Telangana High Court
Ms. Sneha Shamarthi vs Union Of India on 27 September, 2022
Author: A. Abhishek Reddy
Bench: A. Abhishek Reddy
THE HON'BLE SRI JUSTICE A. ABHISHEK REDDY
ARBITRATION APPLICATION No.112 OF 2021
ORDER:
This application is filed under Section 11 (6) (c) of the Arbitration and Conciliation Act, 1996 (for short 'the Act'), seeking appointment of an Arbitrator to adjudicate the disputes arising under Company Owned and Company Operated (COCO) Service Provider Agreement dated 08.03.2018 entered by the parties.
The case of the applicant is that in pursuance to the public advertisement issued by respondent No.2 in various newspapers on 01.03.2017, the applicant has applied for starting outlet under COCO category to the Deputy General Manager on 28.06.2017. On 12.02.2018, the letter of indent as well as the appointment letter were issued to the applicant for a term of 3 years i.e. from 14.03.2018 to 13.02.2021. Thereafter, due to pandemic and outbreak of Covid-19, the Government issued a Memorandum dated 13.05.2020 extending the period of contracts with Government for 3 to 6 months. Accordingly, the applicant has addressed several letters and e-mails to the respondent for extending the contract period, however, there was no response from the respondent. Finally, when the tenders were floated by the respondent, the applicant has 2 approached this Court and filed W.P. No.4758 of 2021. This Court vide order dated 01.03.2021 directed the respondent to consider the request of the petitioner for extension. Accordingly, vide letter dated 08.03.2021, the tenure of the contract of the applicant was extended till 31.03.2021. Further, when the respondent Corporation has directed the applicant to handover the premises by 30.04.2021, the applicant has filed O.P.No.6 of 2021 and the same is pending consideration before the I Additional Chief Judge, Secunderabad. In the said O.P., the Court has granted injunction order dated 28.04.2021 restraining the respondent from interfering with the possession of the applicant. Further, the applicant has also issued a notice to the respondent on 12.06.2021 to refer the matter to the arbitrator. But, the respondent refused for referring the matter to the Arbitrator. Hence, the present Arbitration Application is filed by the applicant.
A counter has been filed by the respondent Corporation mainly stating that extension was given to the applicant from 13.03.2021 to 31.03.2021 based on the decision of the respondent Corporation to extend the tenure of all existing COCO agreements across the country upto 31.03.2021, but not pursuant to the order dated 01.03.2021 passed in W.P. No.4758 of 2021, as contended by the applicant. It is further stated that 3 as per the terms of the COCO agreement, all the amounts incurred by the applicant towards wages for manpower were reimbursed to her and she was paid applicable remuneration and incentives, therefore the question of applicant sustaining loss due to covid-19 pandemic does not arise. Further, the applicant has participated in the tender floated by the respondent Corporation, but was unsuccessful. The applicant has initially filed W.P. No.1031 of 2021 before this Court for extension of tenure under COCO Service Provider Agreement, but the same was withdrawn by the applicant on 20.01.2021. Further, the discrimination alleged by the applicant with that of the other COCO Service Providers is denied by the respondent. Hence, it is prayed to dismiss the Arbitration Application.
Heard the learned counsel for the applicant and the learned counsel for the respondent. Perused the record.
The learned counsel for the respondent Corporation has vehemently opposed the present arbitration application stating that the applicant has been permitted the continue in the said premises even after the Covid-19 period and has been adequately compensated due to the said extension. Thus, there is no arbitrable dispute which needs to be adjudicated by the arbitrator as the petitioner was adequately compensated due to extension given by the Corporation. The alleged loss if any 4 sustained by the petitioner cannot be gone into by the Arbitrator and has relied on the judgments in Indian Oil Corporation Limited vs. NCC Limited1, and DLF Home Developers Limited vs. Rajapura Homes Private Limited2 to buttress his contention.
With all due respect to the leaned counsel for the respondent, this Court is not in agreement with the said contention urged by the respondent in view of the fact that this Court cannot go into the merits of the case while dealing with an Arbitration Application. For the purpose of deciding the present application, this Court has only to see whether there is an arbitrable dispute between the parties and whether the agreement entered between the parties has an arbitration clause to refer the matter to an arbitrator. Whether the petitioner has been adequately compensated by the extension of the contract by the Corporation or not can only be gone into by the Arbitrator only.
In IBI Consultancy (India) (P) Ltd. v. DSC Ltd.3, the Hon'ble Supreme Court while dealing with the Arbitration Application filed under Section 11(6) read with Section 11(9) of the Arbitration and Conciliation Act, for appointment of an 1 2022 SCC OnLine SC 896 2 2021 SCC OnLine SC 781 3 (2018) 17 SCC 95 5 arbitrator to adjudicate the disputes that have arisen between the parties therein in connection with the contracts in question, has held, at para 8, as under:
8. 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, the 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 in the affirmative then whether the petitioner has made out a case for the appointment of arbitrator.
Further, in Duro Felguera, S.A. v. Gangavaram Port Ltd.,4 the Hon'ble Supreme Court, at para 59, has held as under:
"The scope of the power under Section 11(6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. [SBP and Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 :
(2009) 1 SCC (Civ) 117] . This position continued till the amendment brought about in 2015. After the amendment, all that the courts need to see is whether an arbitration agreement exists nothing more, nothing
4 (2017) 9 SCC 729 6 less. The legislative policy and purpose is essentially to minimise the Court's intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected." In view of the law laid down by the Hon'ble Supreme Court in IBI Consultancy (India) (P) Ltd. and Duro Felguera, S.A. (referred supra), this Court deems it fit to allow the Arbitration Application and refer the matter for arbitration to be conducted by a sole arbitrator.
In the result, the Arbitration Application is ordered appointing Sri T. Muralidhar, retired District Judge, as the sole Arbitrator to arbitrate on the disputes between the applicant and the respondent and the said arbitrator shall enter on reference and proceed with, as enjoined by the Act.
The learned Arbitrator shall fix his remuneration as per the statutory provisions. He shall also fix the costs and expenses of the secretarial assistance for the arbitration proceedings upon deliberation and consultation with the parties. All the costs and expenses of the arbitration proceedings shall be borne by both the parties in equal share. The learned Arbitrator is requested to complete arbitration proceedings, and pass an award at the earliest, preferably within six months from the date of commencement of the arbitral proceedings. It is 7 made clear that this order does not preclude the respondent from raising any legally tenable objections as may be permissible under the law.
Miscellaneous Applications, if any, pending in the Arbitration Application shall stand closed.
____________________ A. ABHISHEK REDDY, J Date : 27.09.2022 sur