M/S. Meyer Organics Pvt. Ltd., Vs M/S. Scs Enterprises

M/S. SCS ENTERPRISES LOCATED AT PRERANA NILAYA 3RD CROSS GANAGASARAPPA LAYOUT ANJANEYA SWAMY TEMPLE ROAD THIPPENAHALLI NAGARASANDRA POST BENGLARUU 560073 REP BY ITS PROPRIETOR MR SATHISH B N

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(BY SRI. ABHINAV RAMANAND A., ADVOCATE)

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…RESPONDENT

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THIS CIVIL MISC. PETITION IS FILED UNDER SECTION 11(6) OF ARBITRATION AND CONCILIATION ACT., PRAYING TO (I) APPOINT A SOLE ARBITRATOR OR ARBITRATORS IN PURSUANCE OF CLAUSE 17 OF ARBITRATION AGREEMENT DATED 1.04.2023 PRODUCED AS ANNEXURE - C3 AND ETC.

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THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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NC: 2025:KHC:46717 CMP No. 46 of 2025

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HC-KAR

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CORAM: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ

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ORAL ORDER

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The petitioner is before this Court seeking for the

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following reliefs;

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(i) Appoint a sole Arbitrator or Arbitrators in pursuance of clause 17 of Arbitration agreement dated 1.04.2023 produced as annexure - C3

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(ii) Appoint the arbitration center, Bengaluru as the Institution to conduct the arbitral proceedings.

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(iii) Award cost s of this petition in favour of the Petitioners.

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(iv) Pass such other orders or relief that this Hon’ble Court may deems fit and proper in the circumstance of the case.

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The petitioner and the Respondent entered into an agreement on 01.04.2020, which was subsequently renewed on 01.04.2022 and thereafter on 01.04.2023. The last of the agreement is governed by an arbitration Clause in terms of Clause 17, which

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is reproduced hereunder for easy reference;

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17. If dispute between parties is not resolved then in cases dispute of differences between parties will be referred to arbitration as per the Arbitration and Conciliation Act of 1996 subject to Bangalore jurisdiction only.

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NC: 2025:KHC:46717 CMP No. 46 of 2025

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HC-KAR

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It is contended that the petitioner had made certain payments to the Respondent, which the Respondent was required to make payment to the workers, which was not so made. Hence, the petitioner made payment to the said workers directly. The petitioner invoked the arbitration Clause on 24.10.2024 vide its legal notice and called upon the Respondent to make payment of the said amount paid to the Respondent. Failure thereof, the petitioner had also indicated that it is right to nominate the person named therein as Arbitrator to arbitrate the dispute between the parties.

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The notice having been served, the Respondent replied to the same vide their reply notice dated 28.11.2024 contending that there is no amount which are due to be paid, the claim made by the petitioner is without substance, etc.,

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The petitioner had addressed one more notice and called upon the Respondent to concur with the

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appointment of an arbitrator. There being no concurrence the petitioner was constrained to approach this Court.

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Notice having been issued, Respondent have been served and have entered an appearance.

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Sri.Abhinav Ramanand.A., learned counsel for the Respondent, having filed his statement of objection, contends that;

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7.1. The matter would have to be adjudicated before

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the Industrial Tribunal, since the disputes arise out of an industrial relationship between a contractor, worker/s and principal employer and as such, an arbitrator cannot be appointed.

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7.2. He relies upon the decision of the Hon’ble Apex Court in Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd.,¹ more particularly para 35 thereof, which is reproduced hereunder for easy reference;

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1 (2011) 5 SCC 532

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NC: 2025:KHC:46717 CMP No. 46 of 2025

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HC-KAR

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35. The Arbitral Tribunals are private fora chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public fora constituted under the laws of the country. Every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of the Arbitral Tribunals is excluded either expressly or by necessary implication. Adjudication of certain categories of proceedings are reserved by the legislature exclusively for public fora as a matter of public policy. Certain other categories of cases, though not expressly reserved for adjudication by public fora (courts and tribunals), may by necessary implication stand excluded from the purview of private fora. Consequently, where the cause/dispute is inarbitrable, the Court where a suit is pending, will refuse to refer the parties to arbitration, under Section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes.

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7.3. By relying on Booz Allen & Hamilton Inc.’s

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case, the submission is that where a remedy is provided under a special statute, the adjudication should be done under those statutes and special tribunals created thereunder and cannot be done by way of arbitration, which is a private forum.

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7.4. He relies upon the decision of the Hon’ble Apex

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Court in Vidya Drolia v. Durga Trading

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NC: 2025:KHC:46717 CMP No. 46 of 2025

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Corpn. ,² para 76.4 thereof, which is

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reproduced hereunder for easy reference;

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76.4. (4) When the subject-matter of the dispute is expressly or by necessary implication non-arbitrable as per mandatory statute(s).

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7.5. By relying on Vidya Drolia’s case, his submission in that the subject matter of dispute is not arbitrable and as such cannot be referred to arbitration.

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7.6. Lastly, he relies upon the decision of the

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Hon’ble Apex Court in National Insurance Co. Ltd. v. Mastan,³ more particularly para 23 to 27 thereof, which are reproduced hereunder for easy reference;

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23. The “doctrine of election” is a branch of “rule of estoppel”, in terms whereof a person may be precluded by his actions or conduct or silence when it is his duty to speak, from asserting a right which he otherwise would have had. The doctrine of election postulates that when two remedies are available for the same relief, the aggrieved party has the option to elect either of them but not both. Although there are certain exceptions to the same rule but the same has no application in the instant case.

