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REPORTABLE

IN THE SUPREME COURT OF INDIA

 CIVIL ORIGINAL JURISDICTION

            ARBITRATION CASE (C) NO. 53 OF 2016

IBI Consultancy India Private Limited                 …Petitioner(s)

Versus  

DSC Limited                …Respondent(s)

WITH

     ARBITRATION CASE (C) NO. 63 OF 2016

     ARBITRATION CASE (C) NO. 54 OF 2016

     ARBITRATION CASE (C) NO. 57 OF 2016

   J U D G M E N T

R.K.Agrawal J.

1) The  IBI  Consultancy  India  Private  Limited-the

petitioner-Company is the Indian subsidiary of the IBI Group

based in Canada.  The above petitions,  under Section 11(6)

read with Section 11(9) of the Arbitration and Conciliation Act,

1996 (hereinafter referred to as ‘the Act’), have been filed by

the  petitioner-Company  as  well  as  by  the  IBI  Group  for

appointment of an Arbitrator to adjudicate the disputes that

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have  arisen  between  the  parties  in  connection  with  the

contracts in question.  

2) The  petitioner-Company has  filed  two petitions  for  the

appointment  of  Arbitrator  and  its  parent  company  viz.,  IBI

Group has also filed two petitions of the same nature. Since

the point of consideration is same in all these four petitions,

purpose would be served if we moot the case of either of the

petition and would be disposed off by this common judgment.

Arbitration Case No. 53 of 2016

3) The petitioner-Company is a multi-disciplinary company

engaged in the business of providing system integration and

maintenance service for Toll and Traffic Management Systems

whereas  the  DSC  Limited,  the  respondent-Company  is  a

Company registered under the Companies Act,  1956 having

two subsidiary companies.  First  subsidiary Company of  the

respondent-Company  is  the  Lucknow  Sitapur  Expressway

Limited (LSEL) which is a special purpose vehicle (SPV) of the

respondent-Company and has signed a Concession Agreement

with  the  National  Highways  Authority  of  India  (NHAI)  for

developing  Lucknow-Sitapur  Highway  Project  (LSEL  Project)

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for  widening  the  existing  2-Lane  Road  to  4-Lane  dual

carriageway between Km 413.200 to Km 488.270 on NH-24 in

the State of Uttar Pradesh. Second subsidiary Company of the

respondent-Company  is  Raipur  Expressway  Limited  (REL),

which  is  also  a  special  purpose  vehicle  (SPV)  of  the

respondent-Company and has signed a Concession Agreement

with  the  NHAI  for  developing  the  Raipur-Aurang  Highway

Project (REL Project) for widening the existing 2-lane Road to

4-Lane dual carriageway between Km 239 to Km 281 on NH-6

in the State of Chhattisgarh.   

4) Vide e-mail dated 16.02.2010, the respondent-Company

sent a Request for Proposal (RFP) to the petitioner-Company,

inviting technical and commercial proposal for their LSEL and

REL  Projects.  Vide  letter  dated  07.06.2010,  the

petitioner-Company  had  given  a  proposal  to  execute  the

contract  for  installation,  erection  and commissioning  of  the

Toll Collection and Traffic Control Equipments at NH-24.  The

respondent-Company, vide letter dated 14.06.2010, accepted

the said proposal.   Pursuant thereto,  a Contract Agreement

dated  30.08.2010  was  executed  between  the  parties.   The

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value  of  the  Contract  was  mutually  finalized  at  Rs.

1,55,20,700.00 in pursuance of the Contract Agreement.    In

total, the IBI group and the petitioner-Company had entered

into 6 (six) separate contracts for the respective LSEL and REL

Projects with the respondent-Company.  

5) During  completion  of  the  projects,  the

respondent-Company  defaulted  in  releasing  the  agreed

payment  to  the  petitioner-Company  and  the  IBI  Group.

Though  several  verbal  and  written  communication  were

exchanged  between  the  parties  to  this  effect,  the

respondent-Company  could  not  release  the  outstanding

payment.   On  06.09.2012,  a  legal  notice  was  sent  to  the

respondent-Company  by  the  IBI  Group  as  well  as  by  the

petitioner-Company for the recovery of outstanding payment

for all the contracts.  Further, on 12.06.2013, a reminder for

outstanding payment was sent to the respondent-Company.   

