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2017 Supreme(Mad) 3986
IN THE HIGH COURT OF JUDICATURE AT MADRAS
ANITA SUMANTH, J.
M/s. Film Craft, through its Sole Proprietor Ms. Anjana G. Adhikari - Petitioner
Vs.
Prasar Bharati Doordarshal Bhawan Mandi House, Coppernicus Marg, New Delhi and Ors. - Respondents
O.P. No. 341 of 2017 and A.Nos. 2670 and 7597 of 2017
Decided On : 06-12-2017
For the Petitioner: Mr. M.S. Krishnan, M/s. Cyril Amarchand Mangaldass
For the Respondents: Mr. T.L. Thirumalaisamy
Headnote:
Arbitration and Conciliation Act 1996 – Sections 11, 14 – Termination of the mandate – Original Petition is filed under section 14 of the Arbitration and Conciliation Act 1996 (Act) seeking a termination of the mandate of R2 and, vide application in A. the appointment of an Arbitrator in terms of Section 11(6) of the Act to adjudicate upon disputes that have admittedly arisen between the parties from out of two Accreditation Agreements – Held, ‘classical notion’ earlier in vogue was that the High Court, in exercising power under Section 11 of the Act, will appoint the Arbitrator as per the contract between the parties. – This principal saw significant erosion in ACE Pipeline Contractors (P) Ltd. vs. Bharat Petroleum Corporation Ltd. ((2007) 5 SCC 304) wherein the Supreme Court had taken the view that though the contract between the parties must be adhered to, deviations therefrom in exceptional circumstances would be permissible. – Thereafter in Union of India vs. Bharat Battery Mfg. Co. (P) Ltd. ((2007) 7 SCC 684), the Supreme Court following a Full Bench judgment in Punj Lloyd Ltd. v. Petronet MHB Ltd. [Punj Lloyd Ltd. v. Petronet MHB Ltd. (2006) 2 SCC 638], held that once an aggrieved party files an application Under Section 11(6) of the Act to the High Court, the opposite party would lose its right of appointment of the arbitrators as per the terms of the contract. – The implication that the Court would be free to deviate from the terms of the contract was thus obvious. – The position was crystalized in Indian Oil Corporation Ltd. vs. Raja Transport (P) Limited ((2009) 8 SCC 520) to the effect that the Chief Justice/designate, while exercising power under Section 11(6) shall endeavour to give effect to the procedure set out in the agreement between the parties, but may decide to ignore and deviate from the same, in circumstances that are to be recorded. – Court proceed to (i) terminate the mandate of R2 and (ii) appoint a neutral arbitrator to commence, conduct and complete the proceedings for arbitration. – Court have taken into account the statutory bar and ineligibility of R2 to act as Arbitrator, the gross and inexcusable delay in commencement and conduct of the proceedings of nearly thirteen years and the instances of private communication of Prasar Bharati with the Arbitrator to which Film Craft was not privy. – Original Petition Allowed
This Original Petition is filed under section 14 of the Arbitration and Conciliation Act 1996 (Act) seeking a termination of the mandate of R2 and, vide application in A. No. 7597 of 2017 the appointment of an Arbitrator in terms of Section 11(6) of the Act to adjudicate upon disputes that have admittedly arisen between the parties from out of two Accreditation Agreements dated 31.10.1989 and 01.04.2002.
2. The petitioner is a sole proprietor engaged in the business of producing and marketing television programmes as well as other allied activities. The petitioner is henceforth referred to as 'Film Craft'. Prasar Bharati - R1, is a public broadcasting agency and R2, the ADG (Engineering) in Prasar Bharti, is the Arbitrator appointed by R1 as Sole Arbitrator to adjudicate upon the disputes between itself and Film Craft.
3. The disputes are not referred to in detail in so far as neither party questions the existence of disputes inter se. Admittedly, clause 5 of both agreements provides for the reference of disputes and differences to a sole Arbitrator to be appointed by the Director General, Doordarshan. Clause 5 is extracted hereunder:
'5. In the event of any question, dispute or difference arising under these presents or in connection therewith (except as to any matters the decision of which is specially provided for by these presents), the same shall be referred to the sole arbitration of an officer appointed to be the arbitrator by the Director General, Doordarshan. It will be no objection that the arbitrator is a Government servant, that he has to deal with the matters to which these presents relate o4r that in the course of his duties as a Government servant, he has expressed views on all or any of the matters in dispute or difference. The award of the arbitration shall be final and binding on the parties to these presents.
In the event of the arbitrator dying, neglecting or refusing to act or resigning or being unable to act for any reason, it shall be lawful for the Director General, Doordarshan to appoint another arbitrator in place of the outgoing arbitrator in the manner aforesaid.
The arbitrator may, from time to time, with the consent of the parties to these presents on large time for making and publishing the award.
Upon every and any such reference, the assessment of the costs of and incidental to the references and the award respectively shall be in the discretion of the arbitrator. Subject as aforesaid the Arbitration Act, 1940 and the rules thereunder and any statutory modifications thereof for the time being in force shall be deemed to apply to the arbitration proceedings under this clause.
Doordharshan shall have the right to amend or alter terms and rules governing grant of accreditation status from time to time, as it may deem necessary and such amendments and alterations shall be binding on the agency.
The president of India, agrees to bear the stamp duty, if any, chargeable on these presents.'
4. The dates and events relevant to adjudicate upon the prayers in the present petition/ application are as follows:
(i) Disputes arose between the parties and Prasar Bharti called upon the petitioner in September 2004 to settle outstanding dues to the extent of Rs.71,89,28,664/- along with interest at the rate of 18% upto the date of payment. The petitioner rejected the claim of Prasar Bharti and raised a counter claim for an amount of Rs.16,52,00,000/-. The existence of disputes inter se the petitioner and Prasar Bharti is thus not in question.
(ii) A notice of Arbitration was thereafter issued by Prasar Bharti on 30.11.2004 requesting the Director General (DG) to appoint an Arbitrator to adjudicate upon and resolve the disputes inter se the parties.
(iii) The DG appointed by order dated 13.05.2008, one Mr. G. Jayalal, Deputy Director General of the All India Radio, as sole Arbitrator to arbitrate upon the disputes between the parties. The delay of four years in appointment is stated to be on account of a paucity of of
