M/S. OMEGA HEALTHCARE MANAGEMENT SERVICES PVT. LTD. vs MR. KAMALRAJ CHANDRASEKARAN & ANR

The petitioner -M/s. Omega Healthcare Management Services Pvt. Ltd., has filed this petition in this Court on 12.02.2015 seeking appointment

of an Arbitrator in a dispute arising between the parties, the present petitioner and the two Respondents namely, Mr.Kamalraj Chadrasekaran &

Mr.K.Jayanth Kumar, who are said to be the Ex-employees of the petitionerDate of Order 09-02-2018 C.M.P.No.34/2015 company which is

engaged in the business of management services to the Health Care Companies.

The learned counsel for the petitioner Ms.Meena Venugopal has pointed out before the Court that in the Amendment to Employment

Agreement Annexure-D dated 01.08.2011 between the parties, an Arbitration clause was incorporated for both these Respondents. The said

clause is reproduced below for ready reference:-

Any disputes arising from this Agreement shall be resolved through arbitration processes under the Indian Arbitration and conciliation Act.

Arbitration shall be done by a panel of three members; one each to be appointed by Omega and the Employee and the third to be appointed

jointly. Decisions by the Arbitration panel shall be binding on both the parties"".

She has further submitted that the dispute arose on account of the Respondents, in breach of the terms of employment, joining the other company

and doing illegal activities against the business interest of the petitioner-company and therefore, the claim of Rs.One crore was notified to them to

be raised through the Notice Annexure-N dated 28.07.2014 which was replied by the Respondents through their Advocate vide Annexure-S

dated 01.11.2014 denying any such liability of the claim made in the said Notice.

The learned counsel for the Respondents Mr.Samarth Parkash also submitted before the Court that the employment terms bound the

Respondents only to comply with during the term of employment and since the present petitioner-company terminated the employment of the

Respondents, the Respondents cannot be bound to comply with those terms after the termination of the employment by the petitionercompany and

therefore, the Arbitration clause cannot be invoked by the petitioner-company to appoint an Arbitrator through the process of this Court under

Section 11 of the Act.

Having heard the learned counsels for the parties, this Court is satisfied that the merit of the claim of the petitioner-company or the possible

defences thereof or even the counter claim by the Respondents is not the subject matter to be considered by this Court under Section 11 of the

Act.

The Arbitration clause in the Employment Agreement admittedly exists, so also the dispute between the parties also exists. Equally true is the

fact that the parties have failed to appoint a mutually agreed Arbitrator in the said matter despite exchange of Notices for the said purpose and

reply thereof. Therefore, the petitioner-company has approached this Court under Section 11 of the Act for appointment of an Arbitrator.

The amended provisions of Section 11 of the Act, 1996 in this regard have been discussed by this Court in the judgment rendered in the case of

N.K.Developers Pvt. Ltd.. vs. Concord India Ltd., decided on 26.10.2017 in C.M.P.No.98/2008 are also quoted below for ready reference:-

In view of the aforesaid legal position, this Court is of the view that the objections raised by the learned counsel for the Respondent are not

maintainable and sustainable. Not only because no such objections have been pleaded and raised before this Court either in the Statement of

Objections or otherwise in the reply to the notice served by the petitioner on the respondent seeking an appointment of the Arbitrator, but also in

view of the recent amendment in law by insertion of sub-sections (6-A) and (6-B) in Section 11 of the Act, which not only confers positive and

overriding powers upon this Court but also at the same time an obligation to confine their examination of the existence of a valid Arbitration

Agreement between the parties and to see that the arbitration proceedings are not unnecessarily delayed on the basis of such technical objections.

The failure on the part of the Respondent-Company itself to take the petitioner through the arbitration proceedings to the ICA, now does not

entitle it to raise this objection at the fag end after eight years of pendency of the present application before this Court under Section 11 of the Act

and it can be inferred therefore that the said procedure agreed between the parties to approach ICA had failed and which itself has largely

defeated the very purpose of expeditious disposal of the disputes through the mechanism of Alternative Dispute Resolution (ADR) provided under

the Act and agreed to by the parties.

Sub-sections (6-A) and (6-B) now not only mandate the Court while dealing with application filed under Section 11 of the Act to confine its

examination to the existence of a valid Arbitration Agreement which undisputedly exists in the present case and thus, the jurisdiction of this Court to

appoint the Arbitrator in view of agreed Arbitration Agreement is not ousted at all. The failure of parties to appoint ICA or any other Arbitrator

through the Institution of Indian Arbitration Centre can certainly be construed to be the failure of the parties, enabling any one of them to apply to

this Court under Section 11(6) of the Act. Therefore, the said objection of the Respondent-Company deserves to be over-ruled and this Court is

of the opinion that this Court has the jurisdiction to appoint the Arbitrator under Section 11 of the Act in the present case, at this stage.

The judgments relied upon by the learned counsel for Respondent on the provisions as they existed prior to the amendment of Act No.3 of

2016 w.e.f. 23.10.2015 are therefore of no help to the Respondent-Company. Those judgments only delineate that the procedure agreed upon

between the parties for appointment of Arbitrator should be followed. That legal position, even if held applicable in the present case, has exhausted

itself and the agreed mode of approaching the Indian Council of Arbitration at this belated stage is not an option for which this Court should either

relegate the parties or refuse to appoint Arbitrator under Section 11(6) of the Act. Moreover, the amendment in law removes the rigour of those

precedents"".

Accordingly, this Court is of the opinion that in the present case also, an Arbitrator deserves to be appointed to resolve the dispute between the

parties.

Both the learned counsels have fairly agreed to the appointment of a Retired District Judge, namely, Mr.Somaraju to act as an Arbitrator to

resolve the dispute between the parties under the provisions of the Arbitration and Conciliation Act, 1996, as per the Rules governing the

Arbitration Centre at Bangalore.

Accordingly, this petition under Section 11 of the Act is disposed of by appointing Mr.Somaraju, Retired District Judge, to enter into the said

reference of Arbitration and act as an Arbitrator in the present case in the Arbitration Centre, Bengaluru, as per the Rules governing in the said

Arbitration Centre.

A copy of this order be sent to the Arbitration Centre, Khanija Bhavan, Bengaluru, for proceeding further in the matter, on administrative side and

also to Mr.Somaraju, on the address available with the said Arbitration Centre, Bengaluru.