IN THE HIGH COURT OF GUJARAT AT AHMEDABAD PETN,UNDER ARBITRATION ACT. No 30 of 2003 For Approval and Signature: HON'BLE MR.JUSTICE D.K.TRIVEDI ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- GUJARAT ADANI PORT LTD. Versus VAN OORD ACZ INDIA PVT. LTD. -------------------------------------------------------------- Appearance: 1. PETN,UNDER ARBITRATION ACT. No. 30 of 2003 Mr.S.B.Vakil, Senior Advocate, with Mr. Rakesh Gupta and Mr. Kartik Thakkar for M/S TRIVEDI & GUPTA for Petitioner Mr.T.S. Murthy with and Mr.Jayesh L. Odedra, advocates of M/s.Amarchand and Mangaldas & Suresh A.Shroff & Co. the Advocates on Record, for Respondent. -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE D.K.TRIVEDI Date of decision: 06/07/2004 CAV JUDGEMENT 1. The petitioner Company incorporated under the Companies Act, 1956, engaged in the business of rendering various types of port services including the work related to dredging and reclamation works in relation to construction of container / bulk terminal at Port Mundra within the jurisdiction of Gujarat State, has moved this court for appointment of arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act" for short). In the application, the petitioner has prayed for appointment of Hon'ble Justice G.T. Nanavati (Retired Judge of the Supreme Court) as an Empire or any other Empire or any other name as may be suggested by the leave of this Court by the Advocates of the petitioner at the time of hearing. Other reliefs have also been sought for in the petition by praying the direction to proceed and determine the dispute and/or differences between the parties as early as possible. This petition is supported with an affidavit of Dr. M.K. Upadhyay, Deputy G.M. (Legal) of the petitioner Company dated 9th May, 2003. The petitioner has while filing this petition, annexed various documents including the contract dated 19th March, 2001, the Tripartite Agreement dated 18th July, 2001 and the correspondence between the parties including the legal notice issued by the petitioner to the respondent. 2. As found from the record that this petition was placed for consideration before the Judge Nominated by the learned Chief Justice to consider the application under the Act and notice was issued to the respondent as per order dated 20th June, 2003 and the same was made returnable on 18th July, 2003 subject to payment of Rs.1000=00 with the Registry of this court. It is further found that this petition was placed before the learned Nominated Judge by the learned Chief Justice from time to time after the service was served on the respondent and considering the joint request made by the counsel appearing in the matter, the matter was adjourned from time to time. 3. It is further found from the record that during pendency of this petition, an application being Civil Application No. 160 of 2003 was filed, in which the applicant Company has prayed for certain directions namely that respondent Company be directed to state on affidavit the exact / total number of employees in their employment during the years between 1999-2000, 2000-2001, 2001-2002 and 2002-2003 and also sought for reliefs that the respondent Company be directed to confirm by affidavit that the details mentioned in the statement contained in the 5th Annual Report for the year ended on 31st March, 2002 being the statement under Section 217 (2A) of the Companies Act are correct. In the said application, the applicant Company has also prayed for seeking direction that the respondent Company be directed to furnish to the applicant, or produce on record the details and documents asked for by the applicant by Advocate's letter dated 14.8.2003. The said application was also supported with an affidavit of Shri M.K. Upadhyay, Deputy General Manager (Legal) dated 19th September, 2003, in which, the applicant had also produced certain documents, including the letter issued by the advocate for the applicant Company dated 17th September, 2003 addressed to Solicitors of the respondent Company and the copy of 5th Annual Report for the year ended on 31.3.2002 signed by the Directors of the respondent Company and other documents. 4. It is further found from the record of the said application that an affidavit-in-reply is filed by Shri Srivastava, the Director of the respondent Company dated 26th September, 2003 by highlighting that as per the agreement between the parties in the present case, the arbitration is an International Commercial Arbitration and the application filed before the Designate of the Hon'ble High Court of Gujarat has no jurisdiction to hear the application for arbitrator and in respect of the notice issued through advocate by the applicant Company, calling upon the respondent Company for supply of various details, the respondent Company had through Companies advocate gave reply on 21st August, 2003 and furnished required documents to the applicant Company and as against, it is the case of the applicant that though they have received certain documents, according to the applicant Company, the said statement does not appear to be exhaustive and seems to be containing details of only those employees in respect of whom details are required to be mentioned under the provisions of Section 217 (2A) of the Companies Act, 1956 and that there may be other employees in the employment of the respondent Company during the said period in addition to 51 employees whose details are mentioned in the said statement and accordingly, it is the case of the applicant that necessary directions be given to the respondent Company in respect of the request made in the application. It is also the case of the applicant Company that under letter dated 14.8.2004, when the applicant Company had asked the respondent Company to furnish details / documents, the respondent Company has not furnished the same to the applicant and those documents are very vital and relevant to the question whether central management and control of the respondent Company is within India or outside India and the information, which the applicant has sought for are within exclusive knowledge of the respondent and that grave prejudice would be caused to the applicant in effectively dealing with the contentions raised by the respondent Company, if those documents are not ordered to be produced on record and accordingly, the applicant has prayed that the respondent be directed to produce these records in the present proceedings. 