Delhi High Court
Delhi Transport Infrastructure ... vs M/S Aom Advertising Pvt. Ltd. on 7 December, 2021
$~27
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (COMM) 291/2021 & I.A. 12778/2021, I.A.
12779/2021, I.A. 12780/2021
DELHI TRANSPORT INFRASTRUCTURE DEVELOPMENT
CORPORATION LTD. ..... Petitioner
Through: Mr. Amiet Andlay, Adv.
versus
M/S AOM ADVERTISING PVT. LTD. ..... Respondent
Through: Mr. S.P.Singh, Adv.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
J U D G M E N T (ORAL)
% 07.12.2021
1. This petition, under Section 34 of the Arbitration and
Conciliation Act, 1996 ("1996 Act"), at the instance of the Delhi
Transport Infrastructure Development Corporation Ltd. (DTIDC),
assails order dated 10th September, 2021, passed by a three-member
Arbitral Tribunal, rejecting the application, under Section 16 of the
1996 Act, preferred by the petitioner before it.
2. The disputes, which arise out of three Concession Agreements
dated 5th December, 2017, executed between the petitioner and the
respondent, are presently in seisin before the learned Arbitral
Tribunal. The respondent is the claimant before the learned Arbitral
Tribunal and the petitioner is the respondent before it.
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
3. The respondent, in its Statement of Claim before the learned
Arbitral Tribunal, consolidated its claims in respect of the three
Concession Agreements. The petitioner, thereupon, moved an
application under Section 16 of the 1996 Act, objecting to the
consolidation of the claims and contending that the learned Arbitral
Tribunal would have to treat each claim as a separate arbitrable
dispute, and therefore, could not consolidate the claims. It is this
application that has come to be dismissed by the order impugned in
the present case.
4. Mr. Amiet Andlay, learned counsel for the petitioner, submits
that he has no objection to the respondent filing separate Statements of
Claims before the learned Arbitral Tribunal qua its claims in respect
of each Concession Agreement and the learned Arbitral Tribunal
treating them as a separate dispute for the purpose of arbitration. He,
however, opposes the consolidation of the claims as has been done by
the learned Arbitral Tribunal and, therefore, submits that the rejection
of his Section 16 application was erroneous.
5. The Concession Agreements between the petitioner and the
respondent relate to marketing, operation and maintenance of various
bus queue shelters (BQS). The shelters were divided into three Zones;
Zone-2, Zone-4 and Zone-5. Though, initially, a consolidated Request
For Proposal (RFP) was issued by the petitioner, inviting tenders for
service providers for all the three Zones, thereafter, consequent on the
respondent emerging as the successful bidder, three separate
Concession Agreements were executed between the petitioner and the
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
respondent, one for each Zone, all of which were dated 5th December,
2017.
6. Two Bank guarantees, for each zone, were also furnished by the
respondent, as required by each Concession Agreement.
7. The petitioner alleges that the respondent was in default of
licence fee payable under the Concession Agreements, whereupon the
petitioner issued notices to the respondent on 6th June, 2020, 18th June,
2020 and 8th July, 2020. These notices, it is asserted, were separately
issued for each Concession Agreement, i.e. for each zone.
8. Each Concession Agreement contains its own arbitration clause,
though they were identical. The arbitration clause may be reproduced
thus:
"23.1 Amicable Resolution
Save where expressly stated to the contrary, in this
Agreement, any dispute, difference or controversy of
whatever nature between the Parties, howsoever arising
under, out of or in relation to this Agreement (the "Dispute")
shall in the first instance be attempted to be resolved amicably
in accordance with the procedure set forth in sub-clause (b)
below.
(b) Either Party may require such Dispute to be referred to
the Chairman DTIDCL and the Chief Executive Officer of the
Concessionaire for the time being, for amicable settlement.
Upon such reference, the two shall meet at the earliest mutual
convenience and in any event within 15 days of such
reference to discuss and attempt to amicably resolve the
Dispute. If the Dispute is not amicably settled within 15 days
of such meeting between the two, either Party may refer the
Dispute to arbitration in accordance with the provisions of
Signature Not Verified
Clause 23.2 below.
