[Case Brief] Consultancy India Pvt. Ltd. v/s DSC Ltd. – Supreme Court of India

Case NameConsultancy India Pvt. Ltd. v/s DSC Ltd.
Case numberArbitration case (c) No 53, 63, 54, & 57 of 2016
CourtSupreme Court of India
BenchJustice R.K. Agrawal, Justice S. Abdul Nazeer
Author of the judgment Justice RK Agrawal
Decided onApril 16, 2018
Relevant Act/Sections1) Arbitration and Conciliation Act, 1996 (Sections 11(6) and 11(9))
Author of the case briefSneha Chugh

Brief facts and procedural history-

The IBI Consultancy India Private Limited is a petitioner company engaged in the multi-disciplinary business of providing system integration and maintenance service for Toll and Traffic Management systems and is the Indian subsidiary of the IBI Group based in Canada. The respondent, DSC Limited is a Company registered under the Companies Act, 1956 and has two subsidiary companies namely, Lucknow Sitapur Expressway Limited (LSEL) and Raipur Expressway Limited (REL). Both the subsidiary companies have signed a Concession Agreement with the National Highways Authority of India (NHAI) for developing Highway Projects respectively.

The respondent-Company sent a Request for Proposal (RFP) to the petitioner-Company, inviting a technical and commercial proposal for their LSEL and REL Projects. The petitioner company accepted the proposal and both the parties entered into a Contract. The value of the Contract was mutually finalized at Rupees 1,55,20,700 in pursuance of the Contract Agreement.

During the completion of the project, the respondent-Company defaulted on releasing the agreed payment to the petitioner-Company and the IBI Group. Thereafter, a legal notice for invoking the Arbitration Clause and appointment of Arbitrators was sent to the respondent-Company. On receiving no reply from the respondent Company, the petitioner Company and the IBI group filed a petition before the High Court of Delhi under Section 11(6) read with Section 11(9) of the Arbitration and Conciliation Act, 1996, for appointment of an Arbitrator to adjudicate the disputes that have arisen between the parties in connection with the contracts in question.

The petitions were disposed of on the ground that one of the parties to the petition was an entity incorporated outside therefore, the arbitration of the dispute involving such an entity was an ‘international commercial arbitration’ within the meaning of Section 2(1)(f) of the Act and for seeking appointment of an Arbitrator in a dispute involving such an entity, an application will have to be filed before the Supreme Court under Section 11(9) of the Act. The petitioners, therefore, invoked the jurisdiction of this Court.

The issue before the court-

Whether there exists an Arbitration Agreement between the parties and if the answer is affirmative then whether the petitioner has made out a case for the appointment of Arbitrator?

The ratio decided by the court-

The Court observed that the first and the foremost thing is the existence of an arbitration agreement between the parties to the petition under Section 11 of the Act and the existence of a dispute(s) to be referred to Arbitrator is condition precedent for appointing an Arbitrator under Section 11 of the Act.

It is a cardinal principle of the Arbitration and Conciliation Act that the parties are free to decide the number of arbitrators, provided, it is an odd number, as well as the procedure for appointing them. However, if the parties are not able to agree on the said procedure, or constitute the Arbitral Tribunal to their mutual satisfaction, either of the party has an option to route to an appropriate remedy under Section 11 of the Act, which provides detailed machinery for the appointment of Arbitrator through judicial intervention.

The decision as given by the court-

The Court was of the considered view that Arbitration clause exists in the Contract and hold the point in favor of the petitioner-Company.

Accordingly, Justice Amitava Roy, a former Judge of the Court, was appointed as the sole Arbitrator to adjudicate the disputes between the parties.

 

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