Surana Telecom Limited And ... vs Bharat Sanchar Nigam Limited
2008 Latest Caselaw 630 Del

JUDGMENT

Hima Kohli, J.

1. By way of this common order and judgment, the Court proposes to dispose of AA No. 247/2007 & AA No. 248/2007 as the disputes in both the cases arise out of the same contract and the respondent in both the cases is common. The present petitions are filed by the petitioner praying, inter alia, for appointment of an Arbitrator in terms of Section 11(6) of the Arbitration and Conciliation Act, 1996. For the sake of convenience, facts of AA No. 247/2007 are being recorded herein.

2. It is stated by the petitioner that the respondent-BSNL invited bids vide tender notice dated 27.8.2002 for supply of mobile terminals, fixed terminals etc. The petitioner responded to the aforesaid tender and submitted its bid and was awarded a purchase order dated 5.11.2003. The said purchase order also contained an Annual Maintenance Contract. The said Annual Maintenance Contract was forwarded by the respondent to the petitioner on 19-20.7.2005 and was signed and returned by the petitioner to the respondent under cover of letter dated 21.7.2005.

3. After a period of about one year and nine months, the petitioner wrote a letter dated 7.4.2007 to the respondent making a request for review of certain clauses in the AMC. The aforesaid letter was addressed to the Director (Operation) of the respondent and ended with a request that certain anomalies in the AMC clauses as indicated in the letter may be removed by the respondent by modifying the clauses. Counsel for the petitioner relies on Section 3 Clause 20 of the bid document containing the arbitration clause which is reproduced hereinbelow:

20 ARBITRATION

20.1 In the event of any question, dispute or difference arising under this agreement or in connection there-with (except as to matters, the decision of which is specifically provided under this agreement), the same shall be referred to the sole arbitration of the CMD, BSNL, New Delhi or in case his designation is changed or his office is abolished, then in such case to the sole arbitration of the officer for the time being entrusted (whether in addition to his own duties or otherwise) with the functions of the CMD, BSNL or by whatever designation such officer may be called (hereinafter referred to as the said officer) and if the CMD, BSNL or the said officer is unable or unwilling to act as such the sole arbitration or some other person appointed by the CMD, BSNL or the said officer. The agreement to appoint an arbitrator will be in accordance with the Arbitration and Conciliation Act, 1996.

There will be no objection to any such appointment on the ground that the arbitrator is a BSNL Servant or that he has to deal with the matter to which the agreement relates or that in the course of his duties as BSNL Servant he has expressed views on all or any of the matters in dispute. The award of the arbitrator shall be final and binding on both the parties to the agreement. In the event of such an arbitrator to whom the matter is originally referred, being transferred or vacating his office or being unable to act for any reasons whatsoever, the CMD, BSNL or the said officer shall appoint another person to act as arbitrator in accordance with terms of the agreement and the person so appointed shall be entitled to proceed from the stage at which it was left out by his predecessors.

20.2 The arbitrator may from time to time with the consent of both the parties enlarge the time frame for making and publishing the award. Subject to the aforesaid, Arbitration and Conciliation Act, 1996 and the rules made there under, any modification thereof for time being in force shall be deemed to apply to the arbitration proceeding under the clause.

20.3 The venue of the arbitration proceeding shall be the Office of the CMD, BSNL, New Delhi or such other Places as the arbitrator may decide.

4. Counsel for the petitioner states that in view of the fact that the respondent refused to respond favorably to the aforesaid letter of request of the petitioner dated 7.4.2007, the present petition is filed praying, inter alia, for appointment of an Arbitrator to adjudicate the disputes raised by the petitioner.

5. The aforesaid petition is opposed by the counsel for the respondent who states that in the first instance, the petitioner did not follow the procedure prescribed in the contract for appointment of an Arbitrator which required the parties to approach the CMD, BSNL, New Delhi, for adjudicating their disputes as a sole arbitration. As against the aforesaid clause mandating the petitioner to approach the CMD, BSNL, New Delhi, the petitioner approached the Director (Operation), BSNL in terms of its letter dated 7.4.2007. Hence, it is stated that there was no valid invocation of the arbitration clause.

6. It is further stated by the counsel for the respondent that a perusal of the petition as also the letter dated 7.4.2007 shows that, in fact no dispute or difference has been specified by the petitioner which can be referred for adjudication to the sole arbitrator. He submits that a bare perusal of the letter dated 7.4.2007 shows that the petitioner is seeking modification of certain clauses of the Annual Maintenance Contract which was entered into voluntarily by the petitioner with the respondent. Thus it is submitted that the said issue is not within the scope of arbitration and cannot be termed as a dispute/difference for being referred to adjudication.

7. I have heard learned Counsels for the parties and have also perused the relevant documents referred to by the parties. There is substance in the submission of the learned Counsel for the respondent that for a matter to be referred to arbitration, prima facie, a dispute ought to exist which can be referred for adjudication. In the present case, as is apparent from a perusal of the letter dated 7.4.2007 addressed by the petitioner to the Director (Operation) of the respondent, the petitioner has sought for modification of certain terms and conditions of the Annual Maintenance Contract which forms part of the work order awarded to the petitioner. The petitioner having entered into the contract with the respondent with open eyes, any modification and/or variation of the clauses governing the parties cannot be termed as dispute/difference for being referred to arbitration. While it is within the scope of an Arbitrator to interpret the terms and conditions of the contract as they exist on the record and govern the parties however, he cannot re-write the contract for either of the parties.

8. It is not denied by learned Counsel for the petitioner that both the parties are working within the parameters of the contract signed by them. However, it is his case that the terms and conditions of the contract are lopsided and more favorable to the respondent. If such is the case, then it was for the petitioner to decide at the relevant time, as to whether it was commercially viable for it to enter into the contract with the respondent or not. Even now, it is for the petitioner to renegotiate the terms and conditions of the contract with the respondent, if the latter is willing to do so. However, the present remedy as sought by the petitioner, by invocation of the arbitration clause to seek review/modification of the existing terms and conditions of the contract, cannot lie within the scope of arbitration.

9. It is therefore held that the petitioner has failed to specify any dispute in the petition or in any correspondence exchanged with the respondent which can be termed as a dispute/difference, in respect of the contract governing the parties for the purposes of being referred to an Arbitrator for adjudication. For the aforesaid reasons, the prayers made in the petitions are declined and the same are rejected.

10. Needless to state that any observations made hereinabove are only in the context of the present petition and shall not be construed as an observation on the merits of the grievance raised by the petitioners in their letter dated 7.4.2007 addressed to the respondent and that the petitioners shall be at liberty to invoke the civil remedies as may be available to them in law.