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, ...

[2008) 15 S.C.R. 567

M/S COM ED CHEMICALS LTD. v.

C.N. RAMCHAND (Arbitration Petition No. 17 of 2007)

NOVEMBER 6, 2008

[C.K. THAKKER, J.]

The Arbitration and Conciliation Act, 1996:

s.2(1)(f) and 11 (6) and (9) - 'International commercial C arbitration - A British National appointed as Director (Technic; al) of an Indian subsidiary company formed under the Memo of Understanding - Dispute with regard to functioning of Director (Technical) - Application for appointment of arbitrator- Opposed on the ground that Director (Technical) 0 being an employee and providing technical know-how and expertise for payment of fees, matter was not covered under the term 'commercial' so as to _attract provisions of the Act - HELD: The relevant clause in the agreement expressly declared that any dispute pertaining to MoU would be decided through arbitration - The Director (Technical) was required to E undertake certain responsibilities under the agreement - He was allotted 40% equity share in subsidiary company, besides salary. and other benefits in lieu of services to be rendered by him - Any dispute between the parties would be covered under the arbitration clause in the agreement - Case is F covered by clause (f) of s.2(1) of the Act - Arbitrator appointed. ·

INTERNATIONAL CONVENTIONS/TREATIES

UNCITRAL Model Law on International Commercial G Arbitration as adopted by United .Nations Commission on International Trade Law - Expression 'commercial' - HELD: Should be given a wide interpretation so as to cover matters

567 H

A arising from all relationships of a commercial nature, whether contractual or not.

The petitioner company, in order to expand its business in chemicals in the field of bio-technology, entered into a Memorandum of Understanding and 8 appointed the respondent as Director (Technical). The

MoU stipulated that the respondent would work full time with the company at least for next eight years. The case of the petitioner was that the respondent did not take interest in the work and failed to attend Board Meetings, C and sent a letter of resignation. The petitioner did not accept t_e resignation and sent a notice to the respondent for arbitration, nominating an arbitrator. The respondent did not agree to the arbitrator nominated by the petitioner and suggested three names. In view of non- 0 agreement between the parties, the petitioner filed an application under s.11 of the Arbitration and Reconciliation Act, 1996 and requested the Chief Justice of the High Court to appoint an arbitrator. The respondent raised an objection that he being a British National, Chief E Justice of the High Court had no jurisdiction to entertain the application. Consequently, the company filed the instant petition.

The respondent opposed the petition as not- F maintainable on the grounds that the agreement provided for supply of technical knowmhow and expertise l-- for payment of 'fees' and there was no dispute arising out of legal relationship that could be considered as 'commercial' covered under clause (f) of s.2(1) of the Act; and that the respondent was appointed by the company G as an employee and the relationship between them was of master and servnt, and as such the Act had no application. ·

 Allowing the petition, the Court H

COMED CHEMICALS LTD. v. C.N. RAMCHAND 569

HELD: 1. A bare reading of Clause 12 of the A Agreement leaves no room for doubt that it is an 'arbitration clause' and expressly declares that any dispute pertaining to MoU would be solved and decided by an arbitrator. [Para 13] [576-H; 577-A] B 2.1. It would not be correct to say that there was no 'commercial' element in the agreement so as to be covered within the term 'International commercial arbitration'. This Court has held that the agreement to render consultancy service was 'commercial' in nature G and there was commercial relationship between the parties. [Para 14 and 17] [577-B; 578-C]

Kamani Engineering Corporation Ltd. & Ors. v. Societe De Traction Et D'Electricite Societe Anonyme, & Ors., AIR

(1965) Born 114; Josef Meisaner GMBR & Co. v. Kanoria D Chemicals & Industries Ltd. & Anr., AIR (1986) Cal 45 and Mukesh H.Mehta & Ors. v. Harendra Mehta, (1998) 92 Comp Cases 402, cited.

R. M. Investment & Trading Co. Pvt. Ltd. v. Boeing Co. & E Anr., [1994] 4 sec 541, relied on.

2.2. The UNCITRAL Model Law on International Commercial Arbitration as adopted by the United Nations Commission on International Trade Law lays down that the term 'commercial' should be given a wide F

i interpretation so as to cover matters arising from all relationship of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, inter alia, the transactions of consulting; joint venture and other forms of industrial or business G cooperation. This Court has also held that commercial contract must be broadly construed with a view to give efficacy to such contract rather than to invalidate it.

..,,...._,., Clauses of the contract must be liberally interpreted.

