Full Text
HIGH COURT OF DELHI
JUDGMENT
MANPOWERGROUP SERVICES INDIA PRIVATE LIMITED..... Petitioner
Through: Mr. Neil Hildreth, Mr. Rahul Jain and Mr. Kshitiz Arya, Advs.
Through: Mr. Bharat Chugh and Mayank Arora, Advs.
1. The present petition has been filed under Section 11(6) of the Arbitration and Conciliation Act,1996 (hereinafter referred to as „A&C Act,1996‟) with the following prayers:- “It is therefore respectfully prayed that this Hon‟ble Court may be pleased to pass an order: a. Appointing an independent sole arbitrator under Section 11(6) read with Section 11(8) of the Arbitration and Conciliation Act, 1996 for the adjudication of disputes that have arisen between the parties; b. Pass such other order(s) as this Hon‟ble Court may deem fit and proper in the facts and circumstances of the present case.”
2. It is a case where the petitioner had appointed the respondent to provide hostel facilities for the execution of the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) Scheme in which the petitioner was participating. The DDU-GKY is a placementlinked skill development program of the Ministry of Rural Development (MoRD). The primary aim of the program is to alleviate poverty by providing regular wage employment to youth from rural areas specifically falling inside the below poverty line (BPL) households. The petitioner also executed a Champion Employer Memorandum of Understanding with the MoRD, Government of India on September 25, 2014.
3. The MoRD defines „training and placement‟ as the two core program components of DDU-GKY. The petitioner as a Project Implementation Agency (PIAs) was allowed to outsource the core components („training and placement‟) for implementation of the scheme and the SkillsTech Services Private Limited (“SkillsTech”) is a MoRD approved outsourced partner for the training component.
4. The petitioner and SkillsTech entered into a MoU dated December 16, 2016 and as per which the petitioner had to outsource the Training component of the DDU-GKY project to SkillsTech and perform the Placement component itself. As per, Ld. Counsel appearing on behalf of the petitioner, SkillsTech was appointed as an Outsourcing Partner for carrying out training in three states viz. (a) Maharashtra, (b) Tamil Nadu and (c) Karnataka.
5. According to DDU-GKY norms and SoPs (Standard Operating Procedures) the PIA was also authorized to engage non-core partners as well to implement the project.
6. The PIA was also responsible for periodic and annual audits, submission of utilization certificates, quality control (Q-Team), MIS and submission of documents on the ERP/Portal.
7. The State Rural Livelihood Missions (SRLMs) are the State government‟s rural missions, monitoring the project and utilization of funds and resources by the PIAs.
8. It was on the recommendation of the SkillsTech that the respondent herein was incorporated specifically with the objective of providing hostel operations under the DDU-GKY project to the petitioner.
9. Consequently, the petitioner and the respondent executed an agreement titled as Hostel Operations Agreement („Agreement‟) dated June 26, 2018 which was later on amended twice on August 07, 2018 and September 01, 2018.
10. It is the case of the petitioner that under the afore-said Agreement, the petitioner had agreed to pay the respondent the entire amount received from the State governments towards lodging and boarding. As per the petitioner, between 2018 to February 2020, the respondent enrolled 436 candidates in the State of Maharashtra and 280 in the State of Tamil Nadu. Cumulatively, an amount of ₹1,96,74,403/- stands paid by way of advances to the respondent.
11. Ld. Counsel appearing on behalf of the petitioner stated that under the Agreement executed between the parties, the respondent was required to carry out its obligations as per the SoPs and the guidelines issued by the MoRD. Article 11.[1] of the Agreement also obligated the respondent to maintain proper records and retain all the original paperwork connected with the work carried out under such Agreement. Particularly, he submitted that the petitioner was also required to obtain the „Financial and Operational Documents‟ from the delivery partners. According to him, following documents are required to be submitted with the Maharashtra State Rural Livelihood Mission („MSRLM‟, governing body of the State of Maharashtra under the DDU-GKY Scheme) and are still there in the possession of the respondent: Sr. No. Details Maharashtra Tamil Nadu Training Centre Khopi Chandrapur Chennai Kanchipuram
1 Final Invoices against advances released with supporting documents Pending Pending Pending Pending 2 Staff Details (For staff deployed at hostel facility ): Date of Joining, Offer/Appointment Letters, Offered Salary details (CTC/NTH Per Month), Date of Leaving 3 Candidate-wise AEBAS Hostel Attendance 4 Candidate Manual Attendance Registers 5 Biometric Machine Submission The aforesaid documents are collectively referred as „Financial and Operational Documents‟.
