Delhi High Court
United India Periodicals P. ... vs Mahanagar Telephone Nigam ... on 7 December, 2011
Author: S. Muralidhar
IN THE HIGH COURT OF DELHI AT NEW DELHI
O.M.P. No. 135/1994
UNITED INDIA PERIODICALS P. LIMITED ..... Petitioner
Through: Mr. Rajiv Sawhney, Senior
Advocate with Ms. Shyel Trehan
and Ms. Manjira Dasupta,
Advocate
versus
MAHANAGAR TELEPHONE NIGAM LIMITED & ORS.
..... Respondents
Through: Mr. Harish Malhotra, Senior
Advocate with Mr. Ravi Sikri, and
Mr. Vaibhav Kalra, Advocates
With
O.M.P. No. 151/1996
MAHANAGAR TELEPHONE NIGAM LIMITED ..... Petitioner
Through: Mr. Harish Malhotra, Senior
Advocate with Mr. Ravi Sikri and
Mr. Vaibhav Kalra, Advocates
versus
UNITED INDIA PERIODICALS P. LIMITED ..... Respondent
Through: Mr. Rajiv Sawhney, Senior
Advocate with Ms. Shyel Trehan
and Ms. Manjira Dasupta,
Advocate
JUDGMENT
7.12.2011
1. O.M.P. No. 135 of 1994 has been filed by United India Periodicals Pvt.
Ltd. ('UIPL') under Section 33 of the Arbitration Act, 1940 ('Act') praying
for declaration that arbitration clause contained in Clause 20 of the
Agreement dated 14th March 1987 between Respondent No. 1 Mahanagar
Telephone Nigam Ltd. ('MTNL') and UIPL does not subsist insofar as
UIPL is concerned on account of events subsequent to the said Agreement
and for a declaration that an order dated 21st September 1994 issued by the
Chairman-cum-Managing Director ('CMD') of MTNL appointing Justice
K.S. Tiwana as Arbitrator is invalid, void and to no effect.
2. The connected O.M.P. No. 151 of 1996 is by MTNL under Section 28 of
the Act praying for extension of the time for the Arbitrator to make and
publish the Award.
3. In terms of an Agreement dated 14th March 1987 (hereafter 'the Original
Contract') UIPL was awarded by MTNL the job of printing and publishing
five main telephone directories and five supplementary telephone
directories for each of the two metropolitan cities, i.e., Bombay and Delhi
for the years 1987 to 1991. Clause 3.1 of the said Agreement read as under:
"3.1 In consideration of permitting the contractor to publish the
telephone directory together with advertisements on yellow pages
as specified under the general terms and conditions of the
contract and strip advertisements at the bottom of the white pages
of the telephone directory as specified herein after the Contractor
shall pay a royalty to MTNL over years at the rate specified
hereunder:
Royalty For Delhi & Bombay
Year Directories (Rs. In Crores)
1987 0.18
1988 0.36
1989 4.23
1990 5.22
1991 10.17
Total for 5 years 20.16
The Contractor shall also supply the under-mentioned quantities
of the directories free of cost to the MTNL:
Directory Issue No. of Directories
Delhi Bombay
1987 6.00 7.00
1988 7.00 9.00
1989 8.25 10.05
1990 9.50 11.75
1991 11.00 13.05
In addition to the above quantities the Contractor shall supply the
required corresponding number of supplementary directories free
of cost to MTNL also. The cost of any additional supplementary
directories other than those mentioned hereinabove would be
charged by the Contractors as follows:
Delhi Bombay
Main Supplementary Main Supplementary
(per copy) per page/10000 (per copy) per page/10000
copies copies
It is agreed by the parties that the Contractor shall have no
monetary claim in the manner in which MTNL disposes of or
otherwise deals with the Directories supplied to MTNL whether
they be supplied free of cost or otherwise.
The Contractor shall, however, have the right to print additional
directories and the right to sell to anybody including government,
semi government, public enterprises or private enterprises."
4. It was agreed that in consideration of publication the directories and
procuring advertisement thereof UIPL would retain the entire
advertisement revenue on condition that in addition to free supply of
specified number of directories UIPL would pay to MTNL fixed amounts
by way of royalty specified in the Agreement within ten days of the
publication of the directories each year.
5. Appended to the Original Contract were 'Specific Terms and
Conditions' which, inter alia, contained the following clauses.
