Rajeevan.P. V vs M. K. Jayakrishnan

G.Girish, J

This Arbitration Request is filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) for the appointment of

sole Arbitrator to adjudicate the disputes arisen between the petitioner and the respondent.

The petitioner, who claims to be a business man engaged in the research and development of pharmaceutical products, would contend that he

entered into a Technology Share Agreement dated 12.07.2023 with the respondent, who is said to be engaged in developing pharmaceutical

substances. As per the above agreement produced as Annexure-A, the petitioner and the respondent are said to have agreed for a collaborative effort

to develop a new formulation for manufacturing 7 DEHYDRCHOLESTEROL/Vitamin D3 variants with 98% yield through single step conversion

method. According to the petitioner, Annexure-A agreement contained Article 8 which deals with the resolution of disputes between the parties

through an independent Arbitrator appointed by this Court. It is the further contention of the petitioner that consequent to the disputes which had arisen

between the parties and legal measures initiated, the petitioner and the respondent, on 12.07.2023 entered into a settlement agreement as per which

the respondent acknowledged receipt of Rs.5 Crores by way of cash on raw materials for research and development of the product and various other

pharmaceutical substances since 2020. As per the above agreement produced as Annexure-B, the respondent is said to have paid an amount of

Rs.3.5 Crores to the petitioner and had valued the product at Rs.1,000 Crores and agreed to enter into an agreement for the commercialisation of the

products including transfer of technology to third parties. Alleging that the respondent violated the terms of Annexure-A agreement, the petitioner

claims to have issued Annexure-C notice by way of e-mail to the respondent calling upon him to settle the dues. To the above notice, the respondent is

said to have issued a vague reply vide Annexure-D. Thus it is stated that an Arbitrator has to be appointed in accordance with the terms of Annexure-

A agreement for the resolution of the dispute with the respondent.

The respondent appeared through his counsel and filed counter affidavit strongly disputing the genuineness of Annexures A and B agreements

relied on by the petitioner. According to the respondent, the above two documents were concocted by the petitioner, and that the signature shown in

Annexure-B is not that of the respondent. The respondent would further contend that the amount of Rs.3.5 Crores mentioned in Annexure-B was paid

to the petitioner by way of seven cheques dated 12.07.2023 from the joint account of the respondent and his wife to settle a false criminal case foisted

by the petitioner against the respondent, his wife and their 24 year old daughter. At the instance of the petitioner, a complaint is said to have been filed

against the respondent on 20.05.2023 before the Judicial First Class Magistrate Court-X, Ernakulam, alleging the commission of offence under Section

420 read with Section 34 I.P.C. Accordingly, the Palarivattom police is said to have registered F.I.R.No.1138/2023 against the respondent. In the

above F.I.R, the wife and daughter of the respondent are also arraigned as accused. Later on, the respondent, his wife and daughter are said to have

been forcefully taken to the Palarivattom Police Station on 12.07.2023 and subjected to threat, intimidation and duress for getting various blank papers

signed from the respondent. The amount of Rs.3.5 Crores is said to have been paid by the respondent by way of seven cheques on 12.07.2023 under

the aforesaid threat and coercion perpetrated upon him. After encashing the above amount, the petitioner is said to have agreed for quashing the

aforesaid F.I.R registered against the respondent, and for the above purpose, arranged for the filing of Crl.M.C.No.6050/2023 before this Court. Thus

it is contended that the prayer for appointment of Arbitrator on the basis of Annexure-A and Annexure-B agreements, created by way of forgery,

cannot be allowed. The respondent further contended that the petitioner has not issued a valid request for arbitration in accordance with the provisions

of Section 11(5) of the Arbitration and Conciliation Act, 1996.

Heard the learned counsel for the petitioner and the learned counsel for the respondent.

The request of the petitioner for the appointment of an Arbitrator is strongly resisted by the respondent on two grounds. Firstly, it is stated that there

is non-compliance of the mandatory requirement of Section 11(5) of the Arbitration and Conciliation Act, 1996 insofar as it relates to the necessity to

issue a request for the appointment of Arbitrator. The second contention of the respondent is that Annexures A and B agreements are forged

documents and hence it is not possible to invoke any clause in Annexure-A agreement for the appointment of an Arbitrator to resolve the issues

between the petitioner and the respondent.

