Sole Arbitrator Cannot Be Appointed Solely By One Party: High Court Of New Delhi

 IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 09.11.2021 ARB.P. 930 2021 M S. ARKAS BIOCON PRIVATE LIMITED ..... Petitioner Through: Mr. Paritosh Budhiraja Ms. Surabhi Maheshwari & Ms. Divya Singh M S. KASHINATH AGRO INDUSTRIES PRIVATE LIMITED Through: Mr. Utkarsh Sharma Advocate Respondent HON BLE MR. JUSTICE SURESH KUMAR KAIT JUDGMENT For adjudication of disputes with respondent petitioner has filed the present petition under the provisions of Section 11(6) of the Arbitration and Conciliation Act 1996 seeking appointment of sole Arbitrator. Petitioner is a Company incorporated under the Companies Act 1956 who had entered into a Lease Agreement dated 09.05.2018 with respondent a private limited company whereby Plot bearing Khasra No.292 Khata Khatuni No. 00037 Village Itara Tehsil & District Meerut Uttar Pradesh along with manufacturing shed including plant machinery and equipment ARB.P.930 2021 constructed thereon was leased to the petitioner for eleven months on a monthly rental of Rs.4 50 000 with applicable GST. According to petitioner the said plant was taken on lease from the respondent for the purpose of manufacture of Liquid Glucose Malto Dextrin Powder and the byproduct being cattle feed which were to be manufactured by the petitioner from broken rice by enzymatic process. Further claimed that in terms of the Lease Agreement dated 09.05.2018 petitioner had furnished security deposit of Rs.27 00 000 to the respondent. However certain disputed with regard to equipments electricity and pollution approvals from concerned authorities electricity and water connection etc. arose between the parties and the claim of petitioner is that despite assurances respondent failed to fix the disputes due to which petitioner had to suffer for running the manufacturing unit at the site. Further claim of petitioner is that the plant became fully operational only on 22.09.2018 and as per the agreement petitioner is liable to pay the lease rent only from the date when the production from the plant shall become fully operational i.e. 22.09.2018 only. to petitioner the delay replacement of the equipment was solely attributable to petitioner and since ARB.P.930 2021 respondent failed to complete the refurbishment repairs replacement of the plant within 45 days of the execution of the lease agreement respondent has no right to demand any amount in part or in full from the sale proceeds of the products so manufactured and sold by the petitioner and the sole consideration payable by the petitioner to the respondent was the agreed monthly lease rental. It is also averred on behalf of petitioner that upon completion of eleven months from the date of the commencement of the agreement the lease agreement in question stood terminated and petitioner vide email dated April 19th 2019 had informed the respondent that petitioner shall vacate the leased premises on April 21st 2019. Thereafter several communications were exchanged between the parties and despite repeated requests of petitioner security deposit after adjustment of two months rental has not been refunded to the petitioner. Besides security deposit petitioner has also claimed refund towards electricity deposit with interest thereon and certain other claims. The claim of petitioner is that when respondent failed to make the payments raised by the petitioner a legal notice dated 03.03.2021 was the respondent calling upon to make the payment of ARB.P.930 2021 Rs.1 97 77 000 and notified that if respondent fails to make the payment within 14 days of receipt of notice the same shall be presumed to be refusal on the part of respondent and in that eventuality Arbitration Clause as contained in Article 17 of the Lease Agreement shall stand invoked. Petitioner said to have even proposed names of three Arbitrators for adjudication of disputes. However since petitioner did not receive any communication from respondent in response to its legal notice dated 03.03.2021 it has approached this Court seeking appointment of Arbitrator. At the hearing though the claims so raised by the petitioner are opposed by learned counsel appearing on behalf of respondent however existence of Lease Agreement dated 09.05.2018 is not disputed. It is also not disputed that in terms of Article 17 of the Lease Agreement disputes have to be adjudicated through arbitration. However learned counsel for respondent has submitted that this Court may appoint Arbitrator instead of any names so proposed by the petitioner. In view of the above keeping in mind that disputes inter se parties have to be resolved in terms of Article 17 of the Lease Agreement dated 09.05.2018 which is not disputed this petition is allowed. Accordingly Mr. Justice Retd.) Sangeet Lodha ARB.P.930 2021 9414130220) is appointed Sole Arbitrator to adjudicate the dispute between the parties. 10. The fee of the learned Arbitrator shall be governed by the Fourth Schedule of the Arbitration and Conciliation Act 1996. 11. The learned Arbitrator shall ensure compliance of Section 12 of Arbitration and Conciliation Act 1996 before commencing the arbitration. 12. The petition is accordingly disposed of. 13. A copy of this order be sent to the learned Arbitrator for information. NOVEMBER 09 2021 SURESH KUMAR KAIT) JUDGE ARB.P.930 2021 

Summary: The petitioner has filed the present petition under the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of sole Arbitrator, and the same issue was held in the judgement passed by a single bench judge comprising HON’BLE MR. JUSTICE SURESH KUMAR KAIT, in the matter, dealt with an issue mentioned above M/S. ARKAS BIOCON PRIVATE V. M/S. KASHINATH AGRO INDUSTRIES PRIVATE LIMITED dealt with an issue mentioned above Petitioner is a Company, who had entered into a Lease Agreement dated 09.05.2018 with the respondent, a private limited company, along with manufacturing shed, including plant, machinery and equipment, ARB.P.930/2021 constructed thereon, was leased to the petitioner for eleven months on a monthly rental of Rs.4,50,000/- with applicable GST. According to the petitioner, the said plant was taken on lease from the respondent for the manufacture of Liquid Glucose, Malto Dextrin Powder and the by-product being cattle feed, which was to be manufactured by the petitioner from broken rice by an enzymatic process, They also mentioned that petitioner had furnished security deposit of Rs.27,00,000/-In the Lease Agreement dated 09.05.2018. According to the petitioner, the delay in the refurbishment of the equipment was solely attributable to the petitioner and since ARB.P.930/2021 respondent failed to complete the refurbishment of the plant within 45 days of the execution of the lease agreement, the respondent has no right to demand any amount. Meanwhile, the petitioner claims that when the respondent failed to make the payments raised by the petitioner, a legal notice dated 03.03.2021 was issued to the respondent calling upon to make the payment of ARB.P.930/2021 Rs.1,97,77,000/- and notified that if the respondent fails to make the payment within 14 days of receipt of the notice. However, since the petitioner did not receive any communication from a respondent in response to its legal notice dated 03.03.2021, it has approached this Court seeking the appointment of Arbitrator. Given the above, keeping in mind that disputes inter se parties have to be resolved in terms of Article 17 of the Lease Agreement dated 09.05.2018, which is not disputed, this petition is allowed. The court perused the facts and argument’s presented, it believed that- “The fee of the learned Arbitrator shall be governed by the Fourth Schedule of the Arbitration and Conciliation Act, 1996. The learned Arbitrator shall ensure compliance of Section 12 of Arbitration and Conciliation Act, 1996 before commencing the arbitration. The petition is accordingly disposed of”.