M/s Sagar Twisters v. Mahanagar Gas Limited

1. This application is filed under Section 11 of the Arbitration and Conciliation Act, 1996 (“ACA” for short), praying for the following substantive relief:- “b. that this Hon’ble Court be pleased to invoke powers under S.11 of the Arbitration and Conciliation Act, 1996 and appoint an arbitrator from the notified list of Advocates as the sole arbitrator to arbitrate and resolve the disputes and differences Rajesh V. Chittewan, P.A. that has been arisen between the applicant and the respondents.” (A) Factual Matrix:-

2. The following are the relevant facts necessary for adjudication of this application.

3. The applicant is a partnership firm registered in the name of “M/s Sagar Twisters” since 1987, having registered office and factory at the address stated in the cause title. It is engaged in the manufacturing of Print, Space Dyed in Polyesters and Polyester Filament Yarn.

4. Respondent no. 1- Mahanagar Gas Limited (“MGL” for short) is a natural gas distribution company incorporated on 8 May 1995 having its registered office as stated in the cause title. The respondent no. 2 is incharge of commercial transactions of respondent no. 1 and looks after day to day affairs and is authorized to deal, negotiate, install and grant Piped Natural Gas (“PNG” in short) commercial connection to its customers.

5. The present dispute between the parties pertains to the registration form/contract for obtaining a commercial PNG connection. The said registration form/contract contains an arbitration agreement set out in clause 16 of the said registration form/contract.

6. I have heard the learned counsel for the Applicant and with his assistance perused the record.

7. At the very outset, it may be noted that none appears for the respondents. This is despite the fact that the affidavit of service filed by the applicant dated 10 January 2025, indicates completion of service to the respondents affected by the applicant pursuant to order of this Court dated 25 October 2025. This was followed by another order of this Court dated 29 November 2024, by which this application under section 11 ACA, was adjourned to 3 January 2025 with a direction to the applicant to positively serve the respondents before the next date of hearing, if the same was not done. Pursuant to such direction, the applicant filed its affidavit of service dated 10 January 2025, which is on record in this proceeding.

8. It was on 28 January 2025 that the application was listed for hearing under the caption “For Hearing and Final Disposal under Section 11”. When it was called out in the morning session, learned advocate for the applicant was directed to inform/intimate the advocate for the respondents about the hearing of this application. Accordingly, the matter was kept back. In the post lunch sessions, the learned advocate for the applicant then informed this Court that they accordingly addressed an email to the respondents, informing them and their advocate on record of the hearing. A copy of the said email is taken on record. However, despite such email being delivered to the respondents/their advocate, as conveyed by the learned advocate for the applicant, none would appear for the respondents. In view thereof, as this application under section 11 of the ACA was filed on 4 July 2023 in this Court and is pending since then. As noted above, it has been listed in the past and the respondents have chosen not to appear. In such facts and circumstances, I proceed with the hearing and adjudication of the said application.

9. Firstly, the registration form/contract dated 18 April 2015 executed between the Applicant and Respondents contain an arbitration clause, which reads thus:- “16. Arbitration: Any difference or dispute arising out of or in connection with these Terms and Conditions shall be referred to the arbitration of a sole Arbitrator to be appointed by the seller. The arbitration shall be subject to the provisions of the Arbitration and Reconciliation Act, 1996 or any statutory amendment or modification thereof or any reenactment thereof and shall be held in Mumbai.” In the above context, section 7 of the ACA mandates that an arbitration agreement may be in a form of an arbitration clause contained in a contract or in a form of a separate agreement, which shall be in writing. In the given case the arbitration clause as noted (Supra) contained in the registration form/contract clearly partakes the nature and character of an arbitration agreement as prescribed under section 7 of the ACA.

10. In the given facts and circumstances, it appears that disputes and differences arose between the parties, mainly on account of excessive billing alleged by the applicant due to change of category from ‘A’ to ‘B’, which led to various letters culminating into a legal notice issued by the applicant’s advocate dated 10 October 2022, followed by a reminder notice dated 29 November 2022 addressed by the applicant’s advocate to the respondents. Such legal notice dated 10 October 2022 was duly replied by a letter of the respondents’ advocate dated 30 January 2023.

