Back
IN THE HIGH COURT OF DELHI
Neena Bansal Krishna, J.
Mos Utility Private Limited - Appellant
Versus
Indian Railways Catering and Tourism Corporation Ltd. (IRCTC) - Respondent
O.M.P. (T) (COMM.) 81 of 2020
Decided On : 10-10-2022
Arbitration and Conciliation Act, 1996 - Appointment of Sole Arbitrator - Sections 14 and 15 - Summary of Acts and Sections: A&C Act, 1996, Sections 12(5), 12(1), 14, 15, Fourth Schedule - The court discussed the appointment of a Sole Arbitrator, the eligibility criteria for arbitrators, and the procedure for appointment of an arbitrator. The judgment highlighted the importance of impartiality and independence of the arbitrator and referred to relevant legal provisions and case laws to support the decision.
Fact of the Case:
The petitioner sought termination of the mandate of the Sole Arbitrator and appointment of a substitute Arbitrator due to the arbitrary suspension of their Principal Service Provider status by the respondent. The respondent unilaterally appointed a former Director as the Sole Arbitrator, which the petitioner objected to.
Finding of the Court:
The court found that the appointment of the Sole Arbitrator by the respondent was not in accordance with the law and the arbitrator was ineligible under Section 12(5) of the A&C Act, 1996. The court allowed the petition and appointed a substitute Arbitrator to adjudicate the disputes between the parties.
Issues: The issues involved the arbitrary suspension of the petitioner's status, the appointment of the Sole Arbitrator, and the eligibility and impartiality of the arbitrator.
Ratio Decidendi: The court relied on the provisions of the A&C Act, 1996, particularly Section 12(5), and referred to relevant case laws such as Perkins Eastman Architects DPC Vs. HSCC India Ltd. and TRF Ltd. vs. Energo Engineering Projects Ltd. to establish the criteria for the appointment of an arbitrator and the importance of impartiality and independence.
Final Decision: The court allowed the petition, terminated the mandate of the Sole Arbitrator, and appointed a substitute Arbitrator to continue the arbitration proceedings.
JUDGMENT
Neena Bansal Krishna, J. (ORAL)
1. The present petition under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "A&C Act, 1996") has been filed on behalf of the petitioner seeking termination of the mandate of Shri Vinod Ashthana (former Director, IRCTC), Sole Arbitrator in the pending Arbitration proceedings and also for appointment of a former Judge of this Court as the substitute Arbitrator.
2. Facts in brief are that the petitioner-Company has been doing business with the respondent-IRCTC since 2012 as a Principal Service Provider of IRCTC (hereinafter referred to as "PSC") for its e-ticketing business which typically had two Agreements, namely; (i) Agreement (Internet Cafe Services) - ICS Agreement; and (ii) Agreement (Web Services Business to Business) - B2B Agreement.
3. It is submitted that under these two Agreements, the petitioner-Company provides e-ticketing services to IRCTC through appointment of sub-agents known as Retail Service Providers (hereinafter referred to as "RSPs").
4. It is asserted that the petitioner-Company also engaged in business with banks and NBFCs, wherein under contractual arrangement, the petitioner-Company provided e-commerce, such as mobile banking, air-ticketing, payment utility services through sub-agents known as money transfer agents. The money transfer agents appointed under these two Agreements with banks are completely separate and distinct from the RSPs appointed under IRCTC Agreements.
5. It is asserted that the B2B Agreement with IRCTC was renewed for a period of one year w.e.f. 29th December, 2018 to 28th December, 2019, and the ICS Agreement was also renewed for a period of one year w.e.f. 29th April, 2019 to 28th April, 2020.
6. It is submitted that on 20th November, 2019, the IRCTC vide its E-mail dated 20th November, 2019 sought the petitioner-Company's consent for renewal of B2B Agreement which was expiring on 28th December, 2019. However, in November, 2019, the petitioner-Company received a Notice from RPF (sic.), Basti (Uttar Pradesh) in CC No. 330/2019 in relation to investigation of a scam wherein a certain illegal software known as ANMS was being used for illegally booking e-tickets on IRCTS platform. The investigations were carried out by the Investigating Officers from RPF. The petitioner-Company duly cooperated with the investigation team. However, on 12th March, 2020, the RPF in excess of its jurisdiction issued a letter to IRCTC and recommended IRCTC to cancel/blacklist the petitioner-Company's Agreements, namely, ICS and B2B with IRCTC pending investigation of the discovered scam.
7. It is submitted that the IRCTC vide its E-mail dated 13th March, 2020 suspended the PSP status of the petitioner-Company under the ICS and B2B Agreements.
8. Aggrieved by this arbitrary suspension of PSP status, the petitioner-Company vide Notice dated 21st April, 2020 invoked the arbitration under both the Agreements, namely, ICS and B2B and requested the respondent to immediately revoke the suspension of Agreements.
9. It is submitted that since IRCTC failed to respond to the Notice Invoking Arbitration, the petitioner-Company approached the Court and filed the petition bearing No. O.M. P. (I) (COMM.) 107/2020 under Section 9 of A&C Act, 1996 seeking stay of the suspension of the petitioner-Company's PSP status.
10. It is submitted that during the pendency of O.M. P. (I) (COMM.) 107/2020 under Section 9 of A&C Act, 1996, the IRCTC issued a Show-cause Notice dated 07th May, 2020 calling upon the petitioner as to why (i) Termination of the B2B Agreement' and (ii) a fine of Rs. 25,00,000/- each under both the Agreements were not imposed.
11. It is asserted that this Court vide Order dated 18th May, 2020 disposed of the petition bearing No. O.M. P. (I) (COMM.) 107/2020 under Section 9 of A&C Act, 1996 directing the IRCTC to defreeze the bank accounts of the petitioner-Company in order to enable processing of refund to custo
The main legal point established in the judgment is the importance of impartiality and independence of the arbitrator, as well as the eligibility criteria for arbitrators under the A&C Act, 1996.
The unilateral appointment of a Sole Arbitrator by a party in conflict with statutory provisions and judicial judgments is impermissible. The waiver of the right to object and the criteria for impart....
Unilateral appointment of an arbitrator by a party with an interest in disputes is invalid and conflicts with the impartiality requirement in arbitration law.
The main legal point established in the judgment is the application of Section 12(5) of the Arbitration and Conciliation Act, 1996, and the proviso allowing parties to waive disqualification through ....
Point of Law : It is not open for the petitioner to challenge the learned Arbitrator on the ground that there are justifiable doubts as to his independence and impartiality in terms of the Guidelines....
The petitioner must first seek termination of the existing Arbitrator's mandate through the appropriate civil court before requesting a new Arbitrator, as the existing proceedings had commenced.
The de jure disqualification of an Arbitrator under A&C Act, 1996, Section 14(1) leads to the termination of the mandate and the appointment of a substitute Arbitrator.
Unilateral appointment of an arbitrator by a party with vested interests breaches principles of fairness and impartiality, rendering such appointment invalid under arbitration laws.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