A Narrow and technical approach should be avoided. [Para

20 and 22] [579-D-F; 580-CD]

Union of India v. D.N. Revri & Co., [1976] 4 SCC 147 and Citibank N.A. v. TLC Marketing PLC & Anr., [2008] 1 B SCC 481, relied on.

Russel on Arbitration (1997) p.60, referred to.

2.3.- The applicant-Company wanted to venture into the field of bio-technology which was not previously c chartered or traversed by it (novel bio-products). The respondent possessed special knowledge and to get the benefit of such research and expertise, an agreement was entered into by the parties and respondent was appointed l)irector (Technical) of the. subsidiary 0 Company. He was allotted 40% equity shares in the subsidiary Company (Corned Bio~Tech Ltd.). Overand above that, he was to be. paid salary and other bt:nefits in lieu of services rendered by him. Para 3 of the Agreement required the resrondent to undertake certain E responsibilities. [Para 25 and 27] [581-G, H; 581-8]

Ram Pershad v. Commissioner of Income Tax, New Delhi, [1972] 2 sec 696, relied on.

Lee v. Lee's Air Framing Ltd., (1961) AC 12, referred to.

2.4. From settled legal position as also from the functions to be performed by the respondent, he was working in double capacity, i.e. (i) as an employee, and

(ii) as a Director. In the latter capacity, however, he was . the Chief Executive Officer of the subsidiary Company G and had to look after all operational matters. The functions to be performed by him were supervisory and related to policy making decisions in the affairs of the Company. Any. dispute between the applicant-Company and the respondent would, therefore, be covered by H Clause 12 of the Agreement which provides for

COMED CHEMICALS LTD. v. C.N. RAMCHAND 571

arbitration. [Para 32] [583-E-G] A - >-

3. The case is covered by clause (f) of sub-section

(1) of Section 2 of the Act. It is a case of 'International commercial arbitration' and is covered by Clause 12 of MoU. Since there is a dispute between the parties, it has B to be decided by an arbitrator. The relevant clause provides for an arbitrator i.e. sole arbitrator; therefore, only one arbitrator should be appointed. Sole arbitrator

} appointed to decide the dispute between the parties. [Para 33] [584-A-C] c Case Law Reference :

AIR 1965 Born 114 cited Para 15

AIR 1986 Cal 45 cited para 15

(1998) 92 Comp Cases 402 cited para 15 'o

(1994) 4 sec 541 relied on para 16

(1976) 4 sec 147 relied on para 21

(2008) 1 sec 481 relied on para 22 E

(1961) AC 12 referred to para 27

(1972) 2 sec 696 relied on para 29

CIVIL ORIGINAL JURISDICTION: Arbitration Petition No.

F 1 17 of 2007. - O.P. Dhingra, Kav!ta Kapil and Debasis Misra for the Appellant.

Prashant Bhushan and Mayank Misra for the Respondent.

The Judgment of the Court was delivered by

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C.K. THAKKER, J. 1. The present petition is filed by the petitioner under Section 11 of the Arbitration and Conciliation H

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A Act, 1996 (hereinafter referred to as "the Act") praying to

Hon'ble the Chief Justice of India to appoint third Arbitrator as Presiding Arbitrator or to appoint Sole Arbitrator as deemed fit in the facts an<d circumstances of the case.

2. It is the case of the applicant that it is a Company known as Mis Corned Chemicals Ltd. registered under the Indian Companies Act, 1956. Mr. Ashwani Kapil is the authorized signatory who has approached this Court. It is stated in the application that the Company is doing business in chemicals C in the fieid of bio-technology. To expand the business, the Company floated a subsidiary company in the name and style of Corned Biotech Ltd. For the said purpose, it entered into a Memorandum of Understanding ('MoU' for sho:-t) and appointed Dr. C.N. Ramchand (respondent herein) on September 4, 2003 for the development of products in the field of bio-industries and D manufacturing and marketing of such products. After various meetings and negotiations, terms and conditions were finalized between the parties and the respondent was appointed as Director (Technical) by the applicant Company. A copy of the agreement has been annexed to the Application. MoU also E provided that the respondent will work full time with the Company at least for next eight years from the date of signing of the agreement. According to the Company, it invested large amount in the new adventure and paid substantial sum as remuneration to the respondent for the work.