12. It is further the case of the petitioner that by email dated November 19, 2020, it had sought the final invoices for the advances paid to the respondent.
13. Apart from this, the petitioner had also sought „Financial and Operational Documents‟ from the respondent. However, it is the primary case of the petitioner that the respondent on one pretext or another has deflected the issue of supplying these fundamental documents to the petitioner.
14. According to the petitioner, disputes have arisen between the parties on account of failure on part of the respondent to: a) provide all the „Financial and Operational Documents‟ and b) carry out obligations under the Agreement in accordance with the SoPs and the guidelines. Thereby, the petitioner invoked the dispute resolution process prescribed under Article 24.[2] of the Agreement by issuing the Notice dated January 20, 2021 to the respondent. Article 24 of the Agreement is reproduced as follows: “24.[1] This Agreement shall be governed by the applicable laws of India. 24.[2] Any and all disputes, controversies and conflicts(“Disputes”) arising out of this Agreement between the Parties or arising out of or relating to or in connection with this Agreement or the performance or non-performance of the rights and obligations set forth herein or the breach, termination, invalidity or interpretation thereof shall be referred for arbitration in terms of the Arbitration and Conciliation Act, 1996 including any amendments or statutory modifications thereof Prior to submitting the Disputes to arbitration the parties shall resolve to settle the dispute/s though mutual negotiation and discussions. In the event that the said dispute/s are not settled within 30 days of the arising thereof, the same shall finally be settled and determined by arbitration. The seat of arbitration shall be New Delhi and the language used in the arbitral proceedings shall be English. Arbitration shall be conducted by a sole arbitrator to be appointed by Manpower Group. 24.4... 24.5... 24.[6] It is agreed that the Courts of Delhi shall have the exclusive jurisdiction to entertain any matter between the parties including challenge of any order / award of arbitration proceeding. 24.7...”
15. That by sending the afore-said Notice, the petitioner had called upon the respondent to resolve disputes through amicable discussions and mutual negotiations, which were supposed to took place within thirty days of the receipt of the written notice, as mandated by Article 24.[2] of the Agreement. However, the respondent chose not to reply to the said notice.
16. Thereafter, the petitioner sent an email dated January 23, 2021 seeking all the „Financial and Operational Documents‟ from the respondent. Again, there was no reply to the said email.
17. Ld. Counsel for the petitioner argued that on account of nonsupply of these documents, an amount of ₹ 1,96,74,403/-,which was paid by the petitioner to the respondent, is now to be refunded to the State Government. Thereafter, multiple emails dated February 04, 2021 and July 08, 2021 were sent to the respondent but it failed to respond to any of them.
18. It was being fundamentally argued that because of failure on part of the respondent to perform requisite tasks as per the terms of the Agreement, the MSRLM has now directed closure of the project which was awarded in favour of the petitioner. To this effect multiple notices and reminders dated March 19, 2021, March 31, 2021, April 06, 2021 and May 17, 2021 were sent by the MSRLM to the petitioner.
19. That the petitioner had already filed a petition under Section 9 of the A&C Act,1996 against the SkillsTech (respondent therein), wherein the petitioner had sought an interim direction of this Court to the effect that the „Financial and Operational Documents‟ lying in the possession of the SkillsTech, be handed-over to the petitioner.
20. This Court vide order dated November 10, 2021, with the consent of the parties, had appointed Justice (Retd.) J.R. Midha, as the Sole Arbitrator to adjudicate the disputes between the parties therein i.e., (petitioner and the SkillsTech). Along with this, this Court had also directed the SkillsTech to furnish a list of documents which were lying in its possession and to preserve the same till further orders passed by the Arbitral Tribunal.
21. It is the case of the petitioner that since present disputes relate to implementation of the DDU-GKY Scheme and also since the respondent herein is a related company to the SkillTech (respondent therein), therefore, Justice (Retd.) J.R. Midha, who has already been appointed as the sole arbitrator in the afore-said Section 9 petition, should also be appointed in the present case to adjudicate the disputes between the petitioner and respondent herein.
22. On the other hand, the respondent in its reply primarily denies the existence of any sort of disputes between the parties. It is the case of the respondent that the documents which have been sought by the petitioner, either do not exist or have already been submitted to the petitioner or are already in the possession of the petitioner by virtue of the petitioner‟s own performance of specific project-related functions including: a) Q-Team (Quality Monitoring & Assurance), b) MIS, Center inspections, c) PFMS (financial reporting), d) AEBAS access (Government of India‟s online portal to access attendance),e) ERP, Kaushal Bharat, MRIGS (Government of India‟s online ERP for DDU- GKY), Kaushal Panjee, f) MVR (Monthly Verification Certificates) and g) Periodic and Annual Audits, utilization certificates etc.
