IMPORTANT POINT
A clause in the agreement making the Head of organisation (Chairman) or his nominee sole arbitrator whose decision is to be final, conclusive and binding on the parties is not an arbitration clause.

Headnote:Arbitration and Conciliation Act, 1996 – Section 2(b) r/w section 7 – Clause 28 of Agreement – Dispute arising out of or in connection with this agreement – Clause 28 making the Chairman India Trade Promotion Organisation or his nominee sole arbitrator – His decision to be final, conclusive and binding on the parties – Not an arbitration clause – Appointment of an Arbitrator by the nominee of the Chief Justice rightly set aside by Division Bench of the High Court – Proceedings under PP Act, if any, to continue. (Para 24)
       (2014) 2 SCC 201; K.K. Modi; (1980) 2 SCC 341; (1996) 2 SCC 216; (2004) 1 SCC 372; (2007) 5 SCC 28 – Relied upon
       AIR 1986 Bom 76 – Cited with approval
       (2000) 7 SCC 201; (2002) 2 SCC 388; (2005) 8 SCC 618; (2007) 5 SCC 295; (2011) 1 SCC 320; (2010) 5 SCC 425; (2000) 6 SCC 659; (2004) 3 SCC 155; (1990) 4 SCC 406; (1999) 5 SCC 688; ILR 2000 KAR 4953; (1992) 2 SCC 166 – Referred
       Facts of the case:
       The appellant herein was running the “Appu Ghar”. The land for the purpose was initially allotted to the appellant by India Trade Promotion Organisation (ITPO) on licence basis as the lease between the Central Government and the ITPO was still pending and as such permanent allotment of the land could not be made in favour of the appellant. Only as an administrative measure, the license agreements were entered into between the appellant and the ITPO.
       The appellant claimed that it was the permanent allottee of the land for running the amusement park on the similar lines as were allotted in favour of the Statutory Corporations/ Instrumentalities of the State and Central Government. It was only on the assurance of the Land & Development Office, Ministry of Urban Development and ITPO that the appellant made huge amount of investment for establishing and running “Appu Ghar”. The last agreement entered into between the parties was on 6.11.1995. In the said agreement, arbitration clauses 27 and 28 were incorporated.
       The ITPO called upon the appellant to vacate the premises vide letter dated 02.09.1999.
       The appellant filed W.P. (C) No.1425 of 2000 before the Delhi High Court questioning the correctness of the order passed by the Estate Officer.
       Thereafter, on 08.05.2000, the appellant filed an application under Section 11(6) and petition under Section 9 of the Arbitration Act before the Chief Justice of Delhi High Court. The learned single Judge, who is the nominee of the learned Chief Justice, allowed the application by appointing an arbitrator for deciding the disputes between the parties through the process of arbitration.
       The ITPO filed Writ Petition (C) before the Division Bench of Delhi High Court, challenging the correctness of the order of appointment of the arbitrator by the High Court.
       The High Court allowed Writ Petition (C)No. 2015 of 2001 filed by the ITPO. The application C.M. (M) No. 553 of 2007 filed by the appellant was also dismissed.
       Finding of the Court:
       Questions of law framed herein are answered against the appellant and in favour of the ITPO and Union of India.
       Result: Appeals dismissed.

JUDGMENT

V.GOPALA GOWDA, J.

Leave granted.

2. These appeals are directed by the appellant against the common impugned judgment and order dated 16.07.2007 passed in writ petition (c) No. 2015 of 2001 and C.M. (M) No.553/2007 by the High Court of Delhi, urging various facts and legal grounds and raising two substantial questions of law which read thus:-

a) Whether the arbitration proceedings can be continued between the International Amusement Limited and the India Trade Promotion Organisation?

b) Whether the Estate Officer appointed as Arbitrator is the correct forum?

Necessary brief facts are stated hereunder with a view to find out whether the questions of law framed in these appeals would arise for our consideration.

3. The appellant herein was running an amusement park in Pragati Maidan, New Delhi since the year 1984, which was well known as “Appu Ghar”. The land for the purpose was initially allotted to the appellant by India Trade Promotion Organisation (for short ‘the ITPO) on licence basis as the lease between the Central Government and the ITPO was still pending and as such permanent allotment of the land could not be made in favour of the appellant. Only as an administrative measure, the license agreements were entered into between the appellant and the ITPO. The appellant claimed that it was the permanent allottee of the land for running the amusement park on the similar lines as were allotted in favour of the Statutory Corporations/Instrumentalities of the State and Central Government. It was only on the assurance of the Land & Development Office (for short “the L&DO”), Ministry of Urban Development and ITPO that the appellant made huge amount of investment for establishing and running “Appu Ghar”. The last agreement entered into between the parties was on 6.11.1995. In the said agreement, arbitration clauses 27 and 28 were incorporated, which are extracted hereunder :-

“27. The licensed premises are public premises as defined in the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 and fall within the jurisdiction of the Estate Officer, Pragati Maidan.

28. In case of any dispute arising out of or in connection with this agreement the disputes shall be referred to the sole arbitration of the Chairman, India Trade Promotion Organisation or his nominee whose decision/award shall be final, conclusive and binding on the parties. Application for reference to arbitration shall be made by either party within two months of arising of the dispute.”

4. The case of the appellant is that it being a permanent allottee of the land at Pragati Maidan, it had made huge investments for opening Water Park, in order to provide additional amusement facilities to the public at large. The ITPO being aware of the permanent status of the appellant in respect of the land as well as the factum of huge investments made by it upon the same towards establishing the Water Park, called upon the appellant to vacate the premises vide letter dated 02.09.1999. The appellant has raised various disputes, claims and counter claims against the ITPO.

5. Immediately after the notice was received by the appellant, it submitted a detailed representation to ITPO with a request to renew the lease of the land for further period. Being unsuccessful, the appellant commenced proceedings under the Arbitration and Conciliation Act, 1996 (for short “the Arbitration Act”) invoking its right under clause 28 of the agreement referred to supra. The arbitration notice dated 11.11.1999 was issued to the ITPO invoking the provisions of clause 28 of the aforesaid licence agreement and filed an application under Section 8 of the Arbitration Act before the Estate Officer for referring the matter for arbitration. On 18.11.1999 ITPO issued notice of eviction under Section 4A of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 (for short “the P.P. Act”) to the appellant to evict from the land of its unauthorised occupation. The application for arbitration fil

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2014 Supreme(SC) 901

IMPORTANT POINTA clause in the agreement making the Head of organisation (Chairman) or his nominee sole arbitrator whose decision is to be final, conclusive and binding on the parties is not an arbitration clause.

Cases Referred (18)

IMPORTANT POINT
A clause in the agreement making the Head of organisation (Chairman) or his nominee sole arbitrator whose decision is to be final, conclusive and binding on the parties is not an arbitration clause.