5. I have also examined the contentions raised in the application and the order passed by the Hon'ble Court (Coram : J.M. Panchal, J.) while deciding the said application on 15th December, 2003 and as per reasoned order, the application filed by the applicant Company was allowed and the respondent Company was directed to state on affidavit the exact / total number of employees in its employment during the years 1999-2000, 2000-2001, 2001-2002 and 2002-2003 and also to confirm by an affidavit that the details mentioned in the statement contained in 5th Annual Report for the year which ended on March 31, 2002, are correct and the respondent Company is further directed either to furnish to the applicant the details and documents except certificate of incorporation, asked for by the advocate of the applicant vide letter dated August 14, 2003, or to produce the same on the record of this forum and three weeks time was granted to the respondent Company for compliance of the said order and the application was accordingly allowed with no costs. 6. As found from the record that after disposal of the said application being O.J. Civil Application No. 160 of 2003, in compliance to the said order, an affidavit is filed by Shri A.P. Srivastava, Director of the respondent Company dated 12.1.2004 and he has annexed certain documents and accordingly, it is the case of the respondent Company that in compliance of the order dated 15.12.2003, the documents were produced. As found from the affidavit of Shri A.P. Srivastava dated 26.12.2003, he has also annexed the order passed by the Hon'ble Designated Judge of the Supreme Court. It is the case of the respondent Company that respondent Company had filed an application before the Apex Court for appointment of arbitrator under Section 11(6) of the Act, in first in point of time, while the present application filed by the petitioner Company, is filed after the application is filed by the respondent Company at a later stage and it is the case of the respondent Company that by this way, petitioner Company is adopting delaying tactics. 7. Before the order was passed by Brother Justice J.M. Panchal while deciding the application being O.J. Civil Application No. 160 of 2003, learned Chief Justice has as per Notification dated 4th December, 2003, nominated me to deal with the matters as per the Arbitration Scheme framed under the Arbitration and Conciliation Ordinance, 1996 with effect from 5th December, 2003 and accordingly, thereafter, the matter pertaining to Arbitration and Conciliation Act as per the Scheme were placed for my consideration for admission and final hearing. The Arbitration matters are notified for admission and final hearing once in a week i.e. on every Friday, thereto in the second sitting and after I was nominated by learned Chief Justice, arbitration matters were placed before me for admission as well as for final hearing. Considering the request made before me by the counsel appearing in the matter and for their convenience, I have heard the matter and after conclusion of the arguments, the order was kept reserved. Thereafter, as per the roster, I was to proceed over the Division Bench, in which, Criminal Appeal were notified for admission and final hearing. As agreed by the counsel that they will furnish the note of arguments by way of submission, time was granted and accordingly, the written submissions were filed on behalf of the parties. While taking up criminal matters, one Confirmation Case with conviction appeal were notified for orders and Court has to give priority while deciding the Confirmation Case and appeal filed by the accused and accordingly, necessary directions were given to the jail authority for production of the accused and said Confirmation Case with appeal were heard and the same were disposed off. Thereafter, group of appeals filed by the accused challenging the order of conviction and sentence under N.D.P.S. Act were notified before us including the acquittal appeal filed by the original complainant. Said group of matters were notified before us and as joint request was made by the counsel appearing in the matter and learned Addl. P.P. and the advocate for the complainant that these appeals require priority, as some of the accused persons were in jail for about more than 11 years and sentence imposed to some of the appellants were to over within short period as the accused persons are in jail for about 11 years, where the sentence was imposed for 12 years and fine. These group of appeals were having bulky record of papers books consisting of about more than 6000 pages and accordingly, we had also given priority to those appeals and heard the said appeals and hearing of the appeals is concluded recently and because of this fact, I could not spare time to pronounce the judgement in the present case and I express my apology for delay in pronouncing the order, in view of the order passed by the Hon'ble Designate Judge of the Apex Court in a pending application filed by the respondent Company. 