Final Order 1

Order Details: Notice of Motion
Pdf Text: Notice of Motion No.1433/2020 ..1.. In S.C. Suit No.1391/2020
IN THE CITY CIVIL COURT FOR GREATER BOMBAY
AT BOMBAY.
NOTICE OF MOTION NO. 1433 OF 2020
IN
S.C. SUIT NO. 1391 OF 2020
CNR NO : MHCC01-004408-2020
Essen Vision Software (Pvt.) Ltd.,
2nd Floor, Indian Surveyors House,
315, Shahid Bhagat Singh Road,
Fort, Mumbai - 400 001. ...Applicant/Defendant
In the matter between
Dipti Sanjay Padave,
Aged : 28 Years,
Residing At : Building No. 13,
Room No. 670, Sardar Nagar No. 1,
Sion Koliwada, Mumbai - 400 022. ...Plaintiff
Versus
Essen Vision Software (Pvt.) Ltd.,
2nd Floor, Indian Surveyors House,
315, Shahid Bhagat Singh Road,
Fort, Mumbai - 400 001. ...Defendant
Appearance :-
Mr. Santosh Gavade, Advocate for Plaintiff.
Ms. Surabhi Waknis, Advocate for defendant.
CORAM : HIS HONOUR JUDGE
SHRI AJIT N. MARE (C.R.No.3)
DATE : 18TH JANUARY, 2021.
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Notice of Motion No.1433/2020 ..2.. In S.C. Suit No.1391/2020
ORAL ORDER
By this notice of motion, the defendant has sought referring
of the matter to the arbitration.
2. In brief, the defendant’s contention is that, plaintiff was
appointed as ‘Security Analyst’ pursuant to an appointment letter. Said
appointment letter contains an arbitration Clause. The defendant has
no objection if a third party or mutually nominated person is appointed
as a Sole Arbitrator in view of the arbitration Clause. This Court does
not have jurisdiction to entertain and try present suit. The defendant
has not submitted first statement on the substance of the dispute.
3. Plaintiff has opposed the notice of motion contending that,
the appointment letter produced by the defendant is got signed from
the plaintiff on 22.11.2019 by Ex-HR Ms. Bharati Koli on the pretext
that defendant had misplaced original letter. The appointment letter
produced by the defendant contains changed date of discontinuation of
service. The Defendant had played fraud on the plaintiff. Reference to
arbitration cannot be made based on fraudulent agreement. The
Defendant has committed various offences punishable under Sections
191 to 193 and other Sections of IPC by filing false affidavit. The
appointment letter contains specific clause dealing with dispute
resolution mechanism conferring jurisdiction on the Civil Court. The
plaintiff has conveyed her intention to the defendants that she will
initiate Civil or as well as Criminal Proceedings. Thus, she had invoked
the jurisdiction of the Civil Court. The reference to arbitration was not
sought on the first date of hearing. Now reference is sought only to
delay the proceedings in the suit. The CEO of defendant has replied
Labour Officer, Mumbai, that the defendant has submitted to the
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jurisdiction of City Civil Court and the case is pending. The defendant
has not come with clean hands. The specific clause of dispute
resolution will prevail over the arbitration clause appearing in General
Rules in the appointment letter. The proposed arbitrator is disqualified
to Act as an arbitrator under Section 12 (1) (b) Explanation 1 read with
Schedule (V) as well as under Section 12 (5) read with Schedule (VII)
of the Arbitration Act. The alleged arbitration Clause excludes the
dispute of present nature from its operation. The original arbitration
Agreement is not filed before the Court. The defendant company has
no Executive Director to act as an Arbitrator in accordance with the
alleged arbitration Clause.
4. Perused. Heard. Gone through the written notes of
submissions.
5. In the written notes the defendant has contended that, in
view of the arbitration Clause and in view of other compliances, of
Section 8 of the Act of 1996, made by the defendant there is no option
for this Court but to refer the matter to arbitration. It is also contended
that whether the arbitration clause is valid or not is to be gone into by
the arbitrator in view of Section 16 of the Act of 1996.
