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2013 Supreme(Del) 1374
High Court of Delhi
MANMOHAN SINGH, J.
Transair & Others
Versus
M/s. Kuwait Airways & Others
OMP. Nos. 21 & 24 of 2013
Decided on : 21-10-2013
Important Points
Subject
Arbitration Law - Termination of Arbitral Tribunal's Mandate
Act Referred
Headnote
Arbitration - Termination of Arbitral Tribunal's Mandate - Arbitration and Conciliation Act, 1996, Section 14 - Article XI of GSA - IATA Rules - [Arbitration] - [Termination of Arbitral Tribunal's Mandate] - [Article XI of GSA, IATA Rules] - The court discussed the applicability of IATA rules and their departure from the provisions of Section 14 and 15 of the Arbitration and Conciliation Act, 1996. The court held that the remedy of seeking replacement arbitrator on the ground of termination of the mandate of the arbitrator would lie to the Director General as per the mechanism and framework agreed and provided under the IATA rules of 1999. The present petition under Section 14 of the Act was deemed not maintainable.
Fact of the Case:
The petitioners sought to invoke Section 14 of the Arbitration and Conciliation Act, 1996 to declare that the mandate of the Arbitral Tribunal constituted for the arbitration proceedings between the petitioners and the respondent stands terminated de jure and de facto with effect from 17th December, 2012. The petitioners and respondent had entered into a General Sales Agency Agreement (GSA) by which the petitioner was appointed as the General Sales Agent of the respondent for sale of passengers, cargo, and mail transportation for various states and cities in India. Disputes arose, and the respondent terminated the GSA. The parties agreed to refer any dispute to arbitration in accordance with the provisions of IATA rules.
Finding of the Court:
The court held that the present petition under Section 14 of the Act was not maintainable as the remedy of seeking replacement arbitrator on the ground of termination of the mandate of the arbitrator would lie to the Director General as per the mechanism and framework agreed and provided under the IATA rules of 1999. Therefore, the said contentions were left open to be decided by the competent forum before which the challenge shall be raised as prescribed under the rules. The present petitions were dismissed, and both petitioners were burdened with costs of Rs.50,000/- which were to be deposited by them in equal share with the Prime Minister Relief Fund within four weeks from the date of the judgment.
Issues: The main issue was the applicability of IATA rules and their departure from the provisions of Section 14 and 15 of the Arbitration and Conciliation Act, 1996. The court also discussed the maintainability of the petition under Section 14 of the Act.
Ratio Decidendi: The court held that the remedy of seeking replacement arbitrator on the ground of termination of the mandate of the arbitrator would lie to the Director General as per the mechanism and framework agreed and provided under the IATA rules of 1999. The present petition under Section 14 of the Act was deemed not maintainable.
Final Decision: The present petitions were dismissed, and both petitioners were burdened with costs of Rs.50,000/- which were to be deposited by them in equal share with the Prime Minister Relief Fund within four weeks from the date of the judgment.
For the Appearing Parties:Chetan Sharma, Rajiv Nayar, Jayant Bhushan, Senior Advocates, Vaibhav Gaggar, Ms. Garima Malhotra, Ms. Tushar Singh, Indresh Kumar, Abhijat, Aaditya, Vijay Kumar, Harsh Hariharan, P. Kumar, Ms. Mamta Tiwari, Ms. Veronica Mohan, Arpit Shukla, Pallav Mongia, Advocates.
Manmohan Singh, J.
1. The petitioners byway of the present petitions seek to invoke Section 14 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) to declare that the mandate of the Arbitral Tribunal constituted for the arbitration proceedings between the petitioners and the respondent stands terminated de jure and de facto with effect from 17th December, 2012.
2. M/s. Transair petitioner in OMP No.21/2013 is a Partnership Firm having its registered office at 803, Ansal Bhavan 16, Kasturba Gandhi Marg, New Delhi-110001. The petitioner No.2, respondent Nos.3 and 4 are partners. Petitioner No.2 Mr. Chetan Gupta is the husband of Ms. Vandana Gupta respondent No.3 herein and son of Smt. Jagwanti, respondent No.4.
3. Respondent No. 1 is a corporation incorporated in Kuwait which own and runs Kuwait Airlines. Respondent No. 2 is the Director General, IATA, which is a trade association of Airlines and under whose procedural rules, the Arbitral proceedings in question are being conducted.
4. Ms. Vandana Gupta and Smt. Jagwanti, the petitioners in OMP No.24/2013 have also filed separate petition for similar relief against respondent No.1 herein.
5. The question of law in both matters are same, therefore both are decided by common single order.
6. The petitioner No.1 Transair and respondent No.1 Kuwait Airways had entered into a General Sales Agency Agreement (hereinafter referred to as GSA) dated 30th July, 1987 by which the petitioner No.1 was appointed as the General Sales Agent of respondent No.1 for sale of passengers, cargo and mail transportation for various states and cities in India.
7. Disputes and differences accrued between the petitioners. The respondent No.1 was
left with no other option but to terminate the GSA vide letter dated 23rd September, 2008.
8. After the termination of GSA, the respondent No.1 sought to raise issues regarding certain debit notes which related to transactions of the period 2005-2008. The respondent No.1, by mail dated 11th March, 2011, informed the Director General, IATA of a dispute to be referred for an arbitration and copy of this request of arbitration made by the respondent No. 1 was received by the petitioners on 11th April, 2011.
9. As per Article XI of the GSA, the parties agreed to refer any dispute to arbitration which related to the scope, meaning or effect of the GSA agreement or its schedules. The said Clause stipulates the disputes and their reference for Arbitration in accordance with the provisions of IATA rules.
10. The case of the petitioners in both matters is that the Arbitral Tribunal had failed to conclude the arbitration proceedings between the parties within the stipulated time agreed between the parties, therefore, the mandate of the Tribunal terminated de jure, because as per Article 19 of IATA Rules, the award is to be passed within 6 months from the date when the Director General notifies that the parties have paid the advance of costs and thereafter, the period may at best be extended by another 3 months by the Director General, IATA.
11. Admittedly the Director General, IATA, constituted an Arbitral Tribunal of three members. The first hearing of said arbitration proceedings was held on 31st March, 2012.
12. The contention of the petitioners is that the procedural order by the Tribunal had decided upon the cost to be paid as the arbitrators fees and secretarial and other expenses. This order was brought to the notice of the Director General, IATA vide letter dated. 13th April, 2012, notified the Tribunal confirming the advance of costs arranged by the parties. This letter was received by the Arbitral Tribunal on 17th April, 2012 and therefore, according of Article 19 r/w Article 29(4) of IATA rules, the Arbitral Tribunal was expected to decide the matter within 6 months from the date of notification by the Director General, i.e. on or before 17th October, 2012.
The petitioners in both the matters stressed that as mandate of