8. I have heard Mr. S.B. Vakil, learned Senior Counsel, who appeared for the petitioner Company and Mr. Murthy, learned advocate for the respondent Company, who in term has taken me through the petition and documents attached thereto and the reply affidavit filed on behalf of the respondent Company. During hearing, the counsel appearing in the matter have also furnished certain orders passed by the Designated Judge of the Apex Court in a matter filed by the respondent Company being Arbitration Petition No. 15 of 2003, in which, the respondent Company had moved the Hon'ble Chief Justice of India for appointment of arbitrator filed under Sub-section (6) of Section 11 of the Act and as per order passed by the Hon'ble Designated Judge of the Apex Court on 6.1.2004, while adjourning the said petition on 15th March, 2004, the Hon'ble Judge has expressed that by that time, the petition pending before the High Court shall be disposed off. Accordingly, for the reasons given earlier for not disposing / pronouncing the order, I once again tender my sincere apology for not disposing the present petition. 9. I am conscious that the respondent Company had moved the Apex Court for seeking appointment of arbitrator as contemplated under Sub-section (6) of Section 11 of the Act and present application is filed by the petitioner Company thereafter, in which the petitioner has requested for appointment of 3rd arbitrator namely Empire, as the two arbitrators are already appointed from each side and they have to appoint the Empire for which, the petitioner Company has prayed for appointment of Hon'ble Justice G.T. Nanavati (Retired Judge of the Apex Court). While, it is the case of the respondent Company that respondent Company is the Company, whose central management and control is being exercised in Netherlands i.e. in the country other then this country and as third arbitrator, in an International Commercial Arbitration, is required to be appointed by the Hon'ble Chief Justice of India or the person or the institution designated by him, who has power to make appointment of 3rd arbitrator of a country other then the nationality of the parties, as the parties are belonging to different Nationality and while filing the application before the Apex Court, they have prayed to appoint 3rd Arbitrator of a Nationality other then the nationality of the parties. 10. After the judgement of the Apex Court, while deciding the application for appointment of arbitrator, I am not require to deal with the merits of the case and as per the decision of the Apex Court, even the contention about jurisdiction of the Arbitrator also can be raised before the arbitrator and arbitrator has to decide, if such contention is raised and accordingly, I had restricted the hearing of this petition, in light of said decision and to consider for appointment of 3rd arbitrator as prayed for in this petition. I will make it clear that, keeping in mind the decision of the Apex Court, which I will refer later on, I am not examining the merits of the case put forward by the parties as well as the contentions raised before me during hearing. 11. As found from the application, the petitioner Company is a Company engaged in the business of rendering various types of port services including the work relating to dredging and reclamation work in relation to construction of containers / bulk terminals at Port Mundra within the jurisdiction of State of Gujarat. I was taken through the contract dated 19th March, 2001 and Tripartite agreement between the parties dated 18th July, 2001. The respondent is an Indian Company incorporated and registered under the provisions of the Companies Act, 1956. The respondent is claiming that their Company is a wholly owned subsidiary of M/s. Van Oord ACZ B.V. (now known as M/s. Van Oord ACZ Marine Contractors B.V.) having office at Nether lands ["Van Netherlands" for short]. The registered office of the respondent is located at Flat No. 204, 2nd Floor, Arunachal Building, Barakhamba Road, New Delhi - 110 001. The contract dated 19th March, 2001 was entered into between the petitioner and Van Netherlands and as per said contract, the work of dredging and reclamation in relation to construction of containers / bulk terminals at Port Mundra, Gujarat State was awarded by Van Netherlands to assign the whole of the contract to such an assignment and accordingly, the assignment agreement dated 18th July, 2001 being tripartite agreement between the petitioner, Van Netherlands and the respondent, was executed. In view of the tripartite agreement arrived at between the parties, the rights and responsibility under the old contract were duly assigned to the respondent Co. as per assignment agreement dated 18th July, 2001 and during the execution of the said work, disputes arisen between the petitioner and the respondent, which is highlighted in the Arbitration Petition. 12. In the contract Agreement, as per Clause 20.2, which clause pertains to Appointment of the Dispute Adjudication Board, which read as under :- Clause 20.2 :- Appointment of the Dispute Adjudication Board :- "Disputes shall be adjudicated by a DAB in accordance with Sub-Clause 20.4 [Obtaining Dispute Adjudication Board's Decision]. The Parties shall jointly appoint a DAB by the date 28 days after a Party gives notice to the other Party of its intention to refer a dispute to a DAB in accordance with Sub-Cluase 20.4. The DAB shall comprise, as stated in the Particular Conditions, either one or three suitably qualified persons ('the members'). If the number is not so stated and the Parties do not agree otherwise, the DAB shall comprise three persons. If the DAB is to comprise three persons, each Party shall nominate one member for the approval of the other Party. The Parties shall consult both these members and shall agree upon the third member, who shall be appointed to act as Chairman. However, if a list of potential members is included in the Contract, the members shall be selected from those on the list, other than anyone, who is unable or unwilling to accept appointment to the DAB. The agreement between the Parties and either the sole member ('adjudicator') or each of the three members shall incorporate by reference the General Conditions of Dispute Adjudication Agreement contained in the Appendix to these General Conditions, with such amendments as are agreed between them. The terms of the remuneration of either the sole member or