23. The Ld. Counsel appearing on behalf of the respondent argued that the petitioner is only seeking to avoid submitting project records to the SRLMs (State Rural Livelihood Missions, which are in-charge of monitoring the project and funds utilization by the PIAs) by fabricating a false narrative of not having them received from the respondent.
24. He further argued that the petitioner is also attempting to shift its liabilities / obligations under the MoU with MSRLM / TNSRLM (Maharashtra State Rural Livelihood Mission/ Tamil Nadu State Rural livelihood Mission) upon the respondent.
25. He then pointed out that following documents viz. 1) Final Invoices against advances released with supporting documents, 2) Staff Details (For staff deployed at hostel facility): Date of Joining, Offer/Appointment Letters, Offered Salary details (CTC/NTH Per Month), Date of Leaving, 3) Candidate-wise AEBAS Hostel Attendance, 4) Candidate Manual Attendance Registers and 5) Biometric Machine Submission, which are averred by the petitioner to be in exclusive possession of the respondent, are already in the possession of the petitioner and this fact has been recorded in various mails and communications with the petitioner.
26. He also pointed out that the respondent herein i.e., Northface Education Private Limited and the respondent in the Section 9 petition i.e., SkillsTech, have common directors and shareholders and both companies are represented by Mr. Philip Christopher. The SkillsTech entered into an agreement with the petitioner for core-activity of training under the project and later the respondent was incorporated for providing only ancillary non-core activity of hostel operations by Mr. Philip Christopher.
27. Another contention put forth by Ld. Counsel of the respondent was that in relation to the DDU-GKY projects for the state of Karnataka, Tamil Nadu and Maharashtra, there are three arbitration proceedings which are already pending between the SkillsTech and the petitioner and in one of those arbitrations, pertaining to the same project/state, all the documents which have been averred in the present petitioner to be in the possession of the respondent, were already supplied by Mr. Philip Christopher along with an affidavit as a response to Section 17 Application filed by the petitioner under those proceedings, to the petitioner.
28. He then submitted a point-by-point reply to each of the averred „Financing and Operational documents, to demonstrate that the socalled „Financing and Operational Documents‟ are only in the possession of the petitioner. The point-by-point reply submitted by the respondent against the averred documents is as follows:
after the project stood completed, that, the Petitioner, as an afterthought started insisting on final invoices. It is manifest that the parties, while referring to „final invoice‟, meant the same to be a reference to the last invoice. The use of the phrase „final invoice‟ in that sense is literal. iv. It is submitted that all the Performa invoices, including the „last invoice‟, were raised and duly paid by the Respondent already. Further all those invoices were charged with applicable taxes and, therefore, there is no separate invoices that can be lawfully or contractually raised. v) The Respondent further submits that there is no mention of final invoices under the SOPs of DDU-GKY whatsoever.”
2. Staff Details (For staff deployed at hostel facility): Date ofJoining, Offer/Appointment Letters, Offered Salary details (CTC/NTH Per Month), Date of Leaving: i. Only hostel wardens and security are staff deployed at the Hostels as per DDU-GKY SOPs. The Respondent was the non-core hostel operations partner, it had deployed the training centre staff as hostel wardens as these staff were also provided accommodation at the residential training center. The security was provided by the respective college management. All the salaries to the staff members were paid only through bank accounts of the Respondent. The details of salary paid and amounts, evident through the bank statements, have already been provided to the Petitioner by way of email dated 17.12.2021 along with bank advice for every transaction. ii. All salaries were paid through bank accounts of Respondent. SRLMs were already aware of this fact as they had conducted a financial audit of the project and the Petitioner had filed monthly and annual audit reports as required under the DDU-GKY SOPs (Finance Module).Furthermore, all documents of staff details have already been given in the form of emails/physical copies upon centre closure and same was intimated to the Petitioner vide mails dated 28.05.2019 and 17.12.2021. True Copy of the Email dated 28.05.2019 hereby annexed as Document No. 4.”
3. Candidate wise AEBAS (Aadhaar Enabled Biometric Attendance System) hostel Attendance: i. It is submitted that the petitioner is the PIA for the project and has/ had unfettered access to AEBAS which is DDU-GKY‟s online biometric attendance hosted on the NIC server. During Covid pandemic the access to the same was withdrawn as the use of Biometrics was discouraged. However, to the best of Respondent‟s knowledge the MoRD has a backup of all AEBAS data for DDU-GKY projects and can provide the same on request. Therefore, the Ministry of Rural Development is the right authority to seek AEBAS records. However, in case the Petitioner faces any difficulty, the Respondent is willing to give all assistance possible to access AEBAS data from the Government.”