"Without prejudice to the rights and remedies of the MTNL
against any of the provisions of this contract or otherwise in law,
if Contractor commits any default or breach of the terms and
conditions of this contract and/or fall in the due performance
thereof within the time fixed by the contract (which is the essence
of the Contract) and do not complete the entire work on the
stipulated due date, the MTNL shall be entitled to recover from
the contractor and the contractor hereby agrees to be bound to pay
to the MTNL as and by way of compensation or liquidated
damages an amount calculated at the rate of Rs. 1,00,000/- for
every day or part thereof of the delay beyond the stipulated date
in respect of the item which is not completed or finished and
delivered completely in the MTNL on the stipulated date as
mentioned in the contract and both the parties the end and intent
that all such liabilities shall be borne and discharged solely by the
Contractor who shall keep indemnified the MTNL against the
same.
.....
All disputes or differences of any kind whatsoever arising out of
or in connection with the contract, whether during the progress of
the work after its completion and whether before or after the
determination of the contract, shall be referred by the Contractor
to the MTNL and the MTNL shall within reasonable time after
their presentation make and notify decision thereon in writing.
The decisions and directions with respect to any matters, decision
of which is specially provided for by these conditions given and
made by the MTNL and agreed by the Contractor herein or by the
General Manager on behalf of the MTNL, which matters are
referred to hereinafter as expected matters shall be final and
binding upon the Contractor and shall not be set aside or
attempted to be set aside on account of any informality, omission,
delay or error in proceeding in or about the same or any other
ground or for any other reason and shall be without appeal.
If the contractor is dissatisfied with decision of the MTNL on any
matter in question, dispute or difference on any account or if the
MTNL fails to make a decision within a reasonable time then and
in any such case, but except in any of the excepted matters
referred to in the above para of these conditions, the Contractor
may within reasonable time but not exceeding 21 days of the
receipt of communication of such decision take steps to refer the
matter in question, dispute or difference to arbitration under
clause 20 hereinafter provided.
The work under the contract shall unless otherwise directed by
the arbitrator be continued by the Contractor during the
arbitration proceedings, subject to other rights and remedies of
the MTNL as provided in this contract.
Except in respect of Excepted matters referred to in clause 19
hereof, all questions, issues, disputes and differences between the
MTNL and the Contractor (whether relating to the Contractor's
claim against the MTNL or vice versa relating to any clause or
provision of this contract) or any interpretation thereof or the
right or liability of any party or as to any act or omission etc. of
either party whether arising during the course of the work or after
the completion or abandonment thereof, its termination, expiry or
otherwise howsoever relating to this contract, shall be referred by
any aggrieved party to the contract (which terms will include the
MTNL) to the sole arbitration of the Managing Director of the
MTNL or his nominee. It will be no objection to any such
appointment that the arbitrator so appointed is a government
servant on deputation with the MTNL or the employee or the
officer of the MTNL or that in the course of his duties as
employee or the officer of the MTNL he had to deal with the
matters to which the contract relates or that he had expressed his
views on all or any of the matters to dispute or difference. The
arbitrator to whom the matter is originally referred, on his being
transferred or vacating his office or being unable to act, for any
reason, the Managing Director of MTNL shall designated any
other person to act as arbitrator in accordance with the terms of
the contract and such person shall be entitled to proceed with the
reference from the stage at which it was left by his predecessor.
The award of the arbitrator so appointed shall be final, conclusive
and binding on all the parties to the contract and provisions of the
Arbitration Act, 1940 or any statutory, modification or re-
enactment thereof and the rules made thereunder and for time
being in force shall apply to the arbitration proceedings under this
clause.
The award shall be made in writing and published by the
arbitrator with six months after entering upon the reference or
within such extended time nor exceeding further four months as
the sole arbitrator shall by a writing under his own hands
extends."
6. The clause concerning assignment of the contract read as under:
"Assignment of contract and change in constitution: The
Contractor shall not assign to any third party the contract or any
part thereof without the prior written consent of MTNL, which
may be given on such terms as MTNL in its discretion thinks fit.
