Facts of the Case

This is not a GST case. The petitioner, M/s IASSIT Advisory Pvt. Ltd., a Bangalore-based consulting firm, filed an Arbitration Request under the Arbitration and Conciliation Act, 1996, asserting that disputes had arisen with the respondents — M/s Dragonstone Reality Pvt. Ltd. and Taurus India Office — regarding payments due under a Consulting Agreement dated 06.06.2018, and seeking appointment of an arbitrator as contemplated in Clause 8.2 of that Agreement.

The petitioner contended that despite sending a legal-cum-demand notice and a subsequent notice invoking arbitration, the respondents had neither engaged in the pre-arbitral discussion and negotiation process contemplated by Clause 8.2, nor agreed to appointment of an arbitrator.

Among the respondent's annexures placed on record was a GST registration certificate — this appears only as a supporting document establishing the first respondent's corporate identity, and is unconnected to the substance of the payment dispute.

Issues Involved

  1. Whether the petitioner had validly invoked the pre-arbitral steps required under Clause 8.2 of the Consulting Agreement.
  2. Whether an Arbitration Request was maintainable in the circumstances, and if so, what arbitral mechanism should be adopted.

Petitioner's Arguments

  • Despite addressing correspondence to the first respondent, including through its Director, the respondents refused to engage in discussions or agree to appointment of an Arbitrator, necessitating the Arbitration Request.
  • The dispute concerned payments eligible to the petitioner under the Consulting Agreement.

Respondent's Arguments

  • Correspondence ought to have been addressed to the Associate Vice President rather than the Director, and was therefore not in conformity with Clause 8.2's requirements, making the Arbitration Request premature.
  • Alternatively, if the Court was not inclined to accept this objection, a suitable and competent Arbitrator should be appointed, since the disputed issues were essentially in the realm of accounting and demand of money.

Court Order / Findings

  • The Court rejected the objection based on the recipient's designation, holding that a Director receiving the correspondence and choosing not to redirect it to the appropriate authority could not later be used to defeat the pre-arbitral requirement.
  • Finding that further negotiation would serve no purpose and that Clause 8.2 obliged the parties to resolve disputes through arbitration, the Court held the Arbitration Request was deserving of being allowed.
  • On the joint request of both sides for a sole Arbitrator (rather than a panel, as originally stipulated in the Agreement) for cost-effectiveness, the Court appointed a named sole Arbitrator to adjudicate the disputes, directed the Registry to communicate the order and obtain the Arbitrator's Statement of Disclosure under Sections 11(8) and 12(1) of the Arbitration and Conciliation Act, and directed the parties to appear before the Arbitrator on a specified date to commence proceedings.

Important Clarification

This order is limited to constituting an arbitral tribunal for a private commercial payment dispute — it does not decide the merits of what, if anything, is owed under the Consulting Agreement, and has no connection to GST law beyond the incidental presence of a GST certificate among the annexures.

Sections Involved

  • Section 11 of the Arbitration and Conciliation Act, 1996 (appointment of arbitrators)
  • Section 12 of the Arbitration and Conciliation Act, 1996 (disclosure by arbitrator)
  • Fourth Schedule to the Arbitration and Conciliation Act, 1996 (arbitrator's fees)

Decision – In Favour of

Decided in favour of the petitioner — the Arbitration Request was allowed and a sole Arbitrator appointed, with the underlying payment dispute left to be decided in arbitration, not by the Court.

Case Details

Court: High Court of Kerala at Ernakulam
Case No.: AR No. 49 of 2023
Coram: Hon'ble Mr. Justice Devan Ramachandran
Date of Order: 12.09.2023

Link to Download the Order

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