II.

THAT THE ARBITRATION CLAUSE IS CONTRARY TO THE SPIRIT OF

ARBITRATION.

1. That the arbitration clause is contrary to the spirit of arbitration as [A] there was no bona
fide intention to invoke arbitration on the part of the respondent. [B] the arbitration clause is
onerous [C] the condition precedent amounted to an unfair and unreasonable condition for
initiating arbitration and [D] the respondent has no right for the appointment of arbitrator.

A. THERE WAS NO BONA FIDE INTENTION TO INVOKE ARBITRATION

2. The most essential element for the initiation of arbitral proceedings is the manifest
intention of the parties to invoke the arbitration clause in case of any dispute arising out of
the agreement. It was contended by the Supreme Court that the Court must only decide the
validity of the arbitration clause based on the intention to arbitrate, if any, expressed by the
parties, effect should be given to the arbitration agreement. (Chatterjee Petroleum Company
& Others Vs. Haldia Petro Chemicals Ltd. & Ors. - 2013 ARBLR 456)

3. As laid down by the Supreme Court in Sudaram Finance Ltd. vs. N.E.P.C. India Ltd, when
an application under Sect. 9 is filed before the commencement of the arbitral proceedings,
there has to be a manifest intention to take recourse to the arbitral proceedings.

4. As per the facts of the case in hand that the petitioner had already sent a letter invoking the
arbitration agreement for resolution of the dispute and requested the Airport Authority to
appoint an arbitrator which the replied stating that they must make all the due payments of
the license fee.

5. Subsequent to this, as the contract was vitiated by fraud, the petitioner again issued a letter
demanding a revision of the amount of the license fee proportionately to the actual land in use
failing to which it was stated that appropriate steps will be taken by Mercury.

6. Since the respondent was mala fidely withholding certain arbitrary clauses about their
participation in the arbitration proceedings and appointment of the sole arbitrator, the
petitioner filed the civil suit. Thus, there was no misleading on the petitioner’s part as the
respondent had no bona fide intention to invoke the arbitration.

B. THE ARBITRATION CLAUSE WAS ONEROUS IN NATURE

7. It is humbly submitted before the court that at the time when the petitioner had willingly
given its consent for the procedure of the arbitrator, they had bona fide relations with the
respondent regarding the contract. After the breach of trust on the part of the respondent, the
petitioner is unsure of the independence and impartial nature of the arbitrator so appointed by
the respondent.

8. The said foundation was structured on the basis that under Section 12(5) of the Arbitration
Act read with the Vth and the VIIth Schedules to the amended Act, which deals with the
grounds for challenging the appointment of an arbitrator. It introduces significantly greater
clarity and detail which “give rise to justifiable doubts as to the independence or impartiality
of arbitrators. It has been amended with the objective to induce neutrality of arbitrators, viz.,
their independence and impartiality.

9. In the instant case, the petitioner is contesting the validity of arbitration clause/agreement,
on the ground that the respondent had drafted a self-serving contract, which is clear as it
gives the respondent, the sole authority to appoint the arbitrator, and when in accordance with
said contract’s arbitration clause, the contractor sent a notice invoking the arbitration, the
company neither respond to it nor initiated the arbitration proceeding.

C. THE CONDITION PRECEDENT AMOUNTED TO AN UNFAIR AND

UNREASONABLE CONDITION.

10. As laid down in the case of Shri Rajat Verma v. Public Works (B&R) Department, the
Clause dealing with arbitration was alleged to be unfair as it required that, in case the
arbitration clause was invoked by the contractor, he was required to deposit 2 percent of the
claim amount with the OPs without any interest payable thereon. It was alleged that this
clause was onerous upon a contractor who may already be under financial distress on account
of wrongful termination of its contract. It was stated that such agreement would be treated
with prima facie view that certain clauses of the agreement are unfair and discriminatory.
Thus, court held that the arbitration clause must not be devised in such a manner that it causes
harassment to the party and deprived them of fair and timely justice.

11. It must be brought to the notice of this court that in the case of Sasan Power Ltd. vs North
American Coal Corporation India Private Ltd., the Supreme Court held that the court cannot
go into the question of validity of entire agreement and can only look at the question of
validity of arbitration clause/agreement. It must thoroughly look whether the arbitration
clause is capable of being performed.

12. Therefore, when an arbitration clause is not operative on the dispute raised, as in the
present case, then it is wholly unreasonable, almost impossible, to hold that still the parties
have to refer to arbitration is against the principals of natural justice.

D. FORFEITED ITS RIGHT TO APPOINT ARBITRATOR

13. It is humbly submitted before this court that the Respondent has waived his right to
appoint the arbitrator under Sect. 11(5) and Sect. 11(6). In other words, in cases arising
under Section 11(5), there is no concrete prima-facie evidence to show that after receipt of
notice from petitioner in order to invoke arbitration, there were any serious discussions and
suggestions made by respondent with regard to balance payment claimed by petitioner-
Hence it is clear that respondent had forfeited its right to appoint arbitrator after expiry of
statutory period.

14. It was also contended that if the opposite party has not made an appointment within 30
days of demand, the right to make appointment is not forfeited but continues, but an
appointment has to be made before the former files application under Section 11 seeking
appointment of an arbitrator. In this context, attention needs to be brought that the petitioner
had issued the notice invoking the arbitration agreement on May 12, 2018 but the respondent
had not taken any steps, subsequent to which a civil suit was filed by the petitioner on July
26, 2018.(HCL wala case)

15. The Supreme Court, in the case of Bharat Sanchar Nigam Ltd . and Ors . vs . Motorola
India Pvt. Ltd has held that if the Appointing Authority did not respond to the notice
requiring the appointment of Arbitrator and failed to act within the time prescribed under
Section 11(5) of the Arbitration and Conciliation Act, 1996 then appointing authority loses
the right to object and such right is deemed to have been waived.

16. Thus, in regard to the present case, the respondent has waived his right to appoint any
arbitrator as the petitioner had filed the civil suit before the initiation of any arbitral
proceeding