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SUPREME COURT OF INDIA
Surinder Singh Nijjar, J.
Swiss Timing Limited – Petitioner
Versus
Organising Committee, Commonwealth Games 2010, Delhi – Respondent
ARBITRATION PETITION NO. 34 OF 2013
Decided On : 28-05-2014
(b) Arbitration and Conciliation Act, 1996 – Section 8 and 11 – Respondent claiming contract to be void ab initio – Would not debar Court from referring the dispute to arbitration. (Para 17)
(2003) 6 SCC 503; (2000) 4 SCC 539 – Relied upon
(2010) 1 SCC 72 – Per incurium
(c) Arbitration and Conciliation Act, 1996 – Section 5 and 16 – Even if main contract is void, arbitration clause survives – Concept of Severability – Void and voidable contracts – Court can refer the matter to arbitration – Arbitrator can adjudicate on its own jurisdiction. (Para 22, 24 to 29)
2013 (7) SCALE 327: 2013 (2) Arb. LR 241 (SC) – Relied upon
(d) Arbitration and Conciliation Act, 1996 – Section 11(6) – Pendency of criminal case not an impediment in exercising power under section 11(6) – Respondent however given liberty, in case award is made in favour of petitioners, to resist its execution depending upon outcome of the criminal case – Arbitration tribunal constituted. (Para 36)
Nussli (Swtizerland) Ltd.; (2013) 7 SCC 622; (2007) 5 SCC 510 – Distinguished
Facts of the case:
This is a petition under Section 11(4) read with Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Arbitration Act”), with a prayer to appoint the nominee arbitrator of the Respondent and to further constitute the arbitral tribunal, by appointing the presiding arbitrator in order to adjudicate the disputes that have arisen between the parties.
Finding of the Court:
Impugned judgment is erroneous.
Result: Appeal allowed.
JUDGEMENT
SURINDER SINGH NIJJAR,J.
1. This is a petition under Section 11(4) read with Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Arbitration Act”), with a prayer to appoint the nominee arbitrator of the Respondent and to further constitute the arbitral tribunal, by appointing the presiding arbitrator in order to adjudicate the disputes that have arisen between the parties.
2. The relevant facts as set out in the Arbitration Petition are as under:-
3. The Petitioner is a company duly incorporated under the laws of Switzerland, having its registered office in Corgémont, Switzerland. The respondent is the Organising Committee, Commonwealth Games, 2010. It is a society registered under the Societies Registration Act, 1860 (hereinafter referred to as “the Organising Committee”), established for the primary purpose of planning, organising and delivering the Commonwealth Games, 2010 Delhi (hereinafter referred to as “Commonwealth Games”) and having its registered office in New Delhi, India.
4. The petitioner entered into an agreement dated 11th March, 2010 with the respondent for providing timing, score and result systems (“TSR systems/services”) as well as supporting services required to conduct the Commonwealth Games. According to the petitioner, Clause 11.1 of the aforesaid agreement stipulated the fees, as set out in Schedule 3, which shall be paid to the petitioner for performance of the obligations contained in the agreement. The aforesaid Schedule 3 gives details of the amounts which were to be paid, in instalments, by the Organising Committee. The service provider/Petitioner was to submit monthly tax invoices, detailing the payments to be made by the Organising Committee. These invoices were to be paid within 30 days of the end of the month in which the tax invoices were received by the Organising Committee. All payments were to be made in Swiss Francs, unless the parties agree otherwise in writing. Clause 11.5 provides that on the date of the agreement, the service provider must provide the Performance Bank Guarantee to the Organising Committee to secure the performance of its obligations under the agreement. Certain other obligations are enumerated in the other clauses, which are not necessary to be noticed for the purposes of the decision of the present petition.
5. It is also noteworthy that in consideration of the petitioner’s services as stipulated in the agreement, the petitioner was to receive a total amount of CHF 24,990,000/- (Swiss Francs Twenty Four Million Nine Hundred and Ninety Thousand only). It was also provided in Schedule 3 that payment of the 5% of the total service fees was to be made upon completion of the Commonwealth Games. Accordingly, the petitioner sent the invoice No. 33574 dated 27th October, 2010 for the payment of CHF 1,249,500 (Swiss Francs One Million Two Hundred Forty Nine Thousand Five Hundred only). This represents the remaining 5% which was to be paid upon completion of the Commonwealth Games on 27th October, 2010. The petitioner had also paid to the Organising Committee a sum of Rs. 15,00,000/- (INR 1.5 million) as Earnest Money Deposit (EMD), for successfully completing the TSR services as provided in the agreement.
6. According to the petitioner, the respondent defaulted in making the payment without any justifiable reasons. Not only the amount was not paid to the petitioner, the respondent sent a letter dated 15th December, 2010 asking the petitioner to extend the Bank Guarantee till 31st January, 2011. The petitioner informed the respondent that the Bank Guarantee had already been terminated and released on completion of the Commonwealth Games in October, 2010. It is also the case of the petitioner that there is no provision in the service agreement for extension of the Bank Guarantee. The petitioner reiterated its claim for the aforesaid amount. Through letter dated 26th January, 2011, the petitioner demanded repayment of Rs. 15 lakhs depos
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