3. It is the allegation of the Company that the respondent did not take interest in work and failed to attend Board Meetings held in May and June, 2004 in spite of prior notice and information in advance about such meetings. A notice was issued by the Company to the respondent on July 14, 2004 G asking him to remain present at the Board Meeting scheduled

to be held on July 30, 2004. The respondent, however, sent a Letter of Resignation on July 17, 2004. The Company has alleged that not only the respondent wanted to quit the Company before completing the work assigned to him in H violation of the agreeme, ht, but he also instigated other

COM ED CHEMICALS LTD. v. C.N. RAMCHAND 573

[C.K. THAKKER, J.]

subordinate staff-workers to leave the organization. Resultantly, A .. >- other staff members also resigned. In view of the large investment by the Company, it refused tO accept the resignation of the respondent. There was correspondence and exchange of legal notices between the parties. It is, however, not necessary to enter into the details thereof in the present B proceedings.

4. By a communication dated August 12, 2005, the ·.

I applicant through his advocate sent a notice to the respondent for appointment of an arbitrator in accordance with Clause 12 c of MoU and informed him that the applicant-Company had decided to appoint Ramesh H. Nanavati, retired District Judge as his arbitrator. The applicant called upon the respondent to state whether he was agreeable to the said name. It also stated that if he was not agreeable, he could suggest any other name D and/or appoint an arbitrator for resolving the dispute failing which the applicant would be constrained to take appropriate action in accordance with law. The respondent through his advocate informed the Company on September 12, 2005 hat he was not agreeable to the arbitrator suggested by the Company. He, however, suggested three names. At S!. No. 1, E there was a name of Dr. Sandeep H. Shah, President, Indian Psychiatric Association.

5. In view of non-agreement between the applicant and respondent, the Company filed Arbitration Application No. 9 of F i 2006 under Section 11 of the Act in the High Court of Gujarat • at Ahmedabad requesting the Hon'ble Chief Justice of the High Court to appoint an arbitrator. Notice was issued to the respondent who filed his reply. In the reply, he asserted that he is a 'British national' and hence any question of arbitration G between the applicant-Company which is registered in India and the respondent-British national would fall under 'lnternationai Commercial Arbitration' as defined in Section 2(1 )(f) of the Act and under Section 11 (9) of the Act, it would _, . be within the power and authority of the Chief Justice of India H (

A to deal with and decide such application and the Chief Justice ---'. ... of a High Court has no jurisdiction to entertain the application.

In support of the contention that he is a British national, the respondent submitted requisite material which went to show that he is British national. In view of the above contention, the B Company sought permission from the High Court to withdraw the petition so as to enable the Company to make appropriate application to the Hon'ble Chief Justice of India. The permission sought for was granted and the application was disposed of as withdrawn. c

6. The Company then approached this Court by filing the present application on May 22, 2007. Hon'ble the Chief Justice of India designated me a$ his nominee to deal with and decide the application preferred by the Company. Notice Was issued

D to the respondent pursuant to which he appeared and filed a counter-affidavit on February 12, 2008. The Registry was directed to place the matter for hearing.

7. I have heard the learned counsel for the parties.

8. Learned counsel for the applicant-Company submitted that the application deserves to be allowed by appointing a third arbitrator as Umpire or sole arbitrator in view of difference between the applicant and the respondent and failure to come to an agreement to appoint an arbitrator acceptable to both the

F parties. It was stated that the applicant appointed Ramesh H.

Nanavati, retired District Judge as his arbitrator since the ,..

controversy related to interpretation of agreement and legal ... issues were involved. The respondent, however, did not agree and suggested another name. The applicant could not agree to that name because of absence of legal background on the G part of the person sought to be appointed. The Company, therefore, invoked Section 11 of the Act by going to the High Court of Gujarat. But in view of objection raised by the respondent that he is a British national, the application was

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withdrawn and thereafter the applicant has approached this H Court. It was, therefore, prayed that the petition deserves to be

allowed by either appointing third arbitrator as Umpire or by A appointing sole arbitrator to deal with dispute between the p.arties.

9. The learned counsel for the respondent, on the other hand, submitted that the present application is not 8 maintainable. According to him, there is no dispute arising out of legal relationship considered as commercial covered by clause (f) of Section 2(1) of the Act and hence the provisions of the Act would not apply to the case on hand. It was also submitted that the agreement in substance, provides for supply' C of technical know-how and expertise for payment of 'fees' and there is no element of 'commerce' which could attract the provisions of the Act. It was also urged that the respondent was appointed by the Company as an employee and the relation between the Company and the respondent was of master and servant and to such cases, the Act has no application. Clause D

(12) of the Agreement on which strong reliance had been placed by the Company cannot be termed as 'arbitration clause'. In absence of legal, valid and enforceable arbitration clause, applicant-Company has no right to approach this Court.

