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2023 (3) TMI 938 - HC - Indian LawsSeeking attachment of amount lying in the hands of AWHO who is indebted to pay the amount in order to enable the respondent to release the amount in favour of the petitioner - Existence of Arbitrable Disputes - Forum shopping - Notice of Invocation under Section 21 of Arbitration and Conciliation Act, 1996. Existence of Arbitrable Disputes - HELD THAT - In the present case, though a proceeding may have been initiated by the petitioner before the NCLT asserting that there is an admitted debt as has been pointed out by the respondent, but a mere assertion would not make it into an admitted liability especially when the respondent has been refuting it at every forum and in every proceeding - It is quite evident that there is consistent stand of the respondent challenging the amounts claimed by the petitioner. Clearly, there are arbitrable disputes in regard to the claimed amounts and the objection taken by the respondent in regard to non-existence of arbitrable disputes, is not tenable. Forum Shopping - HELD THAT - It can be seen from the various proceedings which have been initiated by the petitioner that different amounts had become due and payable at different times and also interest component which was being claimed, was a variable. The petitioner has given explanation for claiming the amounts before various forums depending upon when it had approached that particular forum. Merely because the petitioner has approached different forums for redressal of its claims, cannot be said to be a ground to hold that this is a case of forum shopping.Each of the provision invoked by the petitioner has its own individual scope and it cannot be said that resort to one has the effect of ousting the other forums or that it is a case of forum shopping - In the present case, the scope of enquiry in the proceedings before the NCLT and before the Arbitrator is absolutely distinct. Merely because the petitioner approached NCLT before seeking appointment of Arbitration, it cannot be said that he was indulging in Forum Shopping. Notice of Invocation under Section 21 of the Act - HELD THAT - In Nirman Sindia Vs. Indal Electromelts Ltd., Coimbatore and others 1999 (7) TMI 712 - KERALA HIGH COURT , a detailed procedure for resolution of disputes in regard to payments was envisaged whereby the disputes were first required to be settled through Superintendent Engineer and if not satisfied with the decision of the Engineer, it was required to be referred to the adjudicator. Non-referral of disputes in regard to the disputes pertaining to payment, execution, work, etc. where it could have been settled without having the need to go to arbitration, was considered as an obstruction by the petitioner in not following the procedure as envisaged in the Contract and the request for arbitration was held to be premature. The facts involved in the present case are clearly distinguishable. In BADRI SINGH VINIMAY PRIVATE LIMITED VERSUS MMTC LIMITED 2020 (1) TMI 1625 - DELHI HIGH COURT , this Court had explained that Section 21 of the Act requires a party to send a request to the counter-party for the dispute to be referred to arbitration, which should indicate the facts leading to the dispute, and the nature of the claim be made clear. It also must clearly indicate the legal recourse intended to be undertaken if its claim is not satisfied. The initiation of arbitration proceedings in such a situation must be expressly contemplated. Thus, it needs to be considered if the petitioner has met the prerequisite requirement of service of Notice under S.21 of the Act. First and foremost, the intention of approaching the appropriate forum for recovery of its claims had been indicated in the Demand Notice itself. It was also stated that in case the claims of the petitioner are not satisfied, it would be compelled to approach the NCLT. Prima facie, it has been shown that there are arbitral disputes between the parties and in terms of the Clause 13 of the Work Order dated 19.12.2011, the disputes between the parties are referable to Arbitration - In light of the facts and submissions made, Ms. R. Kiran Nath, District Sessions Judge (Retd.), (Mobile No. 9910384659) is hereby appointed as the independent Arbitrator to adjudicate the disputes between the parties. Petition allowed.
Issues Involved:
1. Existence of Arbitrable Disputes 2. Allegation of Forum Shopping 3. Notice of Invocation under Section 21 of the Arbitration and Conciliation Act, 1996 Detailed Analysis: A. Existence of Arbitrable Disputes: The respondent claimed that there were no arbitrable disputes between the parties, referencing the petitioner's statement in the NCLT petition that there were no disputes. The court noted that merely filing a petition asserting a definite amount does not imply an admitted liability, especially when the respondent consistently refuted the claim. The court cited *Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited (2018)*, emphasizing that IBC is not a substitute for a recovery forum and cannot be invoked where real disputes exist. The court concluded that there were indeed arbitrable disputes regarding the claimed amounts, making the objection by the respondent untenable. B. Forum Shopping: The respondent alleged that the petitioner was engaging in forum shopping by claiming different amounts in different proceedings. The court examined the petitioner's explanation that different amounts were due at different times and included variable interest components. The court referenced *A. P. State Financial Corporation Vs. Gar Re-Rolling Mills (1994)* and *Union of India and Others Vs. Cipla Limited and Another (2017)* to explain that approaching different forums for redressal of claims does not constitute forum shopping. The court concluded that the petitioner's actions did not amount to forum shopping as the scope of NCLT and arbitration proceedings are distinct. C. Notice of Invocation under Section 21 of the Act: The respondent argued that no valid Notice of Invocation under Section 21 was served. The court referenced *Bharat Sanchar Nigam Limited & Anr Vs. Nortel Networks India Private Limited (2021)* and *Concept Infracon Pvt. Ltd. Vs. Himalaya Press Power Ltd.* to emphasize the necessity of following the procedure for invoking arbitration. The court noted that the petitioner's Demand Notice dated 19.04.2019 indicated the intention to initiate legal proceedings, including arbitration, and the respondent's reply acknowledged the disputes. The court also referenced *Alupro Building Systems Pvt. Ltd. Vs. Ozone Overseas Pvt. Ltd (2017)* and *Badri Singh Vinimay Private Limited v. MMTC Limited (2020)* to highlight that the purpose of Section 21 is to notify the intention to approach arbitration. The court concluded that the petitioner had sufficiently conveyed the intention to invoke arbitration through the Demand Notice and subsequent proceedings, making the objection regarding the lack of a proper Notice under Section 21 insignificant. Conclusion: The court found that there were arbitrable disputes and rejected the respondent's objections regarding forum shopping and the lack of a proper Notice under Section 21. Consequently, the court appointed Ms. R. Kiran Nath, District & Sessions Judge (Retd.), as the independent Arbitrator to adjudicate the disputes. The petition under Section 11 of the Act was allowed, and the respondent was directed to maintain a balance of Rs. 99,87,760 in its account until the disputes are adjudicated. Additional Orders: - The fees of the Arbitrator would be fixed in accordance with the IV Schedule to the A&C Act, 1996. - The Arbitrator must make necessary disclosures under Section 12(1) of the A&C Act, 1996, and not be ineligible under Section 12(5) of the A&C Act, 1996. - The parties were directed to contact the Arbitrator within one week of the order being communicated. Petition No.O.M.P. (I) (COMM) NO. 324 OF 2020 Under Section 9 of the Act: The respondent agreed to maintain a balance of Rs. 99,87,760 as claimed in the Demand Notice dated 19.04.2019 until the adjudication of disputes. The petition under Section 9 of the Act was allowed with the direction to maintain the specified balance.
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