Where the contractors are a partnership firm the previous
approval, in writing, of the MTNL be obtained before any change
is made in the constitution of the firm. Where the Contractor is an
individual or business concern, such an approval like-wise be
obtained before the contractor enters into any partnership
agreement where under the partnership firm would have the right
to carry out the work hereby undertaken by the contractor. If
previous approval as aforesaid is not obtained, the contract shall
be deemed to have been assigned in contraventions of this clause
and shall amount to a breach and the same action may be taken
and the same consequence shall ensure as provided in clause 22."
7. With a view to executing the job awarded to it under the Agreement
dated 14th March 1987, UIPL on 3rd April 1987 floated another company
named United Data Base (India) Pvt. Ltd. ('UDI'), which was a wholly
owned subsidiary of UIPL. UIPL assigned the original contract to the UDI
with the consent of the MTNL to the extent of the job of printing and
publishing of the directories.
8. UIPL states that two main telephone directories for Delhi and one
telephone directory for Bombay were printed and published by UIPL. Since
financial difficulties cropped up UIPL and UDI approached MTNL for an
interest-free loan. Respondent No. 4 Sterling Computers Ltd. ('SCL')
showed interest in diversifying into the field of printing and publishing of
telephone directories and offered to print the balance number of telephone
directories. According to UIPL while the discussions for an interest-free
loan were in progress, SCL was introduced as a party which could on its
own print and publish the balance number of telephone directories and that
the proposal offered by SCL was accepted by MTNL.
9. A Memorandum of Understanding ('MoU') was executed on 19th July
1991 between UIPL, UDI and the MTNL. The relevant clauses of the said
MoU read as under:
"1. Following the liability of M/s UIP/UDI to print the 1989 issue
(2nd issue) of MTNL Bombay telephone directory pursuant to the
Contract dated 14.3.1987 executed by UIP with MTNL which
was subsequently assigned to UDI on 15th October 1987 the
following arrangement was reached by and between the parties
after exchange of series of communications and discussions with
their representatives from time to time. Notwithstanding anything
contrary to the agreement it was agreed that said
understanding/agreement should be recorded in the following
manner:-
2. The contract mentioned herein shall include the said Contract
with UIP read with the said assignment and this Memorandum of
Understanding (MOU) (and any formal Agreement to be
executed by and between the parties hereto alongwith Sterling
Computers Ltd., Principal Directory Supplier, having their
Registered Office at 19, Cathedral Garden Road, Madras-600034,
hereinafter called "Sterling" (who are entrusted by UIP/UDI to
print and publish second issue of Bombay Telephone directories
for MTNL) which expression shall, where the context so permits,
include their respective successors and assigns. Nothing herein
contained shall constitute any partnership by and between the
parties and the said Sterling and the said UIP and UDI will have
no power to assign their interest under the said Contract including
this MOU nor the said Sterling shall have such power except sub
contracting printing and binding or directories on obtaining prior
written permission from MTNL beforehand (and which MTNL
shall not unreasonably withhold) and each of the parties shall
render mutual assistance to one another for fully implementing
the arrangement recorded herein including the execution of the
said Tripartite Agreement, Deed of hypothecation, Affidavit and
other documents hereinafter mentioned and this MOU shall be
read as supplemental to the Contract and except as what are
expressly provided herein, the Contract shall remain in full force
and effect.
3. It is confirmed that UIP/UDI undertook the obligation of
printing (complete in all respects) five main yearly issues and
four supplements to be published in between such yearly issues of
the telephone directories for Bombay and Delhi each for the use
and benefit of MTNL as recorded in the Contract dated
14.3.1987. M/s. UIP/UDI have completed such printing job for
Bombay to the extent of only one issue and one supplement. The
second issue of the Bombay directory is long overdue.
4. It is also confirmed that the said UIP and UDI had under the
contract also agreed to procure their advertisement from the
yellow pages and white pages and covered by bold and additional
entries and intended to be included in the said directories for
which entire revenue earnings would go the said Companies, but
they would pay to MTNL an agreed royalty sum of Rs. 20.16
crores spread over five issues in addition to the free supply of
telephone directories/supplements to MTNL by the said
Companies.
5. It is intention of the parties that MTNL should not, for the time
being, resort to its legal rights as provided under law and/or the
said contract against the said Companies for their failure to print
and publish the telephone directories and supply thereof to
MTNL and to pay dues, if any, and MTNL would assist the said
Companies by rendering certain financial assistance and
extending the period of such printing as recorded herein i.e.
Bombay 2nd issue as per Annexure-I, and remaining issues
annually thereafter.
