned Senior Counsel appearing for the applicant 7 invited attention of the Court to the arbitration clause in the agreement dated 10th September, 1999 which is undisputedly executed by and between the parties and to the correspondence made by the applicant, in particular the letter dated 15th September, 1999 which is in the nature of facsimile message addressed to the respondent, as well as the letter dated 3rd October, 2000. He pointed out that the said two letters clearly show that barge M.V. Jay Rameshwar was offered to the respondent on the monetary terms incorporated in the said letters and it was specifically stated that the other terms and conditions will be as per the agreement dated 10th September, 1999 as regards barge M.V. Sundaram. He invited attention of the Court to further correspondence as well as the averments made by the respondent in Special Civil Suit No.67/2004 in which there is an admission on the part of the respondent that the barge M.V. Jay Rameshwar was given to the respondent on the same terms and conditions on which barge M.V. Sundaram was agreed to be given. He submitted that the demands made preceding filing of the first application relate to all three transactions and perhaps due to inadvertence that the prayer made in the earlier Application No.22/04 was not found properly made. He pointed out that the averments made in the application refer to the 8 entire claim made by the applicant as regards all the three transactions. He submitted that the applicant has established existence of arbitration clause and live disputes arising between the parties. He submitted that all other issues should be left to be considered by the arbitrator. 5. Learned Counsel appearing for the respondent opposed the application. He pointed out that the earlier application was specifically relating to the disputes arising out of the agreement dated 10th November, 2000. He pointed out that a specific objection to that effect was raised by the respondent by filing a reply to the statement of claim. He stated that now the claim of the applicant based on the alleged said two transactions is barred by limitation. He pointed out that based on the contentions raised by the applicant in the statement of claim and by the respondent in the reply, learned Arbitrator has framed an issue as to whether the arbitral reference is required to be restricted to the disputes and differences and the claims arising out of the Agreement dated 10th November, 2000. He submitted that as the issue is already framed by the learned Arbitrator, this Court ought not to entertain the present application as the arbitrator is bound to decide the issue whether the scope of arbitration is confined only to the 9 alleged dispute as regards one transaction or arbitration relates to all the three transactions as claimed by the applicant. He submitted that in the written agreements there is no reference to another barge M.V. Jay Rameshwar. He submitted that the applicant has thus suppressed that the claim as regards the barge M.V. Jay Rameshwar is already made by the applicant before the learned Arbitrator and, therefore, the present application is not maintainable. He submitted that in any event, there is no arbitration agreement in any manner in respect of the alleged transaction of hire of barge M.V. Jay Rameshwar and, therefore, the dispute cannot be referred to the arbitrator. He submitted that therefore, there is no merit in the application and the same deserves to be rejected. 6. I have given careful consideration to the submissions. The issue of scope of adjudication of an application under Section 11 of the said Act is no longer res integra. In the case of National Insurance Co. Ltd. vs. M/s. Boghara Polyfab Pvt. Ltd. (2008 AIR SCW 7084), the Apex Court, after referring to its earlier decision of the Constitution Bench in the case of SBP & Co. vs. Patel Engineering Ltd. (2005 (8) SCC 618) has, in paragraph 17, held thus : 10 “ 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 the 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 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. 11 (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 or 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 12 leave it to the Arbitral Tribunal, be guided by the object of the Act (that is expediting the 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.” 7. The first issue which will have to be decided is whether the applicant has approached the appropriate High Court. In the present case, there is no dispute that the applicant had approached this Court which is the proper Court. The second issue which will have to be decided is whether there is an arbitration agreement and whether the party who has applied under Section 11 of the said Act, is a party to such an agreement. 8. As far as this Court is concerned, the order dated 21st September, 2007 clearly holds that the order passed in the earlier application No.22/2004 appoints an arbitrator only in respect of the disputes which have arisen pursuant to the agreement dated 10th November, 2000. 