It was, therefore, submitted that the application deserves to be E dismissed.

10. Having heard the learned counsel for the parties, in my opinion, the petition should be allowed. Clause (f) of subi Section (1) of Section 2 of the Act defines "International F

Commercial Arbitration" and reads thus;

(f) "international commercial arbitration" means an arbitration relating to disputes arising out of legal relationsrips, whether contractual or not, considered as commercial under the law in force in India and where at G least one of the parties is-

(i) an individual who is a national of, or habitually resident in, any country other than India; or

A (ii) a body corporate which is incorporated in any

......_

country other than India; or

(iii) a company or an association or a body of individuals whose central management and control

B is exercised in any country other than India; or

(iv) the Government of a foreign country.

11. Chapter II of the Act deals with "Arbitration Agreement" and deciares that all disputes arising between the parties would c be governed by the provisions of the Act. Chapter Ill provides for "Composition of Arbitral Tribunal". Section 10 enacts that the parties are free to determine number of arbitrators, but such number shall not be an even number. In case of failure to jdetermine number of arbitrators, the Arbitral Tribunal shall

D consist of a sole arbitrator. Section 11 relates to appointment of arbitrators. It states that in case of failure on the part of the parties in arriving at an agreement to appoint an arbitrator, an application may, be made to the Chief Justice of India in case of International Commercial Arbitration so that an appropriate

E order may be passed for appointment of arbitrator. It is on the basis of the above provision that the applicnt-Company has filed this application.

12. I find no substance in the preliminary objection raised by the learned counsel for the respondent that there is no r F arbitration clause in the Agreement. Clause 12 of the agreement which provides for arbitration reads thus;

12. If there be any dispute pertaining to meaning of this MoU or of any nature, will be solved and decided by

G appointing an independent Arbitrator acceptable to all the parties and if not solved by him can be referred to court of law and for which the jurisdiction will be Vadodara. " ~

13. Bare reading of the above clause leaves no room for doubt that it is an 'arbitration clause' and expressly declares H

... .>--

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' \

that any dispute pertaining to MoU would be solved and A decided by an arbitrator.

14. I am also unable to uphold the argument of the learned counsel that there is no International Commercial Arbitration.

The learned counsel for the respondent submitted that there is B no 'commercial' element in the agreement and what wa$ agreed between the parties was to provide 'technical knowL how' and 'expertise' to the applicant-Company for which the respondent was to be paid 'fees'.

15. The learned counsel in this connection referred tcp c Kamani Engineering Corporation Ltd. & Ors. v. Societe De Traction Et D'Electricite Societe Anonyme, & Ors., AIR (1965) Born 114, Josef Meisaner GMBR & Co. v. Kanoria Chemicalp & Industries Ltd. & Anr., AIR (1986) Cal 45 and Mukesh H.Mehta & Ors. v. Harendra Mehta, (1998) 92 Comp Cases D

402. It was submitted by the counsel that in the above cases, it has been held that if the work undertaken by a person is of~ professional character and does not involve business or trade, the contract cannot be said to be of 'commercial' nature. Such contract does not involve business or trade and there is no E element of participation in commercial activity or in profit.

Remuneration, if any, is in the nature of 'fees'. A person scrupulously keeps himself away from any commercial relationship. As such, provisions relating to arbitration agreement in the field of commercial arbitration are not F attracted to these cases.

16. It may, however, be profitable to refer to a decision of this Court in R.M. Investment & Trading Co. Pvt. Ltd. v. Boeing

Co. & Anr., (1994) 4 SCC 541. There this Court was called G upon to consider the provisions of Foreign Awards (Recognition and Enforcement) Act, 1961. The question before the Court was whether there was commercial relationshi:p between the parties as defined in Section 2 of the Act and whether the Act would apply. In that case, an Indian Company entered into an agreement with a Company registered in USA.

A The Indian Company agreed to provide Boeing with consultancy

..J., - services for sale of Boeing Aircraft in India. Agreement for purchase of two Boeing Aircrafts was executed. A dispute arose and the appellant claimed compensation and remuneration for consultancy services. In view of arbitration

B clause, the matter was referred to arbitrator. It was contended by the foreign Company that there was no 'commercial element' and hence the application was liable to be dismissed.

