IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN TUESDAY, THE 20TH OCTOBER 2009 / 28TH ASWINA 1931 AR.No. 40 of 2008 ------------------------- APPLICANT: ------------------ M/S PARAMOUNT LIMITED, PARAMOUNT COMPLEX GOTRI ROAD, RACE COURSE CIRCLE VADODARA -390 007 (GUJARAT), REPRESENTED BY ITS DIRECTOR SHRI P.D.PATEL. BY ADVS. MR.R.S.KALKURA, MR.M.S.KALESH, MR.HARISH GOPINATH, MR.V.VINAY MENON, MR.M.AJAY (IRUMPANAM). OPPOSITE PARTIES: ------------------------------ 1. THE FERTILISERS AND CHEMICAL TRAVANCORE LTD., (A GOVT. OF INDIA ENTERPRISE) UDYOGAMANDAL 683 501,KOCHI, REPRESENTED BY ITS MANAGING DIRECTOR, THE FERTILISERS AND CHEMICALS TRAVANCORE LTD.,UDYOGAMANDAL- 683 501. 2. M/S FACT ENGINEERING AND DESIGN ORGANIZATION (A DIVISION OF THE FERTILISER AND CHEMICAL TRAVANCORE LTD.,) UDYOGAMANDAL 683 501, KOCHI, REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR. R1 & R2 BY ADVS. MR.E.K.NANDAKUMAR, MR.A.K.JAYASANKAR NAMBIAR, MR.P.BENNY THOMAS, MR.ANIL D. NAIR. THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 06/08/2009, THE COURT ON 20/10/2009 DELIVERED THE FOLLOWING: prv. THOTTATHIL B. RADHAKRISHNAN, J. = = = = = = = = = = = = = = = = = = = = = = = = A.R.No.40 of 2008 = = = = = = = = = = = = = = = = = = = = = = = = Dated this the 20th day of October, 2009. O R D E R 1.The applicant and the respondents have an agreement between them. The second respondent, as the design and engineering consultancy services division of the first respondent, is involved in the process of regulating the transactions referable to that contract. According to the applicant, disputes have arisen between the parties and there is a provision for arbitration which, though invoked, could not be given effect to since the respondents have not appropriately acted and hence, they seek measure in terms of Section 11 of the Arbitration and Conciliation Act, 1996. 2.Clause 25.0.0 of Annexure A3 provides, among other things, that the work order shall be AR40/2008 -: 2 :- subject to and shall, in all respects, be governed by Indian law and any dispute or difference connected with or arising out of work order which cannot be settled by mutual agreement of the parties shall be referred to the Chairman & Managing Director of FACT and his decision will be binding on the parties. In answer to those terms and conditions in the specifications issued by the respondents, the applicant issued Annexure A4 Offer which, among other things, contains Clause 12 providing for reference of disputes to arbitration to be held at Baroda and for appointment of an arbitrator each with provision for nomination of Umpire. Thereafter, the parties had meetings. Annexure A5 minutes, clause 11, states that the second respondent requested the applicant to withdraw the arbitration clause suggested by it and to accept the terms of the respondents which was not agreed by the applicant. The applicant informed that any dispute whatsoever arising out of the contract, unless amicably settled, shall be settled in AR40/2008 -: 3 :- accordance with the provisions of the Indian Arbitration Act, 1940 and/or any statutory modifications thereof. The second respondent informed that the venue of arbitration will be Kochi only. The applicant agreed. Clause 17 of Annexure A5 provides that the second respondent informed that all other terms and conditions shall be as per the enquiry documents and that the applicant agreed to it. 3.After the aforesaid meetings, confirmation order was placed. 4.In answer to the application, respondents have filed objections and have also placed on record, among other things, Annexure R1(d) whereby the respondents are shown to have communicated to the applicant that in terms of the arbitration agreement, the Chairman and Managing Director of FACT is the designated arbitrator and that since they have also a claim of Rs.240.58 lakhs vide Letter dated 27.10.2007, the matter could be AR40/2008 -: 4 :- proceeded unless the amount demanded by the FACT is paid. 5.With the aforesaid materials, it is pointed out by the applicant that there was no specific agreement that the Managing Director of FACT shall be arbitrator and that no decision was taken by FACT to make the reference before the institution of this Arbitration Request. 6.Annexure A4 is the terms and conditions of purchase. That provided for arbitration by the Chairman and Managing Director of FACT. While the applicant made the Offer, it stated that the arbitration proceedings shall be in Baroda and that disputes shall be referred for arbitration by each party appointing arbitrator of its own choice. Provision for nomination of an Umpire was also made. The discussions that led to Clause 11 of Annexure A5 minutes abundantly show that the request of the respondents to the applicant was to withdraw the arbitration clause suggested by AR40/2008 -: 5 :- it and to accept the terms of the respondents. The applicant did not agree to this. The applicant informed that disputes could be settled by arbitration. It also agreed to the suggestion of the second respondent FEDO that the venue of the arbitration will be Kochi only. The specific and clear term as contained in Clause 11 of Annexure A5 minutes is quoted hereunder: “11.FEDO requested PARAMOUNT to withdraw the arbitration clause suggested by PARAMOUNT and to accept our terms; which is not agreed by PARAMOUNT. PARAMOUNT informed that any dispute whatsoever arising out of the contract, unless amicably settled shall be settled in accordance with the provisions of the Indian Arbitration Act, 1940 and/or any statutory modifications thereof. FEDO informed that the venue of Arbitration will be KOCHI only. PARAMOUNT agreed.” 7.In terms of the aforesaid, what the applicant did AR40/2008 -: 6 :- was to agree with the change of venue of arbitration at Kochi. For all intents and purposes, it did not accept the terms of the respondents as regards the arbitration clause. I am not impressed by the contention of the respondents that Clause 17 of Annexure A5 minutes has an overriding effect on the clear prescription in Clause 11 of Annexure A5. 8.With the aforesaid, it also needs to be noticed that even when Annexure R1(d) was issued by the respondents, and also when Annexure A15 was issued nearly an year before that on 27.10.2007, the assertion was a request to satisfy the claim of the respondents and that the Chairman and Managing Director of FACT is the designated arbitrator. This is clearly contradictory to any agreement between the parties. What has not been agreed to, cannot be enforced. It would only stultify the bargain leading to the contract. Such a plea cannot be accepted, while considering an application to take measure. AR40/2008 -: 7 :- 9.On query, it was submitted by both sides, without prejudice to their right to challenge this order, that in the event of the request being allowed appointing an arbitrator other than the Chairman and Managing Director of FACT, both sides would have no objection to the suggestion that Justice P.Krishnamoorthy be appointed as the arbitrator. 10.With the aforesaid, the provision for arbitration between the parties is that the parties having failed for amicable resolution of the disputes, the claims and counter claims have to be decided by arbitration. The venue of arbitration shall be Kochi. Having regard to the questions of law that are shown to arise on the basis of the pleadings already made, it is abundantly appropriate that a former Judge of this Court is appointed as arbitrator. 11.For the aforesaid reasons, this arbitration request is allowed appointing Mr.Justice AR40/2008 -: 8 :- P.Krishnamoorthy, former Judge of this Court as the sole arbitrator. If the learned Arbitrator deems it necessary to obtain the service of any technical person, as may be chosen by the learned Arbitrator, the parties will bear the expenditure in that connection also as part of arbitral expenses. THOTTATHIL B.RADHAKRISHNAN, JUDGE. Sha/151009