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
23.2 Arbitration
a) Procedure
Subject to the provisions of clause 23.1, any dispute, which is
not resolved amicably, shall be finally settled by binding
arbitration under the Arbitration Act. The arbitration shall be
by a panel of three arbitrators, one to be appointed by each
Party and the third to be appointed by the two arbitrators
appointed by the Parties The Party requiring arbitration shall
appoint ail arbitrator in writing, inform the other Party about
such appointment and call upon the other Party to appoint its
arbitrator. If within 15 days of receipt of such intimation the
other Party fails to appoint its arbitrator, the Party seeking
appointment of arbitrator may take further steps in accordance
with Arbitration Act.
(b) Place of Arbitration
The place of arbitration shall ordinarily be Delhi but by
agreement of the Parties, the arbitration hearings, if required.
May be held elsewhere."
9. The respondent, vide letter dated 6th January, 2021, invoked
Article 23.2 of each of the Concession Agreement, in a consolidated
fashion, and suggested the name of its nominee arbitrator.
Subsequently, soon thereafter, the respondent moved OMP (I)
(Comm) 6/2021 before this Court under Section 9 of the 1996 Act,
seeking pre-arbitral interim reliefs.
10. During the pendency of OMP (I) (Comm) 6/2021, the petitioner
addressed the following communication to the respondent on 13th
April, 2021:
"To
M/s AOM Advertising Pvt. Ltd.
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
1515, 15th Floor
89, Hemkunt Chamber
Nehru Place, New Delhi-110019
Subject: "Marketing, Operation and Maintenance of
431 Bus Queue Shelters (BQSs) in Delhi Project, Zone - 2,
4 and 5 on PPP basis
This is in reference to your letter dated: 26.03.2021
received in this office on 31.03.2021 wherein you have
preferred invocation of arbitration under Clause 23.2 of the
agreement and appointed Arbitrator Dr. Kedarnath Tripathi,
Advocate-on-record from your side for the subject matter
"sMarketing, Operation and Maintenance of 431 Bus Queue
Shelters (BQSs) in Delhi Project, Zone - 2, 4 and 5 on PPP
basis.
In this regard, I am directed to intimate you that
DTIDC has also appointed Arbitrator Sh. S.N. Dhingra, Rtd.
Justice Delhi High Court from DTIDC side.
Executive Engineer (C)/
AGM (Works)
DTIDC"
11. By order dated 28th May, 2021, this Court disposed of OMP (I)
(Comm) 6/2021, with a direction to the learned arbitrators appointed
by the parties to appoint a presiding arbitrator and leaving all
questions of fact and law open to be decided by the Arbitral Tribunal,
thus constituted. Subsequently, the two learned arbitrators appointed
Hon'ble Mr. Justice S.K. Agarwal, a learned retired Judge of this
Court, as the Presiding Arbitrator and the Arbitral Tribunal, thus
constituted, entered on the reference.
12. Subsequent to constitution of the Arbitral Tribunal, Statement
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
of Claim was filed by the respondent, as the claimant, before the
learned Arbitral Tribunal.
13. The petitioner, thereupon, moved an application under Section
16 of the 1996 Act, objecting to consolidation of the claims by the
respondent and submitting that the claims pertaining to each zone and,
therefore, covered by distinct Concession Agreements, were required
to be arbitrated as separate disputes and that the learned Arbitral
Tribunal could not consolidate the claims.
14. As noted hereinabove, this application of the petitioner has
come to be dismissed by the learned Arbitral Tribunal by the order
under challenge.
15. The reasoning adopted by the learned Arbitral Tribunal, in
rejecting the petitioner's application, is to be found in the following
paragraphs:
"5. In order to appreciate the rival contentions, it will be
useful to Recall Order 2 Rule 3 of CPC, 1908, which reads:
"3. Joinder of causes of action.- (1) Save as otherwise
provided, a plaintiff may unite in the same suit several
causes of action against the same defendant, or the
same defendants jointly; and any plaintiffs having
causes of action in which they are jointly interested
against the same defendant or the same defendants
jointly may unite such causes of action in the same
suit.
