Sikka Promoter (Pvt.) Ltd. vs The Municipal Corporation Of ...
2009 Latest Caselaw 534 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                            A.A. No.196/2008

%                     Date of Decision: 13.02.2009

Sikka Promoter (Pvt.) Ltd.                               .... Petitioner
                      Through Mr.Alok Tripathi, Advocate

                                 Versus

The Municipal Corporation of Delhi               .... Respondent
                    Through Mr.Amit K. Paul, Advocate
CORAM:
HON'BLE MR. JUSTICE ANIL KUMAR

1.   Whether reporters of Local papers may be                  YES
     allowed to see the judgment?
2.   To be referred to the reporter or not?                     NO
3.   Whether the judgment should be reported in                 NO
     the Digest?


ANIL KUMAR, J.

*

1. This is a petition under Section 11(6) of Arbitration and

Conciliation Act, 1996 by the petitioner for appointment of an arbitrator

in terms of Arbitration agreement between the parties.

2. The petitioner is stated to be engaged in out-door publicity/

advertisement, display of hoardings and kiosks etc. The respondent had

issued a NTI dated 27th January, 2006 for award of contract for display

of illuminated advertisements through kiosks on streetlight poles on

MCD roads. The bid of the petitioner was accepted for a period of two

years and the petitioner also deposited Rs.2.00 lakh per zone as earnest

money.

3. According to the petitioner, respondent had made a very specific

and categorical representation that the bidder will get a right to display

illuminated advertisement through kiosks on streetlight poles on all the

MCD roads including PWD maintained roads. The respondent,

according to the petitioner, had also promised to ensure power supply

for such illumination and it was on the basis of these representations of

the respondent that the bid was made by the petitioner.

4. The petitioner has made a grievance that the letter of allotment

issued by the respondent is contrary to the terms and conditions of the

tender document and the representations made by the respondent.

The letters of allotment excluded the PWD roads from the purview of

contract. It is contended that till date no arrangement has been made

for illuminated display of advertisements. The assertion of the plaintiff

is also that BSES is the agency which supplies electricity, however,

respondent has not entered into any agreement with BSES for supply of

electricity in order to provide facility of illumination of advertisement on

kiosks for display. Since the electricity has not been provided, the

petitioner has asserted that the respondent is not entitled for the

security deposit and monthly license fee. According to the petitioner,

there are also disputes between the respondent and PWD regarding

revenue sharing. The plea of the petitioner is also that in absence of

illumination, the duration of display is almost reduced by 50% and

consequently the revenue generation gets reduced by 50% and in the

circumstances the respondent is not entitled for the amounts claimed

by him.

5. The contention of the petitioner is that he had deposited Rs.2.00

lakh per zone, however, he has been called upon to deposit

Rs.60,48,400/- on 17th April, 2006 which is approximately equal to four

months' license fee for the two zones without the respondent fulfilling

its promise/representation. The petitioner is alleged to have deposited

Rs.52,45,300/- with the respondent and has demanded that the

respondent reduce the amount on account of non-performance of the

terms of agreement. However, by letter dated 24th May, 2006, the

respondent has refused to reduce the monthly license fee. The

respondent is also alleged to have issued a show cause notice dated 7th

June, 2006 to the petitioner.

6. The petitioner is stated to had filed a petition being OMP

No.279/2006 under Section 9 of Arbitration and Conciliation Act, 1996.

During the pendency of the petition under Section 9 of Arbitration and

Conciliation Act, 1996 the respondent has terminated the contract

unilaterally. The petition under Section 9 of the Arbitration and

Conciliation Act, 1996, has however been disposed of with liberty to the

petitioner to take appropriate steps by order dated 2nd February, 2007.

7. The petitioner has contended that the respondent is demanding

the arrears of license fee without taking into consideration the amounts

which the respondent is liable to pay on account of breaches committed

by the respondent. The respondent is also demanding interest which

according to the petitioner, the respondent is not entitled to in the facts

and circumstances. The respondent is also contemplating black-listing

the petitioner and in the circumstances various disputes have arisen

between the petitioner and the respondent. The petitioner has

crystallized its claim in Para 7.28 of the petition.

8. The petitioner has contended that there is an arbitration

agreement between the petitioner and the respondent, which is as

under:-

"28. (A) Any controversy or dispute arising out of the permission granted to the advertiser, for display of advertisement through kiosks on street light poles in the MCD area shall be referred to the sole arbitration of the Commissioner, MCD or any other officer nominated by him in this behalf either by himself or on party's request. There shall be no bar to the reference of dispute to the arbitrator or such officer as nominated by the Commissioner even if the said officer might have dealt with the matter earlier and expressed his opinion thereon. In case the arbitrator to whom the matter is originally referred is transferred or vacates his office or is unable to act for any reason, the Commissioner, MCD shall be competent to appoint another person to act as an arbitrator, who shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. No person other than the one nominated by the commissioner, MCD shall act as arbitrator. The decision of the Commissioner or the arbitrator nominated by him, shall be final and binding on the party(ies). The limitation for filing claims for arbitrator is 90 days from the expiry of the contract period and in case no claim is filed within this period, it shall be presumed that there is no claim/dispute.

