- 1 - HC-KAR NC: 2025:KHC-D:10996 CMP No. 100004 of 2023 IN THE HIGH COURT OF KARNATAKA, AT DHARWAD DATED THIS THE 29TH DAY OF AUGUST, 2025 BEFORE THE HON'BLE MR. JUSTICE G BASAVARAJA CIVIL MISC PETITION NO.100004 OF 2023 BETWEEN: M/S. HERMES DISTILLERY PVT. LTD. YADRAV, TALUK. RAIBAG, DISTRICT. BELAGAVI 590002. REPRESENTED BY ITS SENIOR GENERAL MANAGER, MR. GIRIDHAR S/O. MAHADEV GALANDE, AGE. 54 YEARS, …PETITIONER (BY SRI. MALLIKARJUNSWAMY B. HIREMATH, ADVOCATE) AND: 1. THOMASDESTIL PVT. LTD., 306/307, LAXMI COMPLEX, PUNE MUMBAI ROAD, CHINCWAD STATION, PUNEM MAHARASHTRA, INDIA 411018. HAVING REGISTERED OFFICE AT FLAT NO.G-16, GOKHALE VRINDAVAN CHAPEKAR CHOWK, CHINCHWAD, PUNE-111045 STATE MAHARASTRA. 2. CALLE BAHIA DE POLLENSA 21, 28042, MADRID, SPAIN-101001, TOMSADESTILATTOMSADESTIL.ES …RESPONDENTS (BY SRI. ANOOP G. DESHPANDE, ADVOCATE FOR R1; NOTICE SERVED TO R2) Digitally signed by MALLIKARJUN RUDRAYYA KALMATH Location: HIGH COURT OF KARNATAKA DHARWAD BENCH Date: 2025.09.04 12:46:04 +0530 - 2 - HC-KAR NC: 2025:KHC-D:10996 CMP No. 100004 of 2023 THIS CMP IS FILED UNDER SECTION 11(6) OF THE ARBITRATION AND CONCILIATION ACT, PRAYING TO AN ARBITRATOR BE APPOINTED WITH DIRECTIONS TO ENTER INTO REFERENCE, COMPLETE THE PROCEEDINGS AND GIVE THE AWARD WITHIN SUCH TIME AS THIS COURT WILL BE PLEASED TO DETERMINE AND FURTHER ORDERS BE MADE AND DIRECTIONS BE GIVEN AS TO THIS COURT MAY DEEM FIT AND PROPER. THIS PETITION, COMING ON FOR FINAL HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: ORAL ORDER (PER: THE HON'BLE MR. JUSTICE G BASAVARAJA) This petition under Section 11(6) of Arbitration and Conciliation Act, 1996, is seeking to appoint an Arbitrator to resolve the dispute between the parties as per agreement dated 19th January, 2015 vide Annexure-A. 2. The petitioner, a Distillery Company, registered under the provision of Companies Act, 1956, has set up its hundred KLPD Distillery, 4.5 MW Co-Gen and 10,000 cases of bottling plant at Yadarao village of Raibagh Taluk, Belgaum district. On 19th January, 2015, the respondent No.1 entered into an agreement with the petitioner to design, supply, erect, and commissioning of the super fine alcohol production plant in the factory of the petitioner first respondent has also agreed for installation and commissioning of the said plant. Accordingly, - 3 - HC-KAR NC: 2025:KHC-D:10996 CMP No. 100004 of 2023 purchase orders were issued from time to time during the months of January and February 2015, and finally the commission work started on 14th June, 2017 as per the agreement and work orders. In terms of agreement, respondents have not supplied and erected the plant as per the specifications agreed due to which the petitioner had to incur huge loss due to deficiencies found in the quality and working of plant. 3. It is further stated that many problems were faced during running of the plant. There was frequent choking of evaporation section. It was observed that the eight number of circulation pumps supplied by the respondent were of under capacity which led to choking/stoppages. Concerned person from the respondent company admitted about the said defects and had agreed to arrange for new pumps of higher capacity. Respondents having failed to arrange higher capacity pumps, petitioner had to arrange for the same from the factory run by its sister concern viz. Shivasakthi Sugars Limited, Saundatti as a temporary arrangement to keep distillation operation continued till the new pumps were supplied by the respondents. The first - 4 - HC-KAR NC: 2025:KHC-D:10996 CMP No. 100004 of 2023 respondent-company had agreed to rectify the problem in the evaporation section to resolve the frequent choking issue. The rectification/modification was done in phases in the month of August 2017, September 2017 and October 2017. However, the problem remained unresolved and frequent choking of evaporation section continued. The said defect was again brought to the notice of respondent company through e-mail dated 13th and 14th August, 2017. 