each of the three members shall be mutually agreed upon by the Parties when agreeing the terms of appointment. Each Party shall be responsible for paying one half of this remuneration. If at any time the Parties so agree, they may appoint a suitably qualified person or persons to replace any one or more members of the DAB. Unless the Parties agree otherwise, the appointment will come into effect if a member declines to act or is unable to act as a result of death, disability, resignation or termination of appointment. The replacement shall be appointed in the same manner as the replaced person was required to have been nominated or agreed upon as described in this Sub-Clause. The appointment of any member may be terminated by mutual agreement of both Parties, but not by the Employer or the Contractor acting alone. Unless otherwise agreed by both parties, the appointment of the DAB (including each member) shall expire when the DAB has given its decision on the dispute referred to it under Sub Clause 20.4, unless other disputes have been referred to the DAB by that time under Sub-Clause 20.4, in which event the relevant date shall be when the DAB has also given decisions on those disputes." In view of Clause 20.2 of the Contract, the dispute between the parties is to be resolved by a Dispute Adjudication Board and Board is comprising three persons and each party is entitled to Nominate one member in the said Board. As found from the order passed by brother Justice J.M.Panchal while disposing of Civil Application No. 160 of 2003 that the respondent Company has as per advocate's notice dated 14th January, 2003 has nominated Hon'ble Mr. Justice J.K. Mehra (retired) as its nominee on the Dispute Adjudication Board, whereas, the petitioner Company has under its letter dated 27th January, 2003 nominated Hon'ble Mr. Justice N.J. Pandya (retired) as its nominee. The two appointed Arbitrators have not been able to reach an agreement regarding appointment of third arbitrator, who is designated as Chairman under the Contract. In view of this back ground, the respondent Company has filed petition before the Supreme Court of India as provided under Section 11 (10) of the Act, as it is the case of the respondent Company that their Company's central management and control is exercised in Netherlands i.e. in a country other than India, and as third arbitrator in an International Commercial Arbitration is required to be appointed, Hon'ble the Chief Justice of India or the person or the institution designated by him, has power to make appointment of third arbitrator of a nationality other than the nationalities of the parties, as the parties belong to different nationalities. In the petition filed by the respondent Company, the Designated Judge of the Supreme Court has issued notice to the parties for appointment of Presiding Arbitrator and before the returnable date of the said notice, the petitioner Company has approached this Court for appointment of arbitrator and suggests the name of Hon'ble Mr. Justice G.T. Nanavati (Former Judge, Supreme Court of India) as Empire. It is the contention of the petitioner Company that it is not an International Commercial Arbitration as contended by respondent Company before the Supreme Court and petition which is filed by the respondent Company, has no jurisdiction to entertain such petition. 13. Mr. Vakil, learned Senior Advocate has vehemently urged that when the petitioner has approached this court for appointment of an Arbitrator to resolve the dispute between the parties and the respondent Company has appointed Justice Mehra (Retired) as their Arbitrator on 14.1.2003 and the petitioner has appointed Justice N.J.Pandya (Retired) as his Arbitrator on 27.1.2003 and these two Arbitrators did not appoint the third Arbitrator, accordingly, the petitioner has approached this Court by filing this petition and before approaching this Court, the respondent Company has approached the Chief Justice of India by filing petition as contemplated under Section 11 (7) read with Sub-section 12 (a) of Section 11 of the Act on the ground that allegation that the matter arose in the International Commercial Arbitration and the Hon'ble Designated Judge of the Supreme Court had issued notice, which was made returnable on 15th July, 2003 as per order dated 15th May, 2003. In view of the present petition filed by the petitioner, the learned Nominee by the Chief Justice has issued notice to the respondent. Before the Supreme Court, a reply is filed on behalf of the petitioner Company contenting that petition filed by the respondent Company is not tenable, as the matter is not arise in the International Commercial Arbitration, while the respondent Company has in this proceeding, filed reply that the matter arose in the International Commercial Arbitration and Chief Justice of the High Court is not competent authority as provided under Subsection 7 of Section 11 of the Act and as per the provisions of Sub-section 12 (a) of Section 11, the application would lie before the Chief Justice of India. It is the contention of Mr. Vakil that while deciding such application, where the application is filed for seeking an appointment of an Arbitrator and for determination of such application, as contemplated under the Act, the Chief Justice or his Nominee is functioning as an Administrative Authority and any contention or plea raise by the respondent that the matter arose out of an International Commercial Arbitration, which contention has been denied by the petitioner, the Nominee is required to appoint third Arbitrator without entering into such contention and in support of his submission, he placed reliance upon the decision in the matter of Konkan Railway Corporation Limited Vs. Mehul Construction Company, reported in 2000 (7) SCC p.2001. 14. Mr. Murthy, learned advocate appearing for the respondent Company placed reliance upon Sub-section 12 of Section 11 of the Arbitration and Conciliation Act, 1996