Arbitration; International Amusement Vs. India Trade Promotion Organisation

The Arbitration and Conciliation Act, 1996 – The Public Premises (Eviction of Unauthorised Occupants) Act, 1971 – Section 4A – the clause 28 in the agreement which is referred to in the case on hand is not an arbitration clause. Therefore, the appointment of an Arbitrator by the nominee of the Chief Justice has been rightly set aside in the impugned judgment by the Division Bench of the Delhi High Court.

(The Supreme Court of India decision in International Amusement Limited Vs. India Trade Promotion Organisation dated 17-12-2014 on Appointment of Arbitrator)

Contents

Acts

  • Arbitration and Conciliation Act, 1996
  • Section 4A of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971

Legal Points

Power under Section 11(6) of the Arbitration Act is not an administrative power of either the Chief Justice of the High Court or his designate but a judicial power.

Under Section 15 of the P.P. Act, the bar of jurisdiction applies only to a Court.

Facts of the Case

These appeals are directed by the appellant against the common impugned judgment and order dated 16.07.2007 passed in writ petition (c) No. 2015 of 2001 and C.M. (M) No.553/2007 by the High Court of Delhi, urging various facts and legal grounds and raising two substantial questions of law which read thus:-

a) Whether the arbitration proceedings can be continued between the International Amusement Limited and the India Trade Promotion Organisation?

b) Whether the Estate Officer appointed as Arbitrator is the correct forum?

In the agreement, arbitration clauses 27 and 28 were incorporated, which are extracted hereunder :-

“27. The licensed premises are public premises as defined in the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 and fall within the jurisdiction of the Estate Officer, Pragati Maidan.

28. In case of any dispute arising out of or in connection with this agreement the disputes shall be referred to the sole arbitration of the Chairman, India Trade Promotion Organisation or his nominee whose decision/award shall be final, conclusive and binding on the parties. Application for reference to arbitration shall be made by either party within two months of arising of the dispute.”

The case of the appellant is that it being a permanent allottee of the land at Pragati Maidan, it had made huge investments for opening Water Park, in order to provide additional amusement facilities to the public at large. The ITPO being aware of the permanent status of the appellant in respect of the land as well as the factum of huge investments made by it upon the same towards establishing the Water Park, called upon the appellant to vacate the premises vide letter dated 02.09.1999. The appellant has raised various disputes, claims and counter claims against the ITPO.

It is contended by Mrs. Pratibha M. Singh, the learned senior counsel for the appellant that the legal position prevailing with respect to Section 16 of the Arbitration Act, was that any directions qua-jurisdiction ought to be raised before the Arbitrator and the same cannot be adjudicated under Section 11 of the Arbitration Act by the Judge who is a designate of the Chief Justice under Sections 11(6) and 11(7) of the Arbitration Act.

It was further held that a clause substantially similar to the clauses referred to in P. Dasaratharama Reddy (supra) was interpreted by the three Judge Bench of this Court in the State of Uttar Pradesh v. Tipper Chand (supra) wherein paras 2 and 3 of the said judgment contain the reasons for holding that the clause in the agreement cannot be construed as an arbitration clause.

A two Judge Bench of this Court interpreted clause 30 of the agreement entered into between the parties, which is almost identical to the clauses under consideration, relying upon the judgment in the Tipper Chand (supra), and held that clause 30 cannot be relied upon by the parties for seeking reference of any dispute to an Arbitrator arising out of the contract.

Important Paragraphs

Para 24. In view of the aforesaid decisions and the law laid down by this Court in catena of cases referred to supra which are reiterated in the case of P. Dasaratharama Reddy (supra) we are of the view that the clause 28 in the agreement which is referred to in the case on hand is not an arbitration clause. Therefore, the appointment of an Arbitrator by the nominee of the Chief Justice has been rightly set aside in the impugned judgment by the Division Bench of the Delhi High Court. The law laid down by this Court in the above referred judgments, after interpretation of relevant arbitration clauses in the agreement in those cases, are aptly applicable to the fact situation on hand and we answer the questions of law framed by this Court against the appellant and in favour of the ITPO and Union of India. The other proceedings involved in this case, if any, pending under the provisions of the P.P. Act before the Estate Officer, the same shall be continued by him. Accordingly, the civil appeals are dismissed as there is no merit for consideration to interfere with the impugned judgment and order. No costs.

Referred Cases

  1. Konkan Railway Corporation. Ltd. and Ors. v. Mehul Construction Co., (2000) 7 SCC 201
  2. Konkan Railway Corpn. Ltd. and Anr. v. Rani Construction Pvt. Ltd., (2002) 2 SCC 388
  3. SBP & Co. v. Patel Engineering Limited and Anr., (2005) 8 SCC 618
  4. Maharshi Dayanand University and Anr. v. Anand Coop. L/C Society Ltd. and Anr., (2007) 5 SCC 295
  5. S.N. Prasad, Hitek Industries (Bihar) Ltd. v. Monnet Finance Ltd. and Ors., (2011) 1 SCC 320
  6. Andhra Pradesh Tourism Development Corpn. Ltd. and Anr. v. Pampa Hotels Ltd., (2010) 5 SCC 425
  7. Kamal Pushp Enterprises v. D.R. Construction Company, (2000) 6 SCC 659
  8. Firm Ashok Traders & Anr. v . Gurumukh Das Saluja & Ors., (2004) 3 SCC 155
  9. Ashoka Marketing Ltd. & Anr. v. Punjab National Bank & Ors., (1990) 4 SCC 406
  10. Haryana Telecom Limited v. Sterlite Industries (India) Limited, (1999) 5 SCC 688
  11. P. Dasaratharama Reddy Complex v. Government of Karnataka & Anr., (2014) 2 SCC 201
  12. Mysore Construction Company v. Karnataka Power Corporation Ltd. & Ors., ILR 2000 KAR 4953
  13. Chief Conservator of Forests, Rewa v. Ratan Singh Hans, AIR 1967 SC 166
  14. Rukmanibai Gupta v. The Collector, Jabalpur, (1980) 4 SCC 556
  15. State of Uttar Pradesh v. Tipper Chand, (1980) 2 SCC 341
  16. State of Orissa v. Damodar Das, (1996) 2 SCC 216
  17. Bharat Bhushan Bansal v. Uttar Pradesh Small Industries Corporation Ltd., Kanpur, (1992) 2 SCC 166
  18. State of Maharashtra v. Ranjeet Construction, AIR 1986 Bom 76
  19. Mallikarjun v. Gulbarga University, (2004) 1 SCC 372
  20. Punjab State v. Dina Nath, (2007) 5 SCC 28