6. The said Companies shall complete the printing and publishing
of at least 7 lakhs copies of Bombay telephone directories (2nd
issue) through Sterling as per Annexure-1 attached and time
being deemed to be an essence of the Contract in this regard
provided always that MTNL shall open the letter of Credit for Rs.
6 crores (Rupees Six Crores only) in favour of Sterling to enable
them to complete the said printing and completion of all binding
and other connected jobs for or in respect of the said seven lacs
copies of telephone directories.
And MTNL shall at the cost of UIP/UDI have an unfettered
authority, right of power to lift/collect the said seven lacs copies
of the Bombay telephone directories, from Sterling directly who
will be entitled to collect their moneys from MTNL's Bankers
through whom the said letter of Credit is opened. It is clearly
agreed by and between the parties hereto that MTNL shall make
such payments direct to Sterling against deliver of the stipulated
number of copies of telephone directories as per terms and
conditions.
14. The parties hereto agree that if there is any problem for
implementation of any provision herein contained, the same shall
be referred to the Chairman and Managing Director of MTNL by
the parties concerned for ascertaining his opinion or judgement
and which will be binding on the parties hereto."
10. On the same date, i.e., 19th July 1991 a Tripartite Agreement was
entered into between UIPL and UDI (collectively referred to as First party),
MTNL and SCL. The said Tripartite Agreement clearly mentioned that it
was supplementary to the Original Contract dated 14th March 1987 as well
as the MoU Dated 19th July 1991. It also referred to the fact that MoU
dated 19th July 1991 had provided for execution of a formal agreement to
achieve the purpose mentioned therein. Clause 1 of the Tripartite
Agreement read as under:
"1. That all the terms and conditions and stipulations contained in
the said Contract/Agreement of Assignment and Memorandum of
Understanding (whose true authenticated copies collectively from
Annexure 'A' hereto and shall be read as an integral part hereof)
and obligations thereunder reserved on the part of the First Party
and the rights, privileges and powers provided for MTNL
thereunder and under law shall be applicable or available to and
binding on the parties hereto as if the same are set out in this
Agreement fully and which are not repeated herein to avoid
prolixity. Provided that if any provisions hereof/MOU are silent
in regard to rights and powers of MTNL and the said parties of
the First Part, the provisions of contract will apply, provided that
in the case of any inconsistency or contradictions, the stipulations
contained in the Memorandum of Understanding read with this
Agreement shall prevail and have an overriding effect."
11. On 12th August 1991 an MoU was entered into between UIPL, UDI and
SCL referring to the Agreement dated 19th July 1991 and reducing the
agreement into writing on "the broad terms for implementation of the
agreement and arrangements with MTNL...and for effecting printing and
publication of various directories under the contract with MTNL and DoT."
This MoU was contemporaneous with a meeting of the Negotiation
Committee of MTNL held on the same date with representatives of UIPL,
UDI and SCL which dealt with the various issues that arose between the
parties as a result of the agreement including re-scheduling of the royalty to
MTNL.
12. On 26th September 1991 a Supplemental Agreement was executed
between UIPL and UDI (collectively referred to as parties of the First Part),
MTNL (party of the Second Part) and SCL (party of the Third Part) in
terms of which "subject to the stipulations contained in this Agreement and
the said Memorandum of Understanding read with the said contract,
Sterling shall print and publish in a bound manner and from 13 main issues
of the Delhi and Bombay directories ("the said two directories") for the use
and benefit of MTNL (in the manner agreed or to be indicated to Sterling
by MTNL) within a period of seven years including 1991" on payment of
additional royalty of Rs. 10 crores. This was in addition to the royalty
payable under the Original Contract dated 14th March 1987.
13. It requires to be noticed at this stage that the validity of the above
Supplemental Agreement dated 26th September 1991 was challenged before
this. The decision dated 30th September 1992 of this Court in M/s M&N
Publications Ltd. v. MTNL 49 (1993) DLT 380 (DB) holding the said
Supplemental Agreement to be invalid was affirmed by the Supreme Court
in Sterling Computers Ltd. v. M/s. M&N Publications Ltd. (1993) 1 SCC
445. Therefore as far as the present case is concerned, the said
Supplemental Agreement is to no legal effect.