4. It is further stated that the petitioner-Company has brought to the notice of respondent that the demister pads supplied are not suitable for circulation of vapour as the same used to get choked on every third or fourth day, thereby restricting the vapour passing through demister pads, resulting in frequent stoppage of entire plant for de-scaling and CIP resulting in reduction of production. The plant could produce only 1,45,10,994 liters as against the expected output of 2,91,00,000 liters out of 291 days of operation. The production was almost stopped for 66 days due to frequent cooking of evaporation system and its CIP. Due to stoppage of plant for technical defects and due to less efficiency, the output of the plant was - 5 - HC-KAR NC: 2025:KHC-D:10996 CMP No. 100004 of 2023 only at 50%. Further, due to problem in evaporation section and stoppage of distillation plant, impacted on increase in coal, which resulted in huge loss to the petitioner-company. It is further stated that the petitioner has issued notice to the Respondent under Section 11 of Arbitration and Conciliation Act and the notice was duly served to the respondent. Respondent made reply denying the notice averments. On all these grounds, it is sought to allow the petition. 5. Respondent No.1 has filed its statement of objections. In the objection, it is contended that the respondent No.1 admits that contract has been entered into with the Petitioner-company on 19th January, 2015. Admittedly, there are two arbitration clauses in the said agreement. Article 17 of the said agreement is with respect to technical disagreement, disputes. As per this clause, if there are any technical disagreements, they shall be settled finally under the rules of conciliation and arbitration at International Chambers of Commerce, i.e. ICC Switzerland, Hegibachstrasse 47, Postfach 8032, Zurich, by one or more Arbitrators appointed in accordance with those rules. Hence, it is contended that the appointment of an Arbitrator in accordance - 6 - HC-KAR NC: 2025:KHC-D:10996 CMP No. 100004 of 2023 with Article 22 of the arbitration clause in the Agreement dated 19th January, 2019, is not applicable to the present dispute. It is further stated that the Petitioner-Company has issued notice dated 12th December, 2019 through its Advocate. The respondent had given detailed reply to the said notice on 19th March, 2020. However, now after three years, again the petitioner is coming with another notice on same grounds for appointment of an Arbitrator. This shows the oblique motive of the petitioner to harass respondent No.1 and extract money. It is further contended that the respondent No.2 is a parent company of respondent No.1. The respondent No.1 also stated that the respondent No.2 is not a party to the agreement and there is no privity of contract and respondent No.2 and the petitioner- Company. Therefore, the respondent No.2 had sent letter dated 13th May, 2022 to the petitioner requesting the petitioner to address all the correspondence related to the dispute only to respondent No.1. The respondent No.1 has specifically stated that even after being fully aware of the fact that the respondent No.2 is in no way concerned with the said agreement, the petitioner-Company has made respondent No.2 a party to the petition. Respondent No.1 has specifically conveyed to the - 7 - HC-KAR NC: 2025:KHC-D:10996 CMP No. 100004 of 2023 petitioner-Company in its reply Notice dated 08th September, 2022 to complete with the Notice dated 19th March, 2020 in toto. But the petitioner, without complaining the same, has approached this court seeking appointment of an Arbitrator. Hence it is contended that the petition is not maintainable, and on all these grounds sought for dismissal of the petition. 6. I have heard the arguments on both sides. 7. Learned Counsel Sri Mallikarjunaswamy B. Hiremath appearing for the petitioner-company, would submit that as per Article 22 of the Agreement dated 19th January, 2015, Arbitrator has to be appointed to resolve the dispute and the place of arbitration is shown as Belgaum. It is submitted that respondents have filed statement of objections contending that the dispute is actually a technical dispute. In view of Clause 17 of the Agreement, this Court has no jurisdiction to appoint the Arbitrator and the petitioner has to approach the international Chambers of Commerce at Zurich. The learned counsel would submit that the dispute is not a technical dispute. It is also submitted that the petitioner before issuance of notice to the respondents has sent emails to resolve the dispute, but the same - 8 - HC-KAR NC: 2025:KHC-D:10996 CMP No. 100004 of 2023 were not attended to. Therefore, the petitioner has invested huge amount and got the issues resolved on its own. Therefore, now the respondent cannot raise that objection. Since the petitioner-Company has already taken services from outside, the respondents are liable to pay that amount and now the question of appointment are approaching the International Chambers of Commerce, Zurich, does not arise. The learned Counsel would further contend that under Section 44 of Code of Civil Procedure, Zurich is not coming under reciprocal country. On all these grounds, it is sought to allow the petition by appointing the sole Arbitrator. 