IMPORTANT POINT
Agreement providing only a right of appeal to only one party cannot be said to be an arbitration clause.

JUDGMENT

S.A. BOBDE, J.

Leave granted.

2. The Appellant-South Delhi Municipal Corporation (hereinafter referred to as ‘SDMC’) has challenged the impugned order dated 17.06.2016 passed by the learned Single Judge of the Hon’ble High Court of Delhi, New Delhi in Arbitration Petition No. 475/2015. By that order, the learned Single Judge allowed the Petition filed by the Respondent-SMS AAMW Tollway Private Ltd. (hereinafter referred to as ‘SMS AAMW’) under Section 11(6) of the Arbitration and

Brief Facts

3. The National Highways Authority of India (hereinafter referred to as ‘NHAI’) entered into a State Support Agreement (hereinafter referred to as ‘the SSA’) dated 27.5.2004/22.2.2005 with M/s Jaypee-DSC Ventures Limited (hereinafter referred to as ‘Concessionaire’) for the design, engineering, financing, procurement, construction, completion, operation, maintenance and the toll collection of certain sections of the NH-8 highway.

4. The arrangement under the SSA was that the Concessionaire of the NHAI shall not only collect the toll under the concession agreement executed between NHAI and its Concessionaire, but also the entry toll (toll tax) levied by the Appellant-SDMC on entry of specified commercial vehicles into the territory of NCT of Delhi. The Appellant-SDMC is a ‘designated agency’ of the Government of NCT of Delhi under the SSA.

5. The Appellant-SDMC, for the purpose of collection of toll tax from all border entry points within the NCT of Delhi, decided to engage a contractor and accordingly floated a tender, inviting bids from interested parties. The Respondent-SMS AAMW being the successful bidder was awarded the work for collection of toll tax for a period of 3 years and a Bilateral Agreement dated 14.05.2011 (hereinafter referred to as ‘the Agreement’) was entered into between the Appellant-SDMC and the Respondent-SMS AAMW.

6. As per the Agreement, the Respondent-SMS AAMW was obliged to pay an amount of Rs.26 crores every month to the Appellant-SDMC in lieu of the tax collected from all entry points within the NCT of Delhi. However, the said toll tax for Rajokri integrated toll plaza was said to be collected vide the mechanism set out under the SSA i.e. it will be collected by the NHAI’s Concessionaire and passed on to the Respondent-SMS AAMW.

7. Thereafter, on 19th February 2014, the Rajokri integrated toll plaza was dismantled, apparently, as a result of an understanding between the parties to the SSA. It is the case of Respondent-SMS AAMW that due to this situation, it was forced to incur the expenses to arrange for the collection of the Appellant-SDMC’s toll tax from the Rajokri Integrated toll plaza. As a result, the Respondent-SMS AAMW suffered a huge loss amounting to approximately Rs.80 crore.

8. Thereafter, a notice of Arbitration dated 09.03.2015 was sent by the Respondent-SMS AAMW to the Appellant-SDMC, and to the other parties under the SSA, detailing the issues and disputes that had arisen under Clause 9 of the SSA. The Appellant-SDMC vide letter dated 7.5.2015 raised a demand of Rs.97,08,76,449/-against the Respondent-SMS AAMW. To this Respondent-SMS AAMW responded vide letter dated 11.05.2015, clarifying the mistakes in computation, by the Appellant-SDMC. Thereafter, Appellant-SDMC reconciled the accounts and reduced the demand to Rs.80,46,31,504/- vide letter dated 13.05.2015.

9. The Respondent-SMS AAMW being dissatisfied with the decision contained in the letter dated 13.05.2015, preferred an appeal under Clause 16.3 of the Agreement vide letter dated 26.05.2015. Subsequently, the Appellant-SDMC vide letter dated 17.06.2015, intimated to the Respondent-SMS AAMW that since there is no arbitration clause in existence between the parties, the arbitration is not acceptable.

10. However, the Respondent-SMS AAMW filed the Arbitration Petition No.475/2015 under Section 11(6) of the Act before the High Court of Delhi for appointment of an Arbitrator relying on Clause 9 of the SSA and Clause 16 of the Agreemen