17. This Court, however, rejected the contention. It Was held

c that the agreement to render consultancy service by the appellant to the respondent was 'commercial' in nature and there was commercial relationship between the parties.

18. Referring to earlier cases, this Court stated; ..

D "It is not disputed that the sale of aircraft by Boeing to customers in India was to be a commercial transaction. The )r question is whether rendering of consultancy services by

RMI for promoting such commercial transaction as consultant under the Agreement is not a "commercial

E transaction". We are of the view that the High Court was right in holding that the agreement to render consultancy services by RMI to Boeing is commercial in nature and that ... ,, RMI and Boeing do stand in commercial relationship with each other. While construing the expression "commercial" in Section 2 of the Act it has to be borne in mind that the r F Act is calculated and designed to subserve the cause of "'<'- facilitating international trade and promotion thereof by

; ,.. providing for speedy settlement of disputes arising in such r trade through arbitration and any expression or phrase occurring therein should receive, consistent with its literal G and grammatical sense, a liberal construction." [See: Renusagar Power Co. Ltd. v. General Electric Co. (SCC ) at p. 723-24 : SCR at p. 492) and Koch Navigation Inc. v. i-- Hindustan Petroleum Corpn. Ltd.6 (SCC at p. 262 : SCR

!'- at p. 75).J H

...

 .. . ,

r"' >- j The expression "commercial" should, therefore, be A

. i

.. -r .

. at

construed broadly having regard to the manifold activities which are integral part of international trade today".

(emphasis. supplied)

19. lt was further observed;

"While construing the expression 'commercial relationship' in Section 2 of the Act, aid can also be taken from the Model Law prepared by UNCITRAL wherein relationships

of a commercial nature include "commercial c representation or agency" and 'consulting"'.

20. Now, UNCITRAL Model Law on International Commercial Arbitration as adopted by the United National Commission on International Trade Law defines the term 'commercial' thus;

"The term 'commercial' should be given a wide interpretation so as to cover matters arising from all relationship of a commercial nature, whether contractual

or not. Relationship of a commercial nature include, but are E not limited to, the following transactions; any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring leasing, construction of works; consulting; engineering, licensing; investment, F financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road." [Foot-note to Article 1 (1)]

(emphasis supplied) G

21. Before more than three decades, in Union of India v .

D.N. Revri & Co., (1976) 4 SCC 147, this Court stated;

"It must be remembered that a contract is a commercial H

document between the parties and it must be interpreted in such a manner as to give efficacy to the contract rather than to invalidate it. It would not be right while interpreting a contract, entered into between two lay parties, to apply strict rules of construction which are ordinarily applicable to a conveyance and other formal documents. The meaning of such a contract must be gathered by adopting a common sense approach and it must not be allowed to be thwarted by a narrow, pedantic and legalistic interpretation". ,_

22. Very recently, in Citibank N.A. v. TLC Marketing PLC & Anr., (2008) 1 SCC 481, this Court held that commercial contract must be broadly construed with a view to give efficacy to such contract rather than to invalidate it. Clauses of the contract must be liberally interpreted. Narrow and technical D approach should be avoided. [see also Russel on Arbitration (1997); p.60]

23. The other issue which has been raised by the learned courrsel for the respondent is that the respondent was appointed E as an employee by the applicant-Company and there is

relationship of master and servant between the parties. A contract in question is a contract of employment to which the Act does not apply. The submission of the Company, on the other ha.nd, is that looking to the agreement as a whole, it F cannot be said that the respondent was a mere employee. The

relevant clauses of the agreement go to show that it was a contract of trade and business, which is a commercial transaction and Clause 12 clearly gets attracted.

24. It has not been disputed by the applicant-Company that G if the contract is merely of an employment and the relationship between the parties is of master and servant, the matter cannot be referred to Arbitral Tribunal. But if the respondent is engaged by the applicant Company to perform functions which are

inextricably linked with functions which could be undertaken by H a businessman or by a Company and such activities form an

integral part of his activities, there is element of 'commerce' .

A ....,

)..

In that case, the provisions of the Act would clearly apply. •

25. In the instant case, the respondent has been appointed as Director (Technical) and has been allotted 40% equity shares in the subsidiary Company (Corned Bio-Tech Ltd.). Over and B above that, he was to be paid salary and other benefits in lieu of services rendered by him. Para 3 of the Agreement required the respondent to undertake certain responsibilities.

26. They are as under; c ,. "Responsibility of DR. C.N. RAMCHAND

.... 1 .

