Delhi High Court
Delhi Tourism And Transportation ... vs Kore Security Services on 25 September, 2018
$~9
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 25.9.2018
+ O.M.P.(MISC.)(COMM.) 4/2018
DELHI TOURISM AND TRANSPORTATION DEVELOPMENT
CORPORATION ..... Petitioner
Through: Mr. Abhimanyu Garg with Mrs.
Preety Makkar, Advs
versus
KORE SECURITY SERVICES ..... Respondent
Through: Mr. Ravindra Kumar Raizada, Senior
Advocate with Mr. Vinay Kumar
Bhasin, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
RAJIV SHAKDHER, J. (ORAL)
I.A. No. 13112/2018
1. This is an application seeking condonation of delay in filing the
rejoinder.
2. For the reasons given in the application, the delay is condoned.
3. The application is disposed of.
O.M.P.(MISC.)(COMM.) 4/2018
4. This petition has been filed under Section 29A(4) of the Arbitration
and Conciliation Act, 1996 (in short „1996 Act‟). The respondent in this
matter resists the extension of time sought by the petitioner.
5. The extension of the time sought by the petitioner in this particular
matter has somewhat peculiar background.
O.M.P.(MISC.)(COMM.) No.4/2018 Pg. 1 of 9
6. The petitioner and the respondent had entered into a contract dated
02.02.2015 (in short "contract").
7. By virtue of this contract, the respondent was to provide security and
manpower services to the petitioner. The tenure of the contract was 24
months.
8. Inter alia, under the contract, the respondent was obliged to make
payments to its personnel at the minimum wages prescribed in that behalf. In
addition thereto, the respondent was also required to ensure that the
personnel engaged were paid EPF and ESI. In sum, the respondent was
responsible for ensuring compliance with all labour laws.
9. It appears that the petitioner received complaints from the personnel
engaged by the respondent with regard to non-payment of salaries and
personnel being made to work overtime.
10. Consequent thereto, an inquiry was held by the petitioner which,
according to it, lent credence to the allegations levelled against the
respondent. As a result of this development, on 22.04.2016, the petitioner
terminated the contract.
11. Since the respondent had furnished a bank guarantee to the petitioner
and it was apprehended by it that same would be encashed, the respondent
took a decision to file a petition under Section 9 of the 1996 Act, albeit,
before the Additional District Judge in Rohini Court, Delhi. This petition
was filed by the respondent in and about 26.04.2016.
12. I am informed by counsel for the parties that an injunction was
granted by the learned ADJ vis-a-vis encashment of the bank guarantee
which was vacated by this Court upon the petitioner carrying the matter by
way of appeal to this Court.
O.M.P.(MISC.)(COMM.) No.4/2018 Pg. 2 of 9
13. It is however important to note that the learned ADJ vide its order
dated 27.04.2016 had directed the petitioner to initiate the process of
appointment of an arbitrator.
14. Consequent thereto, on 06.05.2016, the petitioner appointed, one,
Mrs. Janak Juneja, a retired IAS officer as an Arbitrator.
15. Evidently, on account of allegations raised by the respondent, Mrs.
Janak Juneja decided to withdraw from the arbitration proceedings. This was
conveyed by Mrs. Janak Juneja vide a communication dated 14.09.2016.
16. As a result of the aforesaid circumstance, the petitioner proceeded to
appoint another arbitrator, that is, one, Mr. Ramesh Narayanaswami. Mr.
Ramesh Narayanaswami is also a retired IAS officer.
17. Both these aforesaid appointments were made by the petitioner in
terms of Article 58 of the contract obtaining between the parties.
18. The record shows that the respondent had filed even before the
appointment of the Mr. Ramesh Narayanaswami a petition under Section 11
of the 1996 Act for appointment of an independent Arbitrator. This petition
came to be numbered as Arb. Petition No. 277/2016. The petition was
disposed of by this Court vide judgment dated 20.10.2016.
18.1 The Court after noticing the objection of the respondent came to the
conclusion that since the petitioner‟s Managing Director had been given the
authority to appoint an Arbitrator and there was nothing on record to show
that he was not independent, the relief sought in the petition could not be
granted.
18.2 However, an observation was made by the Court, which is, that the
learned Arbitrator would have to adhere to the mandate of the section 12 of
the 1996 Act.
O.M.P.(MISC.)(COMM.) No.4/2018 Pg. 3 of 9
19. The net effect of the judgment passed by this Court was that Mr.
Ramesh Narayanaswami‟s appointment was sustained.
