IBI Consultancy India V. DSC Ltd

IN THE CIVIL ORIGINAL JURISDICTION ARBITRATION CASENO. 53 OF 2016 IBI Consultancy India Private Limited …Petitioner(s …Respondent(s ARBITRATION CASENO. 63 OF 2016 ARBITRATION CASENO. 54 OF 2016 ARBITRATION CASENO. 57 OF 2016 JUDGMENT The IBI Consultancy India Private Limited the petitioner Company is the Indian subsidiary of the IBI Group based in Canada. The above petitions under Section 11(6 read with Section 11(9) of the Arbitration and Conciliation Act 1996have been filed by the petitioner Company as well as by the IBI Group for appointment of an Arbitrator to adjudicate the disputes that have arisen between the parties in connection with the contracts in question. The petitioner Company has filed two petitions for the appointment of Arbitrator and its parent company viz. IBI Group has also filed two petitions of the same nature. Since the point of consideration is same in all these four petitions purpose would be served if we moot the case of either of the petition and would be disposed off by this common judgment Arbitration Case No. 516 The petitioner Company is a multi disciplinary company engaged in the business of providing system integration and maintenance service for Toll and Traffic Management Systems whereas the DSC Limited the respondent Company is a Company registered under the Companies Act 1956 having two subsidiary companies. First subsidiary Company of the respondent Company is the Lucknow Sitapur Expressway Limitedwhich is a special purpose vehicleof the respondent Company and has signed a Concession Agreement with the National Highways Authority of India for developing Lucknow Sitapur Highway Project which is also a special purpose vehicle of the respondent Company and has signed a Concession Agreement with the NHAI for developing the Raipur Aurang Highway Projectfor widening the existing 2 lane Road to 4 Lane dual carriageway between Km 239 to Km 281 on NH 6 in the State of Chhattisgarh. Vide e mail dated 16.02.2010 the respondent Company sent a Request for Proposalto the petitioner Company inviting technical and commercial proposal for their LSEL and REL Projects Vide letter dated 07.06.2010 the petitioner Company had given a proposal to execute the contract for installation erection and commissioning of the Toll Collection and Traffic Control Equipments at NH 24. The respondent Company vide letter dated 14.06.2010 accepted the said proposal. Pursuant thereto a Contract Agreement dated 30.08.2010 was executed between the parties. The value of the Contract was mutually finalized at Rs 1 55 20 700.00 in pursuance of the Contract Agreement. In total the IBI group and the petitioner Company had entered into 6separate contracts for the respective LSEL and REL Projects with the respondent Company. During completion of the projects respondent Company defaulted in releasing the agreed payment to the petitioner Company and the IBI Group Though several verbal and written communication were exchanged between the parties to this effect the respondent Company could not release the outstanding payment. On 06.09.2012 a legal notice was sent to the respondent Company by the IBI Group as well as by the petitioner Company for the recovery of outstanding payment for all the contracts. Further on 12.06.2013 a reminder for outstanding payment was sent to the respondent Company. On 24.04.2014 a legal notice for invoking Arbitration Clause and appointment of Arbitrators was sent to the respondent Company and the name of Mr. Debashish Moitra Advocate was suggested as a Sole Arbitrator however there was no reply from the other side. The IBI Group and the petitioner herein filed petitions under Section 11 of the Act before the High Court being Arbitration Petition Nos. 443 448 444 and 4414 before the High Court of Delhi at New Delhi. Learned single Judge of the High Court vide order dated 24.02.2015 disposed of the petitions while holding that since one of the parties to the petition is an entity incorporated outside India therefore the arbitration of the dispute involving such an entity would be an ‘international commercial arbitration’ within the meaning of Section 2(1)(f) of the Act and for seeking appointment of an Arbitrator in a dispute involving such an entity an application will have to be filed before the Supreme Court under Section 11(9) of the Act. The petitioners herein have therefore invoked the jurisdiction of this Court by filing the above petitions. The first and the foremost thing is the existence of an arbitration agreement between the parties to the petition under Section 11 of the Act and the existence of dispute(s) to be referred to Arbitrator is condition precedent for appointing an Arbitrator under Section 11 of the Act. It is also a well settled law that while deciding the question of appointment of Arbitrator court has not to touch the merits of the case as it may cause prejudice to the case of the parties. The scope under Section 11(6) read with Section 11(9) is very limited to the extent of appointment of Arbitrator. This Court has to see whether there exists an Arbitration Agreement between the parties and if the answer is affirmative then whether the petitioner has made out a case for the appointment of It is worth mentioning that the position after the insertion of sub Section 6(A) of Section 11 of the Act dated 23.10.2015 has been changed. The extent of examination is now confined only to the existence of the Arbitration Agreement. At this juncture it is pertinent to set out Article 1 as well as Clause 3.14 of the Contract Agreement dated 30.08.2010 which are as under: “Article 1 The following document shall constitute the Contract between the client and the contractor and each shall be read and construed as an integral part of the Contract i) This Contract Agreement and Appendices hereto ii) Letter or indent ref no. No LSEL Tolling IBI HO 2 dated 14th June 2010…..” “Clause 3.14 ArbitrationAccordingly Justice Amitava Roy a former Judge of this Court is appointed as the sole Arbitrator to adjudicate the disputes between the parties on such fees he may fix Nevertheless to say the said appointment is subject to the necessary disclosure being made under Section 12 of the Act and the Arbitrator not being ineligible under Section 12(5) of the Act. 12) The petitions as well as interlocutory application if any are disposed of accordingly …. …J. ….... …J. NEW DELHI APRIL 16 2018. 

