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CASE NO.: Arbitration Petition  17 of 2005

PETITIONER: HBM PRINT LTD

RESPONDENT: SCANTRANS INDIA PVT. LTD

DATE OF JUDGMENT: 29/03/2007

BENCH: K.G. BALAKRISHNAN

JUDGMENT: JUDGMENT

O   R   D    E   R K.G. BALAKRISHNAN, CJI.   

       The petitioner herein has filed an application under  Section 11 of the Arbitration and Conciliation Act, 1996.  The  petitioner, a company incorporated  under the laws of  Singapore is carrying on business at No. 745, Toa Payoh  Lorong 5, Singapore, 1231, now known as SHC CAPITAL  LIMITED, 302 Orchard Road, # 10-01 Singapore 238862. The  respondent company, Scantrans India Pvt. Ltd. was  incorporated  under the Companies Act, 1956, having its  registered Office at 425, Pantheon Road, Egmore, Chennai- 600008.  The petitioner alleges  that petitioner and respondent  entered into a joint venture agreement on 15-12-1993 for  setting up a manufacturing unit in Chennai and to carry on  the business of printing and colour separation.  The Reserve  Bank of India (RBI) granted permission to the joint venture  company and the joint venture agreement  was executed on        15-12-1993.  The Sale Deed was executed on 26-4-1995.  A  dispute arose between the parties under Clause 8 of the Sale  Deed relating to Arbitration. Clause 8 reads as follows  :-  "8.1\027Any dispute arising out of or  in connection with this Sale Deed,  including any question regarding its  existence, validity or termination,  shall be referred to and finally  resolved by arbitration in India in  accordance with the Arbitration  Rules in the Indian Republic for the  time being in  force which rules are  deemed to be incorporated by  reference into this Clause".

       The petitioner issued a notice for appointment of an  arbitrator  on 1-3-2000 and the respondent replied that the  petitioner cannot resort to Arbitration Proceedings alongwith   the winding up proceedings and the agreement does not  provide for more than one Arbitrator. Thereafter, on 5-6-2000,  the petitioner filed an application before the Chief Justice of  High Court of Madras for appointment of an Arbitrator. This  application was withdrawn by the petitioner on 26-8-2004 as  the Chief Justice of Madras High Court had no jurisdiction as  only the Chief Justice of India or his nominee could appoint  an Arbitrator. Thereafter on 31-1-2005 the present application  was filed under Section 11 of the Arbitration and Conciliation  Act, 1996 seeking appointment of an Arbitrator.  As the matter

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has been assigned to me, I heard the parties on either side.  The respondent filed detailed objection wherein it is contended  that the application filed under Section 11 of the Act is barred  by limitation.  The main contention urged by the respondent is  that the notice was served on the respondent by the petitioner  on 25-3-2000 and the application for appointment of the  Arbitrator should have been filed on or before 25-4-2003 and  as the present application  was filed only on 31-1-2005, it is  barred by time.  The petitioner on the other hand contended  that though he bona fide believed  that the Chief Justice of the  High Court of Madras was the competent authority to appoint  the Arbitrator, but only after the filing of the  application, he  realized  that this being a dispute under an  International  Commercial  Agreement would fall under  the domain of   Section 2(f) of the  Arbitration and Conciliation Act, 1996.  The  Chief Justice of India is the appropriate  authority to appoint  the Arbitrator. Therefore,  the application filed before the Chief  Justice of the High Court  of Madras was withdrawn  and filed  before this Court.  It is prayed that under Section 14 of the  Limitation Act,  the petitioner is entitled to exclude the period  during which the petitioner’s application was pending before  the  Chief Justice of the High Court of Madras.  

       I find force in the contention urged by the petitioner.  Petitioner filed the application before the Chief Justice of the  High Court of Madras thinking that the Chief Justice of that  court  was the competent authority to appoint an Arbitrator,  but later realized that in respect of International Commercial  Agreement,  Chief Justice of India was the competent  authority and, therefore,  filed the instant application under  Section  11 of the Arbitration Act.  Section 14 of the Limitation  Act has wider amplitude and provides that the time spent in  prior proceedings is liable to be excluded provided the  proceedings relating to the same matter were in issue and  prosecuted  in good faith in the  court which from the   definition of the jurisdiction   either because of like nature was  unable to entertain it. I find no reason  to hold that the earlier  proceedings before the Chief Justice of the High Court of  Madras  were not  filed in good faith. The petitioner might have  realized  later that the application is to be filed under Section  11 of the Act before the Chief Justice of India.  The respondent  has not pointed anything to show that there was willful  negligence  or lack of good faith on the part of the petitioner in  having filed the application before the Chief Justice of Madras  High Court.  Therefore,  the contention raised by the  respondent as to limitation is only to be rejected.  

Another strange contention has been advanced by the  respondent that if under Section 42 of the Arbitration Act once  an application has been filed before particular court,   that  court has got jurisdiction  over the  arbitral proceedings  and  also all subsequent applications arising out of that agreement  shall be filed in that court.  Section 42 of the Arbitration  and  Conciliation Act, 1996 reads as follows :- "42. Jurisdiction.-Notwithstanding anything  contained  elsewhere in this Part or in any other  law for the time being in force, where with respect  to an arbitration agreement any application  under this Part has been made in a Court, that  Court alone shall have jurisdiction  over the  arbitral proceedings and all subsequent  applications arising out of that agreement and  the arbitral proceedings shall be made in that  Court and in no other Court".

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       Section 42 has no application to the fact of the present  case. Section 42 is applicable in a case where the party has  submitted to the jurisdiction of a particular court and has filed  an application before that court.  All subsequent proceedings  in such a case shall be initiated only in that court.  The  Arbitration agreement if any arbitral proceedings applicable on  appointment was filed before the Chief Justice of the High  Court and subsequently any modification or anything is to be  required or in any  matter relating the award itself comes for  decision, the party can file application only in that court and  in no other court.  In the present case,  the Chief Justice of  the Madras High Court had no jurisdiction but appointment of  Arbitrator in the matter being  a dispute between the parties  related to International Commercial Agreement and under  Section 11 Chief Justice of India alone or any other person or   institution designated by him alone has jurisdiction to appoint  the Arbitrator.  Therefore,  the contention raised as to Section  42 of the Act also is without any basis.   In the result, the matter is to be referred to the  Arbitrator and out of the names as suggested by the parties,  I  hereby appoint Mr. Justice P. Shanmugam a retired Judge of   Madras High Court as an Arbitrator.  The dispute between the  parties is referred to the Arbitrator. The Arbitrator is requested  to pass a reasoned award within eight months from this Order.   The remuneration of the Arbitrator shall be fixed by the  Arbitrator in consultation with the parties.