6. The Act of 1996 has been extensively amended by the
amendment Act of 2015. Prior to the amendment of 2015 Section 8 of
the Act of 1996 did not contemplate an enquiry by the judicial authority
to see whether
prima-facie no valid arbitration agreement exist or to
the contrary. Thus, before 2015 amendment the judicial authority has
to refer the matter to the arbitration, if the arbitration clause exists and
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the dispute is covered by the arbitration agreement. However, post
amendment of 2015 Section 8 sub-section (1) is as follows,
“8. Power to refer parties to arbitration where there is
an arbitration agreement.-
(1) A judicial authority, before which an action is
brought in a matter which is the subject of an
arbitration agreement shall, if a party to the
arbitration agreement or any person claiming through
or under him, so applies not later than the date of
submitting his first statement on the substance of the
dispute, then, notwithstanding any judgment, decree
or order of the Supreme Court or any Court, refer the
parties to arbitration unless it finds that
prima facie no
valid arbitration agreement exists.”
7. In view of the last line of sub-section (1) of Section 8 of the
Act of 1996 as amended by 2015 amendment now a judicial authority,
before referring the matter to arbitration, has to satisfy that
prima-facie
no valid arbitration agreement exists. In other words, if a valid
arbitration agreement exists only then the matter can be referred to
arbitration, else it need not be referred.
8. In the written submissions, the defendant has come with a
case that, due to the amendment of 2015 the arbitration clause in the
appointment letter of the plaintiff is invalid, as it binds the parties to
refer the matter to Executive Director of defendant Company for
arbitration. However, it is further contended that, it does not render the
arbitration agreement invalid and this Court can appoint an arbitrator
who can be a neutral or third party as done by the Hon’ble Bombay
High Court in the case of Lite Bite Foods Pvt. Ltd. V/s. Airports
Authority of India, (2019 SCC OnLine Bom 5163).
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9. I have gone through the authority cited by Advocate for
defendant wherein the Hon’ble Bombay High Court has summarized
legal principles in paragraph No. 26 as under,
26. (a) An officer or employee of one party cannot be
the arbitrator or, upon eligibility, the person
empowered to appoint an arbitrator. This is the
TRF
Ltd. category or rule.
(b) Where the arbitration clause provides for
nomination by each side, and for the appointment of
an umpire by the two nominee arbitrators, of a person
from a panel: (i) that panel cannot be hand-picked by
one side; and (ii) it must be broad-based and
inclusive, not narrowly tailored to persons from a
particular category. The opponent and the two
nominee arbitrators must have the plenitude of choice.
This is the rule in Voestalpine Schienen. Conceivably,
a broad-based panel commonly agreed in the contract
by both sides would serve the purpose.
(c) A clause that confers on one party’s employee the
sole right to appoint an arbitrator, though that
employee is himself not to the arbitrator, is also not
valid, and this is a logical and inescapable extension of
the
TRF Ltd. doctrine. It makes no difference whether
this power is to be exercised by choosing from a panel
or otherwise. This is the rule in
Eastman Perkins.
10. In this case, the arbitration clause relied upon by the
defendant, though disputed by the plaintiff, is as under,
“In the event of any dispute/disagreement/difference
of opinion over the interpretation of any of the terms
herein above contained excluding those governed by
judicial remedies abroad for any claim or liability
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payable in India, the same shall be referred to the
arbitration of executive director of the company and
the decision of the arbitrator shall be final and binding
upon all the parties hereto. Such reference shall be
deemed to be submission to arbitration under the
Arbitration and Conciliation Act, 1996 or any
modification or statutory re-enactment thereof. The
venue of arbitration shall be Mumbai, India subject to
the jurisdiction of Courts in Mumbai, which shall have
exclusive jurisdiction in proceedings to enforce the
arbitration.”
11. In view of the observations of the Hon’ble Bombay High
Court in the authority cited by the defendant, if the arbitration
agreement confers right on a party for referring the dispute to
arbitration of its own employee or confers a right on a party to appoint
an arbitrator or his or her choice, such arbitration agreement will be
invalid.
12. In Lite Bite Foods Private Limited’s case, after holding that
the arbitration clause was invalid, the Hon’ble High Court has appointed
an arbitrator exercising the discretion under Section 11 of the Act of
1996. The defendant has requested this Court also to do so. However,
provisions of Section 11 of the Act of 1996 provide for appointment of
arbitrator by the Hon’ble Supreme Court or by the Hon’ble High Court
or any person or institution designated by such Court. Section 11 does
not confer power on this Court to appoint an arbitrator.