(2) Where causes of action are united, the jurisdiction
of the Court as regards the suit shall depend on the
amount or value of the aggregate subject-matters at the
date of instituting the suit."
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
(emphasis supplied)
6. Order 2 Rule 3 of CPC is an enabling provision and it
enables the Plaintiff/Claimant to include and club in the same
suit/claim several causes of action against the same defendant.
In other words, the aggrieved party has the discretion to dub
or not to club, the causes of action in one claim petition for
adjudication through the arbitration. The purpose of this Rule
is to avoid multiplicity of suits. Further, Section 19(1) of
Arbitration and Conciliation Act, 1996 provides that the
arbitral tribunal is not be bound by the Code of Civil
Procedure, 1908 (5 of 1908) or the Indian Evidence Act,
1872. The words "shall not be bound" in Section 19(1) are the
words amplitude and not restrictions. In this regard, reference
may be made to the Supreme Court decision in SREI
Infrastructure Finance Limited vs Tuff Drilling Private
Limited (2018)11 SCC 470, the relevant paragraph of the
judgment read as follows:
"15. Section 19 of the Act provides for determination
of Rules of procedure. Sub-clause (1) of Section 19
provides that the arbitral tribunal shall not be bound by
the Code of Civil Procedure, 1908 or the Indian
Evidence Act, 1872. The words "arbitral tribunal shall
not be bound" are the words of amplitude and not of a
restriction. These words do not prohibit the arbitral
tribunal from drawing sustenance from the
fundamental principles underling the Code of Civil
Procedure or Indian Evidence Act but the tribunal is
not bound to observe the provisions of Code with all of
its rigour. As per Sub-clause (2) of Section 19 the
parties are free to agree on the procedure to be
followed by the arbitral tribunal in conducting its
proceedings."
(emphasis supplied)
7. In this case, it is not in dispute that all the three
Concession Agreements in respect of Zones 2, 4 & 5 are of
the same date i.e. 05.12.2017 and contain exactly similar
terms, except the license fee. The Respondent vide letter dated
06.11.2020, demanded consolidated payment of Rs.
4,l1,85,948/- plus interest thereon, in terms of the relevant
clauses of the Agreements. The Respondent again vide Notice
dated 17.12.2020 demanded consolidated payment of arrears
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
of the said amount plus interest thereon amounting to
Rs.4,29,30,309/- and vide letter dated 05.01.2021, intimated
to the bank regarding forfeiture of all the six Bank Guarantees
in respect of the said three Concession Agreements of Zones
2, 4 & 5 on PPP basis in lieu of advertising rights (Annexure-
C7, 8 & 9 respectively). In view of the above, in our
considered view the Claimant is well within its rights to club
the claims in the Statement of Claim arising out of three
Concession Agreements in respect of "Marketing Operation
and Maintenance of bus Queue Shelters (BQS) in Zone 2, 4 &
5 on PPP basis".
8. It is not the case of the Respondent that the joinder of
causes of action by the Claimant would in any manner
prejudice their defense or delay the proceeding. Learned
counsel for the Respondent in support of his contention placed
reliance on the order dated 26.09.2017 passed by another
Hon'ble Arbitral Tribunal directing the Claimant to file
tripartite the claims Zonewise. But there is nothing in the
order to show that the provision of Order 2 Rule 3 CPC and
Section 19 of Arbitration and Conciliation Act, 1996 were
brought to the notice of the Tribunal. In view of the same it
cannot be of any help to the Respondent and each case
depends on its own facts.
xxx
10. For the foregoing reasons, there is no merit in the
Respondent's application and the same is dismissed. The
procedural directions for completion of pleadings etc. are
being separately passed in the today's proceedings."
16. I have heard Mr. Amiet Andlay, learned counsel for the
petitioner, and Mr. N.P. Singh, learned counsel for the respondent, at
length.
