M/S. Nelson Health Spa Pvt. Ltd. vs I.T.D.C. Ltd.
2008 Latest Caselaw 1704 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                 Arb. AP.8/2008

%22.09.2008


                                  Date of decision :         22.9.2008

M/s. Nelson Health Spa Pvt. Ltd.                 ....... Appellant
                        Through: Ms. Sujata Kashyap, Advocate

                                Versus

I.T.D.C. Ltd.                                   ....... Respondent
                        Through: Mr. Rajiv Nayar, Sr. Advocate with
                                 Mr. Sushant Kumar Advocate


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.     Whether reporters of Local papers may
       be allowed to see the judgment?       Yes

2.     To be referred to the reporter or not?    Not Necessary

3.     Whether the judgment should be reported
       in the Digest?                                  Yes


RAJIV SAHAI ENDLAW, J.

1. This appeal u/s. 37 of the Arbitration and Conciliation Act,

1996 is preferred against the order of the Arbitral Tribunal (Sole

Arbitrator) in exercise of powers u/s. 17 of the Act. The appellant

had entered into an agreement with the respondent for running the

health club in hotel Samrat of the respondent. The said agreement is

stated to have been renewed from time to time. Disputes and

differences having arisen between the parties relating to further

renewal of the agreement, the appellant invoked the arbitration

clause and filed petitions in this court for interim relief. The

respondent made a statement in the said proceedings that the

appellant shall not be dispossessed save by due process of law.

Arbitrator was also appointed and arbitration proceedings are

underway.

2. This appeal is preferred against the order dated 27.5.2008 of

the Arbitral Tribunal. The appellant applied before the Arbitral

Tribunal u/s. 17 of the Act stating that the appellant had learnt that

the respondent had initiated the process of inviting tenders for

running the health club in hotel Samrat and sought order from the

Arbitral Tribunal to restrain the respondent from doing so. The

respondent resisted the said prayer of the appellant.

3. The Arbitral Tribunal has by the order impugned in this appeal

inter alia held that the jurisdiction u/s. 17 of the Act is only to protect

the interest of both the parties; that the agreement of the respondent

with the appellant had admittedly expired; that allowing the prayer

of the appellant would mean binding the respondent with the

appellant perpetually and as such no case was made out for

restraining the respondent from inviting tenders. The Arbitral

Tribunal, however, further ordered that the appellant will not be

dispossessed from the premises without following the due process of

law, as already undertaken by the respondent and that by the

respondent so inviting tenders, no prejudice shall be caused to the

appellant and to the arbitration proceedings. With these directions,

the application of the appellant u/s. 17 was dismissed.

4. Though, numerous grounds have been taken by the appellant

in the memorandum of appeal, but upon inquiry from the counsel for

the appellant as to what prejudice the appellant will suffer, if the

respondent so invites the tender or processes or finalizes the same,

the counsel fairly stated that if that was to be permitted, immediately

upon the award of the Arbitrator, if against the appellant, the

respondent shall award the contract to the new party, even before

the appellant has had a chance to prefer the objections against the

said award.

5. In my view, the aforesaid reasoning of the appellant cannot

stand in law. The appellant has remedies available to it for the fears

expressed. However, the appellant as a litigant has no right to delay.

The appellant cannot be permitted to take advantage of the inherent

delays in the functioning of the respondent which is a public sector

undertaking. It is common knowledge that the process of inviting

tenders, selection and finalization of the agreement is fraught with

sanctions of different authorities and takes several months. Unless

such process is allowed to be initiated now itself, the respondent

even in the event of succeeding in the arbitral proceedings will have

to necessarily either be compelled to allow the appellant to function

or be forced to shut down the health club, till the time the new

contract is finalized, if the process thereof is to take only after the

conclusion of the arbitral proceedings. This would amount to giving

the appellant an undue advantage over the respondent.

6. On the contrary, the appellant shall not suffer in any manner, if

the tender process is permitted to commence. In the event of the

appellant succeeding in the arbitral proceedings, the only

consequence would be that the time, money and effort put by the

respondent in the tender process would be wasted and the

respondent may also become liable, if finalizes the contract with

another party to such party. The Arbitral Tribunal has protected the

appellant by providing that the tender process initiated by the

respondent shall not affect the appellant or arbitral proceedings.

7. I do not find any merit in other submission also of the counsel

for the appellant that the respondent having on an earlier occasion

stated before the Arbitrator that it had no intention of initiating the

tender process, was not entitled to change its stand. The

respondent, if finding arbitral proceedings to be nearing close,

decides to now commence the tender process, it cannot be prevented

from doing so for the reason of having not earlier shown an

inclination for the same.

8. The grant/non-grant of interim measures u/s. 17 necessarily

involves the exercise of discretion and such exercise of discretion by

the Arbitral Tribunal is not to be lightly interfered in appeal unless

the exercise of such discretion is shown to be wholely unjust or

arbitrary. In my view, the same principle as in appeals against the

orders of courts with respect to orders of interim relief are to apply

to orders of the Arbitrator with respect to the interim relief. The

Arbitral Tribunal is but a court/Judge of the choice of the parties.

9. In the present case, I do not find the refusal of the Arbitrator to

grant interim relief claimed by the appellant to be unjust or

arbitrary. The appeal has no merit and is dismissed.

10. This court vide order dated 11.6.2008 while issuing notice of

the appeal had directed the respondent to hold back the issuance of

tender. The appeal having failed, the said interim order stands

vacated. However, in the circumstances of the case, the parties are

left to bear their own costs.

RAJIV SAHAI ENDLAW (JUDGE) September 22, 2008 k