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2 (2021) 2 SCC 1

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3 (2006) 2 SCC 641

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HC-KAR

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24. In Nagubai Ammal v. B. Shama Rao [1956 SCR 451 : AIR 1956 SC 593] it was stated: (SCR p. 470)

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“It is clear from the above observations that the maxim that a person cannot ‘approbate and reprobate’ is only one application of the doctrine of election, and that its operation must be confined to reliefs claimed in respect of the same transaction and to the persons who are parties thereto.”

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25. In C. Beepathumma v. Velasari Shankaranarayana Kadambolithaya [(1964) 5 SCR 836 : AIR 1965 SC 241] it was stated: (SCR p. 850)

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“The doctrine of election which has been applied in this case is well settled and may be stated in the classic words of Maitland—

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‘That he who accepts a benefit under a deed or Will or other instrument must adopt the whole contents of that instrument, must conform to all its provisions and renounce all rights that are inconsistent with it.’

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(See Maitland's Lectures on Equity, Lecture 18.)

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The same principle is stated in White and Tudor's Leading Cases in Equity, Vol. (sic) 18th Edn. at p. 444 as follows:

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‘Election is the obligation imposed upon a party by courts of equity to choose between two inconsistent or alternative rights or claims in cases where there is clear intention of the person from whom he derives one that he should not enjoy both…. That he who accepts a benefit under a deed or Will must adopt the whole contents of the instrument.”

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(See also Prashant Ramachandra Deshpande v. Maruti Balaram Haibatti [1995 Supp (2) SCC 539].)

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26. Thomas, J. in P.R. Deshpande v. Maruti Balaram Haibatti [(1998) 6 SCC 507] stated the law thus: (SCC p. 511, para 8)

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“8. The doctrine of election is based on the rule of estoppel — the principle that one cannot approbate and reprobate inheres in it. The doctrine of estoppel by election is one of the species of estoppel in pais (or equitable estoppel) which is a rule in equity. By that rule, a person may be precluded by his actions or conduct or silence when it is his duty to speak, from asserting a right which he otherwise would have had.” (See also Devasahayam v. P. Savithramma [(2005) 7 SCC 653].)

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27. The first Respondent having chosen the forum under the 1923 Act for the purpose of obtaining compensation against his employer cannot now fall back upon the provisions of the 1988 Act therefor, inasmuch as the procedure laid down under both the Acts are different save and except those which are covered by Section 143 thereof.

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7.7. By relying on National Insurance Co. Ltd.,

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case , he submits that the petitioner, having approached the Deputy Labour Commissioner,

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cannot also invoke the arbitration Clause.

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7.8. By referring to Interplay Between

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Arbitration Agreements under Arbitration

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Act, 1996 & Stamp Act, 1899, In re ,

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HC-KAR

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reported in (2024) 6 SCC 1 , his submission is that the issue as regards stamping of the document would also have to be decided.

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Heard Sri.Anirudh.K.R., learned counsel for the petitioner and Sri.Abhinav Ramanand.A., learned counsel for Respondent and perused papers.

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Though, several judgments have been relied upon by Sri.Abhinav Ramanand.A., learned counsel for Respondent to indicate that there is a special statute which is applicable, and as such, the matter would have to be adjudicated by the Industrial Tribunal. I am unable to agree with the same for the reason that, in the present matter, the dispute which has been raised by the petitioner is only the recovery of a certain sum of money, which the petitioner has stated to have paid to the Respondent.

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The said amounts being required to be paid by the Respondent to the workers, since the Respondent allegedly did not make payment of the said amounts,

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NC: 2025:KHC:46717 CMP No. 46 of 2025

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HC-KAR

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the petitioner has directly paid to the workers. Hence, the dispute as regards the payment to the workers is no longer an issue requiring the application of the Industrial Disputes Act, 1947, as contended by learned counsel for the Respondent.

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The dispute in the present matter is only for the recovery of certain monies which are stated to be advanced by the petitioner to the Respondent, whether those monies are required to be refunded or

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not and the grounds which are available to the Respondent to deny such refund is always a defense which could be raised by the Respondent to claim before the Arbitrator, so appointed.

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In that view of the matter, I pass the following;

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ORDER

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i. CMP is allowed .

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ii. Sri. S.D.Babladi ., a former District Judge of

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the District Judiciary, State of Karnataka, is appointed as a sole arbitrator to arbitrate the

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dispute between the parties under the aegis of the Arbitration Centre attached to this Court.

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iii. The Registry is directed to forward a copy of this order to the Director, Arbitration & Conciliation Centre for doing the needful.

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iv. Since the order is passed in the presence of both the counsels, the counsels are directed to appear before the Director, Arbitration & Conciliation Centre without requirement of any

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notice at 2.30 p.m. on 2.12.2025.

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v. All contentions are kept open.

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SD/(SURAJ GOVINDARAJ) JUDGE

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SR/List No.: 1 Sl No.: 31

M/S. Meyer Organics Pvt. Ltd., v. M/S. Scs Enterprises

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M/S. Meyer Organics Pvt. Ltd., v. M/S. Scs Enterprises

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