Allowed

M/S Monilek Hospital and Research Centre, v. Dr. Sanjay Khandelwal Son of Shri Radha Mohan Gupta

Rajasthan HC3 Feb 2023ARBAP/92/2022

Case brief

AI extract

What is this about?

In an arbitration application under Section 11(6) of the 1996 Act, the High Court appointed a retired judge as the sole arbitrator to resolve a contractual dispute between a hospital and a cardiologist, noting that the originally agreed arbitrator was an interested party and independence was required.

What did the court decide?

Admitted the application and appointed Hon'ble Mr. Justice Mahendra Kumar Maheshwari (Retired Judge) as the sole Arbitrator.

M/S Monilek Hospital and Research Centre, Vs Dr. Sanjay… — Arbitration | Rajasthan HC (2023)

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[2023/RJJP/001624]

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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

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S.B. Arbitration Application No.92/2022

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M/s Monilek Hospital And Research Centre, Having Its Office At Sector-4, Jawahar Nagar, Jaipur In The State Of Rajasthan Represented Through Its Authorized Signatory Dr. Praveer Chandra, Medical Director.

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----Petitioner

¶6

Versus

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Dr. Sanjay Khandelwal Son of Shri Radha Mohan Gupta, Resident of 50, Prabhat Colony, Vijay Badi, Sikar Road, Jaipur, Rajasthan.

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----Respondent

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For Petitioner(s)	: Mr.Peush Nag, Adv.
For Respondent(s)	: Mr.Mohit Khandelwal, Adv. with
	Mr.Falak Mathur, Adv.

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HON'BLE MR. JUSTICE ASHOK KUMAR GAUR Order

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03/02/2023

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The instant arbitration application has been filed by the petitioner under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter read as ‘the Act of 1996’) for appointing sole arbitrator.

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Learned counsel Mr.Peush Nag appearing for the applicant submitted that an agreement was executed and signed on 11.03.2016 between the applicant and the respondent for development of Cardiology Specialty in the ‘MHRC’ and to provide Cath Lab Services in the name and Style of ‘Monilek Heart Care Centre (hereinafter read as ‘MHCC’)’.

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Learned counsel for the applicant submitted that the respondent offered his services for development of such Lab and as such an agreement was executed between the parties on

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11.03.2016 and amendment agreement was also executed on 01.01.2019.

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Learned counsel for the applicant submitted that the respondent had agreed not to enter into any sort of similar agreements with anybody else and had agreed not to work for any other Hospital, Clinic or Agency and as such Clause (16) of agreement was entered into between the parties.

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Learned counsel for the applicant submitted that the respondent violated the conditions of agreement and started working with several Institutions and as such, the applicantcompany found that the terms of the agreements were violated and the respondent suddenly discontinued his services and stopped coming to the hospital run by the applicant-company.

¶21

Learned counsel for the applicant submitted that illegal acts of the respondent resulted into violating the terms and conditions of the agreement and as such the applicant suffered a loss of sum of Rs.25,15,00,000/- approximately.

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Learned counsel for the applicant submitted that there was a Clause (27) relating to arbitration in the agreement dated 11.03.2016 and as such a Notice dated 11.12.2021 was served on the respondent to pay the amount as well as grant consent for naming the Arbitrator within a period of 30 days.

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Learned counsel for the applicant submitted that the reply was received from the respondent to the legal notice dated 11.01.2022 and as such no consent was given for appointment of arbitrator.

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Learned counsel for the applicant submitted that Clause (27) of the agreement relating to arbitration specifically provides that a

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sole arbitrator was to be nominated by both the parties and who was to conduct proceedings as per the Act of 1996 and further both the parties agreed to appoint one Shri Ashok Kumar Odhrani, Chairman of the Trust to be sole arbitrator.

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Learned counsel for the applicant submitted that since the Chairman of the trust was an interested party and as such while sending notice to the respondent, the applicant had proposed the name of one former judge of this Court to act as an arbitrator.

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Learned counsel for the applicant submitted that as per Clause (27) of the agreement, now there is no option with the applicant except to seek appointment of the Arbitrator, as per the powers conferred under Section 11(6) of the Act of 1996.

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Learned counsel for the applicant has placed reliance on a judgment passed by the Apex Court in the case of Perkins Eastman Architects DPC Vs. HSCC (India) Ltd. reported in (2020) 20 SCC 760.

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Per contra , Learned counsel for the respondent has opposed the application filed by the applicant for appointment of an arbitrator.

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Learned counsel submitted that appointment of sole Arbitrator cannot be a discretion of the applicant-Hospital and as such the respondent has never consented to any arbitration clause and same was reiterated in a modified agreement as well.

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Learned counsel for the respondent submitted that the respondent is a renowned Cardiologist by Profession practicing in Jaipur, Rajasthan and he has rendered his services with utmost honesty, dedication and professionalism.

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Learned counsel submitted that the terms and conditions, which were agreed between the parties, were in fact violated by the applicant-company themselves and as such the allegation levelled against the respondent that he had violated the conditions of agreement, is absolutely an incorrect version presented before this Court.

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Learned counsel for the respondent further submitted that accounts of the respondent were never settled by the applicantcompany by paying legitimate amount due to him for the services rendered by him and as such the applicant themselves delayed the payment by taking false plea of non-availability of trustees of the Applicant at one point of time or not having sufficient fund.

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Learned counsel for the respondent further submitted that the outstanding claim of the respondent is yet to be paid by the applicant but now a false plea has been taken by the applicant today to consider the bogus claim of the present applicant.

¶41

Learned counsel submitted that there has been no demand and denial of notice of appointment of an arbitrator and as such, this Court may not entertain the application filed by the applicant.