6) On  24.04.2014,  a  legal  notice  for  invoking  Arbitration

Clause  and  appointment  of  Arbitrators  was  sent  to  the

respondent-Company and the name of Mr. Debashish Moitra,

Advocate was suggested as a Sole Arbitrator, however, there

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was no reply  from the  other  side.   The  IBI  Group and the

petitioner-herein filed  petitions  under  Section 11 of  the  Act

before the High Court being Arbitration Petition Nos. 443, 448,

444 and 449 of 2014 before the High Court of Delhi at New

Delhi.    Learned single Judge of the High Court,  vide order

dated 24.02.2015, disposed of the petitions while holding that

since one of the parties to the petition is an entity incorporated

outside  India,  therefore,  the  arbitration  of  the  dispute

involving such an entity would be 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

herein have therefore invoked the jurisdiction of this Court by

filing the above petitions.  

7) 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 dispute(s) to

be referred to Arbitrator is condition precedent for appointing

an Arbitrator under Section 11 of the Act.  It is also a well

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settled law that while deciding the question of appointment of

Arbitrator, court has not to touch the merits of the case as it

may  cause  prejudice  to  the  case  of  the  parties.  The  scope

under Section 11(6) read with Section 11(9) is very limited to

the extent of appointment of Arbitrator. This Court has to see

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.

8) It  is  worth  mentioning  that  the  position  after  the

insertion of  sub-Section 6(A) of  Section 11 of  the Act dated

23.10.2015 has been changed. The extent of examination is

now  confined  only  to  the  existence  of  the  Arbitration

Agreement. At this juncture, it is pertinent to set out Article-1

as  well  as  Clause  3.14  of  the  Contract  Agreement  dated

30.08.2010 which are as under:-

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“Article-1  

Contract Documents

The  following  document  shall  constitute  the  Contract between the  client  and the  contractor,  and  each shall  be read and construed as an integral part of the Contract;

(i) This Contract Agreement and Appendices hereto

(ii) Letter or indent ref no. No LSEL/Tolling/IBI/HO-2 dated 14th June 2010…..”

“Clause 3.14  

Arbitration (as mentioned in ref. No LSEL/Tolling/IBI/HO-1 dated 14th June 2010)

1.  In the event of any dispute or difference arising out or touching  upon  any  of  the  terms  and  conditions  of  this contract  and  /or  in  relation  to  the  implementation  or interpretation hereof, the same shall be resolved initially by mutual discussion and conciliation but in the event of failure thereof,  the  same  shall  be  referred  to  an  independent arbitrator mutually agreed by the two parties. The decision of the arbitrator shall be final and binding upon the parties. The arbitration shall be in Delhi and the arbitrator shall give his  award  in  accordance  with  “The  Arbitration  and conciliation Act, 1996”.

2. In the event of arbitrator dying, neglected or refusing to act or resigning or being unable to act for any reason or his award being set aside by the court for any reason the parties will mutually agree another to act as Arbitrator.    

                                                 (Emphasis supplied by us)”

9) On a careful perusal of Article-1 as well as Clause 3.14 of

the Contract dated 30.08.2010 along with the Letter of Indent

dated  14.06.2010,  it  is  evident  that  the  letter  dated

14.06.2010 is a part of the Contract and it shall be read and

construed as an integral part of the Contract. Therefore, the

contention  of  the  respondent-Company  that  there  does  not

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exist  any  arbitration  agreement  between  the  parties  is  not

sustainable in the eyes of law. We are of the considered view

that Arbitration clause exists in the Contract and we hold this

point in favour of the petitioner-Company.

10) 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 appointment

of Arbitrator through judicial intervention.  

11) Accordingly, Justice Amitava Roy, a former Judge of this

Court,  is  appointed as the  sole  Arbitrator  to  adjudicate  the

disputes  between  the  parties  on  such  fees  he  may  fix.

Nevertheless to  say,  the  said  appointment is  subject  to  the

necessary disclosure being made under Section 12 of the Act

and the Arbitrator not being ineligible under Section 12(5) of

the Act.

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12) The petitions as well as interlocutory application, if any,

are disposed of accordingly.

..…………….………………………J.       

         (R.K. AGRAWAL)                                  

.…....…………………………………J.      

  (S. ABDUL NAZEER)                    

NEW DELHI;

APRIL 16, 2018.