Will be responsible for the selection of machineries, • instruments, staff selection includin~:J technical staff I

and arrange for the same.

He will arrange for successful operation of the

.... "'

research center.

To arrange and coordinate with the group companies in the area of the product planning, E product development and arrange for the stage up the level of the launching in the market.

He will be dhief executive officer in the Corned Bio Tech Ltd. in al operational matters.

F 5 .. He will be responsible to develop new bio

molelcules as per the discussion with his utmost care integrity.

27. The applicant-Company wanted to venture into the field of bio-technology which was not previously chartered or G

traversed by it (novel bio-products). The respondent possessed special knowledge and to get the benefit of such research and expertise, an agreement had qeen entered into by the parties and respondent had been appointed Director of the subsidiary H

A .Company .

.28. Now, it is well settled .that a Director is not a mere employee or servant 0f Jhe Company. :In Lee v. Lee'.s Air Framing Ltd., 1961 AC 1.2, it was held that .a Oirector is a controller-of the cor:npany's affairs and is not a mere servant of B the Company. Such Director may have .to work_ also as .an employee in a different capacity. Gower and Davies' Principles of Modern Company_ Law, -(17th Edn. pp. ,370-76) .also dea_ls with duties of Director viz-a-viz as an employee of the Company

and makes it clear that a Director per se cannot.be said.to be C an employee or servant of the Company.

29. In Ram Pershad v. Commissioner of Income Tax, New Delhi (1972) 2 SCC696, this Court held that a Managing Director may have a dual capacity. He may be both, a Director D as well 0as an Employee.

30. The Court stated;

"7. Though an agent as such is not a servant, a servant is generally for some purposes his master's implied agent, the extent of the agency depending upon the duties or position of the servant. It is again_ true that a director of a company is not a servant but an agent inasmuch as the company cannot act in its own person but has only to act through directors wl'lo qua the company have the relationship of an agent to its pr.incipal. A Managing Director may have a dual capacity. He may both be a Director as well as employee. It is therefore evident that in the capacity of a Managing Director he may be regarded as having not only the capacity as persona of a director but also has the persona of an employee, asan -agent depending upon the nature of his work and the terms of his employment. Where he is so employed, the relationship between him as the Managing Director and the Company

I • may besimilartoa_person who is'.employed as a_servant or an agent for the term "employed" is facile enough to

, , ""

cover any of these relationships. The nature of his A =i >- employment may be determined by the articles of ..

association of a company and/or the agreement if any, under which a contractual relationship between the Director and the company has ben brougt about, whereunder the Director is constituted an employee of the company, if such 8 be the case, his remuneration will be assessable as salary: under Section 7. In other words, whether or not a Managing Director is a servant of the company apart from his being 1

~ a Director can only be determined by the article of association and the terms of his employment". c

31. The Court then referred to Anderson v. James Sutherland (Peterhead) Limited where Lord Normand at p1 218 said:

~ ,..

" ... the managing director has two functions and two D

capacities. Qua Managing Director he is a party to a contract with the company, and this contract is a contract of employment; more specifically I am of opinion that it is a contract of service and not a contract for service."

32. Thus, from settled legal position as also from the E

functions to be performed by the respondent, I hold that the respondent was working in dual or double capacity, i.e. (i) as an employee, and (ii) as a Director. In the. later capacity, however, he was the Chief Executive Officer of the subsidiary F Company and had to look after all operational matters. The ( "" functions to be performed by him were supervisory and related to policy making decisions in the affairs of the Company, as observed by this Court in Ram Pershad. Any dispute between the applicant-Company and the respondent would, therefore,

~ .

I G I be covered by Clause 12 of the Agreement which provides for arbitration. Hence, the contention of the learned counsel for the

I respondent that the respondent was merely an employee and ' there was no element of business, trade or commerce has no substance and must be rejected.

A 33. For the foregoing reasons, in my opinion, the application filed by the Company must be allowed by holding -"' •. that the case is covered by clause (f) of sub-section (1) of Section 2 of the Act. It is a case of International Commercial Arbitration and is covered by Clause 12 of MoU. Since there

8 is a dispute betWeen the parties, it has to be decided by an arbitrator. The clause extracted hereinabove provides for an arbitrator i.e. sole arbitrator and hence only one arbitrator should be appointed. 1, therefore, appoint Mr. Madhukar Fanse, retired Judge, City Civil Court, Ahmedabad as the sole 1 C arbitrator to decide the dispute between the parties.

R.P.

Arbitration Petition allowed.

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