17. Mr. Andlay submits that the view taken by the learned Arbitral
Tribunal, in the impugned order, is directly contrary to the law laid
down by the Supreme Court in Duro Felguera S.A v. Gangavaram
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
Port Ltd 1. He submits that, in the said decision, the Supreme Court has
clearly held that, in the absence of an agreement to the contrary
between the parties, separate agreements have to constitute the subject
matter of separate arbitral proceedings. He has drawn my attention to
Clauses 1.2, 2.1, 10.2, 11.1 and 17.1.1 of one of the Concession
Agreements - the Clauses being identical in all the Concession
Agreements - to emphasise that each agreement was limited to its own
covenants. Specifically with respect to Clause 17.1.1, Mr. Andlay
points out that default, too, was envisaged on an agreement-wise basis.
Pointing out that the respondent was seeking to avail the benefit of
force majeure, consequent to the Covid-19 pandemic, Mr. Andlay has
drawn my attention to Clause 15.2.1(b) thereof, which reads thus:
"15.2 Duty to report Force Majeure Event
15.2.1 Upon occurrence of a Force Majeure Event, the
Affected Party shall by notice report such occurrence to the
other Party forthwith. Any notice pursuant hereto shall
include full particulars of
xxx
(b) the estimated duration and the effect or probable effect
which such Force Majeure Event is having or will have on
the Affected Party's performance of its obligations under this
Agreement;"
18. As such, submits Mr. Andlay, even the applicability of the force
majeure was envisaged, in each agreement, specific to that agreement.
The respondent, if it desired to avail the benefit of force majeure,
would, therefore, have to point out that, owing to force majeure, it was
unable to perform that particular agreement. There could be no
2017 9 SCC 729
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
question of pleading of force majeure in a consolidated fashion,
spanning all the agreements.
19. As such, Mr. Andlay submits that the impugned order cannot
sustain.
20. Responding to the submissions of Mr. Andlay, Mr. Singh,
learned counsel for the respondent, advances a preliminary objection
to the maintainability of the present petition, contending that the
impugned order was not an "award" or even an "interim award"
within the meaning of Section 34 of the 1996 Act. As such, he submits
that the present petition is not maintainable.
21. Mr. Singh has also invited my attention to the fact that, till the
raising of the objection by the petitioner, the petitioner had also been
consolidating issues in respect of all the agreements. He points out that
the RFP was issued in a consolidated fashion covering all the work,
and the communication dated 13th April, 2021, from the petitioner to
the respondent, in response to the notice of the respondent invoking
arbitration, was also issued in respect of Zones 2, 4 and 5. As such, he
submits, the petitioner had agreed to consolidate arbitral proceedings
in respect of all agreements and could not, therefore, seek to object to
the consolidation of the arbitration at this stage. He also submits that,
even at the time when OMP (I) (Comm) 6/2021 was disposed of by
this Court on 28th May, 2021, the petitioner did not oppose to a
consolidated arbitration. The demand in fact, he submits, was for a
composite reference to arbitration.
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
22. In view thereof, Mr. Singh submits that the reliance, by the
petitioner, on Duro Felguera1 is misplaced.
23. In rejoinder, Mr. Andlay answers the submission regarding
maintainability of the present petition by relying on the judgment of
the Supreme Court in Indian Farmers Fertilizer Co-operative Ltd v.
Bhadra Products 2, to contend that the present petition is maintainable.
Analysis
24. On merits, in my view, there can be no gainsaying, the effect of
the judgment of the Supreme Court in Duro Felguera1. The Supreme
Court has, in that case, clearly held that disputes arising under separate
agreements, if referred to arbitration, have to be arbitrated separately
unless the parties, ad idem, agree to the contrary. The following
passage, from the said decision, merits reproduction in this regard:
"49. On the facts of the instant case, there is no dispute that
there are five distinct contracts pertaining to five different
works. No doubt that all the works put together are for the
expansion of facilities at Gangavaram Port. However, the
parties took a conscious decision to split the works which led
to five separate contracts and consequently an arbitration
clause in each split contract was retained. The sixth one,
namely, the Corporate Guarantee also contains an arbitration
clause.
*****
60. In the case at hand, there are six arbitrable agreements
(five agreements for works and one Corporate Guarantee) and
each agreement contains a provision for arbitration. Hence,
there has to be an Arbitral Tribunal for the disputes
pertaining to each agreement. While the arbitrators can be
(2018) 2 SCC 534
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
the same, there has to be six Tribunals -- two for
international commercial arbitration involving the Spanish
Company M/s Duro Felguera, S.A. and four for the
domestic."
