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IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
M/S INDIACAN EDUCATION PVT. LTD. - Petitioner
Versus
AMIT POPLI - Respondent
ARB.P. 235 & 241 of 2016
Decided On : 04-08-2016
Arbitration - Faculty Engagement Agreement - Arbitration and Conciliation Act, 1996 - Section 11 - 62 of the Indian Contract Act, 1872
Fact of the Case:
The petitioner, engaged in education and training, entered into Faculty Engagement Agreements with the respondents. Disputes arose when the respondents allegedly breached the agreements by promoting themselves and joining a competitive business. The respondents argued that the Contract Addendum novated the Faculty Engagement Agreement, terminating the arbitration clause.
Finding of the Court:
The court found that the Contract Addendum was meant as an addendum to the Faculty Engagement Agreement and did not stand independent of it. The intention of the parties was to modify certain terms, not to give up the original agreement. Therefore, the arbitration clause in the Faculty Engagement Agreement remained valid.
Issues: Dispute over novation of contract and termination of arbitration clause
Ratio Decidendi: The court held that the intention of the parties, as reflected in the documents, indicated that the Contract Addendum was not meant to replace the Faculty Engagement Agreement, and thus the arbitration clause in the original agreement remained in force.
Final Decision: The court allowed the petition and appointed an arbitrator to consider the disputes between the petitioner and the respondents.
VIBHU BAKHRU, J.
1. These are the petitions filed under Section 11 of the Arbitration & Conciliation Act, 1996 (hereafter ‘the Act’) for appointment of arbitrators to adjudicate the disputes which have arisen between the petitioner and the respondents.
2. The Agreements in question entered into between the petitioner and the respondents are identically worded and the controversies involved in these petitions are identical; therefore, these petitions were heard together and are being disposed of by this common order.
3. The petitioner is engaged in imparting education and training in various fields of education. The petitioner claims that it has a network of technology based satellite coaching centres for coaching students for the course of chartered accountancy. The petitioner operates its coaching programme under the brand name of “ETEN CA”. For the purposes of its business/coaching centres, the petitioner entered into a Faculty Engagement Agreement with Amit Popli (respondent in ARB 235/2016) on 16.10.2013. As the caption of the said agreement indicates, the agreement was for engagement of Mr. Amil Popli as a faculty member for the Coaching Centres. The term of the said agreement was for a period of two years, that is, up to 15.10.2015. This Agreement was subsequently extended for a period of one year. In the meantime, the parties entered into another Agreement titled “Contract Addendum” on 12.08.2014. Similarly worded Faculty Engagement Agreement and Contract Addendum, were also executed between the petitioner and Rakesh Kumar Mehta (respondent in ARB. P. 241/2016) on 02.09.2013 and 12.08.2014 respectively. The Faculty Engagement Agreement contained an arbitration clause, which reads as under:-
“Dispute Resolution; Arbitration. The Parties shall attempt in good faith to resolve through negotiation any dispute, claim or controversy arising out of or relating to this Agreement. Any Party may initiate negotiations by providing written notice in letter form to the other Party, setting forth the subject of the dispute and the relief requested. The other Party who is the recipients of such notice will respond in writing within five days with a statement of its position on and recommended solution to the dispute. If the dispute is not resolved by this exchange of correspondence, then the matter will be referred to final and binding arbitration under the provisions of Arbitration and Conciliation Act, 1996. For this purpose, the Parties shall jointly appoint a sole arbitrator. If the Parties fail to agree on the sole arbitrator within 30 days, then the sole arbitrator shall be appointed by the High Court of Delhi. The place of arbitration shall be at New Delhi. The arbitration award shall be final and binding upon the Parties.”
4. The Contract Addendum dated 12.08.2014 entered into with the respondents does not contain an arbitration clause.
5. In terms of the Faculty Engagement Agreement, the respondents agreed to discharge the following obligations:-
“3. Faculty Member’s Responsibilities
3.01 Faculty Member’s responsibilities shall be as detailed in Exhibit A attached to this Agreement. It is hereby agreed that Exhibit A may be subject to further revisions and amendment as mutually agreed to between the parties.
3.02 The faculty shall devote full time, attention, skill and efforts exclusively towards the performance of duties and responsibilities assigned to you from time to time as specified in the Exhibit A.
3.03 The faculty member shall discharge its duties and responsibilities with the highest standards of professional conduct and quality in accordance with the rules and regulations of ICAN.
3.04 The Faculty agrees that it shall not, directly or indirectly, in any capacity or manner, make express, transmit, write verbalize or otherwise communicate in any manner any remark, comment, message information, declaration, communication or other statement of any kind, whether written or verbal, electronically transferred or otherwise,
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