As regards the first challenge, it has to be stated that Annexure-C notice issued by the petitioner is not in conformity with the requirements of

Section 11(4) and 11(5) of the Arbitration and Conciliation Act, 1996. The above communication sent by way of e-mail does not contain a request for

arbitration from the side of the petitioner to the respondent. Nor had the petitioner suggested the name of an Arbitrator and indicated in the pleadings

that due to the failure of the respondent to agree on the Arbitrator within 30 days from the receipt of Annexure-C, the appointment of Arbitrator on

this application is necessitated. Thus, it could be seen that the requirements of Section 11(4), 11(5) and Section 21 of the Arbitration and Conciliation

Act, 1996 have not been complied by the petitioner. Thus, the request for the appointment of an Arbitrator, is liable to be declined for that reason

alone.

The facts and circumstances of the case would also support the contention of the respondent that Annexure-A and Annexure-B agreements relied

on by the petitioner, are concocted documents, and hence, it is not possible to invoke the clause incorporated as Article 8 of Annexure-A in connection

with the resolution of the dispute by way of arbitration. A conjoint reading of paragraphs 2 to 5 of the statement of facts in this arbitration request filed

by the petitioner would give the impression that after the execution of Annexure-A Technology Share Agreement between the petitioner and the

respondent on 12.07.2023 and the commencement of the joint venture, disputes arose between the parties and various legal measures were initiated

which eventually resulted in the execution of Annexure-B settlement agreement, as per which the respondent acknowledged the receipt of Rs.5

Crores by way of cash from the petitioner and paid an amount of Rs.3.5 Crores to the petitioner. But ironically, Annexure-A and Annexure-B

agreements are styled in such a manner that both those agreements were executed on 12.07.2023. The execution of Annexure-A and Annexure-B

agreements on the same day, i.e., 12th July, 2023, cannot be reconciled with the averments in paragraphs 2 to 5 of the statement of facts in this

arbitration request, as per which the origination of disputes and various legal measures consequent to the execution of Annexure-A agreement on

12.07.2023 has resulted in the execution of Annexure-B agreement.

That apart, it could be seen from the copy of the F.I.R, which the respondent has produced as Annexure-R1(b) that on the basis of a complaint

preferred by the petitioner before the Judicial First Class Magistrate Court-IX, Ernakulam, the Palarivattom Police had registered a cheating case

against the respondent, his wife and daughter in connection with the manufacture and distribution of certain pharmaceutical products. It is too hard to

believe that within a short span of about one month from the date of registration of the above crime, the petitioner and the respondent might have

entered into Annexure-A and Annexure-B agreements for the development of a new pharmaceutical product, and indulged in transactions amounting

to Rs.5 Crores. This strange and suspicious circumstances stated above would support the contention of the respondent that Annexure-A and

Annexure-B agreements and various other documents were concocted by the petitioner by exerting threat and coercion upon the respondent.

It is well-settled that the existence of an arbitration agreement does not mean anything unless such agreement is contractually valid. A mere

agreement is not legally binding unless it satisfies the core contractual requirements concerning consent, consideration, legal relationship, etc. {see

Mayavati Trading Pvt. Ltd. v. Pridyuat Deb Burman [(2019) 8 SCC 714] and Garware Wall Ropes Ltd. v. Coastal Marine Construction and

Engineering Ltd. [(2019) 9 SCC 209]}.

As far as the present case is concerned, the genuineness of Annexure-A and Annexure-B agreements has been strongly disputed by the

respondent. The strange and suspicious circumstances discussed in paragraphs 7 and 8 hereinabove would support the above challenge raised by the

respondent. Therefore, the request for appointment of an Arbitrator, is liable to be declined, also for the reason that the legal sanctity of Annexure-A

and Annexure-B agreements relied on by the petitioner, is at stake. As a conclusion to the aforesaid discussion, I find that the request of the petitioner

in this application for the appointment of an Arbitrator, cannot be allowed.

In the result, the Arbitration Request stands dismissed.