14. The present dispute arose with legal notices being sent by MTNL to
UIPL, UDI and SCL on 3rd and 21st September 1994 calling upon them to
pay MTNL Rs. 22,87,67,203 being the money owed to it under
Supplemental Agreement. By a subsequent notice dated 13th September
1994 the total sum demanded by MTNL under the Original Contract and all
subsequent contracts was Rs. 56,18,32,919/-. On 21st September 1994
MTNL wrote to UIPL, UDI and SCL that under Clause 20 of the
Agreement dated 14th March 1987 its CMD appointed Mr. Justice K.S.
Tiwana, a retired Judge of the Punjab and Haryana High Court to be the
Sole Arbitrator for adjudicating the disputes and differences between the
parties.
15. UIPL filed the present Arbitration Petition No. 135 of 1994 in this
Court on 24th October 1994. By an order dated 27th October 1994, this
Court while directing notice to issue directed that the Arbitrator would not,
in the meanwhile, make the Award. The said interim order has continued
since then.
16. In the proceedings before the learned Arbitrator on 16th March 1996 it
was noted that the term of the learned Arbitrator had expired on 7th
February 1996 and SCL had not agreed to the extension of the term. In the
circumstances, on 22nd November 1996 MTNL filed OMP No. 151 of 1996
in this Court under Section 28(1) of the Act seeking extension of time for
the learned Arbitrator to make and publish the Award.
17. At one stage, this Court was informed that Company Petition No. 118
of 1998 had been filed in this Court seeking the winding up of UIPL. On 1st
April 2008 an order was passed by the Company Court permitting the
present two petitions to proceed.
18. On behalf of UIPL it was submitted by Mr. Rajiv Sawhney, learned
Senior counsel, as under:
(i) On account of the subsequent agreements, Clause 20 of the
Original Contract dated 14th March 1987 stood nullified. This was as a
result of the assignment of the work thereunder by UIPL to UDI with
the consent of MTNL, followed by the MoU and Tripartite Agreement
dated 19th July 1991 and the further MoU dated 12th August 1991
between UIPL and UDI and SCL.
(ii) In terms of the Original Contract dated 14th March 1987 the
decision taken by MTNL in relation to the subsequent agreements was
an 'excepted matter' and therefore a dispute resulting therefrom could
not be referred to arbitration.
(iii) To the extent that the claims of MTNL related to non-payment of
royalty from 1987 till 1991 they were barred by limitation and could
not be referred to arbitration.
(iv) With MTNL having filed a Suit No. 4628 of 1994 in the Bombay
High Court, and the said suit having abated vis-a-vis UIPL and UDI,
MTNL must be held to have voluntarily abandoned the arbitration
clause and waived its right to seek the reference of the dispute to
arbitration. Reliance was placed on the decisions in Food Corporation
of India v. Sreekanth Transport (1999) 4 SCC 491, General Electric
Co. v. Renusagar Power Co. (1987) 4 SCC 137 and Raj & Associates
v. Videsh Sanchar Nigam Ltd. 113 (2004) DLT 318. A splitting up of
the causes of action was legally impermissible. The present
proceedings would be non-maintainable on the principle of res
judicata. Reliance was placed on the decisions in Alka Gupta v.
Narender Kumar Gupta (2010) 10 SCC 141, Kunjan Nair
Sivaraman Nair v. Narayanan Nair (2004) 3 SCC 277, Deva Ram v.
Ishwar Chand (1995) 6 SCC 733 and Booz Allen and Hamilton Inc.
v. SBI Home Finance Ltd. (2011) 5 SCC 532.
19. Countering the above submissions of Mr. Harish Malhotra, learned
Senior counsel appearing for MTNL, submitted as under:
(i) The subsequent Agreements were in continuation of the Original
Contract dated 14th March 1987 as was evident from the express
wording of the relevant clauses of the said Agreements.
(ii) MTNL consented to the assignment of the work by UIPL to UDI
by its letter dated 24th April 1987 only on the condition that UIPL
would continue to be responsible for the performance of the contract.
There was, therefore, no discharge of UIPL from its liability on
account of any subsequent Agreements.
(iii) The question of any of the claims of MTNL being barred by
limitation was for the Arbitrator to decide. In fact the subsequent
Agreements contained clauses that amounted to acknowledgement of
debt by UIPL and UDI arising from the Original Contract dated 14th
March 1987. Reliance was placed on the decision in Jai Chand
Bhasin v. Union of India AIR 1983 Del 508.