(B) Subject to above, the provisions of the Arbitration Act in force, or any statutory modification or reenactment thereof and the rules made thereunder and for the time being in force, shall apply to the arbitrator proceedings under this clause.

(C) The party invoking the arbitration clause shall specify the dispute or disputes, to be referred to arbitration under this clause together with the amount or amounts claimed in respect of each dispute.

(D) The arbitrator may from time to time, without the consent of the party, enlarge the time for making and publishing the award."

9. In view of the arbitration agreement, the petitioner invoked the

same and sent a notice of invocation dated 8th January, 2008 and its

reminder dated 15th March, 2008, however, the respondent has not

appointed the arbitrator nor disclosed any reason for not appointing the

Arbitrator.

10. Since the respondent failed to appoint an Arbitrator, the petition

was filed on 16th May, 2008 and the notice was issued to the

respondent for 8th September, 2008. A counsel had appeared on behalf

of the respondent on 8th September, 2008 and sought time to file the

reply and the matter was adjourned to 9th January, 2009. On 9th

January, 2009, the respondent again sought time to file the reply and

the matter was adjourned for 13th February, 2009. However, neither the

reply has been filed nor any arbitrator has been appointed in terms of

the arbitration agreement.

11. Learned counsel for the respondent is unable to explain as to why

the arbitrator has not been appointed by the respondent in terms of the

arbitration agreement. No plausible reason or defense has been

disclosed by the respondent for not appointing an Arbitrator in terms of

the Arbitration Agreement between the parties. In the circumstances,

the respondent has lost the right to appoint a person nominated by the

Commissioner, MCD, as an Arbitrator. This Court in the facts and

circumstances is entitled to appoint an arbitrator which shall

adjudicate all the disputes between the parties.

12. The arbitration agreement between the parties is not denied and

it is also not denied that despite invoking the arbitration agreement, the

respondent has not appointed any arbitrator before filing of the present

petition under Section 11(6) of the Arbitration & Conciliation Act, 1996

on 5th June, 2008. Since the respondent failed to appoint the arbitrator

in terms of the agreement, the respondent lost his right to appoint an

arbitrator.

13. In Union of India v. M/s. R.R. Industries, 120 (2005) DLT 572

(DB) it was held that once a party does not supply the vacancy or fails

to supply the vacancy before filing of a petition under Section 11(6) of

the Arbitration and Conciliation Act, such a party forfeits the right to

supply the vacancy in terms of the arbitration clause and what remains

is only the arbitration clause, i.e. the dispute has to be resolved under

the mechanism of alternative dispute redressal scheme but no right

survives to the respondent to supply the named Arbitrator in the

arbitration clause.

14. A three-Judge Bench of the Supreme Court in Punj Lloyd Ltd. v.

Petronet MHB Ltd. (2006) 2 SCC 638, considered the applicability of

Section 11(6) and held that once notice period of 30 days had lapsed,

and the party had moved the Chief Justice under Section 11(6), the

other party having right to appoint Arbitrator under arbitral agreement

loses the right to do so. While taking this view, the Court had referred to

the judgment rendered in Datar Switchgears Ltd. v. Tata Finance Ltd.

and Another, (2000) 8 SCC 151, wherein at page 158 (para 19) it was

held as under :

"19. So far as cases falling under Section 11(6) are concerned--such as the one before us -- no time limit has been prescribed under the Act, whereas a period of 30 days has been prescribed under Section 11(4) and Section 11(5) of the Act. In our view, therefore, so far as Section 11(6) is concerned, if one party demands the opposite party to appoint an Arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before the first party has moved the Court under Section 11, that would be sufficient. In other words, in cases arising under Section 11(6), if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an

appointment has to be made before the former files application under Section 11 seeking appointment of an Arbitrator. Only then the right of the opposite party ceases. We do not, therefore, agree with the observation in the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an Arbitrator under Section 11(6) is forfeited."

15. In the circumstances, it will be just and appropriate to appoint

an arbitrator to adjudicate the disputes which are raised and which

may be raised by the parties.

16. Considering the facts and circumstances, the petitioner is entitled

for appointment of an arbitrator. Consequently, Mr.S.M. Chopra,

Advocate (retired Additional District Judge), 181, Deshbandhu

Appartments, Kalkaji, New Delhi-110019 (Mobile: 9213230349,

Residence No.26484158) is appointed as an arbitrator. The Arbitrator

shall decide his procedure. However, the fee of the Arbitrator shall be

Rs.10,000/- per hearing, subject to a maximum of Rs.2.00 lakh. The

fees shall be shared by the parties.

Parties are directed to appear before the Arbitrator on 27th

February, 2009 at 5.00 PM. A copy of this order be sent to the learned

Arbitrator. Copies of the order be also given to the parties dasti.

FEBRUARY 13, 2009                                     ANIL KUMAR, J.
"Dev"