(Emphasis supplied)
25. The only exception to separate arbitral proceedings covering
separate agreements, is where the parties agreed to a consolidated
proceeding. In the present case, quite obviously, there is no such
agreement.
26. Despite being repeatedly queried in that regard, Mr. Singh is
unable to dispute the empirical proposition in law, that, in absence of
any agreement between the parties to the contrary, consolidated
arbitral proceedings are not permissible, in view of Duro Felguera1 .
He, however, relies on the communication dated 13th April, 2021,
from the petitioner to the respondent as amounting to assent, by the
petitioner, to consolidation of the disputes arising out of the
Concession Agreements for arbitration. He also points out that a
consolidated RFP had been issued by the Petitioner in the first
instance.
27. I am unable to agree with him.
28. The letter dated 13th April, 2021 from the petitioner to the
respondent, in reply to the respondent's notice invoking the
arbitration, does not expressly or by necessary implication agree to a
consolidated arbitration covering all the agreements. The fact that the
RFP initially issued, covered the work under all the agreements can
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
also be of no avail to the respondent as the RFP; for two reasons;
firstly, because it was issued before the Concession Agreements were
executed and, secondly, because the RFP was a consolidated RFP
covering all the work required to be done, and was no indicator of
whether there would, therefore, be executed one Concession
Agreement or more. Once separate Concession Agreements came to
be executed for the maintenance of bus queue shelters for different
Zones, these separate Concession Agreements would govern the
arbitral proceedings and procedure.
29. Applying Duro Felguera1, therefore, it is clear that the three
Concession Agreements had to constitute subject matter of three
different arbitral proceedings, though they could be decided by one
Arbitral Tribunal.
30. The preliminary objection regarding maintainability, as
advanced by Mr. Singh, is also, in my view, completely bereft of
substance. The judgment in IFFCO2, to which Mr. Andlay alludes,
covers the issue. In IFFCO2, the Supreme Court has clearly held that
an order by an Arbitral Tribunal, which decides an issue finally at the
interlocutory stage would be entitled to be regarded as an "interim
award", for the purposes of Section 34 of the 1996 Act. Mr. Andlay is
correct in his submission that there was no going back on the decision
of the learned Arbitral Tribunal, in the impugned order, rejecting the
petitioner's request for separate arbitral proceedings. Once the learned
Arbitral Tribunal had decided that the proceedings would be
consolidated, they would proceed in a consolidated fashion till
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
completion. This decision was, therefore, on the issue of consolidation
of proceedings, final till the completion of arbitral proceedings, and,
therefore, in my view, is eligible to be regarded as an 'interim award',
amenable to challenge under Section 34 of the 1996 Act.
31. On merits, the view taken by the learned Arbitral Tribunal,
being directly contrary to the judgment of the Supreme Court in Duro
Felguera1, cannot sustain.
32. Accordingly, the impugned order of the learned Arbitral
Tribunal is quashed and set aside.
33. It would be open to the respondent to file separate Statement of
Claims in respect of its claims in each agreement which, if and when
filed, would be decided by the learned Arbitral Tribunal in accordance
with law. This Court does not express any opinion on the
maintainability or merits of such separate Statements of Claims, as
and when filed.
34. If and when the separate Statement of Claims are filed, it shall
be open to the learned Arbitral Tribunal, presently in seisin of the
disputes, to entertain and decide such separate Statements of Claims
treating them as separate arbitral disputes.
35. The decision, in the impugned order, to consolidate the disputes
in one Statement of Claim and decide the disputes as one proceeding,
cannot sustain and is accordingly set aside.
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
36. The petition stands allowed in the aforesaid terms, with no
orders as to costs.
37. Pending applications, if any, stand disposed of.
C.HARI SHANKAR, J
DECEMBER 7, 2021
dsn
Signature Not Verified
Digitally Signed By:SUNIL
Signing Date:11.12.2021
07:52:29