20. The learned Arbitrator, thereafter, held his first hearing on
03.11.2016. At this hearing, as per the record placed before me, the
respondent, i.e. the original claimant was represented by Mr. Kunal Joshi.
20.1 It appears, at this hearing, Mr. Kunal Joshi informed the learned
Arbitrator that since his father, Mr. K.C. Joshi, was not keeping good health,
he had gone to USA to be with his daughter.
20.2 Evidently on that date, the learned Arbitrator also made the necessary
disclosures in terms of Schedule 5, 6 and 7 of the 1996 Act which were
handed over to representative of the parties.
20.3 The arbitrator also fixed a lump sum fees of Rs. 1,00,000/- to be paid
in the matter, with a caveat that it would be shared equally by the parties.
The matter was fixed for further proceedings on 07.12.2016.
21. On 07.12.2016, the matter was adjourned once again to 29.12.2016.
The petitioner was represented by an Advocate on that date. The Advocate
was directed to file a vakalatnama in the matter.
22. On 29.12.2016, a stand was taken on behalf of the respondent that the
appointment of learned Arbitrator was proceeded with undue haste.
22.1 The learned Arbitrator after making the note of assertions and counter
assertions made before him, none of which are relevant at this juncture,
proceeded to fix a further hearing in the matter on 20.01.2017.
23. Pertinently, there is nothing on record to show as to whether or not
proceedings were held on 20.01.2017.
24. What, however, is available on record is the proceedings of
10.02.2017. On 10.02.2017, the learned Arbitrator fixed the schedule for
O.M.P.(MISC.)(COMM.) No.4/2018 Pg. 4 of 9
filing the statement of claim, reply and counter claim, rejoinder and reply to
counter claim. The matter was, thereafter, listed for further proceedings on
29.03.2017.
25. Concededly, statement of claim was not filed by the respondent,
despite an opportunity being given in that behalf. Resultantly, the learned
Arbitrator gave further opportunity and fixed the matter for further
proceedings on 20.04.2017. The result was no different as neither had the
respondent filed its statement of claim nor had the petitioner filed its counter
claim.
26. Accordingly, on 20.04.2017, the learned Arbitrator after recording the
dismal conduct of the respondent in not filing its statement of claim gave
time to the petitioner to file their counter claim, albeit, by 26.05.2017. The
matter came to be fixed for further proceedings on 02.06.2017. On that date,
true to its earlier approach the respondent failed to file its statement of
claim.
26.1 Sadly, though, the petitioner, who had been given an opportunity to
file a counter claim, it also failed to comply.
26.2 Resultantly, on that date, the learned Arbitrator took the view that the
Arbitration proceedings had to be terminated. In this behalf, recourse was
taken by the learned Arbitrator to the provisions of Section 25(a) of the 1996
Act.
26.3 I may only indicate here that the petitioner had at hearing held on
02.06.2017, sought some more time to file a counter claim.
26.4 The learned Arbitrator, however, was of the opinion that the counter
claim could only be filed if a statement of claim is filed by the claimant
followed by the statement of defence. In other words, the view taken by the
O.M.P.(MISC.)(COMM.) No.4/2018 Pg. 5 of 9
learned Arbitrator was since the pre-requisite step of filing a statement of
claim had not been taken, the counter claim could not be filed by the
respondent. The learned Arbitrator, thus, proceeded to terminate the
arbitration proceedings.
27. There is no dispute that a review application was filed by the
petitioner for recall of order dated 02.06.2017. In the review application,
notice was issued to the respondent.
27.1 The learned Arbitrator after hearing the parties passed an order dated
05.10.2017 recalling its order to the extent he had closed the arbitration
proceedings as regards the counter claim which the petitioner was desirous
of having adjudicated upon.
28. I am informed by counsel for the parties that since 05.10.2017, no
proceedings have been held before the learned Arbitrator. The reason, I am
told, the proceedings have come to such a pass is that the 12 months
statutory period came to an end on 07.10.2017.
29. Apparently, the petitioner did write to the respondent on 13.10.2017
to extend time for conclusion of arbitration proceedings. A copy of the letter
has been placed on record which is accompanied by copies of courier
receipts and the tracking report.
29.1 On being queried, counsel for the respondent did concede that the
respondent had not responded to the said request made by the petitioner for
extension of time.
30. In view of the lack of cooperation by the respondent, the petitioner
has moved the aforesaid petition. This petition was filed by the petitioner in
and about 19.12.2017.