8. Sri Anoop G. Deshpande, learned counsel appearing for respondent No.1 would submit that the respondents have sent a reply notice to the petitioner. Petitioner had issued first notice on 12th December, 2019 and respondent made reply notice on 19th March 2020. As regards, e-mail sent by the petitioner is concerned, it is submitted that the respondents have clearly stated that they have not received any e-mails. In paragraph 20 of reply notice, the respondents have vehemently denied that the problem remained and resolved and frequent choking of - 9 - HC-KAR NC: 2025:KHC-D:10996 CMP No. 100004 of 2023 operation section continued as urged in the notice. It is also contended that the Petitioner-Company never followed the basic parameters or the instructions issued by the respondents and its technicians for the operation of Unit. It is also contended that issues are purely technical issues and therefore this court has no jurisdiction to entertain the petition. To substantiate his submissions, he has relied on the decision of Hon’ble Supreme Court in the case of PASL WIND SOLUTIONS PRIVATE LIMITED v. GE POWER CONVERSION INDIA PRIVATE LIMITED rendered in Civil Appeal No.1647 of 2021 decided on 20th April, 2021. 9. Having heard the arguments on both sides, the following point for my consideration: “Whether the petitioner has made out a ground for two point arbitrator as sought for?” 10. It is not in dispute between the parties that the parties have entered into an agreement on 19th January 2015, as per Annexure-A. Articles 22 and 22.1 of the Agreement reads thus: “22. Jurisdiction 22.1. In the event of any dispute arising between the parties arising out of this Agreement, the same - 10 - HC-KAR NC: 2025:KHC-D:10996 CMP No. 100004 of 2023 shall be settled by reference to Arbitration by appointing each arbitrator from each party and the provisions of Indian Arbitration Act, shall in that behalf apply. The jurisdiction shall be Balgaum District, Karnataka.” 11. It is also not in dispute that the petitioner has issued notice to respondent No.1 on 12th December, 2019. The respondent has issued reply notice on 19th March, 2020 as per Annexure R2. Thereafter, the petitioner issued another notice dated 14th March, 2022, calling upon the respondent to suggest the name of the petitioner as per Annexure-B. Notice was duly served on the respondent and the respondent issued reply to the set notice on 08th September, 2022 as per Annexure-C. Thereafter, the petitioner filed this petition before the Court on 2nd February, 2023. It is relevant to mention here as to Clause 17.2.2 of the agreement. The same reads thus: “Article 17. Technical disagreements, disputes: 17.2.2. Any dispute arisen with regard to the contract shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce of Zurich, by one or more arbitrators appointed in accordance with those rules.” - 11 - HC-KAR NC: 2025:KHC-D:10996 CMP No. 100004 of 2023 12. Having given my anxious consideration to submissions advanced on both sides, at this stage, this Court cannot decide as to whether dispute between the parties is purely technical or not. The same has to be decided by the Arbitrator. Hence the argument advanced on behalf of the respondent cannot be accepted. The respondent is at liberty to urge all the contentions before the Arbitrator. Since there is an arbitration Clause between the parties in the agreement and the petitioner having complied all the provisions before initiation of proceedings before this court, it is just and proper to allow the petition. Accordingly, I answer the point arose for consideration in the affirmative. In the result, I proceed to pass the following: i) Petition filed under section 11(6) of Arbitration and Conciliation Act, 1996 is allowed: ii) In view of the submission made by both the learned Counsel, Sri A.L. Solhapurkar, Retired District Judge, “Kalpataru”, Plot No. 87, Nagukanagar Colony, Near Guruprasad Colony, Belgaum, Ph:9845626642, is appointed as sole - 12 - HC-KAR NC: 2025:KHC-D:10996 CMP No. 100004 of 2023 Arbitrator to resolve the dispute between the parties; iii) Registry is directed to send the documents along with the copy of this Order to the sole Arbitrator; iv) It is made clear that the respondents are at liberty to urge all the contentions before the learned Arbitrator; v) The Arbitrator shall consider all the contentions to be taken up by the respondents, in accordance with law. Sd/- (G BASAVARAJA) JUDGE lnn Ct-cmu LIST NO.: 1 SL NO.: 64