“In the event of arbitrator dying, neglected or refusing to act or resigning or being unable to act for any reason or his award being set aside by the court for any reason the parties will mutually agree another to act as Arbitrator.”
| Case name: | IBI CONSULTANCY INDIA v. DSC LTD |
| Case number/Citation: | Arbitration Petition No. 000053-000053 / 2016 |
| Court: | Supreme Court of India |
| Decided on: | April 16, 2018 |
| Relevant Act/Sections: | S.11 & 12 of Arb and Conciliation Act |
- BRIEF FACTS AND PROCEDURAL HISTORY:
- 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-Company
- The 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.