IBI CONSULTANCY INDIA PRIVATE LIMITEDversusDSC LIMITED

                        [2018] 3 S.C.R. 1027                              1027


         IBI CONSULTANCY INDIA PRIVATE LIMITED                            A
                                  v.
                           DSC LIMITED
                (Arbitration Case (C) No. 53 of 2016)
                           APRIL 16, 2018                                 B
       [R. K. AGRAWAL AND S. ABDUL NAZEER, JJ.]
      Arbitration and Conciliation Act, 1996 – s.11(6) r/w s.11(9)
– Appointment of arbitrator – The scope under s.11(6) read with
s.11(9) is very limited to the extent of appointment of Arbitrator –
                                                                          C
The Court has to see whether there exists an Arbitration Agreement
between the parties – 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 – In the instant case,
arbitration clause existed in the contract – Accordingly, sole
arbitrator appointed to adjudicate the disputes.                          D
     Disposing of interlocutory application and petitions, the
Court
      HELD: 1. 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         E
referred to Arbitrator is condition precedent for appointing an
Arbitrator under Section 11 of the Act. 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         F
very limited to the extent of appointment of Arbitrator. Perusal
of contract showed that arbitration clause did exist in the Contract.
[Paras 7, 9][1030-D-E; 1031-F, G]
      2. It is a cardinal principle of the Arbitration and Conciliation
Act that the parties are free to decide the number of arbitrators,        G
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
                                                                          H
                                 1027
1028             SUPREME COURT REPORTS                            [2018] 3 S.C.R.


 A     detailed machinery for appointment of Arbitrator through judicial
       intervention. 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. The
       said appointment is subject to the necessary disclosure being
       made under Section 12 of the Act and the Arbitrator not being
 B
       ineligible under Section 12(5) of the Act. [Paras 10-11][1031-G-
       H; 1032-A-B]
               CIVIL ORIGINAL JURISDICTION: Arbitration Case (C) No.
       53 of 2016.
               Under Section 11(5), 11(6) (a) read with Sections 11(9) & 11(12)
 C
       (a) of the Arbitration and Conciliation Act, 1996.
                                            WITH
               Arbitration Case (C) Nos. 63, 54 and 57 of 2016
               Rakesh Kumar, Ms. Preeti Kashyap, P. K. Sachdeva (For
 D     Shibashish Misra), Merusagar Samantaray, Advs. for the Petitioner.
               Ms. Manali Singhal, Santosh Sachin, Ms. Vinita Sashidharan, Jatin
       Mongia, Abhijat P. Medh, Advs. for the Respondent.
               The Judgment of the Court was delivered by
               R. K.AGRAWAL J. 1. The IBI Consultancy India Private
 E     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 have arisen between the parties in connection with the
 F     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
 G     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
 H
     IBI CONSULTANCY INDIA PRIVATE LIMITED v. DSC                          1029
              LIMITED [R. K. AGRAWAL, J.]

for Toll and Traffic Management Systems whereas the DSC Limited,           A
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
                                                                           B
Highways Authority of India (NHAI) for developing Lucknow-Sitapur
Highway Project (LSEL Project) 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      C
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     D
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.         E
Pursuant thereto, a Contract Agreement dated 30.08.2010 was executed
between the parties. The 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       F
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-         G
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.
                                                                           H
1030             SUPREME COURT REPORTS                            [2018] 3 S.C.R.


 A            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 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,
 B
       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
 C     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.
 D            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 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
 E     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.
 F            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
 G     30.08.2010 which are as under:-
              “Article-1
              Contract Documents
              The following document shall constitute the Contract between
              the client and the contractor, and each shall be read and construed
 H
     IBI CONSULTANCY INDIA PRIVATE LIMITED v. DSC                               1031
              LIMITED [R. K. AGRAWAL, J.]

      as an integral part of the Contract;                                      A
      (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                                                              B
      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         C
      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       D
      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
                                                                                E
      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     F
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 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.                                                      G

       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
                                                                                H
1032              SUPREME COURT REPORTS                         [2018] 3 S.C.R.


 A     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,
 B     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.
 C           12. The petitions as well as interlocutory application, if any, are
       disposed of accordingly.


       Devika Gujral                                            Petitions disposed of.


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