4. Candidate Manual Attendance registers i. It is submitted that all records related to Manual attendance were handed over to the Petitioner in boxes, along with centre documents and communicated to them vide mail dated 6.6.2019, 22.08.2019 & 28.08.2019. Copies of the e-mails dated 06.06.2019, 22.08.2019 & 28.08.2019 and photographs of documents being delivered for Jaya and Ramanujar Centers, are annexed herewith and marked as Document No. 5 (Colly.) ii. All manual attendance records/registers have been handed over to the Petitioner soon after the Petitioner force-closed SkillsTech‟s Centers.”
5. Biometric machine i. The Petitioner avers that the Biometric machines have not been given by the respondent. It is noteworthy that the Respondent has never purchased/owned the biometric devices. The training centers had the biometric machines already installed before the Respondent was contracted for the project. Nevertheless, all biometric devices in the possession of SkillsTech were handed over to the Petitioner on 20.12.2021 at Pune, Maharashtra. ii. Further the Respondent was never contracted by the Petitioner for the Chennai Training Center (Jaya College) to be able to submit any records for the same.”
29. He also pointed out that various State/Central government departments have already imposed show cause notices/penalties on the petitioner for violations of program norms/breaches of contract with the government and hence the petitioner is only attempting to shroud its inability to manage and successfully complete its obligations to the respective state governments.
30. He pointed out that the petitioner had admittedly disclosed that it was exploring means to disguise the costs of the project partners from the authorities. To demonstrate this, he submitted an excerpt from an email dated December 28, 2017, wherein Mr. Shrishailya Phatak, (Head of Govt. Projects for Manpower Group and Director) wrote to Mr. Philip Christopher, in the following manner: “Though we understand about the cost involvement during the project commencement like centre identification and set up, staffing, content development,( for which we are in the process of finding suitable solution to disguise the cost of partners) and candidate‟s mobilization etc.” He submitted that the afore-said conduct manifests that there are huge manipulations in the utilization of government funds and also in the appointment of project partners and now the petitioner is under pressure to answer the authorities which have been sending it notices and it is to distract from the question of their accountability, the petitioner is resorting to harass the respondent and the SkillsTech.
31. According to Ld. Counsel of the respondent, the conduct of the petitioner has always been evasive and non-cooperative towards the respondent. To substantiate this, he submitted that the respondent was once categorically asked by the petitioner to levy GST for the services being provided by the respondent, even though the services were exempted from the GST tax ambit while on the other hand, various other project partners delivering similar services were exempted from levying any sort of GST.
32. He also stated that notwithstanding petitioner‟s contentions and averments about non-supply of the „Financing and Operational Documents‟, the respondent is still ready and willing to submit within four weeks, any other valid and legitimate documents which are required to be submitted in conformity of the Agreement undergone between the parties, in case the same have been inadvertently missed for any reason.
33. It is also the case of the respondent that the petitioner, in order to apportion project costs between itself and SkillsTech and other partners including Professional Skills, Talent Edge, Green Hills, Dhatri Foundation, etc. under the norms of DDU-GKY, had allocated 100% of the boarding and lodging costs to the SkillsTech. Whereas, the SkillsTech, to ensure transactional integrity, transparency and most importantly compliance with DDU-GKY norms, assigned the boarding and lodging activities under a separate legal entity to the respondent.
34. As far arrangement of payment structure between the petitioner, SkillsTech and respondent, was concerned, Ld. Counsel for the respondent submitted that payments to the respondent were to be derived from the total payments made by the petitioner to the SkillsTech. He further averred that as per estimations, the SkillTech was qualified for 79.37% of the total project cost for DDU-GKY, Tamil Nadu and 80.57% of the total project cost for DDU-GKY, Maharashtra. It is further his case, that this DDU-GKY cost heads were allocated by the petitioner itself citing its own internal accounting requirements and under the same internal accounting of the petitioner, 100% of the boarding and lodging cost was assigned to the SkillsTech. He further argued that after advent of the Agreement on June 26, 2018, the petitioner allocated the entire amount received from the State governments towards boarding and lodging costs to the respondent as the rightful fee for delivering hostel operations.
35. It is also the case of the respondent that it was never contracted by the petitioner to undertake the process of enrolments of the students. It was the SkillsTech only which enrolled 573 and trained 476 candidates for the Maharashtra DDU-GKY project and enrolled 765 and trained 654 candidates for the Tamil Nadu DDU-GKY project. All payments made by the petitioner to the respondent were on the basis of undisputed invoices raised by the respondent.