13 9. It appears that there were two agreements relating to the barge M.V. Sundaram. The first is dated 10th September, 1999 and the other is dated 10th November, 2000 which appears to be for a period subsequent to the earlier agreement. In the agreement dated 10th September, 1999 there is a clear arbitration clause which reads thus : “ ARBITRATION : Any dispute arising by virtue of this contract or any difference of opinion between the parties hereto concerning their rights and obligations under this contract which cannot be mutually settled shall be resolved by arbitration as per the Indian Arbitration Act. This Agreement is subject to the jurisdiction of courts in Goa and for all legal purposes this, Agreement shall be deemed to be executed in Goa and subjected to Goa territorial jurisdiction only” In Special Civil Suit No. 67/2004, the respondent has referred to and relied upon the said agreement. Therefore, there does not appear to be any dispute about the execution of the agreement containing arbitration clause. The other dispute is as to whether there was an arbitration clause as regards the transaction in respect of the second barge namely 14 M.V. Jay Rameshwar. The first communication relied upon by the applicant in this behalf is dated 15th September, 1999. By the said communication, the applicant offered to make available barge M.V. Jay Rameshwar on the terms and conditions set out in the said communication. There is a further communication dated 28th August, 2000 issued by the applicant to the respondent. The communication dated 3rd October, 2000 is again a letter issued by the applicant to the respondent which refers to the discussion held on 24th September, 2000 which records the proposal of the applicant on the basis of the discussion. The said communications make reference to barge M.V. Jay Rameshwar as is clear from the communication dated 28th August, 2000. The other terms set out are as regards the amounts payable by the respondent. In the said letter 3rd October, 2000, what is material is clause 7 of the said communication which reads thus : “ 7) All other terms and conditions as per agreement dated 10-9-1999 between two parties for Barge M.V. “Sundaram” M-7489”. There is a further communication dated 26th January, 2000 which refers to the earlier offer given by the applicant. Paragraph 4 of the suit filed by the respondent will be relevant on this aspect. Paragraph 4 reads 15 thus : “ (4) The defendant is an owner of the barges named “Sundaram” and “Jay Rameshwar” and he was in need of to provide his barge services on rental basis. So its director Mr. Anil Raje came down at Bhavnagar and proposed to provide his services and after discussion and as the rental charges were agreed by the parties, one agreement was signed at Bhavnagar by the parties on 10th September, 1999 and as per the agreed terms the defendant had to provide one barge named M.V. Sundaram. Then after as per the request of defendant one another barge also order to work at Magdalla with same price and conditions. So that the barge named M.V. Sundaram was in service and barge named M.V. Jay Rameshwar was in service.”. As pointed out in paragraph 4, the respondent admitted execution of the agreement dated 10th September, 1999. Further, in the said paragraph, the respondent seems to have accepted that the barge M.V. Jay Rameshwar was in service with the respondent. The averments specifically record that the said another barge was also ordered to work at Magdalla on the same price and conditions. Thus, the averments made in the plaint filed by the respondent spell out the agreement 16 between the parties as regards barge M.V. Jay Rameshwar and it notes that the barge was in service on the same conditions as per the Agreement dated 10th September, 1999 as regards barge M.V. Sundaram. As pointed out earlier, in the agreement dated 10th September, 1999 there is an arbitration clause which is quoted above. Therefore, a finding will have to be recorded that there is an arbitration agreement between the parties and the applicant is party to the said arbitration agreement. From the claims made by the applicant which are referred to in the correspondence annexed to the application, it appears that the applicant has made monetary claim as regards all the three transactions. The first two transactions are based on the agreement in writing referred to above and the third transaction is as regards the barge M.V. Jay Rameshwar. 10. Whether the claim of the applicant is within limitation or not is a matter which will have to be left to the arbitral Tribunal. 11. As held by the Apex Court in the case of National Insurance Co. Ltd. (supra), whether the claim made falls within arbitration clause and the merits of the claim, are the issues which are 17 required to be left for the decision of the arbitral Tribunal. 12. Subject to what is observed above, the Application for Appointment of Arbitrator must succeed and I pass the following order: Subject to the observations made above, Shri Justice G.D. Kamat (Retired Chief Justice of Gujarat High Court) is appointed as an arbitrator in respect of the disputes which have arisen between the parties as regards the Agreement dated 11th September, 1999 as regards the barge M.V. Sundaram and the agreement spelt out as regards the barge M.V. Jay Rameshwar. The applicant is directed to deposit as processing fee Rs.5000/- within a period of four weeks from today. A.S. OKA, J. ssm.