13. In the light of above discussion, therefore, it is clear that
the arbitration agreement or clause in the appointment letter is invalid.
Therefore, considering amended provisions of Section 8 of the Act of
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1996 this Court cannot refer the parties to arbitration as
prima-faice
there is no valid arbitration agreement existing.
14. Advocate for plaintiff submitted that, the plaintiff has
raised plea of fraud. According to him the appointment letter tendered
on record by the defendant is outcome of fraud played by the defendant
on the plaintiff, since the plaintiff was asked to sign it under
misrepresentation that the original is lost by the defendant company.
She has further contended that, the defendant company has committed
various offences under IPC of forgery, cheating etc. Such contentions
are raised in the reply filed to the notice of motion. According to him
therefore, when the plea of fraud is raised the matter cannot be referred
to arbitration as held in Shri Ghanshyamdas Baheti V/s. Jamuna
Transport Corporation in A.P.O.T No. 492/2010 G.A.No. 2735/2010
C.S.No.24/2010 dated 08.03.2011 of the Hon’ble High Court at
Calcutta and Zenith Drugs & Allied Agencies Pvt. Ltd V/s. M/s. Nicholas
Piramal India Ltd., in Civil Appeal No. 4430/2009 dated 30.07.2019 of
the Hon’ble Supreme Court. He also relied upon N. Radhakrishnan V/s.
M/s. Maestro Engineers & Ors in Civil Appeal No. 7019/2009 (Arising
out of SLP© No. 5994/2007) dated 22.10.2009 of the Hon’ble Supreme
Court.
I have gone through the authorities cited supra. In the
authorities cited supra, in the plaint there were serious allegations of
fraud leveled by the plaintiff which could never have been the subject
matter of an agreement and such serious allegations of fraud could not
have been gone into by the arbitrator. Therefore, it was held that the
matter cannot be referred for arbitration.
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15. In this case, perusal of plaint reveals that, apart from faint
plea that her signature is obtained on the appointment letter on the
pretext of loss of original, no plea of fraud is raised which would give
rise to serious questions of law and facts. In view of this, the allegations
of fraud raised in the reply would not help the plaintiff to contend that
the matter cannot be referred to arbitration. Consequently, the
authorities cited
supra will not apply to the facts of this case.
16. Advocate for plaintiff also relied upon Deo Nandan
(deceased by L.Rs.) V/s. Chhote, (AIR 1983 ALL 9), High Court of
Judicature At Allahabad, and submitted that a consent obtained by
fraud is no consent and the contract is voidable under Section 13 of the
Indian Contract Act.
17. I have gone through the authority cited supra, wherein, it is
observed that, every consent is said to be free unless it has been
obtained by coercion, undue, influence, fraud or misrepresentation. A
tainted consent it is no consent and the contract would be voidable.
18. In this case, the plaintiff has not sought setting aside of the
appointment letter but on the contrary is seeking relief in accordance
with terms and conditions thereof, though the date of relieving is
disputed. In such circumstances, I hold that the authority cited supra,
will not apply to the present case as the plaintiff has opted to act upon
the appointment letter to seek reliefs.
19. Advocate for plaintiff also relied upon Bihar State Mineral
Dev. Corp. V/s. Encon Builders (I) Pvt. Ltd., in Appeal (Civil)
2025/1997 dated 21.08.2003 of the Hon’ble Supreme Court. I have
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gone through the authority cited supra wherein, the Hon’ble Supreme
Court has held that,
“As in the instant case, the test of bias on the part of
Appellant No. 2 is fully satisfied, the impugned order
is unassailable. As bias on the part of the second
Appellant goes to the root of his jurisdiction to act as
an arbitrator, the entire action is a nullity. As the acts
of bias on the part of the second appellant arose
during execution of the agreement, the question as to
whether the respondent herein entered into the
agreement with his eyes wide open or not takes a
back-seat. An order which lacks inherent jurisdiction
would be a nullity and, thus, the procedural law of
waiver or estoppel would have no application in such
a situation. It will bear repetition to state that the
action of the second appellant itself was in question
and, thus, indisputably he could not have adjudicated
thereupon in terms of the principle that nobody can be
a judge of his own cause.”