31. Arguments in support of the petitioner‟s case have been advanced by
O.M.P.(MISC.)(COMM.) No.4/2018 Pg. 6 of 9
Mr. Abhimanyu Garg; while on behalf of the respondent submissions have
been made by Mr. Ravindra Kumar Raizada.
32. Counsel for the petitioner says that in the given facts and
circumstances, which have been set out above by me, this Court should
extend time not withstanding lack of corporation by the respondent.
33. On the other hand, Mr. Ravindra Kumar Raizada, who, appears for
the respondent, has brought to my attention the letter dated 06.05.2016.
34. Based on the contents of the said letter, whereby, Mrs. Janak Juneja
was appointed as the Arbitrator, it was contended by Mr. Raizada that the
said arbitrator was appointed by the petitioner on a demand made by the
respondent vis-a-vis its claims. The contention being that there was no
demand by the petitioner for appointment of an Arbitrator and therefore, the
learned Arbitrator would have no jurisdiction to rule upon the counter claims
which the petitioner seeks to prefer before the learned Arbitrator.
35. As indicated above, in my narration, since Mrs. Janak Juneja had
withdrawn from the arbitration proceedings a fresh appointment was made,
which resulted in the appointment of Mr. Ramesh Narayanaswami.
36. The sole question that arises for consideration is as to whether the
learned Arbitrator in the facts and circumstances of this case could continue
with the arbitration proceedings notwithstanding the lack of consent by the
respondent.
37. This Court, at this juncture, is not concerned with whether or not the
learned Arbitrator would have jurisdiction to entertain the counter claim
sought to be preferred by the petitioner.
38. The facts and circumstances detailed out above do show that the
learned Arbitrator had, in fact, given the petitioner on 20.04.2017 an
O.M.P.(MISC.)(COMM.) No.4/2018 Pg. 7 of 9
opportunity to file a counter claim. The petitioner, however, failed to do the
needful and renewed its request qua the same on 02.06.2017.
39. On 02.06.2017, however, the learned Arbitrator proceeded to
terminate the arbitration proceedings, despite a request being made by the
petitioner, on that date, that some more time be given to file a counter claim
on account of the view taken by him based on his interpretation of the
provisions of 1996 Act that a counter claim could only be filed once the
statement of claim and the reply had been filed. This view, however, the
learned Arbitrator seems to have revisited in his order dated 05.10.2017.
40. The order dated 05.10.2017 has not been assailed by the respondent,
therefore, as things stand today, the learned Arbitrator has taken a view that
the petitioner can prefer a counter claim.
41. Mr. Ravindra Kumar Raizada, who, appears for the respondent, says
that there is nothing on record to show what were, in fact, the counter claims
of the petitioner.
42. In this behalf, I may only allude to two letters to which my attention
has been drawn by the counsel for the petitioner. These are letters dated
22.04.2016 and 09.05.2016. Briefly, these letters bring to fore the
petitioner‟s grievance of having to pay salaries for the period 01.04.2016 to
21.04.2016 to the personnel engaged by the respondent.
43. This, perhaps, is one of the grievances apart from the other grievances
that the petitioner may have against the respondent, and therefore, the
arguments raised on behalf of the respondent that the counter claim is
speculative is, perhaps, not an accurate submission.
44. Be that as it may, this is an aspect which the learned Arbitrator will
deal with once counter claim (now, claim) is filed by the petitioner.
O.M.P.(MISC.)(COMM.) No.4/2018 Pg. 8 of 9
45. Thus, having regard to the aforegoing discussion and given the
peculiar facts and circumstances which arise arising in the instant case, I am
inclined to extend the time for conclusion of the Arbitration proceedings.
46. Accordingly, time for concluding the arbitration proceedings is
extended till 30.09.2019. The time will commence, however, from
05.10.2017.
46.1 For this purpose, counsel and their parties shall appear before the
learned Arbitrator on 11.10.2018 at 3:00 pm.
46.2 In case, the said date is not convenient to the learned Arbitrator, he
will fix another date which will be proximate to the date fixed by the Court.
46.3 The petitioner will carry its statement of claim on that date of hearing.
47. Needless to say, the learned Arbitrator will give an opportunity to the
respondent to file its reply/statement of defence.
48. The petition is disposed of in the aforesaid terms.
RAJIV SHAKDHER, J
SEPTEMBER 25, 2018
c
O.M.P.(MISC.)(COMM.) No.4/2018 Pg. 9 of 9