(iv) The suit in the Bombay High Court was for recovery of the sums
due for a subsequent period and had not abated vis-a-vis UIPL or
UDI. The present proceedings were not barred by res judicata.
Relying on the decision in Indian Oil Corporation v. SPS
Engineering Ltd. (2011) 3 SCC 507 it was submitted that even this
question ought to be left for the decision of the learned Arbitrator.
(v) The resolution of the disputes involving complicated questions of
fact ought not be decided by the Court in the present proceedings.
20. Mr. Malhotra pointed out that the earlier learned Arbitrator appointed
by this Court expired in the first week of December 2010 and therefore
exercising its powers under Section 20 of the Act this Court should appoint
another Arbitrator in his place for resumption of the arbitration proceedings
before the new Arbitrator. Responding to this last submission Mr. Rajiv
Sawhney, learned Senior counsel for the Petitioner stated that in the event
this Court rejected the plea of UIPL then it would have no objection to the
Court appointing an Arbitrator in place of late Justice Tiwana.
21. The principal contention of UIPL is that on account of the agreements
and MoUs subsequent to the Original Contract it stood discharged of its
liabilities and that as far as it was concerned even the arbitration clause of
the Original Contract could not be invoked by MTNL. A plain reading of
the relevant clauses of the agreements and MoUs that followed the Original
Contract, and which have been extracted hereinbefore, belie this
contention. For instance, Clause 2 of the MoU dated 19th July 1991 stated
that "this MOU shall be read as supplemental to the Contract and except as
what are expressly provided herein, the Contract shall remain in full force
and effect." Clause 1 of the Tripartite Agreement of the same date also
emphasised that all the terms and conditions and stipulations contained in
the Original Contract, the MoU and Agreement would continue to be
"binding on the parties hereto as if the same are set out in this Agreement
fully". Under the proviso to the said Clause the said agreement was to
prevail only if there was any inconsistency between its clauses and those of
the Original Contract. The contemporaneous correspondence between
MTNL and UIPL reveals that the parties intended the rights and obligations
flowing from the Original Contract dated 14th March 1987 to continue. The
Agreements and MoU dated 19th July 1991 or the Agreement of 12th
August 1991 were not in that sense independent 'stand alone' agreements
but in continuation of the Original Contract dated 14th March 1987.
Consequently there was no question of UIPL being relieved of the binding
effect of the arbitration clause of the Original Contract. This Court,
therefore, rejects the principal plea of UIPL that it stood discharged of its
liabilities on account of the agreements subsequent to the Original Contract
and, therefore, cannot be made a party to the arbitration proceedings.
22. The plea that the decision of the MTNL to permit assignment by UIPL
of the work under the Original Contract to UDI is an "excepted matter" is
without merit. The relevant clause defines "excepted matters" as "decisions
and directions with respect to any matters, decision of which is specially
provided for by these conditions given and made by the MTNL and agreed
by the Contractor herein or by the General Manager on behalf of the
MTNL." But this has to be read in the context of the correspondence
between the parties which makes MTNL's consent to the assignment
conditional upon UIPL continuing to be liable. For instance in its letter
dated 24th April 1997 addressed to UIPL, MTNL unambiguously states that
"as far as the MTNL is concerned the complete responsibility of the due
and proper performance of the contract of publishing the Delhi and
Bombay directories shall rest with M/s. UIP only." Then there are the
agreements and MoUs subsequent to the Original Contract which do not
discharge UIPL from its liabilities. Prima facie it does not appear that the
disputes that have arisen as a result of the legal notices issued to UIPL and
the others by MTNL can be considered to be 'excepted matters'. The final
decision in this regard will of course be that of the Arbitrator.
23. The papers concerning Suit No. 4628 of 1994 filed by MTNL in the
Bombay High Court have been placed on record. In para 5 of the plaint it is
stated that "the Plaintiffs are raising a separate claim against the defendants
and initiating arbitration proceedings in view of the arbitration clause
contained in the agreement dated 14.3.1987." Again in para 15 of the plaint
MTNL has confined its claim up to the stage of the execution of the
Agreement dated 26th September 1991, "viz., bringing of 1992 Edn. of the
directories by the defendants." Prima facie there appears to be no
overlapping of the claims that form the subject matter of the arbitration
proceedings and those that form part of the suit. The plea of splitting of the
claims also does not, for the same reason, prima facie appear to be tenable.
