Author: Yash Bisht, 4th year law student at IMS Unison University, Dehradun.
Citation: O.M.P. (T) (COMM.) 30/2021
Petitioner- IWorld Business Solutions Private Ltd.
Respondent:- M/S Delhi Metro Rail Corporation Limited
Bench:- Justice Sanjeev Narula
Statutes Involved:- Arbitration and Conciliation Act 1996
Date of Judgement:- 07-04-2021
Original copy:– View
Facts of the case:
- Back in 7-06-2016, both the parties made a Licence agreement , whereby the commercial property situated at Janpath Metro Station was licenced by the Respondent to the Petitioner. An Arbitration clause was mentioned under Section 8 of the said Agreement which stated that in case of disputes arising out of termination, breach, invalidity etc., the matter would be referred to an arbitrator.
- The nation-wide lockdown due to the outburst of the COVID-19 Pandemic caused many problems in the daily lives of people, such was the scenario with the Petitioners as they terminated the Licence Agreement on 10th April, 2020. Since the Section 8 of the Agreement also. In the light of this event, the Respondents sent a communication on 18-08-2020 in order to evict the Petitioner from the premises.
- This led to the onset of the dispute between the two parties after which the Petitioners decided to invoke the Arbitration clause and appointed Mr. Ashish Dixit as the sole Arbitrator for the case.
- Respondents disagreed with the nomination made by the Petitioners and rather decided to appoint three Arbitrators and made the Petitioners decide any one of them for the Arbitration.
- Petitioner finally decided to approach the High Court under Section 14 read with 12(5) of the Arbitration Act upon the Agreement between both the parties on 07-06-2016 in relation to a similarly situated property.
- Whether the Supreme Court’s decision in the Central Organization of Railway Electrification still stands as a good law or not?
- Whether the appointment of Arbitrator by Respondent favours them and if it would stand terminated de jure or not?
- In a three-judge bench of the Supreme Court in the case of Union of India V. M/S. Tantia Constructions Limited, the Supreme Court’s decision in Central Organisation for Railway Electrification (being referred as CORE) was referred to a larger bench. On this basis, the petitioners contended that the law in the CORE is already under consideration and might be struck off by a larger-bench of the Supreme Court and hence could not be used in the present case.
- Petitioners also took the reference of the VSK Technologies Private Limited and Ors. v. Delhi Jal Board stating that CORE is a bad law.
- Petitioners also argued that the appointment of a sole arbitrator by the Respondents would stand terminated de jure as they are an interested party in this case.
- Respondents in reply contended that the Judgement of CORE has just been sent to reference and hence it does not amount to making it a bad law unless or until it is been struck off by the decision by a larger bench.
- They further argued that since the arbitration clause in the current case is very much similar to the CORE, so the Court in this case shall follow the view taken by it in the IWorld which replied upon the Supreme Court case in CORE (supra).
- The Court took all the arguments made by the parties into consideration and stated that since the present petition is very much identical to the Iworld , in that case the court took into view the applicability of the decision given by Supreme Court in the CORE.
- But as the Respondents have contended, that the decision in the CORE has been put under consideration by the Supreme Court, so the question before the Court is whether such observation would mean that this Court has to make a new way in order to decide this petition. Further the Court decided to go through the Judgement of the Tantya Case, and finally the Court went on to conclude that since no larger-bench till now has been constituted to overturn the CORE case, so until then, the decision of the three-judge bench in CORE would continue to operate.
- The Court also stated that the Petitioner’s reliance on the VSK technologies case is wholly misplaced as the facts of this case do not match with the facts of the current case. The Delhi Jal board appointed arbitrators that were only favouring them, meanwhile in the instant case, three arbitrators were appointed by the Respondent and the Petitioners were given a choice to choose any one of them.
- Keeping all the points mentioned above in contention, the Court stated that there is no merit in the case which has been advanced by the Petitioners. Moreover, it said that the observation of the Supreme Court in the case of Tanya Constructions with respect to the decision of CORE doesn’t mean that the appointment of an arbitral tribunal in the present case stands de jure. Finally, the Court while upholding the Arbitration Clause decided to dismiss the petition.
- Every step that the Court they took in this case turned out to be adequate. The Court rightly stated that until a larger bench answers the questions regarding , the decision of the three-judge bench in CORE will withstand.
- The Court took the contentions made by the Petitioners under notice and kept in mind the Principles of Natural Justice , specifically “Nemo Judex Inre Sua ” as they ensured that the Arbitrators are not favouring any one particular party.