Summary:  The Petitioner, IBI Consultancy India Private Limited is the Indian subsidiary of the IBI Group based in Canada. It is engaged in the business of providing system integration and maintenance service for Toll and Traffic Management Systems.The Respondent, DSC Limited, is a company registered under the Companies Act, 1956, having two subsidiary Companies; firstly Lucknow Sitapur Expressway Limited (LSEL) and secondly, Raipur Expressway Limited (REL), both of which are engaged in developing Expressways in collaboration with the National Highway Authority of India (NHAI).Vide email dated 16.02.2010 the Respondent Company sent a Request for Proposal (RFP) to the Petitioner-Company inviting technical and commercial proposal for their LSEL and REL Projects.Vide letter dated 07.06.2010 the Petitioner Company gave a proposal to execute the contract for installation, erection and commissioning of the Toll Collection and Traffic Control Equipments at NH-24. The proposal was accepted by the Respondent Company vide letter dated 14.06.2010 and the Contract was mutually finalized and executed on 30.08.2010 for the value of Rs. 1,55,20,700/-. In total, the Petitioner had entered into 6 separate contracts for the respective LSEL and REL projects, with the Respondent Company.The facts of the case suggest that, during completion of the projects, the Respondent-Company defaulted in releasing the agreed payment to the Petitioner-Company and the IBI Group, despite several verbal and written communications being exchanged between the parties.A legal notice for invoking Arbitration Clause and appointment of Mr. Debashish Moitra as the Arbitrator, was sent to the Respondent-Company on 24.04.2014. However, there was no reply from the other side.The IBI Group and the Petitioner-Company herein filed Petition Nos. 443,448,444 and 449 of 2014 under Section 11 of the Arbitration Act before the High Court of Delhi.Further, the High Court disposed of the petitions while holding that since one of the parties to the petition is an entity incorporated outside India, therefore, the arbitration of the dispute involving such an entity would be an International Commercial Arbitration within the meaning of Section 2(1)(f) of the Act.Further, it was held that for seeking appointment of an Arbitrator in a dispute involving such an entity, an application will have to be filed before the Supreme Court under Section 11(9) of the Act. Hence, the current Petition has been filed in accordance with the order dated 24.02.2015, of the High Court of Delhi.ISSUE BEFORE THE COURT:Whether there exists an Arbitration Agreement between the parties and if the answer is affirmative then whether the petitioner has made out a case for the appointment of Arbitrator?RATIO OF THE COURT:1.         On a careful perusal of Article-1 as well as Clause 3.14 of the concerned Contract dated 30.08.2010 along with the Letter of Indent dated 14.06.2010, the court held that the letter dated 14.06.2010 is a part of the Contract and it shall be read and construed as an integral part of the Contract. Therefore, the contention of the respondent-Company that there does not exist any arbitration agreement between the parties is not sustainable in the eyes of law. The court was view that Arbitration clause exists in the Contract and we hold this point in favour of the petitioner-CompanyThe court held that it is a cardinal principle of the Arbitration and Conciliation Act that the parties are free to decide the number of arbitrators, provided, it is an odd number, as well as the procedure for appointing them. However, if the parties are not able to agree on the said procedure, or constitute the Arbitral Tribunal to their mutual satisfaction, either of the party has an option to route to an appropriate remedy under Section 11 of the Act, which provides detailed machinery for appointment of Arbitrator through judicial intervention. DECISION HELD BY COURT:This court appointed Justice Amitava Roy, a former Judge of this Court, as the sole Arbitrator to adjudicate the disputes between the parties on such fees he may fix.The court further deemed the said appointment subject to the necessary disclosure being made under Section 12 of the Act and the Arbitrator not being ineligible under Section 12(5) of the Act.