Full Judgment Text
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IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.13700 OF 2015
(Arising out of SLP(C)No.26955 of 2011)
M/S INDIAN INSTT. OF PLANNING & MGMT.& ANR. .......APPELLANTS
VERSUS
M/S AK & I ADVERTISING PVT.LTD. .......RESPONDENT
J U D G M E N T
J.S.KHEHAR, J.
1.
Leave granted.
2. The respondent-M/s AK & I Advertising Pvt.Ltd. and the
appellants were admittedly in a contractual relationship wherein
the respondent was assigned with the responsibility of handling
advertisement work of the appellants. According to the agreement
between the parties, the payment mechanism settled between the
parties required the respondent to raise bills with supporting
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vouchers within 15 to 30 days of the publication of the
advertisement. The bills were to be honoured within 55 days of the
date of publication and/or telecast of the advertisement. It is
also not a matter of dispute, that Clause 11 of the contract
contemplated, that disputes and differences arising between the
parties in connection with their contractual obligations would be
referred to an arbitrator as agreed to by the parties. And that,
the dispute would be settled in consonance with the provisions of
the Indian Arbitration Act.
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3. It is also not a matter of dispute, that consequent upon
differences arising between the parties, the contract was
eventually terminated by the appellants in December, 2006. After
the termination of the contract, the respondent - M/s AK & I
Advertising Pvt.Ltd issued a letter requiring the appellants to
clear the outstanding dues, which were quantified at
Rs.3,17,82,789/-, and in addition thereto, interest on delayed
payment till 31.12.2006. After the receipt of the aforesaid
communication, the appellants released an amount of Rs.71,58,100/-,
and a further amount of Rs.60,00,000/-, totalling in all
Rs.1,31,58,100/- (less TDS of Rs.4,12,678/-).
4. For recovering the remaining principal amount claimed by
the respondent as also the interest component, the respondent- M/s
AK & I Advertising Pvt.Ltd approached the Indian Newspaper Society
(hereinafter referred to as `the INS') for intervening between the
parties for settling their dispute. During the course of the
negotiations, the appellants, through a communication dated
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24.06.2007, offered a full and final settlement of Rs.99,50,000/-
(which included Rs.92,00,000/- towards the principal amount and
Rs.7,50,100/- towards interest). This offer was made towards a full
and final settlement of all pending dues between the parties. In
the ongoing negotiations, a meeting was arranged by the then Deputy
Secretary of the INS, where both the parties participated on
10.07.2007. Thereafter, on 23.07.2007, the appellants paid a sum
of Rs.92,24,206/- and described the same as - “towards full and
final settlement”.
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5. It is the contention of the learned counsel for the
appellants, that on 25.06.2007, the Chairman of the INS advised the
parties to have their dispute amicably settled through arbitration.
And for the said purpose, to nominate an arbitrator. Even
thereafter, through an another communication dated 06.08.2007, the
Chairman of the INS again sought the consent of the rival parties
for appointment of an arbitrator, with reference to the above
subject.
6. Since the parties could not agree to settle their dispute
by way of arbitration, the respondent approached the High Court of
Delhi by filing Arbitration Petition No.16 of 2011, under Section
11 of the Arbitration and Conciliation Act, 1996 (hereinafter
referred to as `the Act'). The prayer made in the above petition
was for appointment of an arbitrator with reference to monetary
obligations arising out of their contractual obliations. This
prayer made before the High Court by the respondent, was accepted
through the impugned order dated 10.05.2011. The High Court
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disposed of the above petition by appointing Mr.Ashwini Mata,
Senior Advocate, as the sole arbitrator to adjudicate the dispute
between the parties. While appointing the arbitrator, the High
Court left open all objections including the objections raised by
the appellants, that the claim raised by M/s AK & I Advertising
Pvt.Ltd was barred by limitation. The High Court also determined
the fee payable to the arbitrator.
7. During the course of hearing, learned counsel for the
appellants, relied upon Section 11 of the Act to assail the
validity of the impugned order dated 10.05.2011. It was the
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contention of the learned counsel for the appellants, that the
mandate of Sub-section (5) of Section 11 required a party to a
dispute, to enjoin the other party to the contract, to agree to
appoint an arbitrator, to settle their disputes, and only on the
presentation of such request, the other party fails to agree to
appoint an arbitrator within 30 days, the aggrieved party can
approach the jurisdictional High Court under Section 11 of the Act,
with a request to appoint an arbitrator. In order to understand the
claim raised by the appellants, it is necessary to extract
hereunder Section 11(5) of the Act, as also, Section 2(1)(h)
defining the term “party”. The above provisions are reproduced
hereunder.:
“2. Definitions.-(1) In this Part, unless the context
otherwise requires,-
(h) “party” means a party to an arbitration
agreement.
11. Appointment of arbitrators.-
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(5) Failing any agreement referred to in sub-
section (2), in an arbitration with a sole
arbitrator, if the parties fail to agree on the
arbitrator within thirty days from receipt of a
request by one party from the other party to so
agree the appointment shall be made, upon request
of a party, by the Chief Justice or any person or
institution designated by him.”
8. Having given our thoughtful consideration to the
submissions advanced at the hands of the learned counsel for the
appellants, we are satisfied to hold, that if the parties fail to
agree to appoint an arbitrator within 30 days from the receipt of a
request made by one party to the other, then and only then, Section
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11 of the Act can be invoked seeking a direction at the hands of
the High Court, to appoint an Arbitrator. Section 2(1)(a) of the
Act, leaves no room for any doubt, that the term “party” expressed
in Section 11(5) of the Act is referable to a party to an
arbitration agreement.
9. During the course of hearing, learned counsel for the
appellants emphasised, that no such request had been made by M/s AK
& I Advertising Pvt.Ltd for the appointment of an arbitrator, to
the appellants, for the settlement of their contractual dispute,
details whereof have been narrated hereinabove. It is the pointed
contention of the learned counsel for the appellants, that a
request for appointment of an arbitrator was made only by the
Indian Newspaper Society and never by M/s AK & I Advertising
Pvt.Ltd. It was the submission of the learned counsel for the
appellants that the term “party” in Section 2(h) of the Act would
include either the appellants before this Court or M/s AK & I
Advertising Pvt.Ltd., and not, the Indian Newspaper Society. No
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document was brought to our notice during the course of hearing by
the learned counsel for the respondent, indicating that M/s AK & I
Advertising Pvt.Ltd. had ever approached the appellants requiring
the appellants to agree to the appointment of an arbitrator, for
the settlement of their monetary disputes, emerging out of their
contractual relationship, with regard to handling of the
advertisement work of the appellants.
10. In the above view of the matter, we are satisfied, that
it was not open to the High Court to invoke its jurisdiction under
Section 11 of the Act, for nominating/appointing an arbitrator. In
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view of the above, the impugned order passed by the High Court
deserves to be set aside, and the same is accordingly hereby set
aside.
11. The appeal is accordingly allowed.
..........................J.
(JAGDISH SINGH KHEHAR)
..........................J.
(R. BANUMATHI)
NEW DELHI;
NOVEMBER 24, 2015.
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