20. I have already held that there is no valid arbitration clause
in the appointment letter filed either by the plaintiff or by the
defendant.
21. Advocate for plaintiff also relied upon Shri Jagatjit Jaiswal
V/s. Karmajit Singh Jaiswal, 2007 (4) ARBLR 300 Delhi HC and
submitted that if there is an agreement merely to refer the matter to an
expert then there is no arbitration agreement at all.
22. In this case, the appointment letter relied upon by the
defendant as well as filed along with suit reveals that there is a clear
arbitration clause. Thus, the authority cited supra is not applicable to
the facts of present case.
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23. Advocate for plaintiff further submitted that, even, if the
arbitration clause is read as it is, it excludes the disputes as to liabilities
which arose in India.
24. I have gone through the arbitration clause. The statement
relied on by the advocate for plaintiff is “exclude those governed by
judicial remedies abroad for any claim or liabilities payable in India”.
25. The above quoted statement in the arbitration clause
excludes those disputes which are governed by judicial remedies
situated abroad for a claim payable in India. The clause does not
exclude the dispute as to claim or liability payable in India and which
are governed by the judicial remedies in India. Hence, the submissions
by advocate for plaintiff is not acceptable.
26. Advocate for plaintiff further submitted that there is
specific clause in the appointment letter providing for dispute resolution
which reads as under,
“Disputes:- All disputes arising out of this letter will
be subject to the jurisdiction of the Mumbai Court.
And that the Court, tribunals and or authorities at
Mumbai only shall have jurisdiction to entertain, try
and decide such disputes or differences arising out of
or pertaining to this contract of employment,
irrespective of your working address being elsewhere
at that times.”
27. Therefore, according to him the arbitration clause placed
under the heading of ‘General Rules’ will not be attracted in this case as
the ‘Dispute’ clause is a specific clause.
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28. The ‘Dispute’ clause confers jurisdiction on the Courts in
Mumbai, as well as the Tribunals and/or Authorities at Mumbai
pertaining to the appointment letter and disputes arising thereof.
However, the plain reading of said clause reveals that the intention is to
limit the jurisdiction to Mumbai only. It does not say that arbitration is
excluded, hence the submissions by advocate for plaintiff in this regard
are not acceptable.
29. Advocate for plaintiff also relied upon N. Radhakrishnan V/
s. Maestro Engineers & Ors in Civil Appeal No.7019/2009 (Arising out
of SLP© No. 5994/2007 date 22.10.2009 of the Hon’ble Supreme Court
and submitted that the original appointment letter is not tendered by
the defendant and so the motion under Section 8 of the Act of 1996
cannot be entertained.
30. It needs to be mentioned that on the date of argument the
defendant has tendered the original appointment letter. Hence, said
submission by advocate for plaintiff is not acceptable.
31. Considering the discussion above, it is clear that though it
can be held that the dispute in the suit is falling in the purview of
arbitration clause and is not excluded by the arbitration clause.
However, the arbitration clause itself is invalid and cannot be acted
upon. This Court has no power to appoint an arbitrator. In such
circumstances, the Court cannot refer the matter to arbitration in
accordance with the provisions of Section 8 of the Act of 1996. In the
result, I hold that the notice of motion has to be dismissed. Hence,
following order:-
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ORDER
Notice of Motion No. 1433/2020 is dismissed
with costs.
(AJIT N. MARE)
Judge,
Date : 18.01.2021 City Civil Court, Gr. Mumbai.
Dictated On : 18.01.2021
Transcribed on : 18 & 19.01.2021
HHJ Signed on : 20.01.2021
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“CERTIFIED TO BE TRUE AND CORRECT COPY OF THE
ORIGINAL SIGNED ORDER.”
UPLOAD DATE TIME STENOGRAPHER NAME
20.01.2021 2.22 p.m. Mahendrasing D. Patil
(Stenographer (Grade-I)
Name of the Judge H.H.J. SHRI. AJIT. N. MARE
(Court Room No.3)
Date of pronouncement of Order 18.01.2021
Order signed by P. O. on 20.01.2021
Order uploaded on 20.01.2021
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