Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
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% Order delivered on : 10 June, 2016
+ OMP(I)(COMM) No.263/2016
WeP Solutions Limited ..... Petitioner
Through Mr.Mandeep Singh Vinaik, Adv. with
Ms. Anjali Sharma, Mr. Deepak and
Ms.Aswathy Menon, Advs.
versus
Tata Consultancy Services Ltd. ..... Respondent
Through None
CORAM:
HON'BLE MR.JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J. (ORAL)
1. The petitioner has filed the present petition under Section 9 of the
Arbitration and Conciliation Act, 1996 praying for urgent interim orders.
2. The petitioner is a company engaged in the business of offering
printing solutions for large projects and has the requisite specialized skills
and experience for handling large-scale projects.
3. The respondent is the successor in interest of the company which was
known as CMC Ltd and was combined and amalgamated with Tata
Consultancy Services Ltd, thereby merging to form one legal entity. By
virtue of the said amalgamation, all contractual rights and obligations of
CMC Ltd are now vested in and binding on the present respondent. This
amalgamation was sanctioned and permitted by the Bombay High Court in
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Company Scheme Petition No. 421/2015, vide order dated 14 August 2015.
The respondent company has expertise in Information Technology ("IT")
and IT enabled services, and has been commissioned by the Government of
India for establishing and running Passport Seva Kendras, who has in
establishing these Kendras outsourced some of the services.
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4. By virtue of agreement dated 20 November, 2009, the services and
expertise of the petitioner Company (at that time "WeP Solutions India
Limited") was contracted for providing printing solutions at various Passport
Seva Kendras across the country by the respondent. The terms and
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conditions of this transaction were set out in agreement dated 20
November, 2009. The agreement is for a term of 8 years, and it was
stipulated that it would not be terminable within the span of those 8 years to
protect the interests of both the parties.
5. The petitioner has reproduced the terms and conditions of this
agreement, including the term which relate to the termination of the same.
The same reads as under: -
3. Terms and Conditions for P1 four (4) years of the Agreement:
d. CMC will not engage any other service provider for managed
printing services at PSK 's for Passport Seva Project. However,
in case of exigency, CMC may repair/resolve the printer on its
own.
4. Terms & Conditions for Last four (4) years of the Contract.
d. CMC will not engage any other service provider for managed
printing services at PSK 's for Passport Seva Project, however, in
case of any exigency, CMC may repair /resolve the printer on its
own.
8. Termination
a. CMC has the option of terminating the contract if mutually
agreed upon performance clauses are not met by Wepsol for
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Three consecutive months. In case of non performance, CMC will
give 1 (one) month advance termination notice for curing the
breach/non performance to Wepsol. In case Wepsol fails to cure
the breach within one month, CMC will have the right to
terminate the Agreement on account of non performance of
Wepsol.
b. Wepsol can also terminate the contract due to the non-payment
issues pending for a continuous period of Three months during
the term of the contract by giving 3 (Three) months advance
written notice. Once the termination notice is served to CMC, the
due payment should be cleared within Seven days of the date of
notice, else the contract will be terminated. Due to any reason
other than Non-performance or Non-payment, the contract
cannot be terminated by either of the parties.
d. In case either of the Parties commits a material breach of any of
the terms and conditions of this Agreement, the other Party shall
give the defaulting Party, a Notice to remedy such breach within
a period of Fifteen (15) days from the date of such material
breach of terms and conditions. The Defaulting Party should
remedy the material breach within 15 days of receipt of such
Notice from the Other Party. If the defaulting Party fails to
remedy such breach within the said stipulated period of Fifteen
(15) days, then the Other Party may terminate this Agreement by
giving a notice of 10 days.
e. Either Party is free at will to terminate this Agreement by giving
thirty (30) days written notice of Termination to the Other Party
in case of bankruptcy or insolvency or liquidation of the Other
Party.
f. In case of termination, CMC will pay 50% of the last month
invoice as winding down charges or CMC will return all the
cartridges back to Wepsol on the last day of termination notice.
Wepsol will not provide cartridges for new calls during the
termination period. In case CMC decides to return cartridges,
Wepsol will provide empty cartridges back to CMC.
g. The foregoing provides for the entire liability of CMC and the
exclusive remedy of Wepsol in the event of termination on this
Agreement.
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In the event of termination, all equipments belonging to Wepsol will
be returned back to Wepsol and any documentation required for
Wepsol to carry back the same to be provided by CMC or the
rightful authority.
z. In the last 4 years, if CMC terminates the contract, CMC may buy
back all the printers on AS IS, WHERE IS basis at the mutually
agreed price of the printers.
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6. On 18 January 2011, the Printing Solutions Division of WeP
Solutions India Limited, i.e., the company entered into the agreement with
the respondent, demerged into Datanet Systems Limited (which was
formerly known as "Datanet Corporation Limited") by virtue of approval of
Scheme of Arrangement by the High Court of Karnataka in Company
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Petitions No. 250 & 251 of 2010 vide its order dated 18 January 2011.
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Thereafter, on 23 December 2011, the name, Datanet Systems Limited, was
changed to WeP Solutions Limited, i.e. the name of the petitioner herein.
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7. It is the case of petitioner that the respondent on 12 May, 2016
without any justification issued a notice of termination of agreement. The
submission of the petitioner is that termination of agreement is arbitrary and
without cause, thereby violating the terms and conditions of the original
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agreement dated 20 November, 2009. The petitioner replied to the notice on
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23 May, 2016 setting out its stand and opposing the said termination.
8. Counsel says that as no response was received from the respondent after
termination notice and it was assumed that the respondent is not even interested
in a conciliation process by which the dispute between the parties arising
directly from the issuance of the termination notice can be resolved amicably.
The petitioner took the steps to suggest the name of neutral person as sole
Arbitrator in terms of clause 17 of the agreement. Counsel has referred the
decision of Supreme Court in the case of Adhunik Steels Ltd. v. Orissa
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Manganese and Minerals (P) Ltd ., (2007) 7 SCC 125 in support of his
submissions.
9. Counsel submits that as the termination of agreement is a wrongful act
which has led to undue hardship and damages suffered by the petitioner, the
order of termination be stayed till the disputes between the parties is settled.
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10. The agreement has been terminated on 12 May, 2016. The petitioner is
claiming damages who has also invoked the arbitration. The present petition is
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filed on 8 June, 2016. The petitioner is seeking the relief for revival of
termination. At present, the Court is not aware about the latest position as to
whether the respondent has entered into any new agreement with third party or
not. Thus, the ex-parte relief cannot be granted.
11. Let the notice be issued to the respondent through all modes including
registered post and approved courier, on filing of process fee and Regd. A.D.
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Covers within a week, returnable on for 17 June, 2016 . The petitioner will
file an affidavit of service along with tracking report about the service of the
respondent on the next date. Dasti in addition.
12. Copy of the order be given dasti to the learned counsel for the
petitioner, under the signatures of the Court Master.
(MANMOHAN SINGH)
JUDGE
JUNE 10, 2016
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