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2009 Supreme(Del) 1165

High Court of Delhi
THE HONOURABLE MR. JUSTICE MUKUL MUDGAL & THE HONOURABLE MS. JUSTICE REVA KHETRAPAL
M/s. Bharat Catering Corporation – Appellant
Versus
Indian Railway Catering And Tourism Corporation Limited (Irctc) & Another - Respondent
FAO(OS) No.226 of 2009 & CM No.8106 of 2009
Decided on : 28-10-2009

ADVOCATES APPEARED:
For the Appellant :A.M. Singhvi, Sr. Advocate with Manish Bishnoi & L. Nidhiram Sharma, Advocates.
For the Respondents:Gaurav Banerjee, Addl. Solicitor General with Saurav Agrawal, Advocate.

Headnote:Arbitration and Conciliation Act, 1996 Section 9 - Reconstitution of the firm- Termination of the contract - Tender conditions stipulated that the respondents at their discretion could revoke the said agreement if the appellant firm changed its structure - Internecine disputes between the partners - One of the partners claiming sole proprietorship of the firm with other partners disputing the same - Scope and ambit of Section 9 do not envisage the restoration of a contract which has been terminated - Section 9 cannot be used to enforce specific performance of a contract Appeal dismissed.

       

Judgment :

REVA KHETRAPAL, J.

1. The present appeal is directed against the judgment of the learned Single Judge dated 26th May, 2009 in OMP No.281/2009 dismissing the petition filed by the appellant under Section 9 of the Arbitration and Conciliation Act, 1996.

2. The brief facts leading to the filing of the aforesaid petition are as follows.

3. The appellant claims to be a partnership firm under the name and style of M/s. Bharat Catering Corporation and is engaged in the business of running catering services. The appellant firm, initially constituted by a Deed of Partnership dated 26th April, 2005 between five partners, was awarded a catering contract by the respondents for providing mobile and static catering services to the respondents. Admittedly, it was one of the conditions of the tender that in case any change was made in the constitution of the firm, an approval would be sought from the respondents.

4. During the subsistence of the contract, one of the partners of the appellant firm, namely, Shri Madhav Bhimsaria made a representation to the respondents by a letter dated 18.11.2008 that the partnership firm had been converted into a proprietorship concern with effect from 15.11.2008. Copy of the Dissolution Deed was also enclosed. It was also informed by the said Shri Bhimsari that he had become the sole proprietor of the firm and the only authorised person to deal with the respondents. Soon thereafter, i.e. on 28.11.2008, another partner, namely, Shri Balmiki Singh approached the respondents asserting that the representation made by Shri Bhimsari to the respondents by letter dated 18.11.2008 was wrong and in fact he had been expelled and he was the sole proprietor. The partners continued to make allegations and counter-allegations against each other in their representations to the respondents asserting that one or other partner of the firm was no longer the partner while the license fees running into several lakhs of rupees in respect of the contract continued to mount, so much so that FIRs were also lodged by two of the partners against each other. Eventually, the internecine disputes of the partners resulting in the cancellation of the contract by the respondents vide letter dated 6th May, 2009.

5. The aforesaid cancellation led to the appellant filing OMP No.281/2009, inter alia, praying for an ex parte order of injunction staying the operation of the aforesaid letter and further restraining the respondents or their agents from giving any effect to the said letter. The learned Single Judge by his order dated May 26, 2009 dismissed the OMP holding that:-

“5....................................the scope and ambit of Section 9 is not to restore the contract which has already been terminated. The contract between the respondent and the petitioner created a commercial relationship between the parties. The termination of contract is one of the facets of the contract and as per contract entered into between the parties, the contract could be terminated by respondent for various reasons given therein. If the petitioner is aggrieved by the act of the termination of the contract by respondent and considers that the termination was bad or illegal, the petitioner is at liberty to invoke the arbitration clause and claim damages, if any, suffered by the petitioner. The contract cannot be restored by the Court under Section 9 nor is it a case where the Court should interfere. In my view prima facie there is no case made out in favour of petitioners. The petitioners conduct, as reflected from the impugned letter of termination justifies termination of the contract.”

6. Aggrieved by the dismissal of its petition under Section 9 of the Act, the appellant has preferred the present appeal, on which counsel for the parties have been heard. Dr. A.M. Singhvi, the learned senior counsel for the appellant has assailed the order of the learned Single Judge on the ground that the respondents were duly intimated about the fact of reconstitutio








































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