ARBAPPL/82/2020 of ACE Engineering Academy Vs Mr. Goutham on 30 December 2020

ORDER

This arbitration apprication is fired under Section 1.r (s) and (6) of theArbitration and conciriation Act, 1996 (for short 'the Act'), read with para 3(r )(d)of scheme of Appointment of Arbitrators, 1g96, as framed by this court, seekingto appoint an Arbitrator for resorving the disputes between the parties arising outof the service agreement dated 16.02.201 7, and to pass an award in accordancewith law.

The case of the appricant, as per the averments made in the affidavit firedin support of the arbitration apprication, is that the appricant - academy, engagedthe services of the respondent as faculty member, and entered into serviceagreement dated 16.02.2017 with him. The further case of the appricant is thatas the respondent left the academy abrupfly without any resignation, andcontrary to the service agreement, they suffered due to non-compretion ofsyllabus. Hence, the applicant got issued legal notice dated 30.11.2019, andthough the said notice was received by the respondent on 05.12.2019, he did notchoose to issue any repry. As the service agreement provides for resorution ofdispute through arbitration under crause 16 of the said agreement, the appricantgot issued notice dated 20.01.2020 invoking the arbitration clause, andappointing an independent Arbitrator Mr. sharad sanghi, Advocate, and requiringthe respondent to give his consent. The respondent, though received the saidnotice on 22.01.2020, failed to respond. Aggrieved by the same, the presentapplication.

Notice sent to therespondent through court returned with postalendorsement 'absent,.

Learned counser for the appricant submits that the respondent reft theapplicant - academy abrupfly in the middre of the academic year, and thisaffected the compretion of syilabus, and he has arso started a rivar institution and*- isworkinginthesaidinstitution.Astheapplicantsuffered'itgotissuedlegalnoticeandalsothearbitrationnotice,andthoughthesaidnoticeswerereceivedby the respondent, [he ][failed to respond']

He further submits [that this court ordered ][notice ][on ][25'11'2020 and ][also]permitted the applicant to [serve ][personal ][notice, and ][accordingly' ][the ][applicant]has taken [personal notice ][to the ][address ][given ][by ][the ][respondent ][in ][the ][service]agreement,butthesamewasreturnedwithendorsement.insufficientaddress'and that he [has also ][taken ][notice ][to the ][organization ][i'e'' ][OHM lnstitute ][Ground]Floor, Mayatri [Heights, ][H.No'16-1 ][1-741lBl1}lA' ][lkon ][Hospital ][Lane']Dilsukhnagar, [Hyderabad ]- [36, ][where ][the ][respondent is ][working' ][but ][the ][same]wasreturnedwithendorsement'partyabsent''Therefore'noticeisdeemedtohave been served [on ][the respondent']

He further submits [that ][in view of ][the ][above circumstances' ][as ][there ][is ][no]dispute with [regard ][to ][existence of arbitration ][agreement' and ][issuance ][of ][notice]invoking arbitration [clause, ][this court ][may ][appoint an independent arbitrator']

As [per ]the above [averments made ][in ][the arbitration application' the ][parties]have entered [into service ][agreement ][dated ][16.02.2017, ][and as disputes ][arose']the case of the [applicant is ][that it got ][issued ][legal ][notice dated ][30"l'l'2019' ][and]alsothenoticedated2o.ol,2o2oinvokingthearbitrationclause,andthoughthesame have been [served, ][the ][respondent ][failed ][to ][respond ][The ][applicant ][along]with the arbitration [application ][filed ][copies ][of ][acknowledges stated ][to ][have ][been]signed by [the ][respondent. Further, ][the ][notice sent by this court ][in ][this ][arbitration]application, [returned ][with ][postal ][endorsement 'absent'']

From a [perusal ][of ][material ][on ][record ][it ][could. ][be ][seen ][that ][the ][applicant]sent legal notice [and ][the ][arbitration notice ][to ][the ][address ][of ][the ][respondent]mentioned [in ][the ][service agreement ][and ][the ][same were ][served' ][but ][when ][it sent]noticetothesameaddressinthisarbitrationapplication,itwasreturnedwithpostal endorsement'insufficient [address'']

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that notice is deemed to have been served on the respondent.

As the respondent did not choose to make his appearance either [in]person, or through an advocate, and no counter affidavit is also filed, theassertions of the applicant with regard to existence of service agreement, disputearising therefrom, and the invocation of arbitration clause contained in the saidservice agreement, by issuing notice, remained un-rebutted.

Clause 16 of the service agreement dated 16.02.2017 [provides ]forresolution of dispute through arbitration. The said clause, for ready reference, isextracted as under:

"16. That, any dispute arose out of this service Agreement or under therelation of Employee and Employer, all such disputes and differences and claims ifany, shall be resolved by way of Arbikation [proceedings ]only, and the Arbitrator shallbe the Managing Director of the Employer i.e., Mr. Y.V.Gopalakrishna Murthy, who willact as sole arbikator and his decision shall be final and binding on both the partieshereto. The iurisdiction for resolving all sorts of disputes and difference arose out thepresenl Service Agreement and other disputes between the Employee and theEmployer shall be only and only at Hyderabad exclusively, and all other [places ]areoutside their [jurisdiction ]expressly."

Arguments

From the above clause, the parties have agreed for resolution of disputethrough arbitration, and the Managing Director of the Employer is agreed to beappointed as sole Arbitrator.through arbitration, and the Managing Director of the Employer is agreed to beappointed as sole Arbitrator.

ln view of Clause (5) to the Vll Schedule under sub-section (5) ofSection 12 of the Arbitration and Conciliation Act, 1996, the Managing Director ofthe applicant, cannot act as Arbitrator for resolution of disputes between theparties arising out of the service agreement.

Learned counsel for the applicant submits that this court may appoint anindependent arbitrator.

Having regard to the facts and circumstances of the case, the arbitrationapplication needs to be allowed, and accordingly allowed.

Sri D.Narendar Naik, Advocate, is appointed as sole Arbitrator to resolvethe disputes between the parties arising of the service agreement dated16.02,2017, and to pass an award in accordance with law.

The learned Arbitrator is entitled to fees as per the rates specified in theFourth Schedule to the Act of 1996, inserted by Act 3 of 2016 with effect from23-10-2015, which shall be borne by both parties in equal shares.

lnterlocutory applications pending, if any, shall stand closed. No order asto coststo costs Before parting with the case it is made clear that all the issues are leftopen to both the parties to agitate before the learned Arbitrator, and the Arbitratorshall pass award on merits and in accordance with law, uninfluenced by anyfinding or observation, made in this order.shall pass award on merits and in accordance with law, uninfluenced by anyfinding or observation, made in this order.

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HIGH COURTARRJDATED:3011212020

ORDERARB.APPL.No.82 ot [2020]

ALLOWINC THEARBITRATION [APPLICATION]WITHOUT COSTS

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