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IN THE HIGH COURT OF DELHI
Vipin Sanghi, J.
Appellants: Indraprastha Gas Ltd.
Vs.
Respondent: Sap India Systems, Applications and Products in Data Processing Pvt. Ltd. and Anr.
ARB. P. No. 112 of 2011
Decided On: 19.05.2011
Arbitration - Appointment of Sole Arbitrator - Arbitration and Conciliation Act, 1996, Section 11 - Clause 3.21, End User License Agreement (EULA) - [Arbitration] - [Appointment of Sole Arbitrator] - [Arbitration and Conciliation Act, 1996, Section 11, National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd.] - The court discussed the arbitration clause in the tender document and the End User License Agreement (EULA) and appointed a Sole Arbitrator to resolve disputes between the parties.
Fact of the Case:
The Petitioner, Indraprastha Gas Ltd. (IGL), sought the appointment of a Sole Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 to settle disputes with Respondent No. 1, SAP India, and Respondent No. 2, Tata Consultancy Services (TCS), arising from a tender for supply and implementation of an ERP package.
Finding of the Court:
The court found that disputes had arisen between the parties and appointed a Sole Arbitrator to resolve the disputes under the contract arising from the tender and the license agreement (EULA) entered into between the Petitioner and Respondent No. 1.
Issues: The issues included the interpretation of the arbitration clause in the tender document, the scope of disputes, and the parties' obligations under the contract and the license agreement (EULA).
Ratio Decidendi: The court held that the appointment of a Sole Arbitrator was appropriate to resolve the disputes, and the issues regarding the scope of disputes and the parties' obligations should be decided by the Arbitral Tribunal.
Final Decision: The court allowed the petition and appointed a Sole Arbitrator, with jurisdiction to decide all disputes under the contract arising from the tender and the license agreement (EULA) between the Petitioner and Respondent No. 1.
Vipin Sanghi, J.
1. This petition has been preferred by the Petitioner under Section 11 of the Arbitration and Conciliation Act, 1996 to seek appointment of a Sole Arbitrator for settlement of disputes between the parties. The Petitioner is Indraprastha Gas Ltd. (IGL); Respondent No. 1 is SAP India, Systems, Applications and Products in Data Processing Pvt. Ltd. also known as SAP India Ltd; Respondent No. 2 is Tata Consultancy Services (TCS). The Petitioner had issued a Request for Proposal (RFP) for supply and implementation of Enterprise Resource Planning (ERP) package at IGL. This tender document contains an arbitration clause in Clause 3.21, which reads as follows:
3.21 Arbitration/resolution of disputes IGL and the Bidder shall make every effort to resolve amicably by direct informal negotiations, any disagreement or dispute arising between them under or in connection with the contract. If any dispute or difference of any kind whatsoever shall arising out of this contract (and whether before or after the termination or breach of this contract) parties thereto shall promptly and in good faith negotiate with a view to its amicable resolution and settlement. In the event, no amenable resolution or settlement is reached within a period of 30 days from the date on which dispute or difference arose, such dispute or difference shall be referred to single arbitrator who will be mutually acceptable to both the Bidder and IGL.
2. The Respondent s formed a consortium vide consortium agreement dated 14.5.2004 where under the Respondent No. 2-TCS was authorized to market and distribute SAP Software in India. TCS was authorized to quote for SAP products for IGL's tender in question for supply and implementation of ERP package at IGL.
3. The tender document defined the expression ladder' to mean both ERP Software Vendor and the System Implementation (SI) partner. It is not disputed that, in the present case, the ERP Software Vendor was Respondent No. 1, whereas System Implementation Partner was Respondent No. 2. The consortium/partnership/joint venture is defined as an association of two or more parties participating jointly in bidding and execution of the contract.
4. The Petitioner has placed on record the communication dated 24.5.2004 issued by Respondent No. 2 to the Petitioner in response to the aforesaid tender inquiry. Vide this communication, the Respondent No. 2 submitted its unpriced bid for the supply of goods and services in accordance with terms and conditions and within the time mentioned in the RFP. Respondent No. 2 further undertook 'to perform the services and supply the goods in accordance with the contract as derived from the terms of the tender document and accept the terms and conditions as laid down in the RFP'.
5. Respondent No. 2 also agreed to the terms and conditions as per Annexure 1-A. It also provided information about SAP vide Annexure 1-C. Various other annexures to the tender were filled in and submitted by Respondent No. 2 while making its bid.
6. According to the Petitioner, the Fax of Intent (FOI) was issued, thereby accepting the bid made by the Respondent s as a consortium, on 21.3.2005. On 23.3.2005, the Petitioner and Respondent No. 1 entered into an End User License Agreement (EULA) and maintenance service contract as well as professional services schedule. On 31.3.2005, the Petitioner issued the letters of acceptance in the name of Respondent No. 2.
7. The Petitioner claims that it had paid to Respondent No. 2 the license charges for using the computer software provided by it from the year 2006 to 2010. According to the Petitioner, Respondent No. 1 demanded charges for additional usage and required the Petitioner to purchase additional SAP license. Another communication dated 23.4.2010 was issued by Respondent No. 1 indicating that the cost of additional license would be Rs. 1,26,83,105/-. On 9.9.2010, Respondent No. 1 claimed that the Petitioner did not purchase any SAP license for the CFM Module
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