11. It is pertinent to note that the applicant in view of the above, issued a notice invoking arbitration dated 9 May 2023 addressed to the respondents. The relevant clauses of the said Notice read thus:-

arbitration. (B) Analysis: -

12. In the above backdrop, it is to be noted that the arbitration clause contained in the registration form/contract, empowers only the seller, i.e., the respondents to unilaterally appoint a sole arbitrator is ineligible to act as an arbitrator in the light of the law laid down by the Supreme Court in TRF Ltd v. and Perkins Eastman Architects DPC v. HSCC (India) Ltd[2] followed by a recent full bench decision in the case of Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV) A Joint Venture Company[3]. The said decisions make it clear that an arbitrator unilaterally appointed by one of the contracting parties having interest in the dispute or its outcome cannot have the power to unilaterally appoint a sole arbitrator. Be that as it may, the court under Section 11(6) of the ACA is clothed with the power to appoint an arbitrator when there is no dispute on the existence of the arbitration clause. Clearly in the present case the existence of the arbitration agreement in clause 16 of the registration form/contract is clear, undisputed and uncontroverted. It is well settled under Section 11(6) read with sub-section (6A) of the ACA, that the court having examined the existence of an arbitration agreement shall exercise its jurisdiction to appoint the arbitrator, under section 11 of the ACA. Similarly, as held by the Supreme Court in Interplay Between Arbitration Agreement Under Arbitration and Conciliation Act, 1996 And Stamp Act, 1899, In re[4], the validity of an arbitration agreement in view of Section 7 of the ACA should be restricted to the requirement of formal validity such that the agreement shall be in writing. Also, the determination of such existence and validity of an arbitration agreement on the basis of material and evidence is to be left to the arbitral tribunal. The said decision of the Supreme Court has been followed this court in Tata Capital Ltd v. Priyanka Communications (India) Private Ltd and Ors[5] and also in a recent decision of the Supreme Court in the case of Goqii Technologies Pvt Ltd v., which follows the ruling in Interplay (Supra). This Court is bound by the said decisions. In view thereof, as in the given facts, the existence of an arbitration agreement is clear and undisputed. In light of the above, I proceed to appoint a Sole Arbitrator under Section 11 of the ACA, in terms of the arbitration clause/ agreement (Supra). ORDER i. Ms. Shruti D. Vyas, Advocate of this Court is appointed as the learned Sole Arbitrator. ii. A copy of this order will be communicated to the learned Sole Arbitrator by the Advocates for the Applicant within ten (10) days from the date this order is uploaded. iii. The Advocates for the Applicant will forward an ordinary copy of this order to the learned Sole Arbitrator at the following postal and email address: - Arbitrator/s: Ms. Shruti D. Vyas, Mo. No. 9820687809 Address: 19, Meher Abad, Near Tata Garden, Bhulabhai Desai Road, Mumbai-400 026. Email id: shrutidvyas@gmail.com iv. Disclosure: The learned Sole Arbitrator is requested to forward, in hard copy, soft copy, the necessary statement of disclosure under

Section 11(8) read with Section 12(1) of the Arbitration and Conciliation Act, 1996 to Advocates for the parties as soon as possible. The Advocates for the applicant will arrange to file the original statement in the Registry, within three (03) days of it being made available by the learned sole arbitrator. v. Appearance before the Arbitrator: Parties will appear before the learned Sole Arbitrator on such date and at such place as the learned Sole Arbitrator decides to obtain appropriate directions in regard to fixing a schedule for completing pleadings, etc. vi. Interim Application/s: Interim Application, if any, filed under Section 17 of the Arbitration and Conciliation Act, 1996 shall be decided by the arbitrator, if and so when referred. vii. Fees: The arbitral tribunal's fees shall be governed by the Fourth Schedule to the Arbitration and Conciliation Act, 1996. viii. Sharing of costs and fees: Parties agree that all arbitral costs and the fees of the arbitrator will be borne by the two sides in equal proportion.