As explained in Indian Oil Corporation v. SPS Engineering Ltd. (supra)
in the context of Section 11 of the 1996 Act, which would equally apply to
the exercise that the Court performs under Section 20 of the Act, such an
issue would have to be examined by the Arbitrator. The decisions cited by
learned Senior counsel for the Petitioner are distinguishable on facts and do
not assist his case.
24. The further plea that the said suit stood automatically dismissed by the
order dated 15th September 1999 of the Bombay High Court is also not
correct. The said order reads as under:
"40. S. 4628-94
Miss J.N. Pandhi, i/b S.I..Sah & Co., Advs. for the Plffs.
Miss. G. Nair, i/b Mnair, & Associates, Advs. for Deft. 1.
Defts. 2 & 3 not served.
P.C: on the appln. of Miss Pandhi, returnable date of the Writ of
Summons is against Defts. 2 & 3 is extended by 12 weeks from
today. If the writ of Summons as against them is not served
within the aforesaid period, Suit as against them to stand
dismissed, automatically, for non-prosecution.
On the appln. of Miss Nair, adjd. For 12 wks. For W/S for Deft.
1."
25. Thereafter, on 8th December 1999 the matter was adjourned for four
weeks "for instructions regarding service against Defts. 2 & 3 who are
under liquidation." On 9th June 2000 the suit against SCL was transferred to
the list of long causes and the suit against the remaining defendants were
adjourned to enable the plaintiff, i.e., MTNL to adopt proceedings against
Defendant Nos. 2 and 3 who were stated to be under liquidation. Therefore,
it is not correct to say that Suit No. 4628 of 1994 stood automatically
dismissed in terms of the order dated 15th September 1999.
26. As regards the plea of UIPL that MTNL's claims concerning the
royalties for the years 1987 to 1990 are barred by limitation, there is merit
in the contention of Mr. Malhotra that this aspect too requires to be decided
by the learned Arbitrator. The decision in Jai Chand Bhasin v. Union of
India rendered in the context of Section 20 of the Act supports this
position. The Agreements and the MoUs subsequent to the Original
Contract 14th March 1987 refer to the outstanding liability of UIPL, UDI
and SCL thereunder and prima facie could be said to be an
acknowledgement of the said liability even as of 1991. Whether this would
in fact save the claim of MTNL from the bar of limitation would be a
question which will be decided by the Arbitrator in terms of the evidence
led by the parties and a detailed scrutiny of the Agreements and MoUs in
question.
27. The conclusion of the Court, as a result of the above discussion, is that
there does exist a valid arbitration Clause 20 in terms of which disputes
between UIPL and MTNL can be referred to arbitration. The plea of UIPL
for a declaration that letter dated 21st September 1994 issued by the CMD,
MTNL appointing the Arbitrator to be invalid is hereby rejected. The
appointment of the Arbitrator by MTNL invoking Clause 20 of the Original
Contract dated 14th March 1987 was valid.
28. Considering that more than seventeen years have elapsed since MTNL
invoked the arbitration clause, and taking note of the submission of Mr.
Rajiv Sawhney, learned Senior counsel for the Petitioner, that in the event
of the Court rejecting the plea of UIPL, it would have no objection to the
Court appointing an Arbitrator in place of late Justice Tiwana who expired
in the first week of December 2010 during the pendency of these petitions,
this Court in exercise of its powers under Section 20 of the Act, appoints
Mr. Justice J.M. Malik (retired), C-I/67, Bapa Nagar, New Delhi-110003
as the Arbitrator to adjudicate the dispute between the parties. The fees of
the learned Arbitrator will be in terms of the Delhi High Court Arbitration
Centre (Arbitrators' Fees) Rules. MTNL is permitted to collect the entire
arbitral record that may be available in the residence/office of late Justice
Tiwana and deposit it with Justice Malik the Arbitrator appointed by this
Court who will, as far as is practicable, resume the proceedings from the
stage at which it was when this Court stayed them. The time for making
and publishing the Award is extended by one year from today.
29. O.M.P. No. 135 of 1994 is dismissed and O.M.P. No. 151 of 1996 is
disposed of in the above terms.
S. MURALIDHAR, J.
DECEMBER 7, 2011
ak