36. He vehemently submitted that there are no disputes which are subsisting between the parties and as far as averments with respect to withholding of documents are concerned, it was his submission, that the respondent had already provided so-called „Financing and Operational Documents‟ to the petitioner and was always willing to provide all the documents in conformity with the DDU-GKY norms to the petitioner. It is basically failure of the petitioner to provide placements to trained students which is causing cold feet to it. Thus, on account of non-existence of subsisting dispute between the parties, he prayed for the dismissal of the present petition.
37. Having heard the learned counsel for the parties and perused the record, the issue which arises for consideration is whether the petitioner is entitled to prayer as made in the petition for appointment of an Arbitrator. There is no dispute that the parties have entered into an Agreement which is called Hostel Operations Agreement dated June 26, 2018, which was later amended on August 07, 2018 and September 01, 2018, respectively. The Agreement was primarily with regard to respondent providing hostel facilities to candidates enrolled for training under the DDU-GKY Scheme. It is the case of the petitioner that amount of ₹1,96,74,403/- has been paid to the respondent for which the invoices and Financial and Operational documents were to be given by the respondent to the petitioner for delivery of the same to MSRLM. It is also the case of the petitioner that despite making several communications to the respondent, to this effect, the same have not been given by it to the petitioner.
38. On the other hand, the case of the respondent is that the petitioner is seeking to avoid submission of the project records to the SRLMs by fabricating a false narrative of not having received the records from the respondent. The respondent contends that the Financial and Operational documents are already in the possession of the petitioner. The respondent has also stated that notwithstanding petitioner‟s contentions and averments about non-supply of the Financing and Operational Documents, the respondent is still ready and willing to submit within four weeks, including any other valid and legitimate documents, which are required to be submitted in conformity of the Agreement undergone between the parties, to the petitioner.
39. Suffice to state, on consideration of the stand taken by the parties, there appears to be disputes existing between them and the same need to be resolved. Article 24 of the Agreement is an Arbitration Clause which contemplates „Any and all disputes‟ need to be referred for arbitration in terms of A&C Act, 1996. The respondent does not dispute the existence of the Arbitration Clause.
40. The law with regard to a prayer for appointment of an Arbitrator is quite well settled, inasmuch as, the Supreme Court in the cases of Mayavati Trading Pvt. Ltd. v. Pradyuat Deb Burman, (2019) 8 SCC 714, Vidya Drolia & Ors. v.Durga Trading Corporation, Civil Appeal No. 2402/2019 decided on December 14, 2020 and Bharat Sanchar Nigam Ltd. & Anr. v. M/s Nortel Networks India Pvt. Ltd., Civil Appeal No.843-844/2021 decided on March 10, 2021, has held that the Court while considering an application under Section 11 of the A&C Act, 1996, for appointment of an Arbitrator is required to see the existence of the arbitration agreement.
41. That apart, various courts have, time and again, held that, if the claims of a party, on merit, for which the appointment of an Arbitrator is sought, are not stale, then such claims need to be referred for arbitration and the prayer as made for appointment of an Arbitrator need to be granted.
42. In the case in hand, to the stand of the petitioner, the respondent has also stated that it is ready and willing to submit within four weeks, any other valid and legitimate documents which are required to be submitted in conformity of the Agreement executed between the parties, in case the same have been inadvertently missed for any reason.
43. In view of such a stand, this Court is of the view, before the parties are referred to the arbitration for adjudication of the disputes which have arisen between them, appropriate shall be, the parties are relegated to the process of mediation under the aegis of the Delhi High Court Mediation and Conciliation Centre, for them to initially workout their disputes. Suffice to state, if the disputes are not settled within a period of three months from the first date of hearing before the Centre, then the same shall be referred to arbitration which shall be conducted by Justice (Retd.) J.R. Midha under the aegis of the Delhi International Arbitration Centre and the rules made thereunder. The parties through their counsel shall appear before the Delhi High Court Mediation and Conciliation Centre on March 20, 2023 at 4 PM.
44. In the eventuality the dispute need to be adjudicated through arbitration then the fee of the Arbitrator shall be regulated in terms of the rules made by the Delhi International Arbitration Centre.
45. Let a copy of this order be sent to Coordinator Delhi High Court Mediation and Conciliation Centre and Coordinator, Delhi International Arbitration Centre.
46. With the above, the instant petition is disposed of.
47. No Costs.
V. KAMESWAR RAO, J
MARCH 13, 2023