M/S Gujral Security Services vs D.S.C.Limited
2009 Latest Caselaw 3828 Del

               * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                             Date of Reserve: 10.9.2009
                                                    Date of Order: 17th September, 2009

Arb. P. No. 42/2009
%                                                                               17.09.2009

         M/s Gujral Security Services               ... Petitioner
                         Through: Mr. Deepender Hooda, Advocate

                  Versus


         D.S.C.Limited                                       ... Respondent
                                Through: Mr. Adarsh Priyadarshni, Advocate


JUSTICE SHIV NARAYAN DHINGRA

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

2. To be referred to the reporter or not?                                              Yes.

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

JUDGMENT

By this application/petition under Section 8 & 11 of the Arbitration &

Conciliation Act, 1996 the petitioner has sought appointment of Sole Independent

Arbitrator for adjudication of disputes between the parties.

2. Brief facts are that the petitioner was rendering security services to

the respondent and was providing security guards. One of the conditions of the

agreement for providing security guards was that in case of any theft taking place

in the respondent company, the value of the stolen goods shall be recovered

from the petitioner. A theft took place in respondent's premises and respondent

in terms of the contract recovered an amount of Rs.4 lac which was equal to the

value of the stolen articles. The petitioner however, disputed its liability for the

theft and submitted that the investigation of petitioner revealed that the Paver

operators of the Rajokari Plant confessed for the act and raising of the debit

note for Rs.4 lac was illegal and excessively penal in nature and protested

against this debit note. Later on, the contract of services of the petitioner was

terminated w.e.f. 31.8.2008. The petitioner sent a legal notice to the respondent

under Sections 8 & 20 of the Arbitration Act and stated that arbitration clause

provided under the contract was not a fair arbitration clause since as per this

clause only Director of the company would be appointed as Arbitrator. The

petitioner called upon respondent to concur in the appointment of an independent

Arbitrator viz. some retired Government Official or retired Sr. Defence Official

within 15 days.

The arbitration clause as agreed between the parties reads as

under:

13. That the dispute, if any, arising between the parties shall be referred to arbitration and the decision of the Arbitrator shall be final and binding on both the parties and arbitrator shall be Director of the Company and his decision shall be final. For this either party shall not go to any court.

3. I consider that once the parties had agreed upon a particular

arbitration clause the parties are bound by that arbitration clause. The petitioner

in this case did not raise dispute about the Director of the respondent being

named as the Arbitrator. If the petitioner was not agreeable to this arbitration

clause, he could have refused to sign the contract in the very beginning.

4. In Indian Oil Corporation & Ors. v. Raja Transport (P) Ltd. (2009)

11 Scale 672, the Supreme Court observed that it was quite common for

governments, statutory corporations and public sector undertakings while

entering into contracts, to provide for settlement of disputes by arbitration, and

further provide that the Arbitrator would be one of its senior officers. If the party,

with open eyes and full knowledge and comprehension of the said provision

enters into a contract with a government/statutory corporation/PSU containing an

arbitration agreement providing that one of its Secretaries/Directors shall be the

Arbitrator, the party cannot subsequently turn around and contend that the party

was agreeable for settlement of disputes by arbitration, but not by the named

Arbitrator, who is an employee of the company. Not the party could say that the

party would be bound by only one part of the agreement and not by the other

part, unless such other party was impossible of performance or was void being

contrary to the provisions of the Act. A party to the contract cannot claim the

benefit of arbitration clause under the arbitration agreement but ignore the

appointment procedure relating to the named Arbitrator, contained in the

arbitration clause.

5. In view of this decision of the Supreme Court, I consider that the

petitioner's prayer for appointment of Sole independent Arbitrator different from

the one given in the arbitration clause cannot be accepted. The petitioner

therefore has to raise dispute before the Arbitrator named in the arbitration

clause. The petition is disposed of with the liberty to the petitioner of raising

dispute before the named Arbitrator.

With these directions, the petition stands disposed of.

September 17, 2009                                    SHIV NARAYAN DHINGRA, J.
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