SHRI SAI NATH ENTERPRISES v. DELHI DEVELOPMENT AUTHORITY

1. Present petition is filed under sections 11(6) and 14 of the Arbitration and Conciliation Act, 1996 seeking to appoint an Arbitrator to adjudicate the disputes and differences that are said to have arisen between the parties.

2. Some of the salient facts are that on 24.6.2014 the respondent invited bids from eligible bidders for allotment of authorised parking sites under its jurisdiction. The petitioner was declared successful bidder in respect of parking site adjacent to Kabristan District Centre, Saket, New Delhi. The petitioner had offered a monthly license fee of Rs.9,02,000. On 16.9.2014 the petitioner deposited the Bank Guarantee for Rs. 1,08,24,000/- being equivalent to 12 months license fee. On 10.10.2014 the petitioner was handed over possession of the parking site in question by DDA. The petitioner has raised certain disputes regarding alleged obstructions in the parking site. It is their contention that the parking site could not be made fully operational as there is no concrete floor or ramps for the vehicles to 2017:DHC:2433 enter into the parking site, the gate for entry of the vehicles in the parking site is too small and DDA workers/labourers have occupied large portions of the parking site and have made their sheds/cabins. While the dispute was still pending, in June 2016 the parking site is said to have been handed over to SDMC. In the meantime SDMC issued a show cause notice to the petitioner as to why the contract be not cancelled. On 4.11.2016 SDMC has cancelled the allotment of the parking site.

3. There are two set of litigations which have gone on between the parties. The first litigation pertains to invocation of the bank guarantee on 16.3.2017. This court on 17.3.2017 had passed an interim order restraining the respondent from invoking the bank guarantee in question inasmuch as the letter of invocation was not in terms ofthe Bank Guarantee. The order was clarified on 31.3.2017 to the effect that the earlier interim order does not preclude DDA to make fresh invocation of the Bank Guarantee. The said OMP being OMP(I)(COMM) No. 125/2017 was disposed of.

4. The second litigation pertains to the Writ Petition filed by the petitioner challenging the cancellation of the allotment of the parking site on 4.11.2016. Certain interim orders were passed by the learned Single Judge on 8.2.2017 directing the petitioner to make payment to the respondent DDA and also to SDMC. Against the said order dated 8.2.2017 an LPA was filed before the Division Bench. The Division Bench in LPA 133/2017 on 22.2.2017 had made directions for the petitioner to deposit or pay at least a sum of Rs.40 lacs to SDMC subject to which the interim stay may be continued. It is noteworthy that earlier the learned Single Judge vide its order dated 9.11.2016 had directed DDA to decide the issue and contentions raised by the petitioner within six weeks. The case of the petitioner is that this decision has not been taken or if taken has not been communicated to the petitioner.

5. In the license deed executed between the parties there exists an arbitration clause being clause 24 which reads as follows:- “Clause 24: Arbitration Clause That in case of any dispute arising between the licensor and the licensee in respect of interpretation or performance of any terms and conditions of this license, the same shall be referred to the sole arbitration of the choice of Vice-Chairman, DDA whose decision thereon shall be final and binding on both the parties. The licensee shall not object to the Vice Chairman of the Delhi Development Authority's action as sole arbitration on the ground that he had dealt with the case or has at some stage expressed opinion in any matter connecting herewith. No arbitration should be allowed without depositing monthly license fee.”

6. It is the case of the petitioner that they have issued a notice on 20.3.2017 invoking the arbitration clause. Hence, it is urged that now the respondent have lost the right to appoint an Arbitrator and this court may take steps to appoint an independent and impartial Arbitrator.

7. Learned counsel for the respondent has, however, submitted that the respondent has already granted remission of 30% of the license fee for the rainy months. Hence, he submits that balance amount the petitioner should pay and that no further dispute survives.

8. The submission regarding payment is subject matter of a separate petition under section 9 of the Arbitration and Conciliation Act and has to be dealt with separately. The dispute between the parties pertains to the quantification of the licence fees. Hence, non-payment of the license fee cannot be a ground to deny adjudication by Arbitration.

9. Regarding the submission of the petitioner that the respondent have lost the right to appoint an arbitrator, reference may be had to the judgment of the Supreme Court in the case of Deep Trading Company vs. Indian Oil Corporation & Ors., (2013) 4 SCC 35 where the Supreme Court held as follows:- “20. If we apply the legal position exposited by this Court in Datar Switchgears Ltd. v. Tata Finance Ltd. and Anr. MANU/SC/0651/2000: (2000) 8 SCC 151 to the admitted facts, it will be seen that the Corporation has forfeited its right to appoint the arbitrator. It is so for the reason that on 09.08.2004, the dealer called upon the Corporation to appoint the arbitrator in accordance with terms of Clause 29 of the agreement but that was not done till the dealer had made application under Section 11(6) to the Chief Justice of the Allahabad High Court for appointment of the arbitrator. The appointment was made by the Corporation only during the pendency of the proceedings under Section 11(6). Such appointment by the Corporation after forfeiture of its right is of no consequence and has not disentitled the dealer to seek appointment of the arbitrator by the Chief Justice under Section 11(6). We answer the above questions accordingly.”

10. In the present case, despite receipt of notice invoking the arbitration clause, the respondent have taken no steps to appoint the arbitrator. Accordingly, they have lost the said right.

11. Accordingly, Justice M.L. Mehta (Retd,) (Mobile No: 09910384620) is appointed as an Arbitrator to adjudicate the disputes between the parties. The arbitration shall take place under the aegis of the Delhi International Arbitration Centre, Delhi High Court. The learned Arbitrator complying with Section 12 (1) of the Arbitration and Conciliation Act. Parties to appear before the DIAC on 30.05.2017 at 2 P.M.

12. Petition stands disposed of.

JAYANT NATH, J MAY 05, 2017 N