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I have heard the submissions made by learned counsel for the parties and perused the material available on record.

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This Court finds that the agreement dated 11.03.2016 contains Clause No.27 and the same is reproduced hereunder:-

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Clause 27:-

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“That in case of any dispute or differences whatsoever arising out of this Contract shall be decided by sole arbitrator who shall be nominated by both the parties as sole arbitrator and who shall conduct all proceedings as per the Arbitration and

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Conciliation Act, 1996. Both the parties to this contract have agreed to appoint Shri Ashok Kumar Odhrani, Chairman of the Trust to be sole arbitrator. The decision of the sole arbitrator shall be final and binding on both the parties.”

¶50

This Court further finds that the applicant-company on account of certain disputes said to be arisen between the parties, had sent a Notice dated 11.12.2021 to the respondent, wherein the respondent was informed about invocation of arbitration Clause for appointment of arbitrator.

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This Court further finds that the applicant had specifically mentioned in his notice that the sole arbitrator, who was to be appointed by the parties, since was an interested person and not an independent arbitrator and as such name of one former judge was suggested by the applicant.

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This Court further finds that reply to the notice sent by the applicant was given by the respondent.

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The respondent in his reply to the notice took objection in respect of claim made by the applicant and further also demanded certain outstanding amount against the applicant-company as a compensation.

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This Court further finds that appointment of sole Arbitrator, as per Clause 27 was by way of nomination by both the parties as a sole Arbitrator to conduct proceedings, as per the Act of 1996 and as such both the parties agreed to appoint one Shri Ashok Kumar Odhrani, Chairman of the Trust to be sole arbitrator.

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This Court finds that the Apex Court in the case of Perkins Eastman Architects DPC Vs. HSCC (India) Ltd. (supra) has

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laid down the law that independence and impartiality of an independent arbitrator is very important.

¶60

This Court, deems it proper to quote the para 23 of the judgment passed in the case of in the case of Perkins Eastman Architects DPC Vs. HSCC (India) Ltd. (supra) as under:-

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23. Sub para ( vii ) of aforesaid paragraph 48 lays down that if there are justifiable doubts as to the independence and impartiality of the person nominated, and if other circumstances warrant appointment of an independent arbitrator by ignoring the procedure prescribed, such appointment can be made by the Court. It may also be noted that on the issue of necessity and desirability of impartial and independent arbitrators the matter was considered by the Law Commission in its Report No.246. Paragraphs 53 to 60 under the heading "Neutrality of Arbitrators" are quoted in the judgment of this Court in Voestapline Schienen Gmbh v. DMRC, while paras 59 and 60 of the Report stand extracted in the decision of this Court in Bharat Broadband Network Limited v. United Telecoms Limited . For the present purposes, we may rely on para 57, which is to the following effect:

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[16..’57] The balance between procedural fairness and binding nature of these contracts, appears to have been tilted in favour of the latter by the Supreme Court, and the Commission believes the present position of law is far from satisfactory. Since the principles of impartiality and independence cannot be discarded at any stage of the proceedings, specifically at the stage of constitution of the Arbitral Tribunal, it would be incongruous to say that party autonomy can be exercised in complete disregard of these principles—even if the same has been agreed prior to the disputes having arisen between the parties. There are certain minimum levels of independence and impartiality that should be required of the arbitral process regardless of the parties' apparent agreement. A sensible law cannot, for instance, permit appointment of an arbitrator who is himself a party to the dispute, or who is employed by (or similarly dependent on) one party, even if this is what the parties agreed. The Commission hastens to add that Mr. P.K.

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Malhotra, the ex officio member of the Law Commission suggested having an exception for the State, and allow State parties to appoint employee arbitrators. The Commission is of the opinion that, on this issue, there cannot be any distinction between State and non-State parties. The concept of party autonomy cannot be stretched to a point where it negates the very basis of having impartial and independent adjudicators for resolution of disputes. In fact, when the party appointing an adjudicator is the State, the duty to appoint an impartial and independent adjudicator is that much more onerous—and the right to natural justice cannot be said to have been waived only on the basis of a "prior" agreement between the parties at the time of the contract and before arising of the disputes.’ “

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This Court, in the facts of the present case, finds that now dispute is being raised by the applicant-company and further some other claims are being made by the respondent on account of an agreement signed between the parties and as such it has become necessary that an arbitrator may be appointed to consider the dispute which is there between the parties.

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This Court, accordingly, allows the present arbitration application filed by the applicant and while exercising the power conferred under Section 11 of the Act of 1996, appoints Hon’ble Mr. Justice Mahendra Kumar Maheshwari (Retired Judge), V-108, Royal Orchid, Opp. Pink Pearl Water Park, Mahapura Road, Jaipur Ajmer Express Way, Jaipur, as the sole Arbitrator to adjudicate the dispute between the parties. The payment of cost of arbitration proceedings and arbitration fee shall be made as per the 4^th Schedule appended to the Act of 1996.

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The intimation of appointment, as aforesaid, may be given by the counsel for the parties as well as by the Registry to

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Hon’ble Mr. Justice Mahendra Kumar Maheshwari (Retired Judge), V-108, Royal Orchid, Opp. Pink Pearl Water Park, Mahapura Road, Jaipur Ajmer Express Way, Jaipur.

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(ASHOK KUMAR GAUR), J

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Monika/46

M/S Monilek Hospital and Research Centre, v. Dr. Sanjay Khandelwal Son of Shri Radha Mohan Gupta

Case brief

What is this about?

What did the court decide?

M/S Monilek Hospital and Research Centre, v. Dr. Sanjay Khandelwal Son of Shri Radha Mohan Gupta

Case brief

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What did the court decide?

What the court decided

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