Ascend World Wide Services Limited v. Himachal Pradesh Road Transport Corporation
2018-06-22
SANDEEP SHARMA
body2018
DigiLaw.ai
JUDGMENT : Sandeep Sharma, J. By way of instant petition filed under Section 11 of the Arbitration and Conciliation Act, 1996, a prayer has been made on behalf of the petitioner, for appointment of an Arbitrator in terms of Clause 46 of the agreement, dated 16.02.2016 (Annexure P2). 2. Briefly stated facts, as emerge from the record are that respondent No.1 published tender notice for outsourcing the Courier Services, wherein two parties including the petitioner participated in the tender process. Petitioner being highest/successful bidder came to be allotted work of outsourcing of the Courier Services on 16.2.2016. Petitioner made highest offer for an amount of Rs. 79,00,000/- (Rupees seventy nine lacs) per annum including services tax. Respondent-corporation accepted the aforesaid offer and executed an agreement on 16.2.2016 (Annexure P2), whereby both the parties agreed that the petitioner company shall have the right to carry couriers in HRTC ordinary buses. As per the agreed terms inter se parties, petitioner was under obligation to pay consideration amount from the date of signing the agreement and it had to deposit annual amount in four equal quarterly installments in advance in the name of respondent No.2. Though, in terms of the agreement (Annexure P2), petitioner commenced its business of courier, but it appears that some dispute arose inter se parties and as such, petitioner by way of communications, dated 6.12.2016, 16.4.2017,10.5.2017 and 12.6.2017 (Annexures P3 to P6), apprised the Managing Director, HRTC, Shimla with regard to the dispute, enabling him to appoint an Arbitrator in terms of Clause 46 of the Agreement. But since the respondent failed to take appropriate steps for appointment of an Arbitrator, petitioner was compelled to approach this Court by way of instant proceedings, praying therein to appoint an impartial/neutral Arbitrator for the adjudication of the dispute inter se parties. 3. Mr. Devender K. Sharma, learned counsel representing the petitioner, while inviting attention of this Court to clause 46 of the Agreement, argued that in the event of dispute or differences, if any, on the terms and conditions of the agreement, petitioner is/was only required to inform Managing Director, HRTC, who was under obligation to appoint an Arbitrator to resolve the issue/dispute arose inter se parties.
He further invited attention of this Court to Annexure P-3 to P-6, to demonstrate that since 6.12.2016 petitioner had been repeatedly requesting the Managing Director, HRTC with regard to the dispute inter se parties, but since he failed to take appropriate action, petitioner was compelled to approach this Court instant proceedings. 4. Ms. Subh Mahajan, learned counsel representing the respondents, while refuting the aforesaid submissions having been made by learned counsel for the petitioner, contends that at no point of time prayer, if any, was made by the petitioner for appointment of an Arbitrator and as such, there is/was no occasion for the Managing Director, HRTC to appoint an Arbitrator. She further states that bare perusal of the Annexures P-3 to P-6, nowhere suggest that specific prayer, if any, was ever made by the petitioner to the Managing Director, HRTC, enabling him to appoint an Arbitrator under Clause 46 of the agreement and as such, present application deserves to be dismissed being devoid of any merit. She further states that since the petitioner failed to abide by the terms and conditions contained in the agreement and huge loss was being suffered by the respondent corporation, agreement, dated 16.2.2016 was cancelled on 25.10.2017, but even at that point of time no steps, whatsoever were ever taken by the petitioner to approach this Court, seeking therein appointment of an Arbitrator and as such, present petition deserve to be dismissed on the ground of limitation also. 5. Ms. Subh Mahajan, leaned counsel for the respondents further contends that since the petitioner violated the terms and conditions of the agreement, respondent corporation rightly forfeited the security of the petitioner and at present there is no claim, if any, of the petitioner against the respondent corporation and as such, there is no dispute which is required to be referred to the Arbitrator. 6. I have heard learned counsel representing the parties and carefully gone through the record. 7. At this stage, it would be profitable to reproduce Clause 46 of the agreement herein below:- “In case of any dispute or differences arising on the terms and conditions of the agreement as the case may be, Managing Director, HRTC will appoint an arbitrator to resolve the issue/dispute and decision of the Arbitrator shall be final and binding on both the parties.” 8.
Careful perusal of Clause 46 of the agreement, clearly suggests that in the event of dispute or differences, if any, interse parties on the terms and conditions of the agreement, Managing Director, HRTC is/was to appoint an arbitrator to resolve the issue/dispute. Careful perusal of aforesaid Clause contained in the agreement as well as other provisions, nowhere suggest that the petitioner is/was required to make a specific prayer for appointment of an Arbitrator in terms of Clause 46 of the agreement, rather it had to apprise Managing Director, HRTC with regard to dispute or differences on the terms and conditions of the agreement inter se parties. Similarly, there appears to be no time limit fixed for making such request. Agreement executed inter se parties, nowhere suggest that prayer, if any, for appointment of an arbitrator is/was to be made within stipulated period, rather same could be made at any time in the event of dispute or differences inter se parties. 9. In the case at hand, bare perusal of Annexures P-3 to P-6, clearly suggest that the petitioner company had been repeatedly requesting/apprising the Managing Director, HRTC with regard to dispute inter se parties, but no steps, whatsoever were taken by the Managing Director, HRTC to appoint the Arbitrator. Though, respondents in their reply have disputed the factum with regard issuance or receipt of communications dated 6.12.2106 and 16.4.2017, but have categorically admitted receipt of communications dated 10.5.2017 and 12.6.2017, meaning thereby, respondent corporation was in the know of the dispute raised by the petitioner. Since, communications dated 10.5.2017 and 12.6.2017 have been admitted to be received and no reply, whatsoever has been sent to the petitioner qua the claim raised by it in the communications, referred here in above, it can be safely presumed that petitioner firm duly complied with the provisions contained in Clause 46 of the agreement, enabling the Managing Director, HRTC to take steps for appointment of an Arbitrator. 10. As far as another argument raised by learned counsel for the respondents, that as of today there is no liability, if any, of the respondent corporation and petitioner has no claim against the respondent corporation is concerned, same cannot be looked into in the present proceedings, because at this stage, this Court is only required to see whether there is any agreement inter se parties and there is provisions for appointment of an Arbitrator.
All the ancillary issues raised in the present petition cannot be considered and decided in the preset proceedings, rather same needs to be decided/adjudicated by the Arbitrator to be appointed in terms of the agreement arrived inter se parties. 11. Section 11 (6) (A) of the Arbitration and Conciliation (Amendment) Act, 2015, which has come into force w.e.f. 23.10.2015, categorically provides that Supreme Court or High Court while considering any application under subsection (4) or subsection (5) or sub section (6), shall notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of arbitration agreement, meaning thereby, if court after having perused agreement executed interse parties is convinced and satisfied that there is an arbitration clause in the agreement, it may consider the prayer having been made by the applicant for appointment of an Arbitrator. 12. Recently Hon’ble Apex Court in Duro Felguera, S.A. v. Gangavaram Port limited, (2017) 9 SCC 729 , has held that after the amendment, all that the court needs to see is that whether an arbitration agreement exists –nothing more, nothing less, because the legislative policy and purpose is essentially to minimize the Court's intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6) (A) ought to be respected. Relevant paras of aforesaid judgment are reproduced herein below: “58. This position was further clarified in National Insurance Company Limited v. Boghara Polyfab Private Limited. To quote: (SCCp.283, para22) "22. Where the intervention of the court is sought for appointment of an Arbitral Tribunal under Section 11, the duty of the Chief Justice or his designate is defined in SBP & Co. This Court identified and segregated the preliminary issues that may arise for consideration in an application under Section 11 of the Act into three categories, that is, (i) issues which the Chief Justice or his designate is bound to decide; (ii) issues which he can also decide, that is, issues which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide. 22.1. The issues (first category) which the Chief Justice/his designate will have to decide are: (a) Whether the party making the application has approached the appropriate High Court.
22.1. The issues (first category) which the Chief Justice/his designate will have to decide are: (a) Whether the party making the application has approached the appropriate High Court. (b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement. 22.2. The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the Arbitral Tribunal) are: (a) Whether the claim is a dead (long-barred) claim or a live claim. (b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection. 22.3. The issues (third category) which the Chief Justice/his designate should leave exclusively to the Arbitral Tribunal are: (i) Whether a claim made falls within 43 the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration). (ii) Merits or any claim involved in the arbitration." 59. The scope of the power under Section 11 (6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. (supra) and Boghara Polyfab (supra). This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an arbitration agreement exists nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Court's intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected.” 13. It is quite apparent from the aforesaid provision of law and the law laid down by the Hon’ble apex Court supra, that after the amendment in Section 11 (6) (A), whereby Section 11 (6) (A) came to be incorporated, Court is only required to see whether an agreement exists or not. Necessarily, it is not required to take into consideration all other ancillary issues raised on behalf of the opposite party, who is opposing the appointment of an Arbitrator. 14.
Necessarily, it is not required to take into consideration all other ancillary issues raised on behalf of the opposite party, who is opposing the appointment of an Arbitrator. 14. This Court after having carefully perused material available on record finds substantial force in the argument of learned counsel representing the petitioner that since in the case at hand, respondent despite having received communications Annexures P-3 to 6, failed to refer the matter to the Arbitration in terms of Clause 46 of the agreement, petitioner rightly approached this Court in the instant proceedings for appointment of an Arbitrator. 15. Consequently, in view of aforesaid detailed discussion as well as law laid down by the Hon’ble Apex Court supra, petition is allowed and with the consent of the learned counsel representing the parties, Shri B.S.Chauhan learned Senior Advocate, HP High Court, Shimla, is appointed as an arbitrator to adjudicate the dispute inter se parties. His consent/declaration under Section 11(8) of the Arbitration & Conciliation Act has been obtained. He has no objection to his appointment as an arbitrator in the present matter. He is requested to enter into reference within a period of two weeks from the date of receipt of a copy of this order. It shall be open to the Arbitrator to determine his own procedure with the consent of the parties. Otherwise also, entire procedure with regard to fixing of time limit for filing pleadings or passing of award stands prescribed under the Act. 16. Needless to say, award shall be made strictly as per the provisions contained in Arbitration & Conciliation Act. A copy of this order shall be made available to the learned Arbitrator, named above, by the Registry of this Court, within a period of two weeks, enabling him to take steps for commencement of the arbitration